H. Patrick Swygert, Mayor Anthony Williams,
signing NCMC Exclusive Rights Agreement, January 5, 2006
EXCLUSIVE RIGHTS AGREEMENT
THIS EXCLUSIVE RIGHTS AGREEMENT (“Agreement”) is made as of this
_____ day of January, 2006 between the District of Columbia, a
municipal corporation (“District”), and Howard University, a
non-profit corporation (“Howard”).
1. The District holds United States
Reservation 13 (“Reservation 13”) in the District of Columbia
pursuant to a Letter Transfer of Jurisdiction from the United States of
America, acting through the General Services Administration, said Letter
Transfer bearing date October 25, 2002, and filed of record in the
Office of the Recorder of Deeds of the District of Columbia on October
30, 2002 as Instrument Number 2002125610.
2. Section 3 of the draft Master Plan
for Public Reservation 13 Approval Act of 2002, effective April 11, 2003
(D.C. Law 14-300, D.C. Code § 10-1502), authorizes the construction of
a hospital on a portion of Reservation 13.
3. Pursuant to the National Capital
Medical Center Negotiation Emergency Resolution of 2003, Council
Resolution No. 15-320, dated November 4, 2003, the Council declared the
need to enter into discussions with Howard for the purpose of
negotiating development of a new hospital on Reservation 13, and further
declared that the District’s existing health care infrastructure is
inadequate in part because of the uneven distribution of hospitals in
4. The parties each believe that the
development of a hospital and related facilities on a portion of
Reservation 13 will result in efficiencies in, and expansion of,
quality, costeffective health care services to medically, underserved
populations in the Southeast Community of the District.
5. As a result of the discussions
between the District and Howard, the parties have negotiated this
Exclusive Rights Agreement (“Agreement”) for the development of a
hospital, medical office building and related research facilities on a
portion of Reservation 13 identified as Sites B and C, consisting of
approximately nine (9) acres (the “Property”) under specific terms
and conditions as stated herein.
Consequently, upon execution of this Agreement by Howard,
the District is submitting this Agreement to the Council for its review
and enactment of legislation to approve the Project, this Agreement, the
Ground Lease, Grant Agreement and the exemption from the Certificate of
Now, therefore, in consideration of the foregoing
premises and the mutual covenants set forth in this Agreement, the
District and Howard agree as follows, intending to be legally bound:
Commencement Date: The first date as of which the
District has approved this Agreement and enacted legislation approving
the Project, the Ground Lease, Grant Agreement and the exemption from
the Certificate of Need process.
Council: The Council of the District of Columbia.
Development Agreement: as defined in Section 5.3
Financing Commitment. A written commitment from the
Federal Housing Administration (“FHA”) to provide FHA mortgage
insurance or other credit enhancement of the NCMC tax-exempt financing
or other form of financing from another source approved by Howard to
fund its share of the Project Costs described in 4.5.3.
Effective Date: The date this Agreement is executed by
both Howard University and the District.
Grant Agreement: as defined in Section 5.1. Ground Lease:
as defined in Section 5.2.
Howard University Hospital or “HUH” means the
division of Howard University responsible for the operation of the
licensed acute care hospital located at 2041 Georgia Avenue, Washington,
D.C. 20060. HUH does not include the Howard University College of
Medicine, its faculty, scientists, clinical departments, institutes,
centers and support services.
HUH Assets means the improvements, fixtures, equipment
and inventory located at HUH and related to the operation of the
hospital, including tangible and intangible property. The term “HUH
Assets” does not include the real estate underlying HUH nor any
tangible or intangible property of the Howard University College of
HUH Liabilities means any debt incurred to purchase,
acquire, maintain or improve, or secured by, the HUH Assets and any
other Howard liabilities related to assets transferred to NCMC by
Improvements: as defined in Section 4.3. Infrastructure
Costs: as defined in Section 4.5.1.
Key Professionals: as defined in
Mayor: the Mayor of the District of Columbia.
Medical Office Building: as defined in Section 2.1.4.
National Capital Medical Center: as defined in Section
NCMC Hospital: as defined in Section 4.3.1.
Preliminary Plan: as
defined in Section 4.3.
Project: as described in Section 4.3.
Costs: as defined in Section 4.5.
Project Documents: this Agreement, the Grant Agreement,
Ground Lease and Development Agreement.
Project Steering Committee: as defined in Section 2.1.3.
Property: as described in Recital 5.
1.2. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the District of Columbia
(without reference to conflicts of laws principles).
1.3. Captions, Numberings and Headings. Captions,
numberings and headings of Articles, Sections, Schedules and Exhibits in
this Agreement are for convenience of reference only and shall not be
considered in the interpretation of this Agreement.
1.4. Number; Gender. Whenever required by the context,
the singular shall include the plural, the neuter gender shall include
the male gender and female gender, and vice versa.
1.5. Business Day. In the event that the date for
performance of any obligation under this Agreement falls on other than a
business day, then such obligation shall be performed on the next
succeeding business day.
1.6. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original and
all of which shall constitute one and the same agreement.
1.7. Severability. In the event that one or more of the
provisions of this Agreement shall be held to be illegal, invalid or
unenforceable, each such provision shall be deemed severable and the
remaining provisions of this Agreement shall continue in full force and
effect, unless this construction would operate as an undue hardship on
the District or Developer or would constitute a substantial deviation
from the general intent of the parties as reflected in this Agreement.
1.8. No Oral Modifications or Waivers. No modification of
this Agreement shall be valid or effective unless the same is in writing
and signed by the District and Howard. No purported waiver of any of the provisions of this
Agreement shall be valid or effective unless the same is in writing and
signed by the party against whom it is sought to be enforced.
1.9. Schedules and Exhibits. All Schedules and Exhibits
referenced in this Agreement are incorporated by this reference as if
fully set forth in this Agreement.
1.10. Including. The word “including,” and variations
thereof, shall mean “including without limitation.”
1.11. No Construction Against Drafter. This Agreement has
been negotiated and prepared by the District and Howard and their
respective attorneys and, should any provision of this Agreement require
judicial interpretation, the court interpreting or construing such
provision shall not apply the rule of construction that a document is to
be construed more strictly against one party.
