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HomeMy WebLinkAboutord2015-052WHAT L'UM C,'UUNI'Y C,'UUNC;IL AGENDA BILL NO. LV17-5 @V CLEARANCES Initial Date Date Received in Council Office Agenda Date Assigned to: Originator: AD 11113/15 C� ��DDivision MC NOV 17 2015 11124115 Introduction Head. AD 11113115 12/8/15 Finance /Council Dept. Head: Prosecutor: WHATCOM COUNTY Purchasing/ dg COUNCIL Executiv . ��' 7 TITLE O OCUMENT: Ordinance approving and authorizing the execution of a plan of conversion, articles of conversion, a certificate of formation, and a BHO interlocal operating agreement in connection with the conversion of North Sound Mental Health Administration ATTACHMENTS: Ordinance 2015 XX, Plan of Conversion; Articles of Conversion; Certificate of Formation • NSBHO Interlocal Operating Agreement SEPA review required? ( ) Yes ( ) NO Should Clerk schedule a hearing? ( ) Yes ( ) NO SEPA review completed? ( ) Yes ( ) NO Requested Date: SUMMARY STATEMENT OR LEGAL NOTICE LANGUAGE. (If this item is an ordinance or requires a public hearing, you must provide the language for use in the required public notice. Be specific and cite RCW or WCC as appropriate. Be clear in explaining the intent of the action.) Conversion of existing North Sound Regional Support Network, conducting business as North Sound Mental Health Administration, to a Limited Liability Company conducting business as the North Sound Behavioral Health Organization. The State requires that as of April 1, 2016, Medicaid purchasing of behavioral health services must be contracted through a Behavioral Health Organization (BHO). COMMITTEEACTION. COUNCIL ACTION.• 12/8/2015: Forwarded to Council for approval 11/24/2015: Introduced 7 -0 12/8/2015: Adopted 7 -0, Ord. 2015 -052 Related County Contract #: Related File Numbers: Ordinance or Resolution Number: Ord. 2015 -052 Please Note: Once adopted and signed, ordinances and resolutions are available for viewing and printing on the County's website at. www.co.whatcom.wa.us /council. 1 2 3 PROPOSED BY: Health Dept. 4 5 INTRODUCTION DATE: 11.24.2015 6 7 8 9 052 10 ORDINANCE NO. 2015 - 11 12 APPROVING AND AUTHORIZING THE EXECUTION OF A PLAN OF CONVERSION, ARTICLES 13 OF CONVERSION, A CERTIFICATE OF FORMATION, AND A BHO INTERLOCAL OPERATING 14 AGREEMENT IN CONNECTION WITH THE CONVERSION OF NORTH SOUND MENTAL HEALTH 15 ADMINISTRATION 16 17 18 WHEREAS, North Sound Regional Support Network, conducting business as North 19 Sound Mental Health Administration ( "NSMHA "), is an unincorporated association called a 20 regional support network ( "RSN "), formed by that certain Interlocal Agreement Establishing 21 a Mental Health RSN for Island, San Juan, Skagit, Snohomish, and Whatcom Counties 22 recorded under San Juan County Auditor No. 97101405 ( "Interlocal Agreement "), and 23 created to form a regional system of care for mental health services; and 24 WHEREAS, the Laws of 2014, ch. 225 and those portions of chapter 71.24 RCW in 25 effect on or after April 1, 2016, require that the parties to the Interlocal Agreement replace 26 the RSN with a behavioral health organization ( "BHO ") as of April 1, 2016; and 27 WHEREAS, in replacing the RSN with a BHO, the parties to the Interlocal Agreement 28 also wish to convert their unincorporated association into a limited liability company as 29 authorized in the LLC conversion statutes, RCW 25.15.417 -.423, and in the Interlocal 30 Cooperation Act, at RCW 39.34.030(3)(b); and 31 WHEREAS, to replace the RSN with a BHO and to convert the unincorporated 32 association to an LLC, the parties to the original Interlocal Agreement are entering into a 33 Plan of Conversion, Articles of Conversion, a Certificate of Formation, and a BHO Interlocal 34 Operating Agreement; and 35 WHEREAS, the BHO Interlocal Operating Agreement will supersede and replace the 36 Interlocal Agreement that created NSMHA. The BHO Operating Agreement will also serve as 37 an operating agreement as provided in the Washington Limited Liability Act, chapter 25.15 38 RCW, as well as an interlocal agreement, as authorized by RCW 39.34.030; 39 40 NOW, THEREFORE, BE IT ORDAINED by the Whatcom County Council that: 41 Section 1. The County Council approves and authorizes the County Executive, or 42 designee, to sign a Plan of Conversion in substantially the form attached hereto as Exhibit A 43 in connection with the conversion of NSMHA. 44 Section 2. The County Council approves and authorizes the County Executive, or 45 designee, to sign Articles of Conversion substantially in the form attached hereto as Exhibit Page 1 of 2 B in connection with the conversion of NSMHA. 2 Section 3. The County Council approves and authorizes the County Executive, or 3 designee, to sign a Certificate of Formation in substantially the form attached hereto as 4 Exhibit C in connection with the conversion of NSMHA. 5 Section 4. The County Council approves and authorizes the County Executive, or 6 designee, to sign the BHO Interlocal Operating Agreement in substantially the form attached 7 hereto as Exhibit D in connection with the conversion of NSMHA. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 ADOPTED this 8th day ofDeceiber , 2015. COUNTY . Dana Brown - Owls,, eck of the Council IN,_,, WHATCOM COUNTY COUNCIL WHATCOM COUNTY, WASHINGTON Carl Weimer, Council Chair WHATCOM COUNTY EXECUTIVE WHATCOM COUNTY, WAS ETON APPROVED AS TO FORM: \Watcam County Civil Deputy Prosecutor Jack Louws, County Execu, ive (x ) Approved ( ) Denied Date Signed: 1 %? e?11 Page 2 of 2 EXHIBIT A PLAN OF CONVERSION This Plan of Conversion ( "Plan") is entered into by all of the parties to the North Sound Regional Support Network, conducting business as North Sound Mental Health Administration ( "NSMHA "). RECITALS A. NSMHA, an unincorporated entity, was formed under the authority of the Interlocal Corporation Act, chapter 39.34 RCW dated December, 1996 by interlocal agreement titled "Interlocal Agreement Establishing a Mental Health Regional Support Network for Island, San Juan, Skagit, Snohomish and Whatcom Counties" recorded October 14, 1997 in the records of the County Auditor of San Juan County under Auditor's File Number 97101405, ( "Interlocal Agreement "). All of the parties to the Interlocal Agreement will also be members of the limited liability company. B. The parties to the Interlocal Agreement wish to convert their unincorporated association into a limited liability company as provided for in the conversion statutes, RCW 25.15.417 -.423. The limited liability company shall be North Sound Behavioral Health Organization, LLC ( "NSBHO, LLC "). C. RCW 39.34.030(3)(b) provides NSMHA, as an organization, may convert into a limited liability company under which each of them are parties to NSMHA in that: 1) each of the parties is a public agency; and 2) the organization's funds are subject to audit. AGREEMENT NOW, THEREFORE, the parties covenant and agree as follows: 1. Recitals. The parties agree the statements in the Recitals are true and accurate statements of facts and are included in this Plan. 2. Terms and Conditions of Conversion. As provided for in the Interlocal Agreement NSMHA is governed by a Board of Directors consisting of nine (9) directors with the directors representing the following counties: County Island San Juan Skagit Snohomish Whatcom IATawni - Temp folder \Exhibit A - Plan of Conversion.docx Page 1 of 6 Members One One One Four Two EXHIBIT A The interest of each of the above counties shall be converted to membership units in NSBHO, LLC held as follows: County Membership Units Island 11.111111% San Juan 11.111111% Skagit 11.111111% Snohomish 44.444444% Whatcom 22.222222% NSBHO, LLC shall be managed by a manager. The manager shall consist of a Board of Directors with representatives of each member county serving as directors. 3. Effective Conversion. When the conversion takes effect, the following shall occur: (a) NSMHA shall be converted to a limited liability company, NSBHO, LLC; (b) The interests, rights and obligations in all real and personal property owned by NSMHA shall be vested in NSBHO, LLC without reversion or impairment; (c) The interests, rights and obligations in all agreements, contracts, leases, instruments and other documents entered into by NSMHA shall be vested in NSBHO, LLC without revision or impairment; (d) All rights, debts, liabilities and other obligations of NSMHA shall continue as obligations of NSBHO, LLC; and (e) Except as prohibited by other law, all of the rights, privileges, immunities, powers and purposes of NSMHA shall remain vested in NSBHO, LLC. 4. No Winding Up Required. NSMHA shall not be required to wind up its affairs or pay its liabilities and distribute its assets. 5. Execution of Documents and Cooperation Plan. The parties to this Plan shall execute and deliver all documents and instruments and take all such other action as necessary or desirable to evidence or carry out the conversion. 6. Effective Date. The conversion shall be effectuated on January 1, 2016. 7. Organizational Documents Converted_ Organization. Attached hereto as exhibits are the following organizational documents of NSBHO, LLC: Exhibit A — Cover Sheet for Conversion of Business Entity; Exhibit B — Articles of Conversion; Exhibit C — Certificate of Formation; and I: \Tawni - Temp folder \Exhibit A - Plan of Conversion.docx Page 2 of 6 EXHIBIT A Exhibit D — Operating Agreement. 