cp03-27-2018HUTCHINSON CITY COUNCIL
MEETING AGENDA
TUESDAY, MARCH 27, 2018
CITY CENTER — COUNCIL CHAMBERS
(The City Council is provided background information for agenda items in advance by city staff, committees and boards.
Many decisions regarding agenda items are based upon this information as well as: City policy and practices, input
from constituents, and other questions or information that has notyet been presented or discussed regarding an agenda
item)
1. CALL MEETING TO ORDER — 5:30 P.M.
(a) Approve the Council agenda and any agenda additions and/or corrections
2. INVOCATION — St. Anastasia Catholic Church
3. PLEDGE OF ALLEGIANCE
4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY
PUBLIC COMMENTS
(This is an opportunity or members of the public to address the City Council. If the topic you would like to discuss is on
the agenda, please ask the Mayor if he will be accepting public comments during the agenda item if nota public hearing.
Ifyou have a question, concern or comment, please ask to be recognized by the mayor —stateyour name and address for
the record. Please keep comments under 5 minutes. Individuals wishing to speakfor more than five minutes should ask
to be included on the agenda in advance of the meeting. All comments are appreciated, butplease refrain from personal
or derogatory attacks on individuals)
5. CITIZENS ADDRESSING THE CITY COUNCIL
6. APPROVAL OF MINUTES
(a) Regular Meeting of March 13, 2018
CONSENT AGENDA
(The items listedjor consideration will be enacted by one motion unless the Mayor, a member of the City Council or
a city staff member requests an item to be removed. Traditionally items are not discussed.)
7. APPROVAL OF CONSENT AGENDA
(a) Consideration for Approval of 44th Annual Arts & Crafts Festival to Be Held September
14 & 15, 2018, in Library Square
(b) Consideration for Approval of Dairy Day Celebration on June 1, 2018
(c) Consideration for Approval of Resolution No. 14869 — Resolution Approving Disposal of
Information Technology Department Surplus Property (Phones)
(d) Consideration for Approval of Resolution No. 14872 — Resolution Approving a
Preliminary and Final Plat and Vacation of Easement for Garbers Addition to Fairway
Estates Located at 1424 and 1428 Heritage Avenue NW with Favorable Planning
Commission Recommendation
(e) Consideration for Approval of Issuing Short -Term Gambling License to Saturday Night
CITY COUNCIL AGENDA MARCH 27, 2018
Cruisers from June — December 2018 at the Hutchinson Mall
(f) Claims, Appropriations and Contract Payments — Register A
8. APPROVAL OF CONSENT AGENDA II
(a) Claims, Appropriations and Contract Payments — Register B
PUBLIC HEARINGS — 6:00 P.M.
9. APPROVE/DENY ORDINANCE NO. 18-781— AN ORDINANCE APPROVING REVISIONS
TO SECTIONS OF THE HUTCHINSON CITY CHARTER AS RECOMMENDED BY THE
CHARTER COMMISSION (SECOND READING AND ADOPTION)
COMMUNICATIONS RE UESTS AND PETITIONS
(T e purpose oj this portion oj the agenda is to provide the Council with information necessary to craft wise policy.
Includes items like monthly or annual reports and communications from other entities)
10. PUBLIC WORKS GROUP ANNUAL REPORT
11. PRESENTATION OF THE PROPOSED FINANCIAL MANAGEMENT PLAN
UNFINISHED BUSINESS
12. APPROVE/DENY ORDINANCE NO. 18-782 - AN ORDINANCE SUSPENDING
ENFORCEMENT OF HUTCHINSON CITY ORDINANCE 92.018 PERTAINING TO
HOURS OF USE OF SOUND AMPLIFICATION EQUIPMENT (SCHROEDER
WEDDING) — SECOND READING AND ADOPTION
NEW BUSINESS
13. APPROVE/DENY RESOLUTION NO. 14868 — RESOLUTION AMENDING THE 2018
GENERAL FUND BUDGET
14. APPROVE/DENY RESOLUTION NO. 14870 — RESOLUTION AMENDING
RESOLUTION NO. 13853 AUTHORIZING FUNDING OF AN EMERALD ASH BORER
FUND
15. APPROVE/DENY RESOLUTION NO. 14871 — APPROVING LEASE AGREEMENT
WITH HUTCHINSON HEALTH/HEALTH PARTNERS
GOVERNANCE
(T e purpose o t is portion of the agenda is to deal with organizational development issues, including policies,
performances, and other matters that manage the logistics of the organization. May include monitoring reports,
policy development and governance process items.)
16. MINUTES/REPORTS FROM COMMITTEES, BOARDS OR COMMISSIONS
(a) Snow Removal and Ice Control Report for February 2018
b City of Hutchinson Financial Report and Investment Report for February 2018
(c) Public Arts Commission Minutes from January 11 and February 8, 2018
2
CITY COUNCIL AGENDA MARCH 27. 2018
�d) Hutchinson Housing & Redevelopment Authority Board Minutes from February 20, 2018
e) Planning Commission Minutes from January 16, 2018
NUSCELLANEOUS
17. STAFF UPDATES
18. COUNCIL/MAYOR UPDATE
ADJOURNMENT
HUTCHINSON CITY COUNCIL
MEETING MINUTES
TUESDAY, MARCH 13, 2018
CITY CENTER — COUNCIL CHAMBERS
(The City Council is provided background information for agenda items in advance by city staff, committees and boards.
Many decisions regarding agenda items are based upon this information as well as: City policy and practices, input
from constituents, and other questions or information that has notyet been presented or discussed regarding an agenda
item)
1. CALL MEETING TO ORDER — 5:30 P.M.
Mayor Gary Forcier called the meeting to order. Members present were Mary Christensen, John
Lofdahl, Steve Cook and Chad Czmowski. Others present were Matt Jaunich, City
Administrator, Kent Exner, City Engineer and Marc Sebora, City Attorney.
(a) Approve the Council agenda and any agenda additions and/or corrections
Matt Jaunich asked that a Proclamation be read under Section 4 of the agenda and adding a
discussion item under New Business related to the Hutchinson Health/Health Partners
merger and the lease with the City of Hutchinson.
Motion by Czmowski, second by Christensen, to approve the agenda with the additional
items noted. Motion carried unanimously.
2. INVOCATION — Due to the absence of the pastor, the invocation was dispensed and a moment
of silence was observed.
3. PLEDGE OF ALLEGIANCE
4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY
(a) Resolution No. 14867 — Resolution Accepting Donation from John & Joan Bradley for
Law Enforcement Memorial Park Fund
Matt Jaunich noted that a $50 donation was given by John and Joan Bradley for the Law
Enforcement Memorial Park.
Motion by Czmowski, second by Lofdahl, to approve Resolution No. 14867. Motion
carried unanimously.
Mayor Forcier read a Proclamation proclaiming March 16, 2018, as a special day to show
appreciation for Reagan Goldstein and her efforts to spread kindness throughout the
world with Reagan's Kindness Campaign.
Mr. Jaunich noted that a photograph will be taken on Friday at 4:00 p.m. in Library
Square for the campaign.
PUBLIC COMMENTS
(This is an opportunity or members of the public to address the City Council. If the topic you would like to discuss is on
the agenda, please ask the Mayor if he will be accepting public comments during the agenda item if nota public hearing.
Ifyou have a question, concern or comment, please ask to be recognized by the mayor —stateyour name and address for
the record. Please keep comments under 5 minutes. Individuals wishing to speakfor more than five minutes should ask
to be included on the agenda in advance of the meeting. All comments are appreciated, butplease refrain from personal
or derogatory attacks on individuals)
5. CITIZENS ADDRESSING THE CITY COUNCIL
6. APPROVAL OF MINUTES
CITY COUNCIL MINUTES MARCH 13, 2018
(a) Regular Meeting of February 27, 2018
(b) Workshop of February 27, 2018
Motion by Christensen, second by Lofdahl, to approve the minutes as presented. Motion
carried unanimously.
CONSENT AGENDA
(The items listedfor consideration will be enacted by one motion unless the Mayor, a member of the City Council or
a city staff member requests an item to be removed. Traditionally items are not discussed.)
7. APPROVAL OF CONSENT AGENDA
(a) Consideration for Approval of Resolution No. 14865 - Resolution Closing Various City
Funds
(b) Consideration for Approval of Authorizing Crow River Winery to Dispense Wine at
Minted Patina Market at McLeod County Fairgrounds on April 27 and 28, 2018
(c) Consideration for Approval of Letter of Support for State Trunk Highway 15 Downtown
Reconstruction Project Geometric Layout (Letting No. 1, Project No. 20-01)
(d) Consideration for Approval of Purchase Orders for Leaf Loader Units
(e) Consideration for Approval of Resolution No. 14866 — Resolution Authorizing
Agreement with MPCA to Host AmeriCorps Member
(f) Consideration for Approval of Compost Fund Skidsteer Loader Purchase
(g) Consideration for Approval of PRCE Concession Agreement with Bernick's Pepsi
(h) Claims, Appropriations and Contract Payments
Item 7(c) was pulled for separate discussion
Motion by Lofdahl, second by Cook, to approve consent agenda with the exception of the
item noted above.
Council Member Cook noted that he had received a call from a resident regarding the
lane width and increased sidewalk widths and Cook explained the ADA requirements
that have to be met. The caller was also concerned with lane width and truck traffic,
however Cook explained the widths are above standard and MnDOT has compromised
during the project design. Kent Exner noted that MnDOT has informed him and his staff
that if any individuals call in or provide comments to the City on the design, they should
be referred to the public liaison on the project, John Rodeberg of SEH, to collect the
feedback and document it.