2.1.1. Howard acknowledges that its educational and
health service qualifications and experience are a material
consideration to the District in entering into this Agreement. Howard
agrees that it shall not assign its rights in whole or in part under
this Agreement, or delegate its obligations in whole or in part under
this Agreement, without the approval of the District, except as provided
herein or in the Project Documents. Notwithstanding the foregoing, it is
expressly understood and agreed by the parties that Howard may assign
its rights under this Agreement and the Project Documents to NCMC (the
new corporation to be formed by Howard as described in Section 4.2.1.).
2.1.2. Howard acknowledges that the qualifications and
experience of a project management firm and other key professionals to
assist Howard in the development of the Property are a material
consideration to the District entering into this Agreement. The
Preliminary Plans shall identify the project management firm or key
professionals selected by Howard to assist its management in the
development of the Project as described in Section 4.3.2. Howard shall
inform the Project Steering Team (described in Section 2.1.3) of its
engagements of such firms and professionals upon their selection.
2.1.3. Howard acknowledges that Howard’s commitment to
an open and transparent process for the development of the Project is a
material consideration to the District in entering into this Agreement.
Howard agrees that the three persons identified on Schedule 1 shall be
Howard’s representatives to a joint project steering committee with
representatives appointed by the District. (“Project Steering
Committee”) that will be dedicated to the Project. The three persons
identified on Schedule 2 shall be the District’s representatives to
the Project Steering Committee. Each representative to the Project
Steering Committee shall be bound to abide by the terms of this
Agreement, including the confidentiality provisions.
(i) The Project Steering Committee shall meet every thirty
(30) days, with the first meeting to be held thirty days after the
Commencement Date of this Agreement.
(ii) The purposes of the Project Steering Committee will be to
discuss the ongoing progress of the Project, to review any information
relevant to the Project that may be requested by a representative of the
Project Steering Committee (subject to the confidentiality provisions
herein) and generally to provide an advisory forum for discussion of any
issues relevant to the Project. Subject to the understandings set forth
in Section 8.4, District acknowledges that the negotiation of contracts,
hiring of personnel, development of proprietary business plans,
financial projections and assumptions are sensitive, confidential and
proprietary business activities and property of Howard and/or NCMC. The
Project Steering Committee, the District and Howard shall not publish or
otherwise disseminate to the public any document that is not designated
as a final public document by the parties. Neither the District nor
Howard or its representatives or professionals shall release any
document nor information marked “Confidential”, “Proprietary”,
“Draft” or a similar designation, without the written consent of the
(iii) Howard and the District may from time to time
substitute new individuals for the representatives identified on
Schedule 1 and Schedule 2.
(iv) Upon formation of the new corporation the Project
Steering Committee shall continue in operation but it shall be advisory
to NCMC board of directors. The new corporation shall provide
information to the Project Steering Team as agreed in this Section and
the Project Documents.
(v) Howard will share with the Project
Steering Committee the FHA application and related documents. These
documents will include pro forma financial statements and other
financial information and NCMC operating plans that Howard will provide
to the FHA consultant engaged to perform the market and financial
feasibility study for the Project.. The FHA feasibility study will be
prepared by an independent accounting firm (with experience in
conducting such studies for hospitals and approved by the FHA) in
accordance with HUD Section 242 Program guidelines. The study will
include an analysis of market need and competition, assumptions about
demand, impact on other providers, hospital utilization, costs and
revenues, and a financial forecast. The financial feasibility study will
be prepared in accordance with AICPA guidelines. Howard shall also share
with the Project Steering Committee any material interim report that the
Project receives from FHA or its consultants and advisors.
2.1.4. Howard acknowledges that Howard’s commitment to
develop a medical office building (“Medical Office Building”) on the
Property is a material consideration to the District in entering into
this Agreement and that it is the parties’ intent that the Medical
Office Building shall be developed concurrently with the NCMC
Hospital, unless mutually agreed otherwise in the Project Documents.
Howard may itself design, construct and develop the Medical Office
Building, or it may sub-lease a portion of the Property to a third-party
developer to develop, operate and maintain the Medical Office Building.
2.1.5. Howard acknowledges and agrees that Howard shall
take all reasonable measures as shall be necessary to assure that all
contracts entered into by Howard with respect to each major phase of the
pre-construction and construction of the NCMC hospital, including
contracts for architectural, engineering, and construction services
(“Project Construction Contracts”), shall provide that at least 50%
of the work in the aggregate under such Project Construction Contracts
shall be awarded to local business enterprises, local small business
enterprises, or local disadvantaged business enterprises, as such terms
are defined in section 2 of the Equal Opportunity for Local, Small, and
Disadvantaged Business Enterprises Act of 1998, effective April 27, 1998
(D.C. Law 12-268; D.C. Official Code § 2-217.01); provided, that of the
percentage of the work required by this section to be awarded to local
business enterprises, local small business enterprises, or local
disadvantaged business enterprises, 35% of the work shall be awarded to
local small business enterprises or local disadvantaged business
enterprises, as such terms are defined in section 2 of the Equal
Opportunity for Local, Small, and Disadvantaged Business Enterprises Act
of 1998, effective April 27, 1998 (D.C. Law 12-268; D.C. Official Code
§ 2-217.01). Of the percentage of the work required by this section to
be awarded to local small business enterprises or local disadvantaged
business enterprises, not less than 20% of the work shall be awarded to
local disadvantaged business enterprises.
2.1.6. Howard acknowledges that the District’s
commitment to grant possession of the Property to Howard, or NCMC, as
designated by Howard, as provided in this Agreement, is conditioned upon
the District receiving written authority to convey such possession from
the United States of America, through the General Services
Administration (“GSA”). The District agrees to use its best efforts
to endeavor to secure such written authority from GSA prior to the
expiration of the Exclusivity Period (as defined in Section 3.2 below).
The District shall commence such efforts and request such authority from
GSA upon execution of this Agreement.
2.1.7. Howard acknowledges and agrees that except for the
transfer of the Ground Lease, construction and installation of the
Infrastructure, and the funds to be provided under the Grant Agreement
as contemplated by this Agreement and the District’s legislation, and
exclusive of any reimbursement agreements between NCMC and the District
for medical and public health services, no subsidy or incentive will be
required by Howard from the District in connection with its development
of the NCMC Hospital (including performance of all obligations of Howard
under the Development Agreement) and construction of Improvements.
