Lakeland, FL – Administrative leadership at the City of Lakeland (the City) and Lakeland Regional Health (LRH) announced today that they have reached an agreement on a proposed sixth amendment to the Lease and Transfer Agreement between the two entities.
Following deliberations by the Lakeland City Commission during the FY 2015 Budget process, LRH’s annual lease payment was capped at $12.9 million for two years. The City and LRH agreed to conduct negotiations to explore long-term alternatives to the payment terms of the current Lease and Transfer Agreement. The proposed amendment is subject to approval by the Lakeland City Commission and the Lakeland Regional Health Board of Directors.
The proposed amendment is for a term of 25 years, which adds an additional seven years to the current Lease and Transfer Agreement that was set to expire on October 1, 2033. The amendment provides a lump sum of $15,000,000 to be paid to the City by LRH on October 1, 2015. Additionally, annual lease payments will be made in the fiscal year ending September 30, 2016 through the fiscal year ending September 30, 2040.
The lease payment for the first year of the proposed amendment will be $13,254,750 and increases by 2.75% per year through the duration of the agreement. Lease payments will be made in equal quarterly payments, beginning on October 1, 2015.
In fiscal year beginning October 1, 2036, the City and LRH will enter into negotiations for a 25-year extension of the proposed Lease and Transfer Agreement. At any time during the lease negotiation period, but no later than October 1, 2037, the City may notify LRH that it intends to sell the hospital. LRH has the opportunity to purchase the hospital at fair market value as determined by a nationally recognized health care appraisal firm mutually agreed to by the City and LRH. If a purchase agreement is reached, a credit against the purchase price for all rent and payments made since inception of the lease on October 1, 1986 would be applied.
Doug Thomas, Lakeland City Manager, said, “Our administration is keenly focused on finding innovative solutions to provide the very best services possible to the citizens of the City of Lakeland. The proposed amendment is a win-win for our community. The lump sum payment provides the City with the opportunity to invest in our future and appropriately plan for a successor lease in 2037. Quarterly lease payments will enable both the City and LRH to better forecast and develop budgets based on known income and expenses.” He added, “We appreciate the strong partnership we have with LRH and believe the fruition of our negotiations respects desired outcomes envisioned in the original Lease and Transfer Agreement and provides stability for both parties over the next 25 years.”
Elaine Thompson, PhD, FACHE, President and CEO of Lakeland Regional Health said of the arrangement, “We appreciate all of the time, hard work and earnest discussions held with City administration on this matter. The predictability of lease and additional payments as provided by the proposed lease amendment positions our not-for-profit organization to make the financial investments necessary to improve patient safety and experience, while delivering nationally recognized, essential healthcare services to all patients, regardless of their ability to pay, at our Medical Center.”
About the City of Lakeland
The City of Lakeland was incorporated January 1885 and has grown to become one of the largest inland communities in Florida. With a current population over 100,000 Lakeland continues to grow. It has been designated a Standard Metropolitan Statistical Area by the U.S. Census Bureau for over 30 years. With tourist attractions and gulf beaches only an hour away, Lakeland continues to capitalize on its ideal central Florida location along the I-4 corridor. The City of Lakeland owns and operates Lakeland Electric, a full service municipal utility servicing over 120,000 customers with some of the most economically priced electricity in the state of Florida. Lakeland Electric is the third largest publicly owned utility in Florida and it was one of the first to offer power in the Sunshine State over 110 years ago. To learn more about the City of Lakeland, please visit www.lakelandgov.net.