HomeMy WebLinkAboutRes 2024-055RESOLUTION NO. 2024-055
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, OPPOSING THE DESERT HEALTHCARE
DISTRICT’S PROPOSED HOSPITAL LEASE AGREEMENT
“NON-COMPETE” PROVISION AND DIRECTING THE MAYOR TO SEND
A LETTER TO THE DESERT HEALTHCARE DISTRICT BOARD
EXPRESSING THIS OPPOSITION
WHEREAS, on May 28, 2024, the Desert Healthcare District (the “District”) Board
received a presentation from Tenet Healthcare (“Tenet”) regarding a new Hospital Lease
Agreement for Desert Regional Medical Center (the “Lease”). The presentation
referenced a new 30-year lease, which would allow Tenet, a Dallas-based entity, to take
ownership of the hospital at the end of the 30-year lease. The new Lease would include
a “non-compete” provision similar to the current lease. If approved by the District Board,
this item would be put on the November 5, 2024, ballot for District voters to weigh in on;
and
WHEREAS, the current lease includes a "non-compete" clause, generally outlined
in Article XIII (Additional Covenant of Lessor) of the May 30, 1997, Hospital Lease
Agreement between the District (Lessor) and Tenet HealthSystem Desert, Inc. (Lessee).
This clause restricts the use of taxpayer funds within th e District boundaries, requiring
Tenet's prior written consent, which Tenet may withhold at its sole and absolute
discretion; and
WHEREAS, due to the District's boundary expansion during the term of the current
lease, some potential ambiguity arose regarding the District's ability to engage in
potentially competing activities within the expanded territory. The new Lease would
restrict such activities within the entirety of the current expanded boundaries of the
District.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm
Desert, California, as follows:
SECTION 1. That the foregoing Recitals are true and correct and are incorporated
herein by this reference.
SECTION 2. That the City Council hereby directs the Mayor, on behalf of the City,
to send a letter to the District Board, detailing the City’s objections and concerns to any
“non-compete” provision within the new Lease.
SECTION 3. That the City objects to any “non-compete” provision in the new
Lease on the following grounds:
1. The Lease would restrict the activities of the District within District boundaries.
2. The Lease would restrict the use of taxpayer funds within the District boundaries
and require Tenet's prior written consent, which Tenet may withhold at its sole and
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absolute discretion.
3. The “non-compete” provision harms communities that lack adequate medical
services the most.
4. Allowing for-profit Tenet to restrict Desert Healthcare District activities and
taxpayer funds for the next 30 years is unacceptable.
5. Future elected District Board Members should determine what is best for taxpayer
funds.
6. The Desert Healthcare District should be accountable to residents, not the for-profit
shareholders of Tenet.
7. The City questions what the District will do with its funds if it is restricted from using
them in such a significant manner.
8. The non-compete provision stifles competition and innovation in healthcare
services within the District.
9. The non-compete provision could have negative economic impacts on the
community by limiting potential new healthcare facilities and related businesses.
10. Restricting the District’s ability to develop and support additional healthcare
facilities and services could adversely affect public health and safety, especially
during health crises or emergencies.
11. The non-compete provision raises legal and ethical concerns regarding the fair use
of taxpayer funds and the District’s mandate to serve the public interest.
ADOPTED ON JULY 11, 2024.
KARINA QUINTANILLA
MAYOR
ATTEST:
ANTHONY J. MEJIA
CITY CLERK
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I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that
Resolution No. 2024-055 is a full, true, and correct copy, and was duly adopted at a
regular meeting of the City Council of the City of Palm Desert on July 11, 2024, by the
following vote:
AYES: HARNIK, KELLY, NESTANDE, AND QUINTANILLA
NOES: NONE
ABSENT: TRUBEE
ABSTAIN: NONE
RECUSED: NONE
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of Palm Desert, California, on ___________________.
ANTHONY J. MEJIA
CITY CLERK
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7/12/2024