Nothing set forth in this Section 2.1.7 shall be deemed to prohibit or
restrict Howard or third party developers, contractors or assigns from (i)
applying for tax exempt financing in accordance with the usual rules and
procedures of the District or (ii) applying for or receiving any subsidy
or incentive that is generally available to be applied for as a
matter-of-right for the Property and other properties in the District of
Columbia that are similarly situated; or (iii) otherwise qualifying for
any economic development program of the District of Columbia or the
2.1.8. The parties acknowledge and agree that upon
completion of the Project, the combined bed total of both the NCMC and
Howard University Hospital will not exceed 482 beds (exclusive of any
special bed requirements requested by the District), which is the
current number of beds licensed at Howard University Hospital.
2.1.9. Subject to appropriate arrangements in the Grant
Agreement between Howard and NCMC with respect to the transfer of HUH
Assets and Liabilities to NCMC, and Howard obtaining any approvals or
assignments required by any lenders or other parties with respect to the
transfer of those HUH Assets to NCMC, Howard acknowledges and agrees
that it will transfer certain HUH Assets and HUH Liabilities to NCMC,
including without limitation, the HUH Level 1 Trauma Center and all
associated services from Howard University Hospital to NCMC Hospital.
2.2.1. The District shall have the right to assign this
Agreement to any agency or instrumentality of the District.
2.2.2. All rights of the District under this Agreement
shall be exercised by the Mayor or by such Persons (including the City
Administrator) as the Mayor may designate from time to time.
2.2.3. The District acknowledges that its commitment to
develop a new building in the area known as Square L of Reservation 13
to house key public health services for the District’s residents is a
material consideration to Howard entering into this Agreement. The
District acknowledges that NCMC Hospital is not intended to be and shall
not be the sole healthcare provider responsible for all uninsured,
underinsured and/or publicly insured patients in the District. NCMC
Hospital shall bear its proportionate share of the public health
services for the underserved of the District as such obligation shall
remain the shared obligation of all health care facilities in the
2.2.4. The District further acknowledges and agrees that
the District’s commitment to continue the D.C. Medicaid and Healthcare
Alliance Program or an equivalent comprehensive health coverage program
for District residents under 200% of the Federal poverty level and not
otherwise eligible for Medicaid or Medicare coverage is critical to the
long-term financial solvency of NCMC Hospital and a material
consideration to Howard entering into this Agreement and undertaking the
development of the Project.
2.2.5. The District acknowledges and agrees that a
material consideration to Howard entering this Agreement is the
development during the Exclusivity Period of a governance model,
operational plan and non-recourse Financing Commitment for the Project
that does not subject Howard to legal and financial exposure for the
ongoing operations of NCMC. Howard’s commitment to fund working
capital deficits of NCMC shall be subject to negotiation in the Project
Documents. Further, the District acknowledges and agrees that Howard’s
agreement to proceed with the Project is subject to Howard obtaining a
Financing Commitment from the Federal Housing Authority or a comparable
source to provide credit enhancement for the NCMC tax exempt financing
to be arranged by Howard for the Project.
3.1. Exclusivity. The District agrees
that during the initial Exclusivity Period, the District shall negotiate
exclusively with Howard with respect to (i) the development and
construction of all Improvements and (ii) the disposition of the
Property. Thereafter, the Exclusivity Period may be extended by the
District while Howard applies for and awaits receipt of a Financing
Commitment from the FHA or another source.
3.2. Exclusivity Period. The “Exclusivity Period”
shall commence on the Effective Date and terminate on the earliest to
occur of any of the following events unless extended under Section 3.3
3.2.1. One hundred eighty (180) calendar days after the
Commencement Date of this Agreement, unless extended pursuant to Section
3.2.2 of this Agreement or by mutual written agreement of the District
3.2.2. The District shall have the discretion to extend
the Exclusivity Period for up to three additional one hundred
eighty-five (185) calendar day periods after expiration of the initial
Exclusivity Period described in 3.2.1, provided that Howard is
proceeding in good faith to apply for the Financing Commitment. If the
District grants a third extension, it shall provide Council with a
report on the progress of the Project and the status of the financing
application. District Council approval must be obtained for further
extensions of the Exclusivity Period by the District beyond twenty-four
(24) months from the Commencement Date.
3.2.3. Notice from a party to the other party that it is
terminating this Agreement at any time after an Event of Default has
occurred with respect to which the declaring party has given any notice
expressly required under this Agreement and the receiving party has
failed to cure such Event of Default within any cure period expressly
provided for in this Agreement; and
3.2.4. Upon the occurrence of such other events as may be
specifically provided for in this Agreement.
3.3. Termination of Exclusivity Period. If Howard
receives a written Financing Commitment, Howard and/or NCMC shall
proceed forthwith to close on the tax exempt financing and the parties
shall proceed to the Construction Phase of the Project. If Howard’s
application for a Financing Commitment is not approvable, either party
may terminate this Agreement and the parties’ rights and obligations
under the Project Documents shall terminate. In such event, the parties
shall share equally the out-of-pocket Project Costs (as defined in
Section 4.4.2) incurred since the Effective Date of the Agreement.
3.4. Preliminary Plan and Costs. If the Exclusivity
Period ends or is terminated without the District’s and Howard’s
execution of all Project Documents, then the District shall be
prohibited from using any of the information, materials and other data
produced by or for Howard in connection with this Project to develop the
Improvements with any other party without Howard’s written approval in
advance, which approval Howard may refuse for any reasonable business
purpose. Notwithstanding the foregoing, if the District or its designee reimburses Howard for its out-of-pocket Project Costs
incurred since the Effective Date of the Agreement, Howard shall consent
to District’s use of the Project materials with another party.
IV. PLANNING SUBMISSIONS AND FUNDING PHASES
4.1. Project Phases. Development and funding of the
Project will proceed in three phases: (1) Planning, (2) Pre-Construction
and Financing and (3) Construction (“Phase” or collectively,
“Phases”), in that order. This Agreement will govern the first
Phase, the Planning Process, as hereinafter described. The parties agree
to use good faith efforts to endeavor to complete the first Phase within
six (6) months of the Commencement Date, the second Phase in no more
than twenty-four (24) months of the Commencement Date and the last Phase
within thirty (30) months of the conclusion of the Pre-Construction and
4.2. District Approvals. Within sixty (60) days of the
Effective Date of this Agreement, the parties shall finalize the terms
of the Grant Agreement and Ground Lease in accordance with Sections 5.1
and 5.2 of this Agreement and the District shall submit this Agreement,
the Grant Agreement, the Ground Lease and the Certificate of Need
exemption request to Council for approval by legislative action.
