21 - Resolution Terminating Paris Regional Medical Center Tax Abatement

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Item No. 21 TO: City Council John Godwin, City Manager FROM: Stephanie H. Harris, City Attorney SUBJECT: Tax Abatement Agreement between the City of Paris and Paris Regional Medical Center. DATE: December 5, 2018 BACKGROUND: The city entered into a Tax Abatement Agreement with Paris Regional Medical Center in 2012 under which PRMC was to make certain improvements to both their Northward Bound campus and their South Campus. The terms of the Agreement required that PRMC operate both campuses as acute care hospitals during the term of the Agreement. In 2017, PRMC closed the geriatric psychiatric unit at the South Campus, and in 2018 the company operating the long-term acute care facility at the South Campus closed its facility, and PRMC closed the hospital license for the South Campus. There is no acute care hospital in operation at the South Campus at this time, and PRMC is thus in default under the Agreement. STATUS OF ISSUE: On September 5, 2018, as provided by the Agreement, the city provided PRMC with a notice of default giving PRMC 60 days to cure its breach of the Agreement. Thereafter, PRMC filed a lawsuit requesting a temporary restraining order and injunction prohibiting Council from terminating the Agreement and requesting a declaratory judgment that PRMC is not in default under the Agreement. To date, the city has not been served with either the lawsuit or a TRO. As the 60 day cure period expired in early November and PRMC did not cure, Council may now consider terminating the Agreement. Should Council terminate the Agreement, PRMC would owe the city all taxes that would have been owed but for the Agreement along with penalties and interest as allowed by the Texas Tax Code. The attached resolution would terminate the Agreement. BUDGET: According to the Chief Appraiser of the Lamar County Appraisal District, taxes, penalties and interest up through the 2018 tax year that would be due but for the Agreement run to approximately $1,137,000.00.