The Wrangell Borough Assembly met in a special executive session on Wednesday, Nov. 2 to discuss an arbitration action between InnoVative Capital and the Wrangell Medical Center over a contract signed by Noel Rea, the CEO of WMC, and InnoVative.
After a closed-door session, the assembly voted 4-3 to let stand a complaint filed by the Borough in Wrangell’s First Judicial District seeking declaratory relief from a contract signed by Noel Rea and InnoVative in August 2009.
Assembly members Mike Symons, Bill Privett, Pamella McCloskey and David Jack voted against the motion, while Wilma Stokes, Don McConachie and Mayor Jeremy Maxand voted in the affirmative.
InnoVative, a banking and financial advisory firm, was hired by the hospital in 2009 to seek out funding for the WMC replacement project. An arbitration proceeding regarding the hiring document is currently underway in Pennsylvania and set to be heard before a three-person panel of the American Arbitration Association.
According to a source close to both the Borough and the WMC Board, the plan discussed by the Assembly centered around an arrangement to withdraw the complaint against InnoVative and Rea. If approved, the assembly would have also considered allowing the board to use non-governmental funds from the WMC Replacement Project budget to fulfill the amount InnoVative alleges they are owed in the arbitration action.
Among the decisions made by the assembly included an agreement that WMC would be responsible for handling the InnoVative contract and arbitration, as well as forming a consensus that they would not recommend the board spend federal or state funds out of the total project budget of $29.3 million.
“Federal or state money is what the assembly is responsible for,” Maxand said. “We are also not a party to the InnoVative contract. Despite the ‘no’ vote, we are very close to a consensus to resolve this situation. That resolution will be put before the assembly soon with a tri-party agreement that hopefully the assembly will support.”
The funding for the WMC replacement project comes from a number of sources, including USDA, the State of Alaska and a number of private or grant-based sources.
In addition to standard fees for services, InnoVative’s contract with WMC called for a percentage-based fee equal to 2.25 percent of the total project budget of $29.3 million – or approximately $660,000.
According to WMC Board President Mark Robinson, a total of $650,000 from various sources would be available to pay InnoVative’s contract fee should the board choose to do so.
Such a payment would likely end the arbitration suit between InnoVative and WMC, making the borough’s request for declaratory judgment moot.
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