4.3. Preliminary Plan. Within one hundred twenty (120)
days of the Commencement Date of this Agreement, or such longer period
as may be mutually agreed upon, Howard shall prepare for review by the
District in accordance with this Article IV a preliminary plan
(“Preliminary Plan”) for the development of the Property and the
design and construction of the hospital and Medical Office Building for
physician offices (the “Improvements”). The goal of the Preliminary
Plan shall be to reach consensus on the primary aspects of the
development of a state-of-the-art teaching hospital and Medical Office
Building at the Property (the “Project”) for purpose of preparing
the Development Agreement during the Planning Phase for execution upon
receipt of the Financing Commitment. The Preliminary Plan shall include,
at a minimum, the information described in sections 4.3.1 through 4.3.4
4.3.1. NCMC Governance. A description of the proposed
governance for the new independent non-profit corporation to be
incorporated by Howard, including the representatives that the District
may appoint to the board of directors. The new non-profit corporation
will bear the name, “National Capital Medical Center” (“NCMC”)
and may, at the request of Howard, do business under a name that
includes Howard University or Howard University College of Medicine. The
purposes of the NCMC will be to (i) succeed to certain rights of Howard
under this Agreement and subsequent agreements relating to the Project,
(ii) subject to Section 2.1.9, own and operate all HUH Assets to be
transferred by Howard to NCMC, (iii) own and manage the new hospital and
related facilities to be developed pursuant to this Agreement and
subsequent agreements (the new hospital and related facilities
collectively the “NCMC Hospital”) and (iv) coordinate programs,
services, staff and funding between the Howard University Hospital and
the NCMC Hospital campuses. The governance description shall include
Howard’s plan for NCMC Hospital becoming the primary teaching hospital
for the Howard University College of Medicine (“HUCOM”) and the
terms and conditions of an Academic Affiliation Agreement between the
HUCOM and NCMC.
4.3.2. Key Professionals. A description of Howard’s
plan for engaging a project manager and other Key Professionals to
assist Howard in the successful completion of all phases of the
development of NCMC Hospital, including but not limited to
pre-construction planning; coordination of all design, architectural
services, and engineering services, including all drawings and
specifications; and development of requests for proposals for all
necessary professionals and consultants. The request for proposals and
selection of a project management firm and Key Professionals shall be
subject to competitive bidding and such other terms and conditions as
the parties agree in the Development Agreement. It is specifically
understood and agreed that Howard shall inform the District in advance
of any major partnerships or in the development, construction and
management of NCMC Hospital or engagement of Key Professionals.
4.3.3. Project Business Plan. A business plan for the
development of the Project, including an inventory of the construction
programs and services, staffing and operating budget, a five (5) year
pro forma financial statement for NCMC (including NCMC Hospital and HUH)
and all other cost budgets that the District may reasonably require. The
Business Plan shall include a detailed financing plan for securing all
funds necessary for the development of the Project, including sources of
funding and working capital for covering potential deficits prior to and
in the first three years of operation of NCMC Hospital. The parties
acknowledge and agree that the Business Plan shall provide that after
its initial three years of operation, NCMC shall be expected to meet its
capital and operating expense requirements of its hospital operations
and that neither the District nor Howard shall have any obligation under
this Agreement or the Project Documents to provide additional financial
support to NCMC.
4.3.4. Project Development Plan.
(i) Hospital Space Plan. A functional space program for the
NCMC Hospital, including a description of the general space required by
department and size, location and dimensions of (i) the hospital
building and (ii) parking requirements.
(ii) NCMC Hospital Services and Plan. A description of the
initial uses and programs to be undertaken by the NCMC Hospital,
including (i) inpatient care, (ii) trauma care, (iii) twenty-four (24)
hour emergency services with triage services and referral to primary
care and/or urgent care, (iv) twentyfour (24) hour urgent care, with
Emergency Department triage, for nonemergency patients, (v) mental
health and substance abuse intake, (vi) primary care services directly
or through contract, (vii) ambulatory surgery, (viii) outpatient
specialty services for all major specialties, (ix) outpatient
diagnostic/radiology services, and (x) outpatient laboratory services.
(A) A description of a public health operating plan for
the NCMC Hospital, including (i) a plan for a continuum of care for
specialty and diagnostic services; (ii) effective processes for
follow-up with primary care providers, (iii) emergency and trauma
transport, (iv) an electronic information data system for communication
with primary care providers, (v) a plan to reduce the number
of unnecessary emergency room visits and ambulatory care sensitive
admissions, (vi) a program to provide emergency health care for the
underserved, regardless of ability to pay.
(B) Subject to the District and Howard
agreeing during the Planning Phase upon mutually acceptable
reimbursement agreements for the District’s payment of NCMC’s
operational costs related to the provision of services to patients in
these units, NCMC will maintain (i) twenty (20) secure beds for
correctional patients at NCMC Hospital and (ii) an inpatient psychiatric
unit, including care for involuntary commitments, at HUH.
(C) A policy for patient billing and
collection practices for NCMC Hospital that is consistent with federal
health care law, current best practices of charitable healthcare
organizations and the IRS’s community benefit standards. The policy
shall include eligibility provisions and patient financial assistance
policies for (i) uninsured and underinsured individuals with incomes up
to 200% of the Federal Poverty Level (“FPL”), (ii) uninsured and
underinsured individuals with incomes up to 400% of the FPL and (iii)
individuals whose income may exceed such limits but whose medical
expenses will deplete personal and family resources beyond a sustainable
level. In addition, those policies shall include reasonable fee
schedules for uninsured individuals eligible for financial assistance
that are comparable to the fees paid by private third party payers.
