Dev Mahadevan, Chief Executive Officer Barbara Adranly, Recorder Michelle Robles, Accountant

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1 Meeting of the EDEN TOWNSHIP HEALTHCARE DISTRICT BOARD OF DIRECTORS OPEN SESSION Hayward Area Recreation & Park District Board Room 5:30 p.m. APPROVED I. CALL TO ORDER Chair Rogers called the meeting to order at 5:38 p.m. Directors Present: Staff Present: Guests: Chair Rogers Director Ratnesar Director West Director Friedman Director Hull Dev Mahadevan, Chief Executive Officer Barbara Adranly, Recorder Michelle Robles, Accountant Colin Coffey, Attorney-at-Law, Archer Norris Bill Brause, Armanino McKenna Jerrel Tucker, Partner, TCA Partners Seven (7) members of the public II. PLEDGE OF ALLEGIANCE Pledge of allegiance was led by Director Friedman. III. APPROVAL OF THE AGENDA MSC: Motion made by Director Ratnesar, seconded by Director Hull, to approve the Agenda of the Board meeting as presented. The motion carried unanimously. 1

2 IV. APPROVAL OF MINUTES The Open Session Minutes for the special meeting of March 19, 2012 and regular meeting of March 21, 2012, as presented, were reviewed. MSC: Motion made by Director Friedman, seconded by Director Ratnesar, to approve the Open Session Minutes for the special meeting of March 19, 2012 and regular meeting of March 21, 2012, as presented. The motion carried unanimously. V. PUBLIC COMMENT Dev Mahadevan, Chief Executive Officer, reported on procedure which should be held tonight with regard to the calling of the Special Meeting. He reported that the Special Meeting cannot start until on or after the scheduled start time posted on the notice and agenda of 6:00 p.m. VI. ENGAGEMENT OF AUDITORS Dev Mahadevan reported that the District received proposals from Armanino McKenna and TCA Partners for the audit of the financial statements for the fiscal year ending June 30, He also reported that he has worked with both firms as auditors for previous organizations that he has worked for and can recommend them without any reservations. Mr. Mahadevan also reported that Macias, Gini & O Connell who have served as the District s auditors for the last five years, have declined to propose due to a shortage of resources in their firm. He also reported that the Board does not have to accept any proposal based on the lowest bid amount since these are professional services not subject to the bidding regulations. Mr. Mahadevan then introduced Jerrel Tucker of TCA Partners and Bill Brause of Armanino McKenna. Jerrel Tucker, TCA Partners, reported on highlights of his firm s proposal. He reported that his firm focuses entirely on healthcare clientele and that their specialty is hospitals and clinics. He said that they also audit many healthcare districts in the State. Mr. Tucker also reported that everyone in their firm is trained in the healthcare arena and they are very experienced in healthcare issues. He also reported that their firm does not have any junior staff, but that everyone in their firm is at the partner level and that all work is done at the partner level. He reported that in their experience audits are more efficient by the use of partners only. Bill Brause, Armanino McKenna reported on highlights of their firm s proposal. Mr. Brause reported that their firm has a dedicated team of healthcare experts. He also reported that they have fifteen auditors dedicated exclusively to the healthcare area. He reported that their firm is one of fastest growing firms in the country. Mr. Brause 2

3 also reported that they welcome the opportunity to continue to work with the District and that their firm is very familiar with the District s books and records. Director Friedman asked Mr. Brause if year round support would be provided at no extra cost by their firm like TCA Partners does. Bill Brause answered yes they would provide year round support. Director Ratnesar asked Mr. Tucker regarding audit fee and that it states it is all inclusive, but above that there are rates and hours as well. Mr. Tucker answered that this is standard in the industry and that if there is another project the District would like done outside the scope of the audit this would be on their hourly rates. Dev Mahadevan clarified travel expenses, and that Jerrold Tucker gave quote of not to exceed $2,000 in travel costs. Mr. Mahadevan also reported that engagement of any audit firm is the Board s decision and he believes both firms are highly qualified. Chair Rogers asked if Board needs to make decision tonight. Mr. Mahadevan reported that it is his recommendation that the Board make a decision tonight. MSC: Motion made by Director West, seconded by Director Friedman, to engage the firm of Armanino McKenna for the audit of the District s financial statements for the fiscal year ending June 30, The motion carried unanimously. VII. FINANCIAL STATEMENTS MARCH, 2012: Michelle Robles presented financial statements for the period ending for the period ending March 31, The District had a net cash loss of $22,487. Of the cash loss the District Office contributed $58,124, and the Eden Medical Building contributed $15,628. These cash losses were offset by a gain of $28,150 from the San Leandro Medical Arts Building and $23,115 from Dublin Gateway. The District had a net loss of $421,111 for the month of March, Of the loss Dublin Gateway contributed $208,680, the District Office contributed $196,091, and Eden Medical Building contributed $24,785. These losses were offset with a gain of $8,445 from the San Leandro Medical Arts Building. The District s investments earned income in March, 2012 in the amount of $21,971 and had realized gain of $13,553 and an unrealized loss of $31,314. Operating expenses were favorable to the budget in the amount of $4,150 for the month of March, 2012, primarily due to favorable investment fees of $9,272, utilities of $4,410, repairs & maintenance of $3,400, and favorable management fees of 3