Motion by Cook, second by Christensen, to approve Item 7(c). Motion carried
unanimously.
PUBLIC HEARINGS — 6:00 P.M. - NONE
COMMUNICATIONS RE UESTS AND PETITIONS
(T e purpose oJ this portion oJ the agenda is to provide the Council with information necessary to craft wise policy.
2
CITY COUNCIL MINUTES MARCH 13, 2018
Includes items like monthly or annual reports and communications from other entities.)
8. PARKS, RECREATION, COMMUNITY EDUCATION ANNUAL REPORT
Dolf Moon, PRCE Director, presented before the Council. Mr. Moon provided an overview
of projects that occurred in the department in the last year. They included the installation of
the wayfinding signs, installation of new playground equipment at Rotary Park, aquatic
center completion, upgrades to VFW Park, completion of dog park, youth
sports/recreational/after school programs, and inclusive park at Elks Park. Future projects
include a new playground at Roberts Park, Gateway Park development, and ballfield
improvements. Mr. Jaunich noted the city has 38 parks all with ongoing maintenance and
improvement needs so when outside organizations offer to contribute financially and
manually, it is deeply appreciated by everyone with the City.
Council Member Cook spoke about scholarships available for those who cannot afford to
participate in youth programs. Moon mentioned that the Learn to Swim fee is waived for
those who meet certain criteria and fees may be waived or reduced for other programs for
those who meet certain criteria. In addition, the United Way provides funding to offset some
costs for park and recreation programs. Community education programs do not have the
ability to waive or reduce fees due to funding that they receive from their sources.
Cook noted that free multigenerational opportunities are very beneficial. Moon noted that
through PRCE and Heart of Hutch several opportunities have been made available. Cook
noted that an idea of a free day/night at the pool has been suggested. Moon spoke about the
cost of doing business and pros and cons to such an idea. Council Member Lofdahl noted
that he liked the idea of a free day at the pool, somewhat similar to the State of Minnesota
when they offer a free day at all state parks.
9. REVIEW OF PROPOSED EMERALD ASH BORER RESPONSE PLAN UPDATES
John Olson, Public Works Manager, presented before the Council. Mr. Olson noted that this
presentation is intended as a follow up discussion regarding forestry operations that took
place in January. Since then, staff has provided copies of the City's Emerald Ash Borer
response plan and urban forestry program documents to the University of Minnesota and to
the Minnesota Department of Agriculture. Both of these agencies were asked to review the
documents and provide any input regarding updates that should be made. Based upon
feedback received from these agencies, a few changes are being suggested to the plan. In
addition, staff has learned that emerald ash borer has been located in Fairmont and Eden
Prairie. Changes to the plan were made in the following sections: Proactive management,
Reactive management and Wood Disposal and Utilization.
Council Member Christensen asked about preventative measures used through pesticides.
Olson noted that pesticide applications for high value trees are beneficial and need to be done
annually to be effective.
UNFINISHED BUSINESS
NEW BUSINESS
10. APPROVE/DENY ORDINANCE NO. 18-782 - AN ORDINANCE SUSPENDING
ENFORCEMENT OF HUTCHINSON CITY ORDINANCE 92.018 PERTAINING TO
HOURS OF USE OF SOUND AMPLIFICATION EQUIPMENT (SCHROEDER
WEDDING)
CITY COUNCIL MINUTES MARCH 13, 2018
Chief Dan Hatten presented before the Council. Chief Hatten noted that Joshua Schroeder
has requested to utilize Masonic West River Park for his wedding celebration on May 12,
2018. Part of the wedding celebration will include several bands playing amplified music
ranging from polka, bluegrass and country. The amplified music is being proposed to be
played until 11:00 p.m. and current ordinance allows for amplified music to be played until
10:00 p.m. Chief Hatten spoke about items related to the event such as campground
reservations and parking.
Joshua Schroeder, 215 4t' Avenue NE, applicant, presented before the Council. Mr.
Schroeder explained that a concern of his is weather conditions and road conditions. Mr.
Schroeder noted that the majority of his guests are either camping or staying at the Days Inn
and he has arranged to have a golf cart or other smaller type vehicle to shuttle guests back
and forth if necessary. Mr. Schroeder also spoke about the plan he has in place for serving
and consuming alcoholic beverages.
Motion by Czmowski, second by Christensen, to set second reading and adoption of
Ordinance No. 18-782 for March 27, 2018. Motion carried unanimously.
11. APPROVE/DENY ITEMS FOR 2018 AIRPORT IMPROVEMENT PROJECT (8 -UNIT T -
HANGAR)
John Olson, Public Works Manager, presented before the Council. Mr. Olson explained that
this project would be funded 90% by FAA, 5% by MnDOT Aeronautics and 5% by the City
of Hutchinson. The project is scheduled to go out for bid on April 4, 2018, with approval of
the bid at the April 10, 2018, Council meeting. The project is proposed to be awarded on
June 3, 2018, assuming federal and state grant funding is approved. Mr. Olson requested that
the Council approve bidding the project and approving the Disadvantaged Business
Enterprise program update as included in the Council packet.
Motion by Czmowski, second by Cook, to approve items for 2018 airport improvement
project. Motion carried unanimously.
12. APPROVE/DENY SETTING COUNCIL WORKSHOP FOR MARCH 27, 2018, AT 4:00
P.M. TO MEET WITH PUBLIC ARTS COMMISSION
Matt Jaunich noted that Council Member Cook has mentioned that there is a conflict with the
proposed date and therefore he is requesting that the workshop be held on April 10, 2018.
Motion by Lofdahl, second by Cook, to set workshop for April 10, 2018, at 4:00 p.m.
Motion carried unanimously.
12.5 DISCUSSION OF HUTCHINSON HEALTH/HEALTH PARTNERS MERGER — CITY OF
HUTCHINSON LEASE AGREEMENT
Matt Jaunich reminded the Council that Hutchinson Health and HealthPartners will be
merging and hope to close on their transaction on April 1, 2018. Mr. Jaunich noted that as
part of the transaction HealthPartners will become the sole corporate member of Hutchinson
Health. Hutchinson Health will continue as a separate legal entity, but will ultimately be
.19
CITY COUNCIL MINUTES MARCH 13, 2018
controlled by HealthPartners. Jaunich noted that Hutchinson Health and the City of
Hutchinson have had a lease arrangement since 2007 where the City has been the landlord
for most of the facilities that Hutchinson Health uses in providing its health care services.
There is currently 20 years remaining in the current lease and under the terms Hutchinson
Health was to acquire the leased property in the event of a change in control and would pay
the City the present value of the lease payments for the remainder of the initial term.
Hutchinson Health has approached the City and has determined that there would be
economic advantage for it if the facilities used to provide health care services could remain
in a lease structure. The City has agreed that it would be worthwhile to retain that structure
rather than convey title to certain properties now. Therefore, it is being proposed to amend
the lease to accomplish that. The City's financial advisor, Ehlers & Associates, has made a
recommendation to the City regarding parameters for the present value payment called for
under the lease and provided a range of values that they believe should be acceptable to the
City. The City averaged the various approaches and Hutchinson Health has accepted the
City's proposed value. Under the proposed amendment, Hutchinson Health will make the
full prepayment of the lease amounts now, will reimburse the City for its costs in connection
with the lease amendments, and reimburse future costs incurred when the City eventually
conveys title to the health care properties to Hutchinson Health. Hutchinson Health will
continue to indemnify the City against costs and liabilities associated with operation of the
health care services and other facilities by Hutchinson Health. The city will convey title to
Hutchinson Health for certain leased property that is not used to provide health care services
as soon as practical and the remaining health care property will continue to be subject to the
amended lease as of the April 1 closing date for the Hutchinson Health/HealthPartners
transaction. Formal documents to accomplish this will be before the Council at the next
meeting for more discussion or perhaps even approval. The first draft of a lease agreement
was just provided to the City late last week.
GOVERNANCE
(The purpose of this portion of the agenda is to deal with organizational development issues, including policies,
performances, and other matters that manage the logistics of the organization. May include monitoring reports,
policy development and governance process items)
13. MINUTES/REPORTS FROM COMMITTEES, BOARDS OR COMMISSIONS
(a) City of Hutchinson December 2017 Preliminary Financial Statements & Local Sales Tax
Update
NUSCELLANEOUS
14. STAFF UPDATES
Kent Exner — Mr. Exner provided an update on a meeting held regarding the Dakota Rail Trail
project. Exner noted that the project has received positive feedback with support for the project
although some issues need to be worked through. Thep
roject will be going out for bids within
the next month or so with completion optimistically set for September. Mr. Exner also noted
that the City will be providing compensation for easements along Century Avenue with formal
temporary construction easements being signed.
Marc Sebora — Mr. Sebora commented on the proposed Charter revisions that were discussed at
the last Council meetm. A public hearing had been discussed to be held this evening, however
due to publication deadlines and statutory requirements, the public hearing will be held and has
5
CITY COUNCIL MINUTES MARCH 13, 2018
been noticed for March 27, 2018.
Matt Jaunich — Mr. Jaunich reminded the Council that the strategic planning session is being
held this Friday and Saturday at the City Center.