Howard acknowledges and agrees that the Business Plan, financial
projections and governance documents for NCMC shall provide (1) for a
reasonable volume of uncompensated care annually of not less that 3% of
NCMC hospitals’ operating costs; (2) that NCMC shall maintain records
of the uncompensated care provided and submit an annual report to the
District or its agency or instrumentality and make such document
available for public inspection; (3) that NCMC shall publish its patient
billing and collection practices policy in appropriate areas, including
admissions, business office, Emergency Room and it shall be published in
English, Spanish and any other language which at least 10% of the
households in the service area speak; (4) that an individual written
notice of NCMC’s free care policy shall be made available to each
person who seeks services from NCMC; (5) that the NCMC governing board
shall be responsible for the review and approval of all collection
policies and shall be responsible for monitoring collection practices of
the hospital and (6) that such collection policies shall include payment
plans that take into account the patient’s and his or her family’s
income and other financial resources and obligations.
(iii) HUH Services and Plan. A plan for relocation of programs
and services currently provided by HUH to NCMC Hospital and the
operating relationship between HUH and the NCMC Hospital, including the
Level 1 Trauma center and all associated services to be transferred from
HUH to NCMC Hospital.
(iv) Community Participation. A plan describing a
Community Participation Program which shall set forth, among other
things, the community organization(s) with whom Howard proposes to
discuss the Development Plan, a schedule for such discussions and type
of information to be provided the community. This Community
Participation Program shall encompass the period from the submission of
the Community Participation Program until the issuance of the
certificate of completion for the project. Howard shall document all
community organization meetings held so as to provide a narrative
description of the events of each meeting, including the concerns raised
by the community organizations, and Howard’s responses to those
concerns. Howard’s documentation of these community organization
meetings shall be made available to the Project Steering Committee
monthly until the completion of the NCMC Hospital project. Howard shall
include a summary of each community organization meeting held during the
preceding month with the documentation of each meeting. The
documentation and summaries shall be designated as public documents.
(v) Local Participation. An Affirmative Action Plan
Memorandum of Understanding (LSDBE MOU”) with the Office of Local
Business Development and First Source Agreement with the District of
Columbia Department of Employment Services for the Project Construction
Contracts that incorporates the commitments described in Section 2.1.5
of this Agreement.
(vi) Financial Statements. The Preliminary Plan documents
shall include audited financial statements for HUH for its last three
(3) fiscal years.
4.3.5. Within thirty (30) business days of receipt of the
foregoing Preliminary Plan, the District shall promptly review the
information described in Section 4.3.1 through 4.3.4. and forward to
Howard such written comments as the District determines appropriate with
respect to its approval of the Preliminary Plan.
4.3.6. Within thirty (30) business days after Howard’s
receipt of the District’s written comments on the respective
submissions, Howard shall complete revisions to the applicable portions
to reflect the District’s comments and shall re-submit the revised
materials to the District. The revised materials shall include such
information as may be reasonably necessary to enable the District to
evaluate the refinement of the revised materials, and such other
information and materials as the District may reasonably request. Should
the District approve the terms and conditions of the Preliminary Plan,
the District shall issue a written notice to Howard stating that it has
granted final approval of the Preliminary Plan.
4.3.7. The specific process described in Sections 4.3 is
not intended by the District and Howard to be exclusive. The District
and Howard agree to work cooperatively and in good faith to complete the
Preliminary Plan within one hundred eighty (180) days of the
Commencement Date, which may include submission by Howard of additional
materials and information not specifically described in such sections,
and the provision by the District of additional comments, guidance and
approvals/disapprovals not specifically described in such sections.
Without limiting the generality of the foregoing, the District and
Howard agree to adhere generally to the schedule of submissions
described in sections 4.3.5 and 4.3.6. It is further understood that the
parties may mutually agree to finalize certain sections of the
Preliminary Plan during the Pre-Construction and Financing Phase.
4.4. Criteria for Submissions. All submissions to the
District for its review and approval pursuant to Section 4.3 shall be in
such form as the District may reasonably require, and include such
number of copies as the District may reasonably require.
4.5. Project Costs.
4.5.1. Infrastructure Costs. The District will, subject
to available appropriations, undertake responsibility, at its sole cost
and expense through the Anacostia Waterfront Corporation (“AWC”),
for demolition of existing improvements on the Property, clearing,
construction and installation of public roads and utilities, and
remediating or removing, transporting and disposing of soils and other
materials from the Property containing hazardous substances
(collectively, the “Infrastructure Costs”). Infrastructure Costs
shall not be included in the Project Costs and shall be the sole
responsibility of the District. Infrastructure Costs shall not include
any special costs required for a hospital facility, but such costs will
be included within the Project Costs, as hereinafter defined.
4.5.2. Project Costs. The District and Howard have
developed preliminary cost projections for the NCMC Hospital and parking
lot costs. “Project Costs” shall mean the reasonable and necessary
costs reasonably required for all architectural, engineering, planning,
permitting and construction work in connection with the NCMC Hospital,
parking as required by governmental authority related thereto, and all
reasonable and necessary medical equipment related to the NCMC Hospital
(but excluding any additional parking structures beyond the hospital
parking or any other improvements that may be constructed on the
Property), including without limitation all drawings, plans,
specifications, permits or other approvals relating thereto, all
insurance and bonds, all costs of construction, including supervision
thereof, telecommunications cabling, and any changes, together with all
related fees and expenses, general conditions and contingences,
professionals and consultants, equipment and financing costs incurred
before or after the execution of this Agreement. Specifically, Project
Costs shall include the following: the hospital facility; hospital
parking garage; hospital medical equipment; architectural and
engineering fees for the hospital and parking garage; furniture,
fixtures and equipment for the hospital and parking garage; capital
costs relating to the relocation of certain services from HUH to NCMC
Hospital or the placement of certain public health services of NCMC at
HUH, and administration for the hospital and parking garage.
It is specifically understood and agreed by the District
and Howard that Project Costs shall not include any cost for the Medical
Office Building or Research Building, including all soft costs such as architectural and engineering fees,
medical equipment, furniture, fixtures and equipment, and owner
administration. Any cost associated with the development and
construction of the Medical Office Building or Research Building shall
be the sole responsibility of Howard.
4.5.3. Project Costs Funding. District and Howard agree
that each party shall contribute fifty per cent (50%) of the Project
Costs defined in section 4.5.2. Such funding obligation shall be in
addition to the District’s funding the Infrastructure Costs and
undertaking to perform the Infrastructure development, and shall be
subject to available appropriations.
