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File Reference Number: 4656-3 TT 960229
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ADMINISTRATIVE REPORT
Date: February 27, 1996
Dept. File No. A701
TO: Vancouver City Council
FROM: Manager of Non-Market Housing, in consultation with the
Director of Legal Services and
the General Manager of Human Resource Services
SUBJECT: Transfer of the Operation of Taylor Manor to
Little Mountain Residential Care & Housing Society
RECOMMENDATION
A. THAT Council approve the transfer of the operation of Taylor
Manor from the City to Little Mountain Residential Care &
Housing Society (Little Mountain) effective April 1, 1996 or
as soon as possible thereafter, on the following terms and
conditions:
1. the building and lands presently occupied by Taylor
Manor and to be occupied by the new replacement
facility (the "New Building") legally known and
described as Lot 3, Section 27 Plan 19386 THSL ("Lot
3") be leased to Little Mountain on the following terms
and conditions:
a) use: continuing care facility;
b) rent: (i) from the commencement of the term until
the occupancy permit is issued for the New
Building and the operation of Taylor Manor has
been successfully transferred to the New Building
the rent shall be $76,300 per year plus a payment-
in-lieu of taxes and water charges (estimated 1995
rates are $17,699 for property taxes and $4,000
for water). For the first year of the Term, the
City will provide a grant-in-lieu of taxes and
water charges so as to keep the budget at the same
level as when the City operated Taylor Manor.
This constitutes a grant and requires eight
affirmative votes of Council.
(ii) after the occupancy permit is issued for the
New Building and the operation of Taylor Manor has
been successfully transferred to the New Building
the rent shall be $1.00 per year plus a payment-
in-lieu of taxes and water charges (At the 1995
rates, the payment would be $76,247 based on one-
half the present $2,823,000 assessed value of Lot
3 with an $11,200,000 building);
c) day-to-day repairs and maintenance: Little
Mountain's responsibility;
d) structural repairs: in connection with the
existing Taylor Manor, Little Mountain must first
make its best efforts to receive money from the
Province for these repairs. If the Province fails
to pay for these repairs the City shall pay for
them provided that the City shall not be obliged
to repair if the cost of the repairs is excessive,
in the sole opinion of the General Manager of
Corporate Services. Little Mountain shall be
solely responsible for structural repairs required
to the New Building;
e) term: the term of the Lease shall commence the
effective date of the transfer and shall terminate
forty (40) years later;
f) early termination rights: prior to commencement
of construction of the New Building, Little
Mountain shall be able to terminate the Lease on
six (6) months' prior written notice if, in the
sole discretion of Little Mountain, the operation
of Taylor Manor by Little Mountain is not
economically viable. Throughout the term of the
Lease the City shall have the City's standard
termination rights (for example, in the event of
default by Little Mountain under the Lease);
g) subdivision, sublease or licence: the approximate
one half of Lot 3 occupied by the current Taylor
Manor, access and recreation areas, shall be
subdivided from the remainder of Lot 3, subleased
or licenced back to the City, at the City's sole
option, once the occupancy permit is issued for
the New Building and the operation of Taylor Manor
has been successfully transferred to the New
Building;
h) notice in the Province's favour: the Title to Lot
3 shall be subject to a notice in the Province's
favour providing that all persons who deal with
Lot 3 shall know of the Province's involvement in
the funding of the construction of the New
Building and the consequent obligations to obtain
the Province's approval prior to dealing with
Little Mountain's leasehold interest;
i) ownership of the building: the City shall always
own the existing Taylor Manor. The New Building
shall be owned by Little Mountain during the term
of the Lease and by the City thereafter (excluding
any hazardous substances);
2. the City transfer the non-fixed capital assets situated
at Taylor Manor valued at $126,549 (depreciated value
at December 31, 1995, as shown in Appendix "A" attached
hereto), plus other physical assets not on inventory
but in the facility, excluding residents' personal
belongings, be transferred to Little Mountain for the
nominal fee of $1.00;
3. accumulated operating surplus to cover 100% of real
liabilities (vacation, gratuity, statutory and
compensating time) and 50% of contingent liabilities
(sick leave) for employees who transfer to Little
Mountain estimated as $95,083 as at February 1, 1995 be
transferred to Little Mountain. Source of funds to be
from combined accumulated surpluses of Taylor Manor and
Cordova House
4. Little Mountain offer employment to all City employees
whose worksite is Taylor Manor under the 1996/97
revised budget and staffing levels.