15. COUNCIL/MAYOR UPDATE
Steve Cook — Council Member Cook spoke about the youth opportunity meeting he
attended with members of the community, the county, the school district and others. Top
topics were identified as multi -generational recreation center; activity bus for after school
events; community data base housing information; free nights for activities; need for family
resource liaison to help coordinate various groups; community network meeting with all
nonprofits and service organizations to find out what organizations are doing
John Lofdahl — Council Member Lofdahl spoke about the goals/objectives set in 2012 that
can be discussed at the strategic planning session set for this weekend
Gary Forcier — Mayor Forcier challenged council members or other community members to
sponsor a youth sports team as he has been doing for the last several years. It is a $100
sponsor fee. He also encouraged those to step up as youth sports coaches.
ADJOURNMENT
Motion by Christensen, second by Cook, to adjourn at 7:10 p.m. Motion carried
unanimously.
ATTEST:
Gary T. Forcier
Mayor
rel
Matthew Jaunich
City Administrator
HUTCHINSON CITY COUNCIL agfof
Aa
Ls
Request for Board Action
Agenda Item: Special Event Request - Arts and Crafts Festival
Department: Police
LICENSE SECTION
Meeting Date: 2/27/2018
Application Complete N/A
Contact: Daniel T. Hatten
Agenda Item Type:
Presenter: Daniel T. Hatten
Reviewed by Staff ✓❑
Consent Agenda
Time Requested (Minutes): 2
License Contingency N/A
Attachments: No
BACKGROUND/EXPLANATION OF AGENDA ITEM:
The 44th Annual Arts & Crafts Festival and Taste of Hutchinson will be held Friday, September 14th, 10 am - 7 pm and
Saturday, September 15th, 9 am - 4 pm in Library Square and 1 S\ Ave SE.
Setup for the festival will begin on Thursday, September 13th at 8 am. The event will end on Saturday the 16th at 4
pm. Cleanup is usually completed by 8 pm on the 16th. A rain location will not be provided. A severe weather
emergency plan is currently in place.
The Arts & Crafts Festival committee would like to request the support and assistance of the City of Hutchinson in
regards to the areas outlined. We understand that our request for support of the festival will affect multiple City of
Hutchinson departments.
Request of Support from the City of Hutchinson -
Administration
• The Hutchinson Ambassadors wish to reserve all concession rights on 1 st Ave SE between Main Street and
Hassan Street as well as the control of any and all food exhibitors for the Taste of Hutchinson. The Ambassadors
have an agreement with the Downtown Association regarding the operation of the Popcorn Wagon during the event.
• Use of electricity in band shell and along 151 Ave SE during the festival weekend.
Police Department
• Overnight security on Thursday, September 13th and Friday, September 14h.
• Assistance with pedestrian traffic crossing on the comer of Main Street and 1st Ave.
• Assistance in directing vendor traffic during the event
• Assistance with vendor check in traffic control and allow use of Hassan Street from Washington to 5th Ave SE to aid
in this process
• Emergency services support during the event
Parks & Recreation
• Exclusive use of Library Square for art & craft exhibitors for September 14-15 2018
BOARD ACTION REQUESTED:
I Recommend approval
Fiscal Impact: $ 4,000.00 Funding Source: Department Buget
FTE Impact: 20.00 Budget Change: No
Included in current budget: Yes
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
HUTCHINSON
* AREA CHAMBER OF COMMERCE
AND TOURISM
2 Main Street South
Hutchinson, MN 55350
320.587.5252
800.572.6689
Fax: 320.587.4752
info@explorehutchinson.com
www.explorehutchinson.com
Greetings from the Chamber and Tourism Staff!
The 44th Annual Arts and Crafts Festival and Taste of Hutchinson are coming very soon:
Friday and Saturday, September 14 &15, 2018
We are excited to host this annual event for the 10,000-12,000 people who come to downtown Hutchinson
during these two days. This is a great opportunity for you to market your products and services to thousands
of people who will see your business. We encourage you to do so.
For your convenience, we are including maps of parking and street closures as provided by Hutchinson
Police Services. We hope this will help you, your employees, and customers, as you plan for the week.
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Thursday, September 13th:
Vendor Check-in & Set-up
Friday, September 14th & Saturday, September 15th:
Festival Days
• Orange— No parking Thursday- Saturday
• Handicap parking will be available on the northeast corner of park
• Red- No parking or through -traffic Thursday - Saturday
• Blue- Public Parking Areas
• Blue & White— Vendor RV & Trailer Parking
• Jefferson Street will continue to be closed for construction
• Several dumpsters will be placed around the park to help keep our
downtown clean
For security and safety, police officers will be on hand the entire festival.
If you have any concerns our office or the Police should be aware of, please let us know. You may call our
office 320-587-5252 or email MaryCaDExplore Hutch inson.com.
We thank you for your partnership; sharing our great downtown with so many visitors! Your positive attitude
and flexibility are very much appreciated, and that is what brings people TO Hutchinson!
With gratitude and appreciation for your help and cooperation,
Mary Hodson
Chamber and Tourism President
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Special Event - Dairy Days
Department: Police
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Daniel T. Hatten
Agenda Item Type:
Presenter: Daniel T. Hatten
Reviewed by Staff
Consent Agenda
Time Requested (Minutes): 2
License Contingency
Attachments: No
BACKGROUND/EXPLANATION OFAGENDA ITEM:
On behalf of the Hutchinson Chamber & Tourism's Agri-Business Committee I would like to make a request to close
First Ave SE between Main Street and Hassan Street.
This request is for our annual Dairy Day Celebration on Friday, June 1, 2018 in library Square. We would like to use
First Ave SE for the tractor club and equipment displays. We currently have library Square reserved from 9:00 am
until 3:00 pm. The tractors would be brought in Friday morning after 9:00 am. The event is scheduled to run until 1:30
pm, but we are requesting 3:00 pm to allow for clean-up.
If you have any questions, or if the committee can be of any assistance, please give me a call at 320-234- 0785 or
email meatmary@explorehutchinson.com.
Thank you for your help.
BOARD ACTION REQUESTED:
Recommend Approval
Fiscal Impact: $ 0.00 Funding Source:
FTE Impact: 0.00 Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Consideration approving disposal of surplus property (Resolution #14869)
Department: Information Technology
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Tom Kloss
Agenda Item Type:
Presenter: Tom Kloss
Reviewed by Staff
Consent Agenda
Time Requested (Minutes): 0
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
The Information Technology department has surplus property no longer needed for municipal operations as described
in the attached spreadsheet.
This equipment was replaced with equipment provided by Nu -Telecom. The intent is to sell the equipment to CXTC
from Syracuse New York.
Staff contacted 7 companies that recycle/refurbish Voice Over Internet Protocol phones. Of the seven companies,
only two offered to purchase the phones. Staff has is requesting to contract with the lower of the two quotes for the
following reasons.
1. CXTEC provides all shipping materials. Approximate cost $100.
2. CXTEC has a very formal process for shipping, receiving, equipment evaluation, and payment.
3. CXTEC has a formal purchase process which includes a Purchase Agreement.
3. Actual shipping costs are covered by both companies.
Staff has elected to combine City of Hutchinson, and Hutchinson Utilities equipment to achieve a larger volume to
gain better pricing. Hutchinson Utilities General Manager has agreed to this process.
BOARD ACTION REQUESTED:
Consideration to approve/reject the sale of surplus property. Resolution No. 14869
Fiscal Impact: Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost: $ 0.00
Total City Cost: $ 0.00 Funding Source:
Remaining Cost: $ 0.00 Funding Source:
RESOLUTION NO. 14869
RESOLUTION APPROVING DISPOSAL OF
INFORMATION TECHNOLOGY DEPARTMENT SURPLUS PROPERTY
WHEREAS, the Hutchinson Information Technology Department has equipment that is no longer
needed for municipal operations, AND
WHEREAS, the Hutchinson City Code and State law provide for the sale of surplus City equipment,
AND
WHEREAS, the City has obtained quotes for the purchase of the surplus City equipment, AND
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
HUTCHINSON, MINNESOTA,
That the Hutchinson City Council hereby approves the sale of the surplus property to CXTEC identified
herein.
Qty.
Description
154
Cisco 7962 VOIP Phone
$770.00
13
Cisco 7915 Expansion Module
$65.00
13
Cisco 7942 VOIP Phone
$65.00
1
Cisco 7911 VOIP Phone
$0.00
2
Cisco Polycom 7937 Conference Phone
$30.00
Total
$930.00
Proceeds from these transactions shall be deposited as follows:
$210 shall be paid to Hutchinson Utilities Commission
$720 shall be deposited into the Information Technology Budget (100-4109)
Adopted by the City Council this 27h day of March, 2018
Gary Forcier, Mayor
ATTEST:
Matthew Jaunich, City Administrator
Arcas Technologies
City of
Hutchinson
Hutchinson
Utilities
Tota I
Cisco 7962 VOIP Phone
121
33
154
Cisco 7915 Expansion Module
8
5
13
Cisco 7942 VOIP Phone
12
1
13
Cisco 7911 VOIP Phone
1
0
1
Cisco Ploycom 7937 Conference Phone
1
1
2
Arcas Technologies
Item Price
Estimated Total
$5.00
$770.00
$10.00
$130.00
$2.00
$26.00
$1.00
$1.00
$60.00
$120.00
Total Purchase $1,047.00
Boxes and bubble wrap
from Staples approximatley
$100
CXTEC
Item Price
Estimated Total
$5.00
$770.00
$5.00
$65.00
$5.00
$65.00
$0.00
$0.00
$15.00
$30.00
Total Purchase $930.00
Shipping materials are
included.