(i) The current estimate of the Project Costs (in 2007
dollars) is [$381,936,000]. Based on that estimate, each party’s 50%
share of the Project Costs will be [$190,968,000]. Each party will also
reserve an additional 20% contingency of [$21,200,000]. This contingency
shall not be spent unless the total shared Project Costs exceed
[$381,936,000]. The final Project Costs’ estimates will be based on
the Project Costs described in the Development Agreement and the terms
of the funding will be finalized in the Grant Agreement. Notwithstanding
the foregoing, the District’s share of Project Costs shall not exceed
(ii) If the Guaranteed Maximum Price increases the Project
Costs to an amount in excess of the estimate stated in (i) above, the
District and Howard shall attempt to negotiate adjustments to the
Preliminary Plans and/or the Development Agreement that are mutually
acceptable to Howard and the District and that bring the Project Costs
down to an amount funded by the District and the Howard on a 50/50
basis. If they are unable to agree upon such a plan, either party may
terminate this Agreement.
V. COMPLETION AND EXECUTION OF PROJECT DOCUMENTATION
5.1.1. Each party will provide its share of funds for
Project Costs under Section 4.5.3 through the terms of a grant agreement
(“Grant Agreement”), which will be subject to Council approval.
Howard and the District agree to negotiate in good faith the form of
such Grant Agreement between the District and Howard. The Grant
Agreement will include the following provisions: (i) the Project will be
funded fifty per cent (50%) by Howard and fifty per cent (50%) by the
District, in accordance with the specific terms and conditions stated in
Section 4.5.3, (ii) the District will release its share of funds for
each Phase after Howard has made its share of funds readily available to
the reasonable satisfaction of the District, and (iii) unless otherwise
specified in the Grant Agreement, each party’s share of funds will be
deposited in and disbursed in accordance with the terms of an escrow or
trust account to be established through the Grant Agreement. The Grant
Agreement shall provide that Howard has no obligation to proceed with
the Pre-Construction or Construction Phases as outlined in the
Development Plan unless and until the District has adequate
appropriations to fund the Grant Agreement as provided in this Agreement
and the Grant Agreement. The Grant Agreement shall provide that Howard is not obligated to fund the Project unless and
until the terms of the Academic Affiliation Agreement between HUCOM and
NCMC are approved by the NCMC board of trustees. The Grant Agreement
shall acknowledge that a portion of Howard’s share of the funding of
the Project Costs may be contributed by third parties and/or Howard
University donations of services, equipment and supplies, including HUH
Assets transferred to the NCMC Hospital site. The Grant Agreement shall
provide that other HUH Assets transferred to NCMC may be approved as a
contribution by Howard, with the approval of the District. Further, the
Grant Agreement shall specify that the value of such donations of
services, equipment and supplies shall be determined and apportioned by
mutual agreements between the parties.
5.1.2. The District will use good faith efforts to
provide Howard an initial draft Grant Agreement on or before thirty (30)
days after the Effective Date and the District and Howard shall endeavor
in good faith to complete substantially the final Grant Agreement for
execution by the parties and approval of Council within sixty (60) days
of the Effective Date.
5.2. Ground Lease.
5.2.1. Howard and the District shall negotiate in good
faith the form of a ground lease (“Ground Lease”) of the Property
between the District and Howard. The Ground Lease shall (i) have a term
of ninety-nine (99) years, (ii) provide for annual rent of one dollar
($1.00) payable in advance for the entire ninety-nine (99) year term,
(iii) provide for construction of Improvements as may be required by the
Project Documents, (iv) have a provision requiring District consent for
sub-leasing or assigning the Ground Lease, (v) have provisions regarding
mortgaging Howard’s interest in the Ground Lease, (vi) have provisions
regarding the District’s right of first refusal and Howard’s right
of first refusal, (vii) have provisions regarding Howard’s use of
Property as an acute care hospital and related health care services; and
(viii) include such other terms and provisions as may be usual and
customary for ground lease transactions in the District of Columbia, or
reasonably necessary or appropriate for the Property, provided that such
other terms and provisions are consistent with the terms as may be
required by this Agreement, the Development Agreement and the Grant
5.2.2. The District shall use good faith efforts to
provide to Howard an initial draft Ground Lease on or before the date
that is thirty (30) days after the Effective Date of this Agreement.
Howard and the District shall endeavor in good faith to complete
substantially the form of the Ground Lease on or before the date that is
sixty (60) days after the Effective Date of this Agreement, subject to
such additional modifications to such form as may be reasonably
necessary or appropriate based upon the final Development Agreement, the
Financing Commitment and Grant Agreement.
5.3. Development Agreement.
5.3.1. Howard and the District shall negotiate in good
faith the form of a development agreement (“Development Agreement”)
between the District and Howard, governing the design, development,
funding and construction of the Improvements from PreConstruction and
Financing phase through the Construction phase. The Development
Agreement shall (i) include such terms as may be required by this
Agreement, the Preliminary Plan and the Grant Agreement; (ii) state that
Howard’s obligation to proceed with the development of the Project is contingent upon receipt of
a Financing Commitment and (iii) such other terms as may be reasonably
necessary or appropriate for the design, development, funding and
construction of the Project during the period that commences at
Pre-Construction and Financing phase and expires upon completion of
Construction, provided that such other terms are consistent with the
terms required by this Agreement, the Preliminary Plan, the Grant
Agreement and the Ground Lease.
5.3.2. The Development Agreement shall incorporate by
reference the LSDBE MOU and First Source Agreement prepared in
accordance with Section 4.3.4(v) hereunder and shall require Howard and
its assigns to comply with all applicable laws, regulations, and
ordinances relating to the construction of NCMC Hospital in the District
and any Federal financial assistance relating to it, including without
limitation, any community participation, affirmative action, District
resident hiring goals, Office of Local Business Development and First
5.3.3. The District shall use good faith efforts to
provide to Howard an initial draft of the Development Agreement on or
before the date that is one hundred twenty (120) days after the
Commencement Date of this Agreement. Howard and the District shall
endeavor in good faith to complete the Development Agreement on or
before the date that is one hundred eighty (180) days after the
VI. CONDITIONS PRECEDENT TO PROCEEDING TO CONSTRUCTION
6.1. District Legislation. Howard’s obligation to
proceed with this Project is contingent upon the Council’s adoption of
legislation approving the Ground Lease, Grant Agreement and exemption of
the Project from the Certification of Need requirements. The parties
shall use their respective best efforts to prepare the necessary
documents and seek Council’s approval of such legislation within
ninety (90) days of the Effective Date of this Agreement. If such
approval is not forthcoming by the expiration of the initial Exclusivity
Period, this Agreement shall terminate.