4 $2,813. Favorable expenses were offset with unfavorable legal fees of $14,010 and various other unfavorable expense of $1,735. Director Ratnesar asked if we are on target regarding the Dublin Gateway property for the year. Michelle Robles answered year to date we are actually $220,000 higher with regards to a net loss. She also reported that revenue is lower to the budget, year to date, by $197,000. She also reported that the primary category of expense contributing to the net loss is legal fees, as legal fees for lease reviews for the Webster Orthopedic and Valleycare leases were not budgeted for. Ms. Robles also reported that utilities, and repairs and maintenance are higher than budgeted. Dev Mahadevan also reported that most of loss comes from loss of revenue, primarily due to extended negotiations with Valleycare and Webster Orthopedic. He reported that this has essentially pushed out the revenue and revenue is therefore delayed. Mr. Mahadevan reported that anticipated revenue from Valleycare is expected in September, He also reported that Webster Orthopedic plans to move in September 1, 2012, and revenues are expected to begin in March, Director Friedman asked who the leasing firm is for this property. Dev Mahadevan answered that the leasing firm is Colliers International. Director Friedman suggested the District look into hiring another leasing firm. Dev Mahadevan responded that the market has been very dismal and that he has been keeping abreast of market conditions and items such as on free rents, etc. He also reported that part of giving free rent is that the 6 month period goes by fairly quickly in relation to the 10 and 15 year term of the lease, but the base rent is higher, which provides greater returns in future years. MSC: Motion made by Director Ratnesar, seconded by Director Hull, to approve the Financial Statements for the month of March, 2012, as presented. The motion carried unanimously. VIII. FYE JUNE 30, 2012 DRAFT BUDGET: Dev Mahadevan reported that the draft budget is being brought before the Board for approval one month earlier this year for a couple of reasons. He reported that next year s budget is more stable with regard to rents. Mr. Mahadevan also reported that the Board has an absolute deadline of approving a budget by June 30, 2012, and presenting the draft budget to them one month earlier gives the Board more time to review and ask questions, if necessary. He also reported that he will be out of town for the May board meeting and is available for any budget questions from the Board tonight. Mr. Mahadevan reported that the Board can adopt the budget tonight or table the budget for a future meeting. Lengthy discussion took place regarding specifics of the draft annual budget for

5 MSC: Motion made by Director Ratnesar, seconded by Director West, to approve the budget presented for the 2013 fiscal year. The motion carried unanimously. A. Community Health Fund Grants Program Director Friedman suggested the Community Health fund Grants program matter be tabled. Director West stated that the $3 million loan to St. Rose Hospital should be considered as a Community Health Fund grant. Discussion took place regarding Community Health Fund Grants program. Director Ratnesar stated that the Community Health Fund Grants funding comes from a percentage of interest income earned by the District and strongly feels the District should reinstate the grants program. Director Hull stated that the District should be looked at as a whole. He also stated that maybe the District should invite some or the organizations, particularly those that serve the underserved areas in Ashland, San Leandro, and South Hayward, to apply for grant funding. He also stated that maybe the District should focus the Community Health Fund Grants program on ways that urgent care or primary care can be delivered in those underserved areas in the District to reduce the stress on the emergency rooms. He also stated that maybe the District only fund one program that serves these needs and that the District does not have to use the complete 60% interest earned on investments, but rather that is a maximum. Chair Rogers stated that $100,000 for the Community Health Fund Grants program was approved in draft budget and asked if the Board wished to change this. MSC: Motion made by Director Friedman, seconded by Director West to remove the $100,000 budgeted item for the Community Health Fund Grants program from the fiscal year end 2012 budget. The motion failed by a vote of two yes (Friedman and West) and three no (Directors Ratnesar, Hull, and Chair Rogers). B. ACHD Membership Dev Mahadevan reported on ACHD membership. He reported that he believes this is a service the District should avail themselves of and that the District should restart membership in ACHD. Mr. Mahadevan reported that the cost would be approximately $15,000 per year. He also stated that we could get prorated dues for the remainder of this year. 5

6 MSC: Motion made by Director Ratnesar, seconded by Chair Rogers, to approve membership in the Association of California Healthcare Districts (ACHD). The motion carried by a vote of four yes (Directors Ratnesar, West, Hull, and Chair Rogers) and one no (Director Friedman). IX. PARCEL TAX FEASIBILITY CONSULTANT - UPDATE Dev Mahadevan reported on current status of parcel tax feasibility study with the Tramutola firm. X. CHIEF EXECUTIVE OFFICER MONTHLY REPORT Dev Mahadevan presented his April, 2012 report to the Board. Mr. Mahadevan reported on the current status of the Eden Medical Building, San Leandro Medical Arts Building, District operations, and the Dublin Gateway property. Discussion took place regarding the current status of the Eden Medical Building. XI. CHAIRMAN S REPORT No Chairman s report was given. XII. CORRESPONDENCE No correspondence was reported on. XIII. OTHER BUSINESS The next meeting to be held will be the Regular Meeting on Wednesday, May 16, 2011 at 5:30 p.m. at the Hayward Area Recreation and Park District Offices, Board Room. Adjourned meeting to Special Meeting at 6:33 p.m. Reconvened to regular meeting at 7:16 p.m. XIV. ADJOURN TO EXECUTIVE SESSION The meeting was adjourned to Executive Session at 7:18 p.m. XIV. EXECUTIVE SESSION The Executive Session was called to order at 7:28 p.m. 6

7 XV. REPORT, IF ANY, FROM EXECUTIVE SESSION No reportable action from Executive Session. XVI. ADJOURNMENT There being no further business, the meeting was adjourned at 8:08 p.m. Attest: Carole S. Rogers, RN, MPH Chair, Board of Directors Lester Friedman Secretary, Board of Director 7