HUTCHINSON CITY COUNCIL ci=v-f�
Request for Board Action 7AL =-ft
Agenda Item: Preliminary and Final Plat and Vacation of Easement for Garbers Addition
Department: Planning
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Dan Jochum
Agenda Item Type:
Presenter: Dan Jochum
Reviewed by Staff
Consent Agenda
Time Requested (Minutes): 5
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
The property owner is requesting to replat two lots in Fairway Estates 2nd Addition into one lot. The new plat is
proposed to be called Garbers Addition to Fairway Estates.
The proposed Garbers Addition to Fairway Estates combines two existing lots into one lot. The property owner
proposes to build a new home on the property one the plat is completed. The new lot will be approximately 24,555
square feet or about .56 acres. Minimum lot area in the R-1 district is required to be at least 10,400 square feet and
there is no maximum lot size.
The Planning Commission held a public hearing regarding this request on March 20, 2018. Nobody from the public
spoke or was in attendance for this meeting.
The Planning Commission unanimously approved the request for the preliminary and final plat and vacation of
easement.
BOARD ACTION REQUESTED:
Approval of Preliminary and Final Plat and Vacation of Easement.
Fiscal Impact: Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
CITY OF HUTCHINSON
MCLEOD COUNTY, MINNESOTA
RESOLUTION NO. 14872
RESOLUTION ADOPTING FINDINGS OF FACT AND REASONS FOR APPROVAL OF A
PRELIMINARY AND FINAL PLAT AND VACATION OF EASEMENT FOR GARBGERS ADDITION
TO FAIRWAY ESTATES LOCATED AT 1424 AND 1428 HERITAGE AVE NW.
FACTS
1. Joseph and Ellen Tracy are the owners of the lots located at 1424 and 1428 Heritage Ave NW; and,
2. The subject property is legally described as:
1424 Heritage Ave NW: Lot 16, Block 1, Fairway Estates Second Addition, Hutchinson, MN
1428 Heritage Ave NW: Lot 17, Block 1, Fairway Estates Second Addition, Hutchinson, MN
Mark and Lynne Garbers have applied for a 1 lot preliminary and final plat and vacation of easement,
located at 1424 and 1428 Heritage Ave NW, Hutchinson, MN, to be known as Garbers Addition to
Fairway Estates.
4. The property is located in the R-1 PD Single Family Residential District.
5. The Planning Commission met on March 20, 2018 and held a public hearing on the request and
considered the effects of the proposal on the health, safety, and welfare of the occupants of the
surrounding lands, existing and anticipated traffic conditions, and the effect on values of properties in
the surrounding area and consistency with the Comprehensive Plan, and hereby recommends approval
of the request subject to the following findings and conditions:
a. The applicants shall record the final plat with McLeod County.
b. Easements as noted on preliminary plat to be vacated, must be vacated prior to plat being
recorded.
c. Any future accessory buildings must be placed in the rear yard and not in any easement areas.
d. A Gopher State One Call shall be done prior to the Plat being recorded to ensure there aren't
unknown utilities located in the easement area to be vacated.
6. The City Council of the City of Hutchinson reviewed the request at its meeting on March 27, 2018 and
has considered the recommendation and findings of the Planning Commission and hereby does
recommend approval of the preliminary and final plat and vacation of easement of Garbers Addition
to Fairway Estates subject to the following findings and conditions:
e. The applicants shall record the final plat with McLeod County.
f. Easements as noted on preliminary plat to be vacated, must be vacated prior to plat being
recorded.
g. Any future accessory buildings must be placed in the rear yard and not in any easement areas.
h. A Gopher State One Call shall be done prior to the Plat being recorded to ensure there aren't
unknown utilities located in the easement area to be vacated.
Findings of Fact — Resolution # 14872
Garbers Addition to Fairway Estates
Preliminary and Final Plat and Vacation of Easement
Page 2
APPLICABLE LAW
7. The preliminary and final plat request meets the following standards as required in Sections 153.35 —
153.39 and 153.50 — 153.51 of the City of Hutchinson Municipal Code.
CONCLUSIONS OF THE LAW
8. The requested plat is consistent with the comprehensive plan and applicable ordinances.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hutchinson, Minnesota, that the
preliminary and final plat and vacation of easement for Garbers Addition to Fairway Estates are approved.
Adopted by the City Council this 27th day of March, 2018.
ATTEST:
Matthew Jaunich
City Administrator
Gary T. Forcier
Mayor
DIRECTORS REPORT - PLANNING DEPARTMENT
To: Hutchinson Planning Commission
From: Dan Jochum, AICP and City of Hutchinson Planning Staff
Date: March 15, 2018 for March 20, 2018, Planning Commission Meeting
Application: Consideration of a one lot preliminary and final plat and vacation of
easement for Garbers Addition to Fairway Estates
Applicant: Mark and Lynne Garbers
Owners: Joe and Ellen Tracy
PRELIMINARY AND FINAL PLAT AND VACATION OF EASEMENTS FOR
GARBERS ADDITION TO FAIRWAY ESTATES
The property owner is requesting to replat two lots in Fairway Estates 2nd Addition into one lot.
The new plat is proposed to be called Garbers Addition to Fairway Estates.
Preliminary and Final Plat and Vacation of Easements
Garbers Addition to Fairway Estates
Planning Commission —3/20/18
Page 2
Existing Zoning:
Property Location:
Existing Lot Sizes:
Proposed Lot Size:
Existing Land Use:
Adjacent Land Use
And Zoning:
Comprehensive
Land Use Plan:
Zoning History:
Applicable
Regulations:
Preliminary and Final Plat:
GENERAL INFORMATION
R-1 PD
1424 and 1428 Heritage Ave NW
1424 Heritage Ave NW — 12,082 sq. ft.
1428 Heritage Ave NW — 12,473 sq. ft.
24,555 square feet
Vacant.
Residential. Rl-PD Zoning
Low Density Residential Neighborhood
This property was originally platted in 1999 and has remained
vacant since that time.
Sections 153.36 and 153.50 of the City Code and City Charter
section 13.05
The proposed Garbers Addition to Fairway Estates combines two existing lots into one lot. The
property owner proposes to build a new home on the property one the plat is completed. The
new lot will be approximately 24,555 square feet or about .56 acres. Minimum lot area in the R-1
district is required to be at least 10,400 square feet and there is no maximum lot size.
There are other considerations that staff would like the Planning Commission to
discuss/consider.
1) Future Assessment Liability — Having larger lots leads to homeowners incurring
larger assessments since assessments are typically administered on a property
frontage basis meaning the more lineal feet in front of a property the larger the
assessment. The purpose of this item is to make the homeowners and Planning
Commission aware of the future assessment liability.
Preliminary and Final Plat and Vacation of Easements
Garbers Addition to Fairway Estates
Planning Commission —3/20/18
Page 3
2) Utilities — The homeowner should initiate a Gopher State One Call to ensure there are
not any utilities in the easement area to be vacated. City records do not indicate any
easements but this needs to be verified.
Final Plat Review Criteria
After the submittal of the final plat, the Planning Commission shall recommend approval or
disapproval of the plat. Failure of the Planning Commission to act upon the final plat shall be
deemed a recommendation of approval of the plat. If plat disapproval is recommended, the
grounds for disapproval shall be stated in the records of the Planning Commission.
A plat shall not be recommended for approval unless it:
(a) Conforms to the preliminary plat;
(b) Conforms to the design standards set forth in this chapter;
(c) Conforms to the adopted Comprehensive Plan; and
(d) Is in accordance with all requirements and laws of this state.
Vacation of Easements:
The existing drainage and utility easements between the two existing lots need to be vacated in
order for a home to be constructed. The existing easements related to the storm water pond will
remain in place.
Vacation: Section 13.05 of the City Charter states: "A majority of the council may by resolution
vacate any street, alley or any public grounds within the city. Such vacation may be made only
after published notice and an opportunity of affected property owners and public to be heard, and
upon such further terms and by such procedure as is prescribed in MN Stat 412.851, and which
the council by resolution may prescribe. A notice of completion of such proceedings shall be
filed with the proper county officers in accordance with law."
Recommendation:
If Planning Commission feels this Plat is acceptable the following conditions should be applied to
the preliminary and final plat and vacation of easements approval:
1. The applicants shall record the final plat with McLeod County.
2. Easements as noted on preliminary plat to be vacated, must be vacated prior to plat being
recorded.
3. Any future accessory buildings must be placed in the rear yard and not in any easement
areas.
4. If the lot is platted as proposed, future assessments will be larger due to the increased
front footage of the properties.
5. A Gopher State One Call shall be done prior to the Plat being recorded to ensure there
aren't unknown utilities located in the easements to be vacated.
FAIRWAY
21
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20
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PRELIMINARY PLAT
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IN;
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item:
g Short -Term Gambling License -Saturday Night Cruisers Car Club
Department: Administration
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete Yes
Contact: Matt Jaunich
Agenda Item Type:
Presenter: Matt Jaunich
Reviewed by Staff
Consent Agenda
Time Requested (Minutes): 0
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
The Saturday Night Cruisers Car Club has submitted a short-term gambling license application into administration for
review and processing. The application is for raffle drawings the organization will be holding between June 1, 2018,
and December 31, 2018. The applicant has completed the appropriate application in full and all pertinent information
has been received.