8. Miscellaneous. (a) Applicable Law. This Plan shall be construed in accordance of the laws of the State of Washington; (b) Severahility. The provisions of this Plan are severable. If any clause or provision is held invalid or unenforceable in whole or in part, the remainder of the Plan shall not be affected and shall be enforceable to the fullest extent permitted by law; and (c) Counterparts. This Plan may be executed in any number of counterparts, all such counterparts shall be deemed to constitute one and the same instrument, and each of said counterparts shall be deemed an original hereof. [Remainder of page intentionally left blank; signatures follow] I: \Tawni - Temp folder \Exhibit A - Plan of Conversion.docx Page 3 of 6 EXHIBIT A IN WITNESS WHEREOF, this Plan is executed this day of , 2015. ISLAND COUNTY BOARD OF COUNTY COMMISSIONERS ISLAND COUNTY, WASHINGTON By: Helen Price Johnson, Chair By: Richard M. Hannold, Member By: Jill Johnson, Member Approved as to form: Prosecuting Attorney SAN JUAN COUNTY ATTEST: Clerk of the Council By: Ingrid Gabriel, Clerk Date REVIEWED BY COUNTY MANAGER By: Michael J. Thomas RANDALL K. GAYLORD APPROVED AS TO FORM ONLY Approved as to form: By: Date Prosecuting Attorney IATawni - Temp folder \Exhibit A - Plan of Conversion.docx COUNTY COUNCIL SAN JUAN COUNTY, WASHINGTON Page 4 of 6 Bob Jarman, Chair District 1 Jamie Stephens, Vice -Chair District 3 Rick Hughes, Member District 2 EXHIBIT A SKAGIT COUNTY BOARD OF COUNTY COMMISSIONERS SKAGIT COUNTY, WASHINGTON Kenneth A. Dahlstedt, Chair Lisa Janicki, Commissioner Attest: Ron Wesen, Commissioner Clerk of the Board Recommended: Department Head Approved as to form: Civil Deputy Prosecuting Attorney Approved as to indemnification: Risk Manager Approved as to budget: Budget & Finance Director IATawni - Temp folder\Exhibit A - Plan of Conversion.docx Page 5 of 6 SNOHOMISH COUNTY By: Snohomish County Executive Approved as to form: By: Deputy Prosecuting Attorney WHATCOM COUNTY By: Jack Louws Its: County Executive Approved as to form: By: Royc is g1� SBA #22503, D ity, ro! _ g Attorney lATawni - Temp folder\Exhibit A - Plan of Conversion.docx EXHIBIT A Page 6 of 6 EXHIBIT B ARTICLES OF CONVERSION for NORTH SOUND REGIONAL SUPPORT NETWORK, conducting business as NORTH SOUND MENTAL HEALTH ADMINISTRATION converting to NORTH SOUND BEHAVIORAL HEALTH ORGANIZATION, LLC ARTICLE I Converting Organization These Articles of Conversion are submitted by NORTH SOUND REGIONAL SUPPORT NETWORK, conducting business as NORTH SOUND MENTAL HEALTH ADMINISTRATION ( "NSMHA "), pursuant to the authority of RCW 25.15.420. The converting organization, NSMHA, is an unincorporated organization formed under the authority of the State of Washington Interlocal Corporation Act, RCW Chapter 39.34, and the State of Washington Community Mental Health Act, RCW 71.24.015, and established by interlocal agreement dated December, 1996 titled " Interlocal Agreement Establishing a Mental Health Regional Support Network for Island, San Juan, Skagit, Snohomish and Whatcom Counties" recorded October 14, 1997 in the records of the County Auditor of San Juan County under Auditor's File Number 97101405. ARTICLE II Plan of Conversion The Plan of Conversion ( "Plan ") adopted by the parties to NSMHA is attached as Exhibit A. Under the Plan, NSMHA is hereby converted to a limited liability company, North Sound Behavioral Health Organization, LLC. ARTICLE III Approval The conversion was approved by all of the members of NSMHA in compliance with its governing statutes. These Articles may be executed in any number of counterparts, all such counterparts shall be deemed to constitute one and the same instrument, and each of said counterparts shall be deemed an original hereof. ARTICLE IV Effective Date of Conversion The effective date of conversion shall be January 1, 2016. 1: \Tawni - Temp folder \Exhibit B - Articles of Conversion.docx Page 1 of 4 EXHIBIT B ARTICLE V Certificate of Formation The Certificate of Formation of North Sound Behavioral Health Organization, LLC is attached as Exhibit B. IN WITNESS WHEREOF, these Articles are executed this 1St day of December, 2015. ISLAND COUNTY BOARD OF COUNTY COMMISSIONERS ISLAND COUNTY, WASHINGTON By: Helen Price Johnson, Chair By: Richard M. Hannold, Member By: Jill Johnson, Member Approved as to form: By: Prosecuting Attorney SAN JUAN COUNTY ATTEST: Clerk of the Council By: Ingrid Gabriel, Clerk Date REVIEWED BY COUNTY MANAGER By: Michael J. Thomas RANDALL K. GAYLORD APPROVED AS TO FORM ONLY Date COUNTY COUNCIL SAN JUAN COUNTY, WASHINGTON 1: \Tawni - Temp folder \Exhibit B - Articles of Conversion.docx Page 2 of 4 Bob Jarman, Chair District 1 Jamie Stephens, Vice -Chair District 3 Rick Hughes, Member District 2 EXHIBIT B Approved as to form: By: - - - , Prosecuting Attorney SKAGIT COUNTY Attest: Clerk of the Board Recommended: Department Head Approved as to form: Civil Deputy Prosecuting Attorney Approved as to indemnification: Risk Manager Approved as to budget: Budget & Finance Director 1: \Tawni - Temp folder \Exhibit B - Articles of Conversion.docx BOARD OF COUNTY COMMISSIONERS SKAGIT COUNTY, WASHINGTON Kenneth A. Dahlstedt, Chair Lisa Janicki, Commissioner Ron Wesen, Commissioner Page 3 of 4 SNOHOMISH COUNTY Snohomish County Executive Approved as to form: LO-A Deputy Prosecuting Attorney WHATCOM COUNTY By: Jack Louws Its: County Executive Approved as to form: By: Roy SBA #22503, Depey-- Prosecuting Attorney I: \Tawni - Temp folder\Exhibit B - Articles of Conversion.docx EXHIBIT B Page 4 of 4 EXHIBIT C CERTIFICATE OF FORMATION LIMITED LIABILITY COMPANY Pursuant to Title 25 of the Revised Code of Washington, the undersigned does hereby submit this Certificate of Formation for the purpose of forming a limited liability company. The name of the limited liability company is: North Sound Behavioral Health Organization, LLC 2. The limited liability company is to have a perpetual existence. 3. The name of the initial registered agent is: Bradford E. Furlong 4. The initial registered office is: 825 Cleveland Avenue Mount Vernon, WA 98273 CONSENT TO APPOINTMENT AS REGISTERED AGENT I, Bradford E. Furlong, hereby consent to serve as Registered Agent in the State of Washington for the above named limited liability company. I understand that as agent for the limited liability company, it will be my responsibility to accept Service of Process on behalf of the limited liability company; to forward license renewals and other mail to the limited liability company; and to immediately notify the Secretary of State in the event of my resignation or of any changes in the Registered Office address. (Signature of Registered Agent) Bradford E. Furlong_ December 1, 2015 (Printed Name) (Date) 5. The address of the principal place of business, and the mailing address, of the limited liability company is: 301 Valley Mall Way, Suite Mount Vernon, WA 98237 6. Management of the limited liability company is vested in one or more managers: D YES ®NO 7. Any other provisions the limited liability company elects to include are attached. See Section 7.1 attached. I: \Tawni -Temp folder \Exhibit C - Certificate of Formation.docx Page 1 of 5 8. This Certificate is executed by each of the five members as noted below: Member County Address City , State Zip Code Island PO Box 5000 Coupeville WA 98239 San Juan PO Box 760 Friday Harbor WA 98250 Skagit 700 S. 2 "d Street, Suite 202 Mount Vernon WA 98273 Snohomish 3000 Rockefeller, MS 504 Everett WA 98201 Whatcom 311 Grand Avenue, Suite 201 Bellingham WA 98225 9. This Certificate will be effective upon filing, unless an extended date and /or time appears here: January 1, 2016 10. This Certificate may be executed in any number of counterparts, all such counterparts shall be deemed to constitute one and the same instrument, and each of said counterparts shall be deemed an original hereof. DATED: .2015 MEMBERS: ISLAND COUNTY BOARD OF COUNTY COMMISSIONERS ISLAND COUNTY, WASHINGTON By: Helen Price Johnson, Chair By: Richard M. Hannold, Member By: Jill Johnson, Member Approved as to form: , Prosecuting Attorney 1: \Tawni - Temp folder \Exhibit C - Certificate of Forrnation.docx Page 2 of 5 SAN JUAN COUNTY ATTEST: Clerk of the Council By: Ingrid Gabriel, Clerk REVIEWED BY COUNTY MANAGER By: Michael J. Thomas RANDALL K. GAYLORD APPROVED AS TO FORM ONLY Approved as to form: By: EXHIBIT C Date Date Prosecuting Attorney SKAGIT COUNTY Attest: Clerk of the Board Recommended: Department Head COUNTY COUNCIL SAN JUAN COUNTY, WASHINGTON two Jarman, k nair District 1 Jamie Stephens, Vice -Chair District 3 Rick Hughes, Member District 2 BOARD OF COUNTY COMMISSIONERS SKAGIT COUNTY, WASHINGTON Kenneth A. Dahlstedt, Chair Lisa Janicki, Commissioner Ron Wesen, Commissioner IATawni - Temp folder \Exhibit C - Certificate of Formation.docx Page 3 of 5 Approved as to form: Civil Deputy Prosecuting Attorney Approved as to indemnification: Risk Manager Approved as to budget: Budget & Finance Director SNOHOMISH COUNTY Lo Snohomish County Executive Approved as to form: Lo Deputy Prosecuting Attorney WHATCOM COUNTY By: Jack Louws Its: County Executive Approved as to fo By: - Roy am, WSBA #22503, Duty Prosecuting Attorney L\Tawni - Temp folder\Exhibit C - Certificate of Fonnation.docx Page 4of5 EXHIBIT C 7.1 LIMITATION OF MEMBERS' LIABILITY No member shall be personally liable for any debts, losses, or liabilities of the company beyond the member's contributions and any obligation of the member to make contributions, except as otherwise specifically provided by law. No member shall have liability to the company or its members or managers for monetary damages for conduct as a member, except for acts or omissions that involve intentional misconduct, gross negligence, a knowing violation of the law, conduct violating RCW 25.15.235, or for any transaction from which the member has personally received a benefit in money, property or services to which the