6.2. Construction. The Project Documents shall provide
that each party’s obligation to proceed to the Construction phase
shall be conditioned on the satisfaction of each of the following
conditions, any of which may be waived by each party in writing:
6.2.1. The Planning phase shall have been completed
pursuant to this Agreement and the Project Documents approved by the
District and Howard’s board of trustees.
6.2.2. FHA or another suitable lender shall issue a
written Financing Commitment to provide mortgage insurance or other
credit enhancement of the tax-exempt financing of Howard’s share of
the Project Costs described in 4.5.3.
6.2.3. Adoption of legislation by the District exempting
the Improvements from the District’s Certificate of Need process and
approving the Grant Agreement and Ground Lease.
6.2.4. There shall exist no default on the part of either
party of any of its material obligations under this Agreement.
Execution Copy 16
6.2.5. All representations and warranties of each party
under this Agreement shall remain true and correct in all material
6.2.6. There shall exist no order of any court that is
binding upon a party and that prohibits that party from consummating the
Project Documents or proceeding with any material aspect of the Project.
6.2.7. GSA’s approval of the sublease of the
District’s interest in the Property to Howard and Howard’s grant of
a mortgage on the Property to the FHA in connection with the tax-exempt
financing for NCMC Hospital.
VII. REPRESENTATIONS AND WARRANTIES
7.1. Howard. Howard hereby represents and warrants to the
District as follows:
7.1.1. Howard is a non-profit corporation duly organized,
validly existing and in good standing under the laws of the District of
Columbia, duly qualified to conduct business in the District of
Columbia, and has the power and authority to conduct the business in
which it is currently engaged.
7.1.2. Howard (i) has the power and authority to execute,
deliver and perform its obligations under this Agreement, and (ii) has
taken all necessary action to authorize the execution, delivery and
performance of this Agreement.
7.1.3. No consent or authorization of, or filing with,
any person (including any governmental authority), which has not been
obtained, is required in connection with the execution, delivery and
performance of this Agreement by Howard,
7.1.4. This Agreement has been duly executed and
delivered by each of Howard, and constitutes the legal, valid and
binding obligation of Howard, enforceable against it in accordance with
7.1.5. The execution, delivery and performance by Howard
of this Agreement will not violate any requirement of law or result in a
breach of any contractual obligation to which Howard is a party.
7.1.6. No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the
best knowledge of Howard, threatened by or against Howard which, if
adversely determined, individually or in the aggregate, could reasonably
be expected to have a material adverse effect on Howard or its ability
to perform its obligations under this Agreement.
7.2. The District. The District hereby represents and
warrants to Howard as follows:
7.2.1. The District (i) has the power and authority to
execute, deliver and perform its obligations under this Agreement, and
(ii) has taken all necessary action to authorize the execution, delivery
and performance of this Agreement.
7.2.2. No consent or authorization of, or filing with,
any person (including any governmental authority), which has not been
obtained, is required in connection with the execution, delivery and
performance of this Agreement by the District.
7.2.3. This Agreement has been duly executed and
delivered by the District, and constitutes the legal, valid and binding
obligation of the District, enforceable against it in accordance with
7.2.4. The execution, delivery and performance by the
District of this Agreement will not violate any requirement of law,
require any approval of Council (other than the approval of this
Agreement, the Grant Agreement, Ground Lease and the exemption from the
Certificate of Need process) or result in a breach of any contractual
obligation to which the District is a party.
7.2.5. No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the
best knowledge of the District, threatened by or against the District
which, if adversely determined, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the
District’s ability to perform its obligations under this Agreement.
7.2.6. District shall use its best efforts to budget for,
seek appropriation for and fund its financial commitments to this
Project as set forth in Sections 2.2.3, 2.2.4, 4.5.1 and 4.5.3. This
representation and warranty shall be continuing through the Project
8.1. Events of Default.
Each of the following shall constitute an “Event of
8.1.1. Any party shall fail to perform any obligation
required under this Agreement,
8.1.2. A party ceases to work on a good faith basis
appropriate for the scale and type of Project and in a manner sufficient
to accomplish completion of its obligations within the applicable times
required under this Agreement; or
8.1.3. Any representation or warranty of Howard made in
this Agreement shall fail to be correct in any material respect on the
8.1.4. Upon the occurrence of any Event of Default
specified in Section 8.1, and the failure of the defaulting party to
cure such Event of Default within thirty (30) days of receipt of written
notice of such Event of Default from the other party (or if such Event
of Default cannot reasonably be cured within such thirty (30) day
period, then within such additional period of time as may be reasonable
necessary to cure such Event of Default, provided that the defaulting
party commences such cure in the initial thirty (30) days and thereafter
diligently pursues such cure), the other party shall have the right (a)
to terminate the Exclusivity Period by written notice to defaulting
party, in which event all obligations and liabilities of the other party
under this Agreement shall thereupon terminate other than
as provided in Sections 8.3 and 8.11; and/or (b) to pursue such other
rights and remedies as may be available under this Agreement and
8.2. Recitals. The Recitals set forth above are
incorporated herein by reference.
8.3. Binding Effect. Upon its execution by the parties,
this Agreement shall be binding upon and inure to the benefit of the
District and Howard and their permitted successors and assigns.
8.4. Confidentiality. Except as set forth below, each
party shall maintain as confidential and shall not publicly disclose the
terms of this Agreement and any Project Documents without the advance
written consent of the President of Howard or the District’s Mayor or
the Mayor’s designee. Notwithstanding the foregoing, the parties agree
that the final, Project Documents, upon execution, are subject to public
disclosure. Each party shall maintain as confidential and shall not
publicly disclose the financial information provided by either party.