BOARD ACTION REQUESTED:
Approve issuing short-term gambling license to Saturday Night Cruisers Car Club from June 1, 2018, to December 31,
2018.
Fiscal Impact: Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
Citta of
1 I I Hassan 5trete SaulilCasl
1 tuldin'son, NtN 55370
(.320) 537-5151 faz: (31-0)2344240
City of Hutchinson
APPLICATION FOR GAMBLING DEVICES LICENSE
In provisions of the City of Hutchinson Ordinance No. 655
and Minnesota Statutes Chapter 349
All applications must be received at least 30 days before event in order to be considered
w short "Perm Dale(s) June 12018 Deoemher 31 2016
Month/Day/Year - Month`Da)IYear
ization Information
_Satu_rday Night Cruisers Car Club
:fume
11Z5_Blackbird Drive SW _
Address where regular ineeting are held
I-ee: $30.00
-1 4-320.c7& Ck—, 4 1478
_ 320-296-1999
Phone Number
Hutchinson " MN 55350
{ it' State Zip —
Federal or State 11): 41-195-0$14
Day and time of meetings? First of the month
Is this organization organized under the laws of the State of Minnesota? W yes ❑ no
How long has the organization been in existence? 1999 1 low may members in the organization? 55
What is the purpose of the organization:' To get classic car enthusiasts and the public together.
In whose custody will organization records be kept`
Sue Lambertson 320-295-1991
Name w Ph017e iVumher
1125 Blackbird Drive SW_ Hutchinson MN 55350
Address _ cill. Stare tin
IDuty Authorized Officer of the Organization Information
Jeannie Tessmer
True Name
950 Ludtke Lane NW
Resrdence .-1 ddre, s
Hutchinson
Crty
320-583-7049
Phone Number
MN 55350
State Zip
Date of Hirth: 11'/03/195_2'_ Place of B firth: Litchfield MN
Morar{a;"ctu�: your' C'rh' ,Stare
I lave you ever been convicted of any crime other than a traffic
offense'? ❑ yes CA no
l f ves. explant :
Ciry n/'Ilarchlnsan
pplic ution /or Gambhilg Uevrces License
!line ? ul 3
Designated Gambling Manager (Qualified under- Afinnesota Statute $329)
Sue Lambertson - Treasurer
True Name
1125_B_ Blackbird Drive SW -
Residence Address
320-296-1991
Phone r,'tttnber
Hutchinson MN
010 State
Date of Birth: 9'912211959..,_._ Place of Birth: Lynwood
�A1on1h/dq) }'ear Citi
Have you ever been convicted of any crime other than a traffic offense? ❑ yes no
I f yes, explain:
How long have you been a member of the organization? Six Years
{Game tntormation
Location 41
Hutchinson Mall
Name of'location where game will he plaved -
1061 MN -15 Hutchinson
Addt•Cs.V rel localion where game will he p1gved
Date(s) and/or day(s) gambling devices will be used -
55350
Zip
CA
State
320 -587-5956
Phone Vumber
MN 55350
city Slate Lip
June through _December
AM AM
I fours of the day gambling devices will be used: f=rom6:00pM NM To g 00 pirn 13M
Maximumnumber of player: Sixty Seoond & fourth Fridays
Will prizes be paid in money or merchandise? Cd money ❑ merchandise
Will refreshments be served during the tirne the gamblina de-ices will be used?
If yes, will a charge be made for such refreshments:' [jves ❑ no o,
Game information _
Location ft2
St. Anastasia Fail Festival
:%lame (?f"lucation where ganae will he player!
Gd yes 0 no
ind Popcorn LISA h _
320-587-6507
Phone Arwnher
460 Lake Street Hutchinson MN
.Address of location where grime will be pla-ved City State
Date(s) and/or day(s) gambling devices will be used: September 11th through Se
AM
Hours of the day gambling devices will be used: From 10:00 am A
Maximum number ol'piayer: sixty
Will prizes be paid in money or merchandise? W money ❑ merchandise
W ill refreshments be served during the time the gambling devices will be used?
11"yes, will a charge be made for such refreshments? iR yes ❑ no
To 3:00
W yes ❑ no
55350
Zip
Der 11th
AM
01,1,, ❑f I111e rinson
IpptkationforGlyn h 1q:OevicesLicense
Page 3 of 3
Officers oft Or anization if'necessa ?, list additional natnes on separate sheen
._._Gary- Lambertson
President
Ivafne
Title
1125 Blackbird Drive SW
Hutchinson
MN
55350
Residence :1 ddress
City
State
Gip
Gary Hotovec
Cruise Master
fVaale
Tille
�____• _ 87308 HWY 71 N
Danube
MN
56230
Residence Address
City
Slate
Zip
Jeannie Tessmer
Secretary
Name
Title
950 Ludtke Lane NW
Hutchinson
MN
55350
Rcsidencu Address
City
Stale
Zip —j
_OtTicers or Other Persons Paid for Services lnformation (i
•necessat- , list additional names on se urale sheet)
Name
Title
Residence .-I eldress
Cirz-
Stale
Zip
Name
Title
ti Resiclenc•e Ac1dress
Ciry
SI[fIe
Zil)T
Name
Title
Residence ,address
� 0112
State
Zi
Have you (Gambling Manager and Authorized Officer) read, and do you thoroughly understand the provisions of all
laws, ordinances, and regulations gaverninc, IIIc operation and use of gatrrbling devices (as outlined in City of
Hutchinson Ordinance 114.20 and Minnesota Statutes Chapter 349)?
Gambling Manager )4yes LJ no <j ---I .Authorized Officer )Gs ❑ no
Initial initial
I declare that thQ intbrination l have provided on this application is truthful, and I authorize the City of Flutchinson
to investigate the information submitted. Also, I have received from the C ity of Hutchinson a copy of the City
Ordinance No. 1 14.10 relating to gambIinv, and 1 w i I I farniIiarire myself s+ith the contents thereof.
Signature of authorized officer of organizalion Dale
_ 2 ,
i.
e �hling nranuger r f otkrxni atiott Date
Internal Use On
City Council Q approved ❑ denied Notes:
CHECK REGISTER A FOR CITY OF HUTCHINSON
CHECK DATE FROM 03/13/18 - 03/27/18
Check -Date----
--------------------------------
03/13/2018
Check
20087
Vendor Name
--------------------------------------------------------------
HP INC
Description
------------------------------------------------------------------------- -----------------------
VOID - prior check run - Duplicate invoices
Amount
(1,209.64)
03/13/2018
200183
HP INC
ELITEDESK 800: ENTERPRISE CTR - reissue correction
604.82
03/08/2018
200184
GLOBAL SPECIALTY CONTRACTORS, INC
AQUATIC CENTER PAYMENT #13 (Retainage -$50K left)
140,048.22
03/16/2018
EFT662
EFTPS
PAYROLL 2/25 - 3/10/2018
59,935.20
03/16/2018
EFT663
MN Dept of Revenue
PAYROLL 2/25 - 3/10/2018
12,402.19
03/16/2018
EFT664
PROVIDENT LIFE & ACC INS
PAYROLL 2/25 - 3/10/2018
703.64
03/16/2018
EFT665
PERA
PAYROLL 2/25 - 3/10/2018
49,082.37
03/16/2018
EFT666
TASC-Flex
PAYROLL 2/25 - 3/10/2018
1,816.06
03/16/2018
EFT667
TASC-H S A
PAYROLL 2/25 - 3/10/2018
12,801.99
03/16/2018
EFT668
ICMA
PAYROLL 2/25 - 3/10/2018
2,292.40
03/16/2018
EFT669
VOYA
PAYROLL 2/25 - 3/10/2018
740.00
03/16/2018
EFT670
MNDCP
PAYROLL 2/25 - 3/10/2018
305.00
03/16/2018
200185
MNPEA
PAYROLL 2/25 - 3/10/2018
663.00
03/16/2018
200186
UNUM Vol Life Ins
PAYROLL 2/25 - 3/10/2018
945.68
03/16/2018
200187
HART
PAYROLL 2/25 - 3/10/2018
662.21
03/19/2018
200188
DVS RENEWAL
TABS: 2006 FORD #8795 - POLICE
11.00
03/27/2018
200189
A R ENGH HEATING & AIR CONDITIONING
SERVICE CALLS - WWTP & FIRE STATION
3,089.00
03/27/2018
200190
AARP
MARCH AARP INSTRUCTION
355.00
03/27/2018
200191
ACE HARDWARE
VARIOUS R&M SUPPLIES
1,091.03
03/27/2018
200192
VOID
-
03/27/2018
200193
ACOUSTICS ASSOCIATES INC
REPAIR KWIK WALL FOLDING DOORS - EVENT CENTER
761.00
03/27/2018
200194
ACS SOLUTIONS LLC
ALL WEATHER PATCHING COMPOUND
548.09
03/27/2018
200195
AEM MECHANICAL SERVICES INC
SCH80 PIPE 2" X 1'- WWTP
8.33
03/27/2018
200196
AFFORDABLE TOWING INC.
3/8/18 TOW DISABLED PLOW TRUCK TO MANKATO
469.50
03/27/2018
200197
ALLIED PRODUCTIONS & SALES
EQUIPMENT RENTAL - CIVIC ARENA
2,205.50
03/27/2018
200198
ALPHA WIRELESS
MAI NT 3/1- 4/1'18 - POLICE
794.75
03/27/2018
200199
AMERICAN BOTTLING CO
MARCH COST OF GOODS - LIQUOR
132.32
03/27/2018
200200
AMERICAN LEGAL PUBLISHING CORP
2018 S-1 SUPPLEMENT PGS
4,255.00
03/27/2018
200201
AMERIPRIDE SERVICES
TOWEL BARS, MOPS, MATS
108.35
03/27/2018
200202
ANIMAL MEDICAL CENTER ON CROW RIVER
BOARDING/PROCESSING FEES
606.00
03/27/2018
200203
ARCTIC GLACIER USA INC.
