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09-25-1974 CCMSPECIAL MEETING CITY COUNCIL AND HOSPITAL BOARD WEDNESDAY, SEPTEMBER 25, 1974 Pursuant to the provisions of the City Charter, Chapter III, Section 3.01, a special meeting of the City Council and the appointed Hospital Board was convened at 7:30 P.M. on Wednes- day, September 25, 1974. Mayor Black called the meeting to order at the appointed time. Present were, Mayor Black, Alderman Lueneburg, Haag, Ackland and Westlund. Hospital Board members Reverend Natwick, Virgil Goebel, Harold Juul, and Dr. Carl Bretzke. Also present were City Attorney Schantzen, Administrator Graves and Administrative Assistant Mealey. Mayor Black summed up the history of the medical services building proposal. First introduction about early 1973, Hospital Board brought it to the City Council in May, 1974. Contract for prelim- inary work with Tom Horty in June. 1974. July 9, 1974 the Hospital Board met again with the Council to urge the plan. Mayor and Council directed all members of both boards to seek public comment and opinion and asked the news media to assist in seeking public opinion. The attorney was directed, at the same time, to seek out which type of bond would best suit such project,and whether or not authority vests in the Council. There being practically no adverse comment on the matter, the City Council directed the Hospital Board to act as agent for the City in working with Horty, Elving Associates to prepare construction plans and specifications, in accordance with the contract terms. Alderman Westlund asked how far the architect has gone in the preparation of plans and what is the best estimate of the sale- ability of the proposed bonds? Attorney Schantzen answered that the bond market is a variable market that cannot be predicted with any degree of authority. The time to find whether or not bonds are marketable is when they are offered for sale. Mr. Graves stated that the architect has completed schematic phase of the plans. Alderman Lueneburg asked about lease insurance, the premium cost and whether or not the premium cost has been calculated in the project cost? He also asked whether progress had been made toward agreement with the Clinic medics as to use of the labora- tory, X -Ray and similar equipment? Phil Graves replied that the details have not yet been worked out, but was confident they would be. Alderman Westlund asked what alternatives to the services building had been considered? Phil Craves said one alternative was to SPECIAL COUNCIL MEETING -2- SEPTEMBER 25, 1974 do nothing, another was for the medics to expand the building at the present clinic site, another was to lease land to the medics near the hospital and allow them to build their own building. Another private contractor had proposed a direct subsidy to a building he would build. For many reasons these were all considered improvement or too clumsy to work. If the thought is to retain control of the building and effectively recruit, and if the general complaint that the present Clinic makeup tends to deter recruitment that wouldn't be resolved if the medics owned the building. J. Harold Beytien asked how long it is estimated before all rental space in the proposed building is rented. Phil Graves said they estimated it would be full in approximately two years. The hospital felt they could use the diminishing space in the interim and support the rent costs from current hospital income. L.C. Vick, 325 Jefferson asked Dr.Bretzke whether there was any foundation to the rumor that the iaedics in the clinic discouraged other medics from locating in this city? Dr. Bretzke replied that he knew of none that were discouraged from coming to Hutch- inson. Mr. Wick then asked about stories circulating that in- cluded in the contemplated capital bond issue was a substanital amount for operating costs to disguise the operating losses? Phil Graves denied the allegation. Mr. Wick also asked Dr. Bretzke about friction between M.D.'s and spent some time wandering aimlessly around the point. Dr. Bretzke pointed out that no group of human beings doesn't have some friction. Mr. Wick seemed satisfied. Dr. Bretzke here interspersed the fact that the easiest course for the medics at the clinic would be to add to the present building. They were abiding this medical services building suggestion of the Hospital Board in order to cooperate in the positive recruitment of M.D.'s for Hutchinson. Tom Savage indicated that the pharmacists accepted a proposal for jointly operated pharmacy in the proposed building as a self defense measure. He stated that he believes the location of medical clinic at or near the hospital will have a severe detrimental effect upon the downtown business activity. Dr. Dwight Chernausek asked whether the proposed services building would attract additional M.D.'s to the city . . . . if there were any guarantee? He was told that there could be no guarantee. However, there is sufficient inquiry to indicate that the possibil- ity of new M.D.'s is good with the new building. W.E. Reyerson told the Council and Hospital Board that he had been practicing law for fifty (50) years. Congratulation were rendered SPECIAL COUNCIL MEETING -3- SEPTEMBER 25, 1974 Mr. Reyerson. He then stated that the Hospital Board had been acting illegally and threatened a law suit to recover damages from each members of the Board to the extent of cost involved in preparation of plans and construction for the proposed medical services building. He also informed Phil Graves that he (Phil Graves) was not familiar with the economic circumstances prevailing through the 1920's. Phil indicated gratitude for that information. Patrick K. Price encouraged the Council and Board to continue with the construction of the proposed building. Mr. James Felling also indicated that he supported the building and en- couraged its construction. Mrs. Leonard Lerberg asked what the ramifications of National Health Insurance might be with regard to the proposed building. Phil Graves indicated that the stress would probably be heavily on preventive medicine and that with the inception of National Health Insurance the use of facilities would be considerably heavier and the savings in time and duplication of facilities would probably be very meaningful. Mr. Richard Marcellus, representing the Downtown Council, opposed expenditures of public