5. the City give notice to the Ministry of Health,
Vancouver Health Board and Continuing Care Facilities
Licensing that the City of Vancouver will cease to
operate Taylor Manor, effective the transfer date.
6. the City assign, convey or transfer to Little Mountain
such other interests, obligations and documentation
including the food service contract, personnel records
and residents files and trust funds, as deemed
appropriate by the General Manager of Community
Services, effective the transfer date;
7. Little Mountain enter into a new operating agreement
with the Ministry of Health, Continuing Care Division;
and apply for a new license from Community Care
Facilities Licensing;
8. the City indemnify Little Mountain for any liabilities
which might arise from events occurring prior to the
transfer date. When the City operated Taylor Manor,
liabilities were covered by the City's self-insurance
program. Accordingly, the City would cover liabilities
incurred prior to the transfer date and would indemnify
Little Mountain for these liabilities. (Staff are
unaware of any potential claims which predate the
transfer date.)
9. the City pay for the exceptional audit of the facility
for the three months January 1 to March 31, 1996 at a
fee not to exceed $3,000 with funds to be provided in
the 1996 Operating Budget;
10. such further and other arrangements as seem appropriate
to the General Manager of Community Services and the
Director of Legal Services.
B. THAT Council authorize the General Manager of Community
Services and/or the Director of Legal Services to execute
the necessary documentation to effect the above
recommendations. No legal obligation shall arise until the
documentation is fully executed.
C. THAT Council instruct the General Manager of Community
Services to report back on options to deal with the
shortfall in administrative fees.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of
A, B and C.
COUNCIL POLICY
There is no applicable Council policy, except that a grant requires
eight affirmative votes of Council.
PURPOSE
This report recommends that Council approve the transfer of the
operation of the 58-bed City-operated continuing care facility Taylor
Manor to the Little Mountain Residential Care and Housing Society
effective April 1, 1996, or as soon as possible thereafter, on the
terms and conditions negotiated to the satisfaction of the General
Manager of Community Services and the Director of Legal Services.
BACKGROUND
Taylor Manor was built in 1915 as a senior's home and later converted
to a 58-bed continuing care facility for people with mental and
behavioural problems. The City operates this facility with Provincial
Ministry of Health funding for "hard-to-house" seniors. The residents
live in rooms with up to 10 beds sharing toilets and showers and
inadequate or inappropriate interior space. While Taylor Manor is an
accredited facility delivering quality care and programs to residents,
the building is recognised as being below intermediate care standards.
A replacement 72-bed multi-level care building is designed and waiting
approval in the Provincial Ministry of Health's 1996/97 Capital Plan.
The new building includes secure wing(s) to house the cognitively
impaired.
On November 14, 1995, Council approved the transfer of the Vancouver
Health Department to the Vancouver Health Board, effective January 1,
1996. As a result, the City decided to withdraw from health services
and an alternative operator for the City-operated continuing care
facilities, Taylor Manor and Cordova House, had to be identified.
DISCUSSION
1. Transfer to a Non-profit Society
Options considered were transfer to the Vancouver Health Board;
creation of a new non-profit society; or transfer to an existing
non-profit society. The Vancouver Health Board was not prepared
to manage any care facilities. Creating a new society was
contrary to the objectives of health regionalization which
includes integration, consolidation and mergers. Consequently,
transfer to an existing non-profit society experienced with
continuing care was deemed to be the best solution and was the
preferred option of the Vancouver Health Board. As the City has
not incurred costs in building or operating Taylor Manor, the
City would not expect to receive compensation for the transfer of
the facility and its assets.
2. The Little Mountain Residential Care & Housing Society
Interest in assuming responsibility for Taylor Manor was explored
initially with a society operating a facility located within the
same Community Health Committee area as Taylor Manor. After
several months of negotiations, concerns about the "fit" led to
termination of those discussions and a search for a better
"fit". While located in a neighbouring Community Health
Committee area, Little Mountain shares the City's resident care
focus and is training all their staff in "gentle care". Little
Mountain operates a 121-bed continuing care facility located at
330 East 36th Avenue and a 96 apartment seniors housing project
next door. Little Mountain's Board is experienced and very
involved in ensuring that the facility provides quality care for
the residents. Their draft Mission, Vision, Values and
Commitment are attached for Council's information as Appendix B.