member was not legally entitled. If the Washington Limited Liability Company Act is hereafter amended to authorize company action further eliminating or limiting the personal liability of members, then the liability of a member shall be eliminated or limited to the full extent permitted by the Washington Limited Liability Company Act, as so amended. Any repeal or modification of this section shall not adversely affect any right or protection of a member of the company existing at the time of such repeal or modification for or with respect to an act or omission of such member occurring prior to such repeal or modification. I: \Tawni - Temp folder\Exhibit C - Certificate of Formetion.docx Page 5 of 5 EXHIBIT D JOINT COUNTY AUTHORITY BHO INTERLOCAL OPERATING AGREEMENT M NORTH SOUND BEHAVIORAL HEALTH ORGANIZATION, LLC, a Washington behavioral health organization and limited liability company Dated and Effective as of January 1, 2016 Exhibit D - BHO OPERATING AGREEMENT Ed JOINT COUNTY AUTHORITY BHO INTERLOCAL OPERATING AGREEMENT OF NORTH SOUND MENTAL HEALTH ORGANIZATION, LLC THIS JOINT COUNTY AUTHORITY BHO OPERATING AGREEMENT (this "Agreement ") is made and entered into effective as of January 1, 2016, by and among the following County Authorities: Island County, San Juan County, Skagit County, Snohomish County and Whatcom County (collectively "County Authorities "). RECITALS A. The County Authorities, as defined below and as provided for in RCW 71.24.025 (12), in effect on and after April 1, 2016, are entering into this Agreement under the authority of the Interlocal Corporation Act, specifically RCW 39.34.030, to jointly provide a community health program and regional system of care, with the collective goal of consolidating administration, reducing administrative layering and reducing administrative costs, consistent with the State of Washington's legislative policy as set forth in RCW 71.24.015. B. This Agreement is a joint operating agreement entered into by a group of County Authorities responding to a request for a detailed plan and contract with the State of Washington to operate as a regional support network from the date termination until April 1, 2016, and as a behavioral health administration as of April 1, 2016, as provided for in RCW 71.24.100. C. This Agreement provides a means for each County Authority to share in the cost of mental and behavioral health services and further provides the means for both payment of services and audit of funds, as provided for in RCW 71.24.100. In addition, this Agreement provides for the joint supervision and operation of services and facilities, as provided for in RCW 71.24.110. D. This Agreement also serves as an Operating Agreement as provided for in the LLC Act, as defined below, as well as an Interlocal Agreement, as authorized by RCW 39.34.030. E. RCW 39.34.040 expressly authorizes local government, such as the County Authorities, to form limited liability companies to carry out their joint activities. F. This Agreement supersedes and replaces the agreement titled " Interlocal Agreement Establishing a Mental Health Regional Support Network for Island, San Juan, Skagit, Snohomish and Whatcom Counties" recorded October 14, 1997 in the records of the County Auditor of San Juan County under Auditor's File Number 97101405. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 1 of 25 G. In adopting this Agreement, in addition to adopting the Articles of the Agreement, the County Authorities hereby also adopt, and agree to, the Recitals and the facts set forth herein. ARTICLE 1 -- DEFINITIONS The following terms used in this Agreement shall have the following meanings (unless otherwise expressly provided herein): 1.1 "BHO Act" means Laws of 2014, chapter 225 and those portions of chapter 71.24 RCW in effect on and after April 1, 2016. 1.2 "BHO" means North Sound Behavioral Health Organization, LLC, governed by this joint operating agreement of the five County Authorities. The BHO is a "company" as that term is used in the LLC Act. 1.3 "Capital Account" means the capital account determined and maintained for each County Authority pursuant to Section 8.3. 1.4 "Capital Contribution" means any contribution to the capital of the BHO in cash or property by a County Authority whenever made. 1.5 "Certificate of Formation" means the certificate of formation pursuant to which the BHO was formed as an LLC, as originally filed with the office of the Secretary of State on 2016, and as amended from time to time. 1.6 "Code" means the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent superseding federal revenue laws. 1.7 "County Authority" or "County Authorities" shall have the same meaning as used in RCW 71.24.025, in effect as of April 1, 2016, as amended, and shall include only Island, San Juan, Snohomish, Skagit and Whatcom Counties. Each County Authority that signs a counterpart of this Agreement shall be a "member" of the LLC formed hereby as that term is defined in RCW 25.15.005 (8) and as that term is used in RCW 25.15.115, as amended. Each County Authority of the BHO must be a public agency as provided for in RCW 39.34.030(3)(b). 1.8 "County Authority's Interest" means all of a County Authority's share in the BHO's assets pursuant to this Agreement and the LLC Act and includes a County Authority's rights to participate in the management and affairs of the BHO, including the right to vote on, consent to or otherwise participate in any decision of the County Authorities. 1.9 "LLC" means limited liability company. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 2 of 25 1.10 "LLC Act" means the Washington Limited Liability Act, chapter 25.15 RCW as amended. 1.11 "Majority Interest" means, at any time, more than fifty percent (50 %) of the then outstanding Units held by the County Authorities. 1.12 "Executive Committee" means the governing body of the BHO as further specified in Article 5 of the Agreement. On behalf of the County Authorities, the Executive Committee shall govern the BHO. The Executive Committee shall be comprised of individual representatives from the following County Authorities with each County Authority having the number of representatives noted: County Representatives Island One San Juan One Skagit One Snohomish Four Whatcom Two 1.13 "Percentage Interest" means with respect to any County Authority, the percentage determined based upon the ratio that the number of Units held by such County Authority bears to the total number of outstanding Units. 1.14 "Regulations" includes proposed, temporary and final Treasury regulations promulgated under the Code and the corresponding sections of any regulations subsequently issued that amend or supersede such regulations. 1.15 "Reserves" means, with respect to any fiscal period, funds set aside or amounts allocated during such period to reserves which shall be maintained in amounts deemed sufficient by the Executive Committee for working capital and to pay obligations, expenses and other costs or expenses incident to the ownership or operation of the services provided by the BHO and the BHO's business. 1.16 "Tribal Authority" means the federally recognized Indian tribes and the major Indian organizations recognized by the Secretary of the Washington Department of Social and Health Services ( "DSHS ") that fall within the boundaries of the County Authorities insofar as those tribal organizations do not have a financial relationship with the BHO that would present a conflict of interest. 1.17 "Tribal Member" means a Tribal Authority that executes an agreement to become a Tribal Member as set forth in Article 4 of this Agreement. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 3 of 25 1.18 "Units" means the Units issued to any County Authority under this Agreement as reflected in attached Attachment A, as amended from time to time, subject to the provisions of Article 10 and Section 12.3 of this Agreement. ARTICLE 2 -- FORMATION OF BHO AS AN LLC 2.1 Formation. The BHO as an LLC was formed on , 2016, when the LLC Certificate of Formation was executed and filed with the office of the State of Washington Secretary of State in accordance with and pursuant to the LLC Act. The County Authorities shall promptly execute all amendments to the Certificate of Formation and all other documents needed to enable the County Authorities or Executive Committee, or their respective agents, to accomplish all filing, recording, and other acts necessary and appropriate to comply with all requirements for the formation and operation of the BHO as an LLC under the LLC Act. 2.2 Name. The name of the BHO is North Sound Behavioral Health Organization, LLC. 2.3 Principal Place of Business. The principal place of business of the BHO shall be 301 Valley Mall Way, Suite , Mount Vernon, WA 98273. The BHO may locate its places of business at any other place or places as the Executive Committee may from time to time deem advisable. 2.4 Registered Office and Registered A€mit. The BHO's initial registered agent and the address of its initial registered office in the State of Washington are as follows: Name Address Bradford E. Furlong 825 Cleveland Avenue, Mount Vernon, WA 98273 The registered office and registered agent may be changed by the County Authorities from time to time by filing an amendment to the Certificate of Formation. 