monies for the benefit of private endeavour. He questioned whether or not the facility would be carried on the tax rolls? He challenged the statement of Reverend Natwick that the facility would be constructed and operated at no cost to the taxpayers and asked who guarantees the bonds? He also asked whether or not this would be setting a bad precedent for the future? Mayor Black indicated that at the present time the facility would probably be carried tax exempt. What the future holds for that status is not given to any of us to know. The bonds would be revenue bonds, and would not pledge taxing authority Of the City. Leases entered into would carry lease insurance which would guarantee lease payments to the term of the lease. Mr. Leslie 0. Smith stated that his family doctor had informed him that he was not allowed to work at the Hutchinson Municipal Hospital, and wanted to know why? Phil Graves stated that the doctor was free to use the hospital with no restrictions. Dr. D. Chernausek asked whether or not the Council had considered a referendum on the matter. Mayor Black informed the gathering that there has been advice from the Attorney General that the Council cannot expend public monies to seek direction when the Council is vested with adequate authority to proceed in a matter. Leonard Lerberg asked whether there might be merit in constructing the building and leasing to the Hutchinson Clinic. Dr. Bretzke pointed out that this would eliminate the benefit that might be gained by public ownership, viz: oportunity for M.D.'s to lease SPECIAL COUNCIL MEETING -4- SEPTEMBER 25, 1974 and operate independently of the clinic, and the obvious savings of having a tax exempt building with the consequent saving in cost to the patients. L.C. Wick asked why not issue General Obligation Bonds. Mayor Black indicated that the Council did not feel it fair to obligate the city's taxing authority to pay for the proposed facility. Revenue bonds, payable from hospital revenue would be adequate. J. Harold Beytien asked whether Dr. Bretzke expected any difficulty getting additional M.D.'s? Dr. Bretzke thaought not. Mr. Irvin Burich asked why the M.D.'s didn't build their own building as has been done in some cities, he cited Waconia, and others? Jay Alrick asked if lease to Hutchinson Clinic would satisfy all the obligation of indebtedness? Phil Graves responded that it would not. The pharmacy would pay some and the Hospital would make up the deficit from current earnings until all spaces were leased, which time he estimated at two years. Dr. Paul Johnson, radiologist, stated that he had been working at the Hutchinson Hospital since before its transfer to a City government function. He thought that he and his compatriots would be increasing their activity from five days a week to seven days, a clear plus for emergency and routine scheduling. He expressed the thought that the proposed facility would be an asset,to the City and a great help in the delivery of medical services to the people of the area. Irvin Burich questioned the interest rate expected on the proposed revenue bond issue, asked the name of the fiscal consultant used by the City. Buzz explained again that the bond market is not predictable enough to give a committment on interest rates or saleability of the bonds. Juran and Moody were named as consultants. Dale McLain asked whether the Clinic has tried to use the X -Ray, lab and other service properties of the Hospital now, while located in disparate sites? Phil Graves indicated that the transporation problem made extensive use difficult. Services beyond those reasonably possible at the clinic were sent to the Hospital, however. Virgil Goebel, member of the Hospital Board, stated that the Board was relying on the architect for expertise on cost estimation and design, and on the Council for overriding authority in entering into contracts and agreements. The Board realizes its limitations as an administrative board. Tom Savage repeated his fears that the move to a site near or at the Hospital would adversely affect the downtown business community, but stated his confidence in the Hospital Board and partial confidence in the Mayor and Council. SPECIAL COUNCIL MEETING -5- SEPTEMBER 25, 1974 Ray Clemenson asked whether service to the patients be improved if the proposed building is erected? Dr. Bretzke thought it would. A young woman, identifying herself as a nurse, expressed the thought that we should be concerned with better patient care and thought that this proposed services building would help in that area. Jay Alrick asked whether M.D.'s officing in the proposed building wouldn't have an advantage over M.D.'s deciding to office in building not tax exempt? He expressed the thought, also that the economic repercussions would be considerable and that this was a socialistic activity with which he vigorously disagreed. Irvin Burich asked for clarification, again, of lease insurance. Buzz described it again. Joseph Wesley asked clarification of lease insurance. He also asked whether this services building wouldn't be duplicating existing services to the detriment of existing services. Phil Graves thought it would lead to more efficient use of currently underused facilities. Irvin Burich asked why three dental offices were included in initial scheme? Phil said that two dentists had already expressed an interest in leasing. The other could be used for whatever is best in the best interest of the Hospital and patients. Chris Harshbarger asked why no one had questioned the need for more M.D.'s. He concluded that there is general agreement that we do need more M.D.'s and that the place to situate them would be at or near the Hospital. Leonard Lerberg concluded that while the facilities and service at the hospital are excellent now, a better clinic building and increased confidence in the Hospital and M.D.'s would result in increased business, which would inevitably help keep unit costs for medical services as low as possible. There being no one else desirous of being heard on the matter the hearing was adjourned at 9:11 P.M. At the request of City Clerk, Alderman Westlund moved that the Clerk be given authority to draw a check for $35,000 to the Minnesota Armory Commission to facilitate the transfer of the old armory to the City. There being no further business to come before the Council, the y adjourned at 9:26 P.M.