Little Mountain is planning to renovate 330 E. 36th Avenue to
include a 26-bed unit for cognitively impaired residents. Little
Mountain is financially healthy and confident that they can
manage Taylor Manor's finances effectively.
Little Mountain has agreed to include representation for Taylor
Manor residents on its Board. Little Mountain's Board presently
provides for representation from Little Mountain Neighbourhood
House Society, Little Mountain Senior Live Wires, CNIB and up to
three Provincial Government appointees. Due to aging and waning
interest on the part of the societies, only two of their six
possible representatives have been appointed and only one
government appointee. Little Mountain is therefore seeking
approval from the Ministry of Health to amend their Constitution
and By-laws to reduce representation from the three societies and
increase the number of members-at-large. Little Mountain plans to
request that the government fill their two vacancies with persons
who have knowledge and expertise in mental health and the hard-
to-house and are receptive to City recommendations.
3. Lease of City-owned Land and Building
The Taylor Manor site located on Lot 3 of the map attached as
Appendix "C" on the corner of Boundary and Adanac, is owned by
the City. In a letter dated December 8, 1977 the Province agreed
to accept financial responsibility for the City to operate Taylor
Manor under the Long Term Care program. Taylor Manor currently
pays the City market rent of $76,300 with rental review every two
and one-half years.
Because the building is obsolete, residents who can climb stairs
and are willing to sleep in shared rooms with up to 10 beds have
become increasingly scarce. Empty beds has reduced revenues and
Taylor Manor has had an operating deficit for the last two years.
Little Mountain is not willing to assume an on-going liability
and asked the City to agree to rent the building to the Society
at a nominal rent for up to five years or until they relocate to
the New Building. In turn, Little Mountain would make a payment-
in-lieu of property taxes and water charges (the 1995 rates for
these are $17,669 property taxes and $4,000 water charges).
The Ministry of Health, however, has advised that they will fund
the $76,300 rent only if it is paid. Since a nominal rent or a
market rent will make no net difference to Little Mountain, it is
recommended that Little Mountain pay $76,300 yearly plus a
payment-in-lieu of taxes and water charges from the commencement
of the term of the lease until the occupancy permit is issued for
the New Building and the operation of Taylor Manor has been
successfully transferred to the New Building. In addition, it is
recommended Council provide a grant-in-lieu for property taxes
and water charges in the first year of the Term, to keep the
budget at the same level as if the City operated Taylor Manor.
Little Mountain has requested the City pay for structural repairs
to the present building should requests to the Province for
Minor Capital Project funding prove futile. Little Mountain does
not view the present building as suitable for the long term and
expects to relocate to the New Building within the next five
years or serve the required 12 month notice to Continuing Care of
their intention to cease to operate.
On relocation, Little Mountain expects to return the heritage
building and approximately half Lot 3 to the City to decide what
new use might be appropriate. Little Mountain will lease Lot 3
for the balance of the Term at a nominal fee of $1.00 per year
and make a payment-in-lieu of taxes and water charges (estimated
at $76,247 1995 rate based on half of the present land value of
Lot 3 of $2,823,000 and new building value of $11.2 million) and
sub-lease or licence half back to the City at a nominal rate.
Alternatively, the City may elect to subdivide Lot 3 in which
case Little Mountain would lease only that portion of Lot 3 with
the New Building constructed thereon, access and recreation areas
(probably 1/2 of Lot 3).
4. Transfer of Capital Assets
The physical assets of Taylor Manor including a vehicle,
computers, beds, dishes and floor polishers, were purchased with
funds from the Provincial Ministry of Health and should transfer
with the facility. The inventory of capital assets appended is
not comprehensive and only includes items with a capital value of
$500 or more. The December 31, 1995 depreciated value of these
items are $126,549. The remaining physical assets while not
listed on the inventory and not valued, were also purchased with
Provincial funds and should remain with the facility.
Accordingly, Little Mountain shall pay the City only a nominal
fee for the transfer of all capital assets.