2.5 Term. The term of the BHO shall be perpetual unless the BHO is dissolved in accordance with either Article 11 of this Agreement or the LLC Act. ARTICLE 3 — AUTHORITY, BUSINESS AND PURPOSE OF BHO 3.1 Authority. As provided for in RCW 71.24.015, it is the policy of the State of Washington to encourage the development of regional mental health services and the availability of treatment components. To this end, RCW 71.24.015 provides for counties to enter into joint operating agreements with one another to form regional systems of care, integrating planning, administration and service delivery duties under chapters 71.05 and 71.24 RCW in order to consolidate administration and reduce administrative layering and costs. This Agreement is a NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 4 of 25 joint operating agreement among the County Authorities to initially operate as a regional support network. Pursuant to Laws of 2014, chapter 225 ( "BHO Act "), effective April 1, 2016, the BHO, and through the BHO, the County Authorities jointly, will undertake the responsibilities of a behavioral health organization. The purpose of the County Authorities, in entering into this Agreement, is to present a plan to the Secretary of DSHS to contract for the provision of behavioral health services and upon approval of such plan undertake to contract for the provision of such services within the boundaries of the County Authorities and to take such other and further actions as are required and /or authorized by the BHO Act. The mutual goal of the County Authorities, in entering into this Agreement, is to work together to provide mental health and behavioral health services to the citizens of each of the County Authorities in an efficient and stream -lined manner. The Interlocal Corporation Act, specifically RCW 39.34.030, provides, in part, that any two or more public agencies may enter into agreements with one another for joint cooperative action. RCW 39.34.030(3)(b) specifically provides: 1) the County Authorities may form a limited liability company under which each County Authority is a public agency, as provided for in Section 1.9, and 2) the BHO's funds are subject to audit, as provided for in Section 9.4 of this Agreement. The County Authorities have exercised the authority granted to them under the BHO Act, the LLC Act and the Interlocal Cooperation Act to form this BHO as an LLC to achieve maximum efficiency in the delivery of mental health and behavioral health services and so that their rights and liabilities as to each other and third parties are firmly established and clearly understood. This Agreement serves as such a joint operating agreement among the County Authorities to operate as a regional support network ( "RSN "), as provided for in RCW 71.24. 100 and 71.24.110, until April 1, 2016 with: (a) Each County Authority bearing a share of the cost of mental health services; (b) The Treasurer of Skagit County serving as the custodian of funds made available for the purposes of such mental health services and that the Treasurer may make payments from such funds upon audit by the appropriate auditing officer of Skagit County and shall be responsible to Washington State Department of Social and Health Services ( "DSHS ") for all debts, obligations, and liabilities owed to DSHS by the RSN upon termination of any contract between the RSN and DSHS, or as a result of remedial action, from RSN funds in its possession; (c) The Auditor of Skagit County serving as the auditing officer of the RSN's funds and accounts; and (d) The joint supervision and operation of services and facilities. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 5 of 25 As of April 1, 2016 this Agreement shall serve as a joint operating agreement, as provided for in RCW 71.24. 100 and 71.24.110, for a behavioral health organization with: (a) Each County Authority bearing a share of the cost of behavioral health services; (b) The Treasurer of Skagit County serving as the custodian of funds made available for the purposes of such behavioral health services and that the treasurer may make payments from such funds upon audit by the appropriate auditing officer of Skagit County and shall be responsible to DSHS for all debts, obligations, and liabilities owed to DSHS by the BHO upon termination of any contract between the BHO and DSHS, or as a result of remedial action, from BHO funds in its possession; (c) The Auditor of Skagit County serving as the auditing officer of the BHO's funds and accounts; and (d) The joint supervision and operation of services and facilities. The foregoing notwithstanding, the Executive Committee, as defined in Section 1.12 of this Agreement and described in Section 5.1 of this Agreement, may by majority vote change the Treasurer and Auditor designation to another Treasurer and Auditor in the same county as any one of the County Authorities. 3.2. Business anti Purpose. The business and the purpose of the BHO shall be: 3.2.1 To be recognized and operate as a regional support network to provide regional systems of care for mental health services as provided for in RCW 71.24. 100 from the date of formation until April 1, 2016; 3.2.2 To be recognized and operate as a behavioral health organization to provide behavioral health services as provided for in RCW 71.24.016 as of April 1, 2016; 3.2.3. To carry out any lawful, services, business or activity that may be conducted by a BHO or LLC as determined by the County Authorities acting through the Executive Committee; and 3.2.4 To exercise all other powers necessary to or reasonably connected with the BHO's business and services it provides that may be legally exercised by limited liability companies under the LLC Act. ARTICLE 4 — NAMES, ADDRESSES AND STATUS OF COUNTY AUTHORITIES NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 6 of 25 The names and addresses of the County Authorities are set forth in the attached Exhibit A, as amended from time to time. Each of the five Counties identified in Section 1.7 of this Agreement, once each executes this Agreement, shall be a County Authority of the BHO. A Tribal Authority may become a Tribal Member by executing an agreement in form approved by the Executive Committee. A Tribal Member may appoint one (1) non - voting, ex officio representative to the Executive Committee. ARTICLE 5 -- MANAGEMENT 5.1 Mana eng lent. The services, business and affairs of the BHO shall be managed by the County Authorities acting through the County Authorities Executive Committee ( "Executive Committee "). The Executive Committee in turn shall work with and delegate to the NSBHO Administrator the administration, services, business and affairs of the BHO, as provided for in Section 5.3.5 of this Agreement. Each County Authority shall select, and provide written notice of the appointment of their representative, and their representative's delegates, together with their name and contact information, by January 1, 2016, and by January 31St of each year thereafter; provided, that a County Authority may provide notice of changes or additions to its appointment of its representative(s) prior to an Executive Committee meeting. Each representative serving on the Executive Committee shall devote to the BHO and apply to the accomplishment of the BHO's purposes so much of his or her time and attention as is reasonably necessary to manage the services and business of the BHO. Each Executive Committee representative shall serve at the pleasure of the County Authority that appointed him or her and may be removed or replaced at any time by such County Authority upon written notice to the other County Authorities and the NSBHO Administrator. The County Authorities recognize that from time to time Executive Committee representatives may not be able to attend Executive Committee meetings. Each County Authority, in addition to appointing Executive Committee representatives may also appoint delegates that may attend Executive Committee meetings on behalf of the County Authority and in lieu of the Executive Committee representative, provided the other County Authorities and the NSBHO Administrator are given written notice of the appointment of the delegate together with the delegate's name and contact information, in advance of the meeting. For those County Authorities that have County Administrators, the written notice must come from the County Executive or his or her designee, and for those County Authorities that are governed by a County Council or Board of County Commissioners, by the Secretary or Clerk of the County Council or Board of County Commissioners. Each County Authority shall provide to the other County Authorities and the NSBHO Administrator written notice of the following, together with contact information, including email addresses: 1) Executive Committee representatives and delegates; 2) Advisory Board representatives; and 3) a notice agent designated to receive notice on behalf of the County Authority as provided for in Section 12.1 of this Agreement. Except as otherwise expressly provided in this Agreement, the Executive Committee shall have full, complete and exclusive authority, power and discretion to manage and control the services provided by the BHO and the services, business, affairs and property of NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 7 of 25 the BHO, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the BHO's services and business. Only representatives of the County Authorities, or their approved delegates as provided for in the preceding paragraph, shall have any voting rights on the Executive Committee. 5.2 Decision - Making. The BHO shall make decisions, take actions and incur obligations as determined by the County Authorities acting through the Executive Committee. The Executive Committee shall take action, expend sums and enter into obligations, as provided for and in the manner set forth in Article 7. 