The foregoing shall not prohibit (i) disclosure to the extent required
under applicable law or valid legal process, (ii) disclosure, on a
need-to-know basis, to the employees, architects, attorneys and other
professionals and consultants providing services in connection with the
Project, and to prospective lenders and investors, provided that such
parties acknowledge the confidentiality of such terms and agree not to
disclose such terms except as permitted under this Section 8.4, and
(iii) recordation of a Memorandum of Ground Lease in the Land Records of
the District of Columbia. Any press release or other public statement
that either party proposes to issue pursuant to the foregoing sentence
shall be subject to the prior review and approval by each party, such
approval not to be unreasonably withheld.
8.5. Waiver of Jury Trial; Jurisdiction. The District and
Howard each hereby waive any right to jury trial in connection with any
suit, action, proceeding or claim relating to this Agreement or to the
transactions contemplated by this Agreement. Any suit, action,
proceeding or claim relating to this Agreement or the transactions
contemplated by this Agreement shall be brought exclusively in the
United States District Court for the District of Columbia or the
Superior Court for the District of Columbia, and the District and Howard
agree that such courts are the most convenient forum for resolution of
any such action and further agree to submit to the jurisdiction of such
courts and waive any right to object to venue in such courts.
8.6. No Recordation. Howard shall not record this
Agreement, or any memorandum or notice of this Agreement, in any public
8.7. Notices. Notices and other communications required
or permitted under this Agreement shall be in writing and delivered by
hand against receipt or sent by recognized overnight delivery service,
by certified or registered mail, postage prepaid, with return receipt
requested or by telecopy. All notices shall be addressed as follows:
If to the District:
1350 Pennsylvania Avenue, N.W.
Washington, D.C. 20005
Attention: Robert C. Bobb
with a copy to:
Office of the Attorney
General for the District of Columbia
Street, N.W., Suite 600 North
Washington D.C. 20001
Barbera, Deputy Attorney
General Telecopy: 202/727-6014
If to Howard:
2400 6th Street, N.W., Suite 300
Washington, D. C. 20059
Attention: President H. Patrick Swygert
with a copy to:
Norma B. Leftwich,
Office of the General Counsel
2400 6th Street, N.W. Suite 321
Washington, D.C. 20059
Telecopy: (202) 806-6357
or to such other addresses as may be designated by proper
notice. Notices shall be deemed to be effective upon receipt (or refusal
thereof) if personally delivered, sent by recognized overnight delivery
service, or sent by certified or registered mail, postage prepaid, with
return receipt requested, or upon electronically verified transmission,
if such delivery is by telecopy.
8.8. Time of Essence. Time is of the essence with respect
to the performance by the District and Guarantors of their obligations
under this Agreement.
8.9. Anti-Deficiency Provision.
8.9.1. The District and Howard acknowledge and agree that
the obligations of the District to fulfill financial obligations of any
kind pursuant to any and all provisions of this Agreement, or any
subsequent agreement entered into pursuant to this Agreement or
referenced herein to which the District is a party, are and shall remain
subject to the provisions of (i) the federal Anti-Deficiency Act, 31
U.S.C. §§1341, 1342, 1349, 1351, (ii) the D.C. Official Code 47-105,
(iii) the District of Columbia Anti-Deficiency Act, D.C. Official Code
§§ 47-355.01 - 355.08, as the foregoing statutes may be amended from
time to time, and (iv) Section 446 of the District of Columbia Home Rule
Act, regardless of whether a particular obligation has been expressly so
conditioned. The District agrees to exercise all lawful and available
authority to satisfy any financial obligations of the District that may
arise under this Agreement; however, since funds are appropriated
annually by Congress on a fiscal year basis, and since funds have not
yet been appropriated for the undertakings contemplated herein, the
District’s legal liability for the payment of any costs shall not
arise unless and until appropriations for such costs are approved for
the applicable fiscal year by Congress (nor shall such liability arise
if, despite the District's compliance with Section 8.9.1, a request for
such appropriations is excluded from the budget submitted by the Council
to Congress for the applicable fiscal year). The District makes no
representation or assurance that Congress will grant the authorizations
and appropriations necessary for the District to perform its financial
obligations under this Agreement.
8.9.2. During the term of this Agreement, the Mayor or
other appropriate official shall for each fiscal period include in the
budget application submitted to the Council the amount necessary to fund
the District’s obligations hereunder for such fiscal period.
Notwithstanding the foregoing, no officer, employee, director, member or
other natural person or agent of the District shall have any personal
liability in connection with the breach of the provisions of this
Section 8.9.2 or in the event of a default by the District under this
8.9.3. This Agreement shall not constitute an
indebtedness of the District nor shall it constitute an obligation for
which the District is obligated to levy or pledge any form of taxation
or for which the District has levied or pledged any form of taxation.
IN ACCORDANCE WITH §446 OF THE HOME RULE ACT, D.C.
OFFICIAL CODE §1-204.46, NO DISTRICT OFFICIAL IS AUTHORIZED TO OBLIGATE
OR EXPEND ANY AMOUNT UNDER THIS AGREEMENT UNLESS SUCH AMOUNT HAS BEEN
APPROVED AND APPROPRIATED BY ACT OF CONGRESS.
8.10. Agents and Representatives. No person other than
the parties to this Agreement, and the permitted assignees of such
parties, shall have any liability or obligation under this Agreement.
Without limiting the generality of the foregoing, Howard agrees that no
consultant, contractor, agent or attorney engaged by the District in
connection with this Agreement or the transactions contemplated by this
Agreement shall have any liability or obligation to Howard under this
8.11. Survival. The parties acknowledge and agree that
the duties and obligations set forth in Sections 3.4, 8.4 and 8.5 shall
survive the expiration or termination of this Agreement for any reason.
IN WITNESS WHEREOF, the District and Howard have executed
DISTRICT OF COLUMBIA
By: Anthony A. Williams
Approved for legal sufficiency:
By: H. Patrick Swygert
Schedules and Exhibits:
Schedule 1: Howard representatives to Project Steering
Schedule 2: District representatives to Project Steering
Schedule 1: Howard Representatives to Project Steering Committee
Senior Vice President Hassan Minor, Ph.D., or his designee
Senior Vice President, Chief Financial Officer and
Treasurer Sidney Evans, or his designee
Senior Vice President for Health
Sciences Victor Scott, MD, or his designee
Schedule 2: District Representatives to Project Steering Committee
City Administrator Robert C. Bobb, or his designee
Department of Health Director Gregg A. Pane, or his
Anacostia Waterfront Corporation President, Adrian
Washington, or his designee