5. Transfer of Accumulated Surplus
In 1993, Taylor Manor had an operating surplus of $226,594 from
which approved purchases of computers and a paratransit vehicle
were made. In 1994 and 1995, ongoing two to three vacant beds
resulted in lost revenue and deficits of $204,435 and $44,784.
The accumulated surplus for Taylor Manor as at December 31, 1995
is $29,301.
Cordova House, which also spent large amounts of its accumulated
surplus in the last two years on a paratransit vehicle, computers
and a sprinkler system, still has $176,891 remaining in its
surplus as at December 31, 1995.
In the City's negotiations with the two non-profit societies,
both societies sought indemnification from liabilities
accumulated by the City. The City has accumulated both real and
contingent liabilities for which no accruals were made. The
value of the total vacation, sick and other leave accumulated for
Taylor Manor as at February 1, 1995 is $226,222. The value of
owed time for employees who are expected to transfer to Little
Mountain is $139,189.
The combined Ministry of Housing surpluses of $206,192 as at
December 31, 1995 are not sufficient to cover 100% of the
combined Ministry of Housing liabilities of $297,694, there is a
shortfall of $6,988 required to cover 100% of the real
liabilities and 50% of the contingent liabilities for employees
expected to transfer. Furthermore, having implemented budget
reduction measures in the latter part of 1995 and early 1996, the
surplus for the first three months of 1996 should be sufficient
to cover this shortfall.
With the approval of Continuing Care, the City will combine the
surpluses of both Cordova House and Taylor Manor and transfer
with each facility, sufficient funds to cover all the real
liabilities and half the contingent liabilities. This amounts to
$118,097 for Cordova House and $95,083 for Taylor Manor.
Indications are that the MOH will fund any exceptional expenses
such as severance or extended sick leave which the societies may
be unable to pay.
6. Employees
Little Mountain has worked with the City to develop a budget and
staffing plan for 1996/97. They intend to offer employment to
all City employees who work at Taylor Manor in this new staffing
plan. Once Council and Little Mountain's Board approve the
transfer of Taylor Manor to Little Mountain, the City will notify
its employees of the decision to cease operating Taylor Manor and
Little Mountain will send offers of employment. Not all
employees are expected to accept the offer. Rather, employees
with qualifications that are likely to find alternate work with
the City may choose to remain with the City. Employees who
choose not to accept the offer of employment with Little Mountain
will remain the responsibility of the City. It is expected that
those who choose to remain with the City will be easily
relocated.
7. Notice of Transfer
The City should notify the Ministry of Health, the Vancouver
Health Board and the Community Care Facilities Licensing that the
City intends to cease operating Cordova House effective the
transfer date and that Little Mountain will be applying for a
license, an operating agreement and funding.
8. Other Obligations
To provide for the transfer of personnel records, resident files,
trust funds, insurance, warranties, and contracts, Council should
authorise the General Manager of Community Services to convey or
transfer to Little Mountain such other interests, obligations and
documentation as he deems appropriate.
9. Exceptional Audit
Little Mountain has agreed to pay for the December 31, 1995 year
end audit from the Taylor Manor annual operating budget but
requests the City pay for the January 1 to March 31, 1996
exceptional audit. A maximum fee of $3,000 for this exceptional
audit is considered a reasonable cost for the City to pay in
achieving the transfer, with funds to be provided in the 1996
Operating Budget.
10. Other Terms and Conditions
Council should authorize the General Manager of Community
Services and the Director of Legal Services to make such further
and other arrangements as seem appropriate and one or both to
execute the necessary documentation to effect the transfer of the
operation of Taylor Manor.
11. Administrative Fee Charged to Taylor Manor
In 1995 the City received $61,800 from the Provincial Government
for the administration of Taylor Manor. With the transfer to
Little Mountain, this income will no longer be available to the
City. The General Manager of Community Services will report back
on options to deal with this shortfall in April.
CONCLUSION
With the transfer of the two City-operated continuing care facilities
(Cordova House and Taylor Manor) the City will effectively complete
the withdrawal as a provider of health services. The City's
obligations for operating Taylor Manor can be transferred to the
Little Mountain Residential Care & Housing Society which is prepared
to assume these responsibilities provided the terms and conditions
they require to continue operating the facility are met. This report
recommends that Council approve the transfer of the operation of
Taylor Manor to Little Mountain Residential Care & Housing Society on
the above terms and conditions.
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