5.3 Power and Authority. Without limiting the scope and generality of the Executive Committee's actions, the Executive Committee shall have the power and authority, on behalf of the County Authorities, to undertake the following: 5.3.1 Pursuant to RCW 39.34.080, enter into contracts with the DSHS pursuant to the provisions of chapter 71.24 RCW; 5.3.2 Enter into contracts with individuals, public and private organizations, and individual counties, including with other County Authorities to this Agreement, to carry out the purposes of the contract with DSHS and other obligations of the BHO as defined in chapter 71.24 RCW, subject to available funds and to the purpose and goals of the BHO; 5.3.3 Accept and expend funds from the State of Washington, the Federal government, the other County Authorities, and from other public and private sources, including gifts, for activities and purposes related to chapter 71.24 RCW; 5.3.4 Prepare and submit to DSHS appropriate plans, both in length and duration, for mental health services and behavioral health services in accordance with the provisions of chapter 71.24 RCW and the BHO Act; 5.3.5. Employ or contract for staff and consultants to carry out the responsibilities of this Agreement and the statutory requirements for a regional support network until April 1, 2016, followed by a behavioral health network as of April 1, 2016. In doing so, the Executive Committee shall hire, give authority to, evaluate, give direction to and terminate the BHO's administrator and employees (collectively " NSBHO Administrator ") who shall administer the BHO's operations, services and administration, including all hiring, development, approval and implementation of all policies and procedures, service delivery plans and operating plans. The NSBHO Administrator, and all of its employees and administrators, shall be employees of the BHO and not of individual County Authorities. The NSBHO Administrator, under the direction of the Executive Committee, shall have the power and authority to: (i) Prepare, review, modify and present to the Executive Committee for approval the BHO's annual budget; NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 8 of 25 (ii) Execute contracts for the provision of services and operation of the BHO, including leases for rental of real and personal property; (iii) Take necessary and appropriate steps on behalf of the Executive Committee to ensure the BHO's compliance with all statutory and funding requirements; and (iv) Take other actions as directed by the Executive Committee or the County Authorities by their respective resolution or consent. 5.3.6 Spend the capital and revenues of the BHO in the furtherance of the business of the BHO and the services it provides; 5.3.7 Acquire, improve, manage, lease, operate, sell, transfer, exchange, encumber, pledge and dispose of any real or personal property of the BHO; 5.3.8 Purchase such liability, casualty, property and other insurance as the Executive Committee, in its sole discretion, deems advisable to protect the BHO's assets against loss or claims of any nature; provided, however, the Executive Committee shall not be liable to the BHO, or to the County Authorities, for failure to purchase any insurance if such coverage should prove inadequate; 5.3.9 Enter into management agreements, service agreements, provider agreements, consultants and professional agreement, maintenance or other service agreements, short-term or long -term rental agreements, together with any other agreements; 5.3.10 As provided for in RCW 71.24.350, as amended, provide for and establish a separately funded mental health ombuds' office that is: (i) Independent of the BHO; and (ii) That maximizes the use of consumer advocates. 5.3.11 Establish risk reserve funds as prudent and as required by its contracts. The NSBHO Administrator shall provide notice to the County Authorities of any need for Capital Contributions to the BHO and as required to fulfill the BHO's obligations and contractual requirements. Upon unanimous vote of the Executive Committee, each County Authority shall make Capital Contributions to the BHO as requested by the NSBHO Administrator and directed by the Executive Committee; provided, that such Capital Contributions shall be in proportion to the County Authority's share of Units. In addition, the NSBHO Administrator shall establish additional risk reserves. 5.3.12 Execute instruments and documents, including without limitation, negotiable instruments, documents providing for the acquisition or disposition of the BHO's NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 9 of 25 property, assignments, bills of sale, leases, management agreements, agreements and any other instruments, agreements or documents necessary, in the opinion of the Executive Committee, to the business, and the services, of the BHO; 5.3.13 Employ accountants, legal counsel, independent contractors, managing agents, service providers, management companies or other experts to perform services for the BHO and to compensate them from BHO funds; 5.3.14 Enter into any and all other agreements for any purpose, in such form as the Executive Committee may approve; 5.3.15 Undertake any and all actions and activities authorized by chapter 70.24 RCW, now or as hereafter amended or otherwise authorized by the laws of the State of Washington; and 5.3.16 To do and perform all other acts as may be necessary or appropriate to the conduct of the BHO's business and services provided. Unless authorized to do so by this Agreement, or by the Executive Committee, no County Authority, individual representative or delegate of the Executive Committee, the Advisory Board, any individual representative of the Advisory Board, employee or other agent of the BHO shall have any power or authority to bind the BHO in any way, to pledge its credit or to render it liable for any purpose. 5.4 Advisory Board. In addition to the Executive Committee the BHO shall have in place an advisory board of the BHO ( "Advisory Board ") with representatives from each county. The Advisory Board representatives shall be appointed according to each County Authority's usual and customary method of appointment with terms to be determined by each County Authority, conforming with its respective County Code. Each County Authority shall endeavor to include as part of its appointment representatives from the County Authority's mental health and /or behavioral health advisory board. The Advisory Board shall review and provide comments on plans and policies developed pursuant to chapter 71.24 RCW, provide local oversight regarding the activities of the BHO, and work with the BHO to address and resolve significant concerns regarding service delivery and outcomes. Two of the representatives of the Advisory Board will sit as ex- officio, non - voting representatives on the Executive Committee. The Advisory Board shall consist of the following twenty -six representatives representing and apportioned to each County Authority as follows: County Authorities Representatives Island Four San Juan Three Skagit Four Snohomish Nine Whatcom Six NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 10 of 25 In addition to the representatives noted above, each of the Tribal Authorities shall have a representative on the Advisory Board. The Executive Committee shall assure the composition of the Advisory Board is broadly representative of the demographic character of the region and shall include, but not be limited to, representatives of consumers and families, law enforcement and Tribal Authorities. 5.5 Compensation. The BHO will not pay the County Authorities or the representatives of the Executive Committee or representatives of the Advisory Board any fees or other compensation for its services provided except as set forth in this Agreement. 5.6 Limitation on Liability; Indemnification. Neither the Executive Committee nor the Advisory Board, or their respective representatives, officials, County Authorities, managers, employees or agents, shall be liable, responsible or accountable in damages or otherwise to the BHO or the County Authorities for any act or omission performed in good faith pursuant to the authority granted by this Agreement or in accordance with its provisions, and in a manner reasonably believed to be within the scope of the authority granted and in the best interest of the BHO; provided that such act or omission did not constitute fraud, intentional misconduct, or gross negligence. The BHO shall defend, indemnify and hold harmless the Executive Committee and the Advisory Board and any of their respective representatives, officials, County Authorities, managers, employees or agents thereof, against any liability, loss, damage, cost or expense incurred by them on behalf of the BHO or in furtherance of the BHO's interests without relieving any such person of liability for fraud, misconduct, bad faith or gross negligence. No County Authority or representative of the Executive Committee or the Advisory Board shall have any personal liability with respect to the satisfaction of any required indemnification of the above mentioned persons. Any tender of defense by an indemnitee arising from any liability, loss, damage, cost or expense incurred that falls within the scope of matters subject to defense, indemnification and being held harmless by this Agreement, shall be promptly accepted by the BHO. Any indemnification required to be made by the BHO shall be made promptly following the fixing of the liability, loss, damage, cost or expense incurred or suffered by a final judgment of any court, settlement, contract or otherwise. In addition, the BHO shall reimburse a person claiming indemnification under this Section 5.6 for legal expenses and other costs incurred as a result of a legal action brought against such person i£ (i) the legal action relates to the performance of duties or services by the person on behalf of the BHO; (ii) the legal action is initiated by a party other than a County Authority; and (iii) such person undertakes to repay the advanced funds to the BHO if it is determined that such person is not entitled to indemnification pursuant to the terms of this Agreement. 