MARCH COST OF GOODS - LIQUOR
314.18
03/27/2018
200204
ARNESON DISTRIBUTING CO
MARCH COST OF GOODS - LIQUOR
1,064.80
03/27/2018
200205
ARTI BEE, JESSICA
UB refund for account: 3-560-4620-7-03
47.09
03/27/2018
200206
ARTISAN BEER COMPANY
MARCH COST OF GOODS - LIQUOR
917.65
03/27/2018
200207
AUTO VALUE - GLENCOE
VARIOUS AUTO R&M SUPPLIES
264.23
03/27/2018
200208
B & C PLUMBING & HEATING INC
LIBRARY: FURNACE SERVING BACK OFFICE
397.68
03/27/2018
200209
BCA
REAL ID REQUIREMENTS: FINGERPRINTING
160.00
03/27/2018
200210
BECKER ARENA PRODUCTS
BLACK, YELLOW, RED PAINT - CIVIC ARENA
296.55
03/27/2018
200211
BELLBOY CORP
MARCH COST OF GOODS - LIQUOR
1,868.24
03/27/2018
200212
BERGER PLUMBING HEATING A/C, LLC
INSTALL NAT GAS LINES TO 2 ARENA DEHUMIDIFIERS
2,275.00
03/27/2018
200213
BERNICK'S
MARCH COST OF GOODS - LIQUOR
380.59
03/27/2018
200214
BOLTON & MENK INC.
2018 AIRPORT IMPROVEMENTS / PLANNING
9,455.88
03/27/2018
200215
BRADLEY SECURITY LLC
INSTALL DEADBOLTS, LOCKS - REC BUILDING
347.00
03/27/2018
200216
BRANDON TIRE CO
SKID STEER BOBCAT: TIRES - PARKS DEPT
1,625.42
03/27/2018
200217
BREAKTHRU BEVERAGE
MARCH COST OF GOODS - LIQUOR
13,437.83
03/27/2018
200218
C & L DISTRIBUTING
MARCH COST OF GOODS - LIQUOR
31,730.84
03/27/2018
200219
CALIFORNIA CONTRACTORS SUPPLIES
PARKAJACKET, HEADLAMPS, FLASHLIGHTS, GLOVES
551.00
03/27/2018
200220
CARS ON PATROL SHOP LLC
VEHICLE TOWING TO PD
285.00
03/27/2018
200221
CENTRAL HYDRAULICS
AERATOR O -RINGS- MBR
11.10
03/27/2018
200222
CENTRAL MCGOWAN
ACETYLENE, HIGH PRESSURE
125.44
03/27/2018
200223
COMMERCIAL REFRIGERATION SYSTEMS IN
EMERG REPAIR: REPLACED MOTORIZED CONTROL
2,663.89
03/27/2018
200224
CORE & MAIN LP
ANNUAL LOGIC SOFTWARE FEE - WTP & WWTP
8,280.00
03/27/2018
200225
CRAGUN'S RESORT & HOTEL ON GULL LAK
T. GRATKE & E. MOORE - MPCA BIOSOLIDS CONF
425.20
03/27/2018
200226
CROW RIVER AUTO & TRUCK REPAIR
2016 PD CAPRICE: OIL CHANGE, PADS, ROTORS
231.46
03/27/2018
200227
CROW RIVER GOLF CLUB
BANQUET, CURRENT YEAR RENTAL - LIQUOR EVENT
536.88
03/27/2018
200228
CROW RIVER WINERY
MARCH COST OF GOODS - LIQUOR
805.90
03/27/2018
200229
DAVE GRIEP CLEANING
CLEAN WINDOWS AT LIQUOR STORE
45.00
03/27/2018
200230
DIMLER, KYLE
REIMB: MEALS/LODGING FOR MN DLI & ICC MTGS
360.33
03/27/2018
200231
DOMINO'S PIZZA
25 LG PIZZAS FOR MANDATORY SAFETY TRAINING
189.94
03/27/2018
200232
DPC INDUSTRIES INC
SODIUM HYPO 12.5%- WTP
1,292.80
CHECK REGISTER A FOR CITY OF HUTCHINSON
CHECK DATE FROM 03/13/18 - 03/27/18
Check -Date----
--------------------------------
03/27/2018
Check
200233
Vendor Name
--------------------------------------------------------------
DUHOUX, VICTORIA & AARON
Description
-------------------------------------------------------------------------
UB refund for account: 2-465-5050-4-01
Amount
-----------------------
1.61
03/27/2018
200234
DYNA SYSTEMS
VARIOUS R&M SUPPLIES
371.32
03/27/2018
200235
EBERT CONSTRUCTION
FINAL PYMT, PAY APP #10 - ENTERPRISE CENTER
118,209.23
03/27/2018
200236
ECOLAB PEST ELIMINATION
RODENT PROGRAM - CREEKSIDE
155.28
03/27/2018
200237
EFRAIMSON, RYE
UB refund for account: 1-395-7350-3-02
38.65
03/27/2018
200238
EWERT BROS INC
CAMERA INSPECTION 12/14/17 - STWT
268.20
03/27/2018
200239
FASTENAL COMPANY
VARIOUS R&M SUPPLIES
453.00
03/27/2018
200240
FELBER, MARIE
REIMB: WORK PANTS (2 PAIR)
144.00
03/27/2018
200241
FINANCE & COMMERCE
LETTING NO. 13 / PROJECT NO. 18-13 PUBLICATION
268.00
03/27/2018
200242
FIRST CHOICE FOOD & BEVERAGE SOLUTI
COL 1.5 FP CASE
121.10
03/27/2018
200243
G & K SERVICES
VARIOUS CLEANING SUPPLIES
158.82
03/27/2018
200244
GAVIN, DONLEY & OSTLUND, LTD
FEBRUARY FLAT LEGAL FEE AGREEMENT
3,300.00
03/27/2018
200245
GEB ELECTRIC INC
20 T5 SOCKETS - FIRE DEPT
178.90
03/27/2018
200246
GOLDSTAR PRODUCTS INC
ASPHALT PATCH KIT / RED HOT SEWER SOLVENT
2,233.10
03/27/2018
200247
GOODPOINTE TECHNOLOGY
2016 SURVEY OF AC TRAIL NETWORK - FINAL
600.00
03/27/2018
200248
GRAINGER
VARIOUS R&M SUPPLIES
788.20
03/27/2018
200249
GRATKE, TIM
REIMB: EXPENSES FOR MRWA CONFERENCE
151.54
03/27/2018
200250
H&L MESABI
SHOP PARTS: VIRNIG PLOW: CARBIDES, PLATE
1,136.72
03/27/2018
200251
HACH COMPANY
ANNUAL SOFTWARE SUPPORT- WTP & WWTP
2,754.00
03/27/2018
200252
HANSEN GRAVEL INC.
FEB & MAR CONTRACTED SNOW REMOVAL
5,335.00
03/27/2018
200253
HANSON & VASEK CONSTRUCTION
MARCH CONTRACTED SNOW REMOVAL
902.00
03/27/2018
200254
HAPPY SPROUT BREW & GROW
SIGN AND AWNING GRANT - EDA LOAN FUND
1,000.00
03/27/2018
200255
HENRY'S WATERWORKS INC
SPRING/FALL GRADE HIGH PERF COLD PATCH
846.20
03/27/2018
200256
HILLYARD / HUTCHINSON
VARIOUS JANITORIAL/CLEANING SUPPLIES
39.72
03/27/2018
200257
HJERPE CONTRACTING
EMERG REPAIR: WATER MAIN ON LAKEVIEW RD
2,924.00
03/27/2018
200258
HOHENSTEINS INC
MARCH COST OF GOODS - LIQUOR
221.75
03/27/2018
200259
HOWARD, TODD
UB refund for account: 3-380-3460-7-00
59.03
03/27/2018
200260
HUTCHFIELD SERVICES INC
COMMERCIAL JANITORIAL MARCH 2018 - HATS
1,415.00
03/27/2018
200261
HUTCHINSON BAPTIST CHURCH
UB refund for account: 3-435-9050-5-03
18.01
03/27/2018
200262
HUTCHINSON CO-OP
GAS, DIESEL, CHEMICALS, SAFETY SUPPLIES - PARKS
1,500.66
03/27/2018
200263
HUTCHINSON FIGURE SKATING ASSOC
JAN - MARCH 2018 SKATING PROGRAM INSTRUC
3,029.50
03/27/2018
200264
HUTCHINSON HEALTH
TESTING: E PETERSON
364.00
03/27/2018
200265
HUTCHINSON UTILITIES
FEB UTILITIES 1/1- 2/1'18
116,077.05
03/27/2018
200266
HUTCHINSON WHOLESALE #1550
SHOP PART: MIRROR - STREETS
45.98
03/27/2018
200267
HUTCHINSON, CITY OF
City Storm Drainage Fees 2/1-2/28'18
6,039.55
03/27/2018
200268
HUTCHINSON, CITY OF
REPLENISH ATM
5,000.00
03/27/2018
200269
HUTCHINSON, CITY OF
15% FOOD FEE - SAFETY MEETING TO EVENT CENTER
34.30
03/27/2018
200270
ICE SKATING INSTITUTE
BETA, GAMMA
6.00
03/27/2018
200271
INTERSTATE POWER COMPANIES INC
BAGGER R&M SUPPLIES - CREEKSIDE
61.75
03/27/2018
200272
ISD #423
FEBRUARY 2018 CLASSES
2,105.00
03/27/2018
200273
JACK'S UNIFORMS & EQUIPMENT
POLICE UNIFORMS
2,282.69
03/27/2018
200274
JJ TAYLOR DIST OF MN
MARCH COST OF GOODS - LIQUOR
4,459.89
03/27/2018
200275
JOE'S SPORT SHOP
SOCCER T-SHIRTS- RECREATION
1,868.75
03/27/2018
200276
JOHNSON BROTHERS LIQUOR CO.