5.7 Right to Rely on the Executive Committee. Any person dealing with the BHO may rely (without duty of further inquiry) upon a certificate signed by the Chairperson or Secretary of the Executive Committee as to the identity and authority of the Executive Committee to act on behalf of the BHO. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page I I of 25 ARTICLE 6 -- RIGHTS AND OBLIGATIONS OF COUNTY AUTHORITIES 6.1 Obli ate ions of C ounty Authorities. Each County Authority shall carry out its obligations under this Agreement including appointments of representatives to the Executive Committee and to the Advisory Board. In addition each County Authority shall: (i) designate staff and resources to plan for local behavioral health needs; (ii) monitor local contracts and, upon request, participate in monitoring BHO contracts; (iii) develop local crisis response systems; and (iv) provide local resource coordination. 6.2 Umitation of COLInty Authorities' Liability. No County Authority or County Authority's representative, official, manager, employee or agent shall be personally liable, merely as a County Authority, for any debts, losses or liabilities of the BHO beyond the County Authority's respective Capital Contributions and any obligation of the County Authority hereunder to make Capital Contributions, except as otherwise specifically provided by law. No County Authority shall have liability to the BHO or its County Authorities for monetary damages for conduct merely as a County Authority, except for acts or omissions that involve intentional misconduct, fraud, gross negligence, or for any transaction for which the County Authority has personally received a benefit in money, property or services to which the County Authority was not legally entitled. If either the LLC Act or the BHO Act is hereafter amended to authorize BHO action further eliminating or limiting the personal liability of County Authorities, then the liability of a County Authority shall be eliminated or limited to the full extent permitted by the LLC Act and the BHO Act, as so amended. Any repeal or modification of this Section of the LLC Act or the BHO Act shall not adversely affect any right or protection of a County Authority of the BHO existing at the time of such repeal or modification for or with respect to an act or omission or such County Authority occurring prior to such repeal or modification. The foregoing notwithstanding, nothing herein shall limit the debts, obligations, and liabilities of County Authorities to DSHS, including, but not limited to, the requirements of County Authorities under chapter 71.24 RCW and any requirements of this Agreement or of any agreement between the BHO and DSHS regarding use of funds, reserves and fund balances. The BHO shall defend, indemnify and hold harmless the County Authorities and any of their respective representatives, officials, County Authorities, managers, employees or agents thereof, against any liability, loss, damage, cost or expense incurred by them on behalf of the BHO or in furtherance of the BHO's interests without relieving any such person of liability for fraud, misconduct, bad faith or gross negligence. No County Authority shall have any personal liability with respect to the satisfaction of any required indemnification of the above mentioned persons. Any tender of defense by an indemnitee arising from any liability, loss, damage, cost or expense incurred that falls within the scope of matters subject to defense, indemnification and being held harmless by this Agreement, shall be promptly accepted by the BHO. Any indemnification required to be made by the BHO shall be made promptly following the fixing of the liability, loss, damage, cost or expense incurred or suffered by a final judgment of any court, NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 12 of 25 settlement, contract or otherwise. In addition, the BHO shall reimburse a person claiming indemnification under this Section 6.2 for legal expenses and other costs incurred as a result of a legal action brought against such person if: (i) the legal action relates to the performance of duties or services by the person on behalf of the BHO; (ii) the legal action is initiated by a party other than a County Authority; and (iii) such person undertakes to repay the advanced funds to the BHO if it is determined that such person is not entitled to indemnification pursuant to the terms of this Agreement. 6.3 Inspection of Records. Each County Authority shall have the right to inspect and copy at such County Authority's expense, the records required to be maintained by the BHO pursuant to Section 9.7. 6.4 No Priority and Return of Capital. Except as expressly provided in Article 8 or 9, no County Authority shall have priority over any other County Authority, either as to the return of Capital Contributions or as to distributions. Any return of Capital Contributions or distributions shall be made on a pro rata basis, based on each County Authority's respective Percentage Interest. 6.5 Withdrawal of County Authority. A County Authority may voluntarily resign or otherwise withdraw as a County Authority; provided: (i) the withdrawing County Authority provides the other County Authorities and the NSBHO Administrator with written notice of withdrawal at least three hundred sixty -five (365) days prior to the expiration of the BHO's current fiscal year; and (ii) the withdrawing County Authority shall not be entitled to payment or return of Capital Contributions or other monies made to the BHO or held by the BHO whether prior to the date of the notice or between the date of notice and the date of withdrawal. ARTICLE 7 -- MEETINGS OF EXECUTIVE COMMITTEE 7.1 Meetings. All meetings of the Executive Committee will be held in full compliance with the Washington Open Public Meetings Act, chapter 42.30 RCW. The Executive Committee shall establish a regular business meeting time in compliance with RCW 42.30.070. Special meetings of the Executive Committee, as authorized by RCW 42.30.080, may be called by (i) the presiding officer of the Executive Committee; or by (ii) a majority of the representatives of the Executive Committee. 7.2 Place of Mcctijlg. The party or body calling the meeting as provided for in Section 7.1 may designate any place within a County Authority County as the meeting site. If no designation is made, the place of meeting shall be the principal office of the BHO specified in Section 2.3 of this Agreement. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 13 of 25 7.3 Notice of Meetings /Agendas, Written notice stating the place, day and hour of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than five (5) nor more than thirty (30) days before the date of the meeting, either personally, by mail or by email, by or at the direction of the Executive Committee or the Executive Committee representatives calling the meeting, to each representative of the Executive Committee entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered three (3) calendar days after being deposited in the United States Mail, addressed to the party as specified herein with postage thereon prepaid. An agenda of every meeting of the Executive Committee shall be posted on the BHO's web site at least twenty -four (24) hours in advance of the meeting. The notice and agenda provisions set forth in this Section are in addition to the notice and agenda provisions set forth in the Open Public Meetings Act, chapter 42.30 RCW. 7.4 record Date. For the purpose of determining the Executive Committee representatives entitled to notice of or to vote at any meeting of the Executive Committee or any adjournment thereof, the date on which notice of the meeting is mailed or the date on which the resolution declaring such distribution is adopted, as the case may be, shall be the record date for such determination. When a determination of representatives entitled to vote at any meeting of the Executive Committee has been made as provided in this Section, such determination shall apply to any adjournment thereof. 7.5 Quorum, A quorum of the Executive Committee shall consist of five Executive Committee representatives representing at least three of the five County Authorities. In the absence of a quorum at any such meeting, the meeting may be adjourned as allowed by and pursuant to RCW 42.30.090. The Executive Committee representatives present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of Units whose absence would cause less than a quorum. Any meeting maybe continued as allowed by and pursuant to RCW 42.30.100. [Note: Don Mitchell has raised several good points with respect to what constitutes a quorum of the Executive Committee and how action is taken. We have revised several provisions of Article 7 in an effort to make this more clear. With respect to a quorum we have revised Section 7.5 to use the same language with respect to quorum as used in Section 4 of the Interlocal Agreement.] 7.6 Manner of Acting, If a quorum is present at a meeting of the Executive Committee, the affirmative vote of representatives from the Executive Committee holding more than fifty percent (50 %) of the Units represented at the meeting shall be the act of the Executive Committee and of the County Authorities, unless the vote of a greater or lesser percentage is required by this Agreement or the LLC Act. Each individual representative of the Executive Committee is entitled to cast one vote per one Unit held by the respective County Authority he or she represents. It is not a requirement that representatives of each County Authority vote the Units held by their respective County Authority in the same manner. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 14 of 25 7.7 No Proxies. At all meetings of the Executive Committee a representative may only vote in person in a session of the meeting open to the public; no proxies or secret voting shall be permitted. Notwithstanding the foregoing, as provided for in Section 5.1 of this Agreement, a delegate appointed by a County Authority may vote in the case of absence of that County Authority's Executive Committee representative.. 7.8 No Action by County Authorities Without a Nleeti�y No action required or pennitted to be taken at a meeting of the Executive Committee may be taken without a meeting. 7.9 Waiver of Notice. When any notice is required to be given to a County Authority, a waiver thereof in writing signed by the County Authority entitled to such notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of such notice. 7.10 Failure to Observe F_ ormalities. Pursuant to RCW 25.15.060, notwithstanding anything herein to the contrary, this Agreement does not expressly require the County Authorities to hold any meetings and the failure to observe any formalities requiring the calling or conduct of any meeting shall not be considered a factor tending to establish personal liability of the County Authorities; provided that this provision shall not be construed to permit actions in violation of RCW Chapter 42.30. ARTICLE 8 CONTRIBUTIONS TO THE BHO AND CAPITAL ACCOUNTS 8.1 County Authorities' Initial Capital Contributions. Each County Authority's initial Capital Contribution shall consist of its respective pro rata share of the assets of North Sound Regional Support Network. All Capital Contributions, if any, shall be made prorata, based on each County Authority's respective Percentage Interest. 8.2 Additional Capital Contributions. Each County Authority shall be required to make such additional Capital Contributions as shall be determined by a unanimous vote of the full Executive Committee as necessary to meet the expenses of the BHO. All such Capital Contributions, if any, shall be made prorata, based on each County Authority's respective Percentage Interest. The Executive Committee shall give written notice to each County Authority of the amount of any required additional Capital Contribution, and each County Authority shall pay to the BHO such additional Capital Contribution no later than sixty (60) days following the date such notice is given, subject to each County Authority's appropriation process and procedures. Nothing contained in this Section 8.2 is or shall be deemed to be for the benefit of any Person other than the County Authorities and the BHO, and no such Person shall under any circumstances have any right to compel any actions or payments by the County Authorities. 8.3 Capital Accounts. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 15 of 25 8.3.1 Establishment and Maintenauice. A separate Capital Account will be maintained for each County Authority throughout the term of the BHO. Each County Authority's Capital Account will be increased by (1) the amount of money contributed by such County Authority to the BHO; and (2) the fair market value of property contributed by such County Authority to the BHO (net of liabilities secured by such contributed property that the BHO is considered to assume. 8.3.2 Compliance with Rcgulations. The manner in which Capital Accounts are to be maintained pursuant to this Section 8.3 is intended to comply with the requirements of Code Section 704 (b) and the Regulations promulgated thereunder. If in the opinion of the BHO's legal counsel or auditors the manner in which Capital Accounts are to be maintained pursuant to the preceding provisions of this Section 8.3 should be modified in order to comply with Code Section 704 (b) and the Regulations thereunder, then notwithstanding anything to the contrary contained in the preceding provisions of this Section 8.3, the method in which Capital Accounts are maintained shall be so modified; provided, however, that any change in the manner of maintaining Capital Accounts shall not materially alter the economic agreement between or among the County Authorities. ARTICLE 9 -- ACCOUNTING, BOOKS, AND RECORDS 9.1 Accounting Methods. The BHO's books and records shall be kept, and its financial statements prepared, under such permissible methods of accounting, consistently applied, as the Executive Committee determines is in the best interest of the BHO and its County Authorities and in full compliance with record - keeping and accounting methods required by Washington law and /or the Washington State Auditor and in compliance with the requirements of any state or federal program providing funding or other support for the BHO's programs and services. 9.2 Budget. The NSBHO Administrator shall prepare, and the Executive Committee shall consider and adopt, an annual budget reflecting proposed revenues and expenditures for the next fiscal year no later than December 1, of each preceding fiscal year. 9.3 Disbursements. Funds received by contract from the DSHS shall be disbursed according to the budget as approved. Vouchering and reimbursement procedures shall be developed in accordance with relevant regulations and approved equitable allocation formulas. 9.4 Fuiids aiid Audit. Funds provided to the BHO from all sources shall be maintained as a separate fund in the Skagit County Treasury or other County Treasury as designated by the BHO's Executive Committee. Such funds shall be designated as the Operating Fund of the BHO per RCW 39.34.030(4)(b) in the Skagit County Treasury or other County Treasury as determined by the Executive Committee. These monies shall be subject to the same audit and fiscal controls as other funds held by the designated County Treasury. Interest on investment of the BHO's funds shall accrue to the benefit of the BHO. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 16 of 25 9.5 Interest oil and Retuni of Capital Contributions. No County Authority shall be entitled to interest on its Capital Contribution or to return of its Capital Contribution, except as otherwise specifically provided for herein. 9.6 AccountinngPeriod. The BHO's fiscal year shall be January 1 through December 31. 9.7 records, Audits and Reports, Public Records Requests and HIPAA. At the expense of the BHO, the NSBHO Administrator shall maintain records and accounts of all operations and expenditures of the BHO. All records shall be maintained and be available to the public pursuant to the Washington Public Records Act, chapter 42.56 RCW, chapter 70.02 RCW, the Health Insurance Portability and Accountability Act ( "HIPAA "), PL 104 -191, as amended and retained pursuant to retention requirements as set forth in RCW Title 40, WAC 434 and schedules established by the Washington Secretary of State, all as may be amended from time to time. At the minimum the BHO shall keep at its principal place of business the following records: (a) A current list and past list, setting forth the full name and contact information for each County Authority and each County Authority representative serving on the Executive Committee; (b) A current list and past list, setting forth the full name and contact information for each representative sitting on the Advisory Board; (c) A copy of the Certificate of Formation and all amendments thereto; (d) Copies of this Agreement and all amendments hereto; (e) Minutes of the County Authority meeting and any written consents obtained from County Authorities for actions taken by County Authorities without a meeting; (f) Copies of the BHO's financial statements for the seven (7) most recent years; and (g) Its Public Records Policy and Procedures and the name or job title and contact information of its Public Records Officer. All records related to the BHO shall be available for inspection and photocopying under the provisions of the Washington Public Records Act, chapter 42.56 RCW ( "PRA "), subject to any exemptions or limitations on disclosure. At the expense of the BHO, the BHO shall adopt a public records policy in compliance with the PRA to respond to public records requests received by the BHO. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 17 of 25 Each County Authority shall respond to public records requests received by that County Authority. If a County Authority receives a request for a BHO record that the County Authority has used, but does not possess, the County Authority shall: a) provide a copy of the request to the BHO and the other County Authorities and identify the specific record sought; and b) notify the requester that the public records request has been forwarded to the BHO and the other County Authorities for the specific record. Upon receipt of a forwarded request, each County Authority and the BHO, in good faith, shall promptly respond to the forwarded request as a public records request from the requester for the specific record sought, provided that the date for responding to the requestor by the BHO pursuant to RCW 42.56.520, shall be based on the date the request is received by the BHO. Conversely, if the BHO receives a request for a County Authority- related record that the BHO has used, but does not possess, the BHO shall: a) forward a copy of the request to the County Authority and, if applicable, to the other County Authorities, and identify the specific record sought; and b) notify the requestor that the public records request has been forwarded to the County Authority and, if applicable, to the other County Authorities, for the specific record. Upon receipt of a forwarded request, such County Authority and the BHO, in good faith, shall promptly respond to the forwarded request as a public records request from the requestor for the specific record sought; provided that the date for responding to the requestor by a County Authority pursuant to RCW 42.56.520 shall be based on the date the request is received by the County Authority. ARTICLE 10 -- TRANSFERABILITY 10.1 General. Except as otherwise expressly provided in this Agreement, a County Authority shall not have the right to: (a) Sell, assign, transfer, exchange or otherwise transfer for consideration, (collectively, "sell" or "sale "); or (b) Pledge, encumber or otherwise use all or part of its County Authority's Interest in the BHO as security for a loan or other obligation. ARTICLE 11 -- DISSOLUTION AND TERMINATION 11.1 Dissolution, The BHO shall be dissolved upon the unanimous vote of the County Authorities of the BHO held at the time of the vote. 11.2 Winding Up, Liggidation and Distribution of Assets, Upon dissolution, the Executive Committee shall immediately proceed to wind up the affairs of the BHO. The Executive Committee shall sell or otherwise liquidate all of the BHO's assets as promptly as practicable (except to the extent the Executive Committee may determine to distribute any assets NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 18 of 25 to the County Authorities in kind) and shall apply the proceeds of such sale and the remaining BHO assets in the following order of priority: 11.2.1 Payment of creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the BHO; 11.2.2 To establish any reserves that the Executive Committee deems reasonably necessary for contingent or unforeseen obligations of the BHO and, at the expiration of such period as the Executive Committee shall deem advisable, the balance then remaining in the manner provided in Section 11.2.3 below; 11.2.3 By the end of the fiscal year in which the liquidation occurs (or, if later, within ninety (90) days after the date of such liquidation), to the County Authorities in proportion to the positive balances of their respective Capital Accounts, as determined after taking into account all Capital Account adjustments for the taxable year during which the liquidation occurs (other than those made pursuant to this Section 11.2.3). 11.3 Termination. The Executive Committee shall comply with any applicable requirements of applicable law pertaining to the winding up of affairs of the BHO and the final distribution of its assets. Upon completion of the winding up, liquidation and distribution of the assets, the BHO shall be deemed terminated. 11.4 Certificate of Cancellation. When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the County Authorities, the Executive Committee shall file a certificate of cancellation. Upon filing the certificate of cancellation, the existence of the BHO shall cease, except as otherwise provided in the LLC Act. 11.5 Return of Contribution Nonrecourse to Other County ALxthorities. Except as provided by law or as expressly provided in this Agreement, upon dissolution each County Authority shall look solely to the assets of the BHO for the return of its Capital Contributions, if any. Return of Capital Contributions shall be made on a pro rata basis reflecting the County Authorities' Percentage Interests. If the property remaining after the payment or discharge of liabilities of the BHO is insufficient to return the contributions to the County Authorities, no County Authority shall have recourse against any other County Authority, the BHO or NSBHO Administrator. ARTICLE 12 -- MISCELLANEOUS PROVISIONS 12.1 Notices. Any notice, demand, or communication required or permitted under this Agreement shall be deemed to have been duly given if delivered personally to the party to whom directed or, if mailed by registered or certified mail, postage and charges prepaid, addressed: (a) if to a County Authority, to the County Authority's address specified in the attached Exhibit A; (b) if to the BHO, to the address specified in Section 2.3 of this Agreement; and (c) if to the NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 19 of 25 NSBHO Administrator to the address specified in Section 2.3. Except as otherwise provided herein, any such notice shall be deemed to be given when personally delivered or, if mailed, three (3) business days after the date of mailing. A County Authority, the BHO or the NSBHO Administrator may change its address for the purposes of notices hereunder by giving notice to the others specifying such changed address in the manner specified in this Section 12.1 of this Agreement. Notwithstanding the foregoing with respect to ordinary communications between the County Authorities, the Executive Committee representatives and the NSBHO Administrators communication via email is permitted. 12.2 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Washington. 12.3 Amendments. This Agreement may not be amended except by the written agreement of all the County Authorities holding a County Authority's Interest in the BHO. 12.4 Construction. Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. 12.5 I Ieadings. The headings in this Agreement are inserted for convenience only and shall not affect the interpretations of this Agreement. 12.6 Waivers. The failure to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation. 12.7 F- grlits_ and Remedies Cumulative. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy shall not preclude or waive the right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. 12.8 Severability_. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law. 12.9 Successors and Assigns. Each of the covenants, terms, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective legal representatives, successors and assigns. 12.10 Creditors /Third Parties. None of the provisions of this Agreement shall be for the benefit of or enforceable by any of the creditors of the BHO or any third parties. NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 20 of 25 12.11 CountM2arts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 12.12 Investment Representations. The Units have not been registered under the Securities Act of 1933, the Securities Act of Washington or any other state securities laws (collectively, the "Securities Acts "). Each County Authority hereby confirms the Units have been acquired for such County Authority's own account, for investment and not with a view to the resale or distribution thereof and may not be offered or sold to anyone unless there is an effective registration or other qualification relating thereto under all applicable Securities Acts. 12.13 This Agreement supersedes and replaces the agreement titled "Interlocal Agreement Establishing a Mental Health Regional Support Network for Island, San Juan, Skagit, Snohomish and Whatcom Counties" recorded October 14, 1997 in the records of the County Auditor of San Juan County under Auditor's File Number 97101405. 12.14 In adopting this Agreement, in addition to adopting the Articles, the County Authorities hereby also adopt, and agree to, the Recitals and the facts set forth herein. written. Executed by the undersigned County Authorities effective as of the date first above [Remainder of page intentionally left blank; signature pages follow] NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 21 of 25 COUNTY AUTHORITIES: ISLAND COUNTY BOARD OF COUNTY COMMISSIONERS ISLAND COUNTY, WASHINGTON By: Helen Price Johnson, Chair By: Richard M. Hannold, Member By: Jill Johnson, Member Approved as to form: By: , Prosecuting Attorney SAN JUAN COUNTY ATTEST: Clerk of the Council By: Ingrid Gabriel, Clerk Date REVIEWED BY COUNTY MANAGER By: Michael J. Thomas Date RANDALL K. GAYLORD APPROVED AS TO FORM ONLY Approved as to form: By: Prosecuting Attorney COUNTY COUNCIL SAN JUAN COUNTY, WASHINGTON Bob Jarman, Chair District 1 Jamie Stephens, Vice -Chair District 3 Rick Hughes, Member District 2 NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 22 of 25 SKAGIT COUNTY Attest: Clerk of the Board Recommended: Department Head Approved as to form: Civil Deputy Prosecuting Attorney Approved as to indemnification: Risk Manager Approved as to budget: Budget & Finance Director BOARD OF COUNTY COMMISSIONERS SKAGIT COUNTY, WASHINGTON Kenneth A. Dahlstedt, Chair Lisa Janicki, Commissioner Ron Wesen, Commissioner NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 23 of 25 SNOHOMISH COUNTY By: Snohomish County Executive Approved as to form: I: Deputy Prosecuting Attorney WHATCOM COUNTY By: Jack Louws, Its: County Executive Approved as to form: Royce am, WSBA #22503, Deputy Prosecuting Attorney NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 24 of 25 ATTACHMENT A COUNTY AUTHORITY INFORMATION AS OF January 1, 2016 Names and Addresses of County Units Percentage Interest Authorities Island County 1 11.111111 1NE7"'St#214 Coupeville, WA 98239 San Juan County 1 11.111111% 55 2" d St N #1 Friday Harbor, WA 98250 Skagit County 1 11.111111 1800 Continental PI #100 Mount Vernon, WA 98273 Snohomish County 4 44.4444444% 3000 Rockefeller Ave., M/S 609 Everett, WA 98201 Whatcom County 2 22.222222% 311 Grand Avenue, Suite 105 Bellingham, WA 98225 NORTH SOUND BHO INTERLOCAL OPERATING AGREEMENT Page 25 of 25