MARCH COST OF GOODS - LIQUOR
26,010.08
03/27/2018
200277
JOHNSON FEED, INC.
UNLOAD CHARGE: LEWIS DRUG - CREEKSIDE
150.00
03/27/2018
200278
JUUL CONTRACTING CO
MARCH CONTRACTED SNOW REMOVAL
1,804.00
03/27/2018
200279
KELLY INN
LODGING: TYLER SCHMELING - SOTA CONFERENCE
209.48
03/27/2018
200280
KENT, JOHN
REIMB: WENCK ASSOC EXAM SESSION
30.00
03/27/2018
200281
KERI'S CLEANING
2/16-2/28 CC, LIBRARY, SR DINE, FIRE DEPT
4,088.00
03/27/2018
200282
KEY GOVERNMENT FINANCE INC.
FINAL PMT ON JETVAC FINANCING
57,639.12
03/27/2018
200283
KOSEK, JEFFREY
MARCH CONTRACTED SNOW REMOVAL
902.00
03/27/2018
200284
KRANZ LAWN & POWER
STIHL BR 700 BLOWER, ELBOW BLOWER, CHAINSAW
616.94
03/27/2018
200285
L & P SUPPLY CO
MOWER SUPPLIES AND PARTS - PARKS
1,868.03
03/27/2018
200286
LEAGUE OF MN CITIES -INS TRUST
LEGAL FEES - SAM ULLAND CASE
8,660.10
03/27/2018
200287
LENZ, BRIAN
UB refund for account: 1-894-3830-2-02
7.09
03/27/2018
200288
LIEN, MIKE
REIMB: PARKING FOR MRWA CONFERENCE
10.00
03/27/2018
200289
LITCHFIELD BUILDING CENTER
BENCH BOARD STAINS
37.46
03/27/2018
200290
LOCATORS & SUPPLIES
WINTER GLOVES - STREETS DEPT
35.28
03/27/2018
200291
LOCHER BROTHERS INC
MARCH COST OF GOODS - LIQUOR
28,896.30
03/27/2018
200292
LOG IS
JANUARY NETWORK/SOFTWARE COSTS
15,228.00
CHECK REGISTER A FOR CITY OF HUTCHINSON
CHECK DATE FROM 03/13/18 - 03/27/18
Check -Date----
--------------------------------
03/27/2018
Check
200293
Vendor Name
--------------------------------------------------------------
LTP ENTERPRISES
Description
-------------------------------------------------------------------------
WELL #8 INSPECTION & PUMP REMOVAL
Amount
-----------------------
1,545.00
03/27/2018
200294
MAGNUSSON, BRIAN
REIMB: WORK PANTS (2 PAIR)
94.61
03/27/2018
200295
MARCO TECHNOLOGIES, LLC
February Cost per Print
1,744.05
03/27/2018
200296
MATHESON TRI -GAS INC
ACETYLENE, HIGH PRESSURE
15.82
03/27/2018
200297
MAYTAG LAUNDRY & CAR WASH
2/21: CLEAN EVENT CENTER LINENS
37.57
03/27/2018
200298
MCLEOD COUNTY COURT ADMINISTRATOR
BAIL: C. RUPPERT
1,300.00
03/27/2018
200299
MCLEOD COUNTY HIGHWAY DEPT.
CARBON FLAT BLADE
147.74
03/27/2018
200300
MCLEOD COUNTY RECORDER
RECORDING FEE - MULTI -TENANT RETAIL BLDG PLAN
46.00
03/27/2018
200301
MED COMPASS
ANNUAL MED EXAM & BLOOD TESTS
2,610.00
03/27/2018
200302
MEDICA
April Medical Insurance Premiums
138,300.72
03/27/2018
200303
MEEKER WASHED SAND & GRAVEL
WINTER SAND - STREETS SNOW OPERATIONS
4,522.91
03/27/2018
200304
MENARDS HUTCHINSON
VARIOUS R&M SUPPLIES
634.49
03/27/2018
200305
MID -AMERICAN RESEARCH CHEMICAL
DEGREASER, TOWELS, OIL- WWTP
1,439.50
03/27/2018
200306
MILLNER HERITAGE VINEYARD & WINERY
MARCH COST OF GOODS - LIQUOR
892.80
03/27/2018
200307
MINNESOTA DEPT OF HEALTH
MICHAEL LIEN: WATERWORKS OPERATOR EXAM
23.00
03/27/2018
200308
MINNESOTA DEPT OF LABOR & INDUSTRY
LICENSE RENEWALS - WTP & WWTP EMPLOYEES
110.00
03/27/2018
200309
MINNESOTA MUNICIPAL BEVERAGE ASSOC
CANDICE WOODS: MMBA ANNUAL CONFERENCE 20
665.00
03/27/2018
200310
MINNESOTA POLLUTION CONTROL AGENCY
T. GRATKE: 2018 MPCA BIOSOLIDS CONF
520.00
03/27/2018
200311
MINNESOTA POLLUTION CONTROL AGENCY
E. MOORE: 2018 MPCA BIOSOLIDS CONF
390.00
03/27/2018
200312
MINNESOTAVALLEY TESTING LAB
BOD, CARBON, COLIFORM TESTING - WWTP
369.80
03/27/2018
200313
MN MECHANICAL SOLUTIONS, INC.
HARMONY LIFT STATION REHABILITATION - WWTP
74,968.00
03/27/2018
200314
MOTION INDUSTRIES INC
BAGGER REPAIRS- CREEKSIDE
799.67
03/27/2018
200315
MYGUY INC.
R&M SUPPLIES FOR HATS
990.00
03/27/2018
200316
NERO ENGINEERING LLC
LIFT STATIONS, MBR, WELL
12,477.90
03/27/2018
200317
NORTHERN BUSINESS PRODUCTS
OFFICE SUPPLIES FOR PD
21.46
03/27/2018
200318
NORTHERN STATES SUPPLY INC
SHOP PARTS: HEX CAPS, PLOWBOLTS - STREETS
157.57
03/27/2018
200319
NORTHERN TIER TRANSPORTATION LLC
FREIGHT - CREEKSIDE TO CROSSLAKE, MN
1,925.00
03/27/2018
200320
NORTROM, ALICIA
REIMB: PREDATORY OFFENDER TRAINING REG
25.00
03/27/2018
200321
O'REILLY AUTO PARTS
VARIOUS AUTO R&M SUPPLIES
358.81
03/27/2018
200322
OFFICE DEPOT
OFFICE CHAIR - STREETS DEPT
289.99
03/27/2018
200324
PATRICK, DARYL
2018 ICE SHOW ANNOUNCER
375.00
03/27/2018
200325
PAUSTIS WINE COMPANY
MARCH COST OF GOODS - LIQUOR
5,227.00
03/27/2018
200326
PHILLIPS WINE & SPIRITS
MARCH COST OF GOODS - LIQUOR
20,775.83
03/27/2018
200327
PLOTZ, GINA
ICE SHOW DIRECTOR
2,400.00
03/27/2018
200328
PLUNKETTS PEST CONTROL
GENERAL PEST CONTROL PROGRAM - CIVIC ARENA
30.00
03/27/2018
200329
PROFESSIONAL WATER TECHNOLOGIES INC
SPECTRAGUARD ANTISCALANT - WTP
5,369.00
03/27/2018
200330
QUILL CORP
MULTIFOLD PAPER TOWELS - REC BUILDING
179.94
03/27/2018
200331
REINER ENTERPRISES INC
FLATBED TRUCKING - CREEKSIDE
4,678.62
03/27/2018
200332
RIDGEWATER COLLEGE
EMR REFRESHER 44 -PLAN COURSE - 1/25/18 - POLICE
1,394.00
03/27/2018
200333
RONNGREN, ALAN & JESSICA
UB refund for account: 2-070-4190-6-01
6.46
03/27/2018
200334
SCHIROO ELECTRICAL REBUILDING INC
VEHICLE R&M SUPPLIES- STREETS
152.75
03/27/2018
200335
SCOTT COUNTY COURT ADMIN
BAIL: A GREEN
168.00
03/27/2018
200336
SEPPELT, MILES
REIMB: MISC SUPPLIES FOR ENTERPRISE CENTER
147.00
03/27/2018
200337
SHI INTERNATIONAL CORP
ANNUAL SOFTWARE MAINT AGREEMENT
26,940.00
03/27/2018
200338
SHORT-ELLIOT-HENDRICKSON, INC
SANITARY SEWER ANALYSIS /ANTENNA PROJECT
5,471.91
03/27/2018
200339
SOUTHERN WINE & SPIRITS OF MN
MARCH COST OF GOODS - LIQUOR
28,018.39
03/27/2018
200340
SOUTHWEST MN CHAPTER OF ICC
2018 MEMBERSHIP DUES - BUILDING INSPECTION
100.00
03/27/2018
200341
SPECIAL OPERATIONS TRAINING ASSOC
ANNUAL TRAINING CONF - ERLANDSON/SCHMELING
620.00
03/27/2018
200342
STANDARD PRINTING -N -MAILING
UTILITY BILL PROCESSING & MAILING / CITY POSTAGE
2,130.48
03/27/2018
200343
STAPLES ADVANTAGE
VARIOUS OFFICE SUPPLIES
249.79
03/27/2018
200344
STAR TRIBUNE
3/18 - 9/16'18 Service Dates
214.50
03/27/2018
200345
STEARNS COUNTY COURT ADMINISTRATOR
BAIL: J MOE
500.00
03/27/2018
200346
SUNCOAST GARDEN PRODUCTS INC.
SUNCOAST CYPRESS BLEND - CREEKSIDE INPUT
4,640.00
03/27/2018
200347
TALKPOINT TECHNOLOGIES INC
PLANTRONICS HEADSETS (3) - POLICE
237.80
03/27/2018
200348
TAPS-LYLE SCHROEDER
CLEANED LINENS & TOPS - EVENT CENTER
25.00
03/27/2018
200349
TASCHE, BREANNE
REIMB: PANTS (2 PAIR)
58.50
03/27/2018
200350
THOMSON REUTERS -WEST
FEBRUARY WEST INFO CHARGES- LEGAL
990.81
03/27/2018
200351
TOTAL COMPLIANCE SOLUTIONS INC
AFTER HOURS EMPLOYEE DRUG SCREENING
252.93
03/27/2018
200352
TRI COUNTY WATER
BOTTLE WATER DELIVERY, RENTAL WATER COOL
85.75
03/27/2018
200353
TWIN CITY GARAGE DOOR CO
HATS GARAGE DOOR: LOOP DETECTORS
563.00
CHECK REGISTER A FOR CITY OF HUTCHINSON
CHECK DATE FROM 03/13/18 - 03/27/18
Check -Date----
--------------------------------
03/27/2018
Check Vendor Name
--------------------------------------------------------------
200354 UNITED FARMERS COOP
Description Amount
------------------------------------------------------------------------- -----------------------
FUEL 32,904.66
03/27/2018
200355 UNUM LIFE INSURANCE CO OF AMERICA
March Life Insurance 2,288.69
03/27/2018
200356 VERHEY, JJ
REIMB: WINTER BOOTS 125.00
03/27/2018
200357 VERIZON WIRELESS
SERVICE FEB 03 - MAR 02 38.34
03/27/2018
200358 VIKING BEER
MARCH COST OF GOODS - LIQUOR 10,687.05
03/27/2018
200359 VIKING COCA COLA
MARCH COST OF GOODS - LIQUOR 690.86
03/27/2018
200360 VINOCOPIA INC
MARCH COST OF GOODS - LIQUOR 5,658.25
03/27/2018
200361 WELCOME NEIGHBOR
NEW RESIDENT VISITS 60.00
03/27/2018
200362 WEST CENTRAL SANITATION INC.
FEB REFUSE HAULING -RESIDENTIAL & CITY FACILITIES 46,154.32
03/27/2018
200363 WEST CENTRAL SHREDDING
MONTHLY SHREDDING SERVICE - PD & CITY CENTER 50.00
03/27/2018
200364 WINE COMPANY, THE
MARCH COST OF GOODS - LIQUOR 632.40
03/27/2018
200365 WINE MERCHANTS INC
MARCH COST OF GOODS - LIQUOR 1,615.71
03/27/2018
200366 WOLD ARCHITECTS & ENGINEERS
MASTER FACILITIES PLANNING: REIMBURSABLE 316.45
03/27/2018
200367 WOODS, CANDICE
MILEAGE FOR MMBA CONFERENCE 94.83
03/27/2018
200368 ZEP SALES AND SERVICE
ZEP ORANGE RESP LIQUID, CHERRY BOMB, FUZ 355.82
Total - Check Disbursement
1,270,871.56
Department Purchasing Card Activity - February 2018
Date
Dept
Vendor Name
Description
Amount
02/02/2018
ADMIN
DRAKE KRYTERION INC
ICMAApplied Knowledge Assessment
75.00
02/01/2018
FINANCE
RED LOBSTER
Dinner at Ehlers Conference - Juergensen & Reid
73.84
02/02/2018
FINANCE
EMBASSY SUITES MINNEAPOLIS
Hotel for A. Reid - Ehlers Conference
157.80
02/02/2018
FINANCE
EMBASSY SUITES MINNEAPOLIS
Hotel for J. Juergensen - Ehlers Conference
157.80
02/15/2018
FINANCE
MINNESOTAGFOA
2018 MNGFOADues - A. Reid
50.00
02/15/2018
FINANCE
MINNESOTAGFOA
2018MNGFOADues -J. Juergensen
50.00
02/20/2018
FINANCE
CASH WISE
Beverages for City-wide safety training meeting
38.71
02/21/2018
PLANNING
THE WEBSTAURANT STORE
spray head assembly
34.94
02/26/2018
PLANNING
DEPARTMENT OF LABOR AND INDUSTRY
Boiler License
20.00
02/03/2018
POLICE
GALLS LLC
Squad Equipment
92.32
02/07/2018
POLICE
AMAZON
Squad Equipment
37.23
02/09/2018
POLICE
GALLS LLC
Squad Equipment
75.15
02/23/2018
POLICE
GALLS LLC
Squad Equipment
337.50
02/01/2018
FIRE
CASH WISE
Kitchen supplies, annual townboard mtg
49.60
02/09/2018
FIRE
GLOBAL TEST SUPPL
4 gas meters
1,410.15
02/11/2018
FIRE
HAMPTON INN
Lodging Tim Peterson, Alexandria Fire Officer School
251.66
02/12/2018
FIRE
BESTBUY
Supplies and adapters for active 911 display project
79.98
02/08/2018
FIRE
WPSG, INC
Uniform pants and flashlight battery holders
138.46
02/19/2018
FIRE
CASH WISE
Kitchen supplies
23.76
02/20/2018
FIRE
GALLS LLC
Uniforms
189.98
02/26/2018
FIRE
MCDONALD'S
Food for the FF after 3am-8am fire
130.62
02/27/2018
FIRE
BESTBUY
Batteries for flashlights
54.38
02/01/2018
IT
AMAZON
Video cables IT Supplies
(88.91)
02/01/2018
IT
AMAZON
SATA disk for SAN
134.00
02/02/2018
IT
AMAZON
Monitor stand Thofineister, KHutton, Uohnson
206.97
02/02/2018
IT
AMAZON
Monitor stand TKloss
68.99
02/05/2018
IT
AMAZON
Keyboard for Enterprise Center Meeting Room
19.99
02/07/2018
IT
AMAZON
DVD player drive for Tony Hand
24.39
02/13/2018
IT
NEWEGG
Hard drive for LH server
139.99
02/13/2018
IT
AMAZON
Drives fro SAN
395.46
02/16/2018
IT
SYMANTEC
Additional VP licenses
150.33
02/21/2018
IT
AMAZON
Hard drive bay for LH server
10.97
02/26/2018
IT
AMAZON
IPAD cases for HUC Electric
23.99
02/27/2018
IT
AMAZON
Phone block for new data logger
33.31
02/27/2018
IT
AMAZON
KVM switch for PD network room
42.85
02/28/2018
IT
AMAZON
Phone case
15.99
02/05/2018
PUB WKS
U OF M CONTLEARNING
MN Transportation Conference Registration - Kent E.
200.00
02/09/2018
PUB WKS
GROUP MOBILE
Vehicle Laptop Mounting System - Jetter Truck
229.99
02/12/2018
PUB WKS
MINNESOTA ELEC SUPPLY MAR
Replacement Cord for Plasma Cutter
630.33
CHECK REGISTER A FOR CITY OF HUTCHINSON
CHECK DATE FROM 03/13/18 - 03/27/18
Check-Date----
--------------------------------
02/15/2018
Check
PUB WKS
Vendor Name
--------------------------------------------------------------
U.S. PLASTIC CORPORATION
Description
-------------------------------------------------------------------------
PVC Vacuum Breaker
Amount
-----------------------
176.42
02/20/2018
PUB WKS
U.S. PLASTIC CORPORATION
PVC Vacuum Breaker
313.77
02/21/2018
PUB WKS
SQUEAKY'S GRILL & BAR
Wastewater Annual Biosolids Program Lunch
293.94
02/27/2018
PUB WKS
MINNESOTA RURAL WATER ASSN
MN Rural Water Association Conference - T. Gratke
230.00
02/07/2018
CREEKSIDE
SPS COMMERCE INC
Monthly SPS fees - UH, ACE Hardware, Bomgaars
249.60
02/13/2018
LIQUOR
HUTCHINSON ACE
Cooler Rail Repairs
3.89
02/15/2018
LIQUOR
RETAIL INFORMATION TEC
Monthly CardDefenderfee
42.75
02/15/2018
LIQUOR
MENARDS HUTCHINSON
Cleaning supplies
38.78
02/22/2018
LIQUOR
CTC CONSTANTCONTACT.COM
Email Blast advertising
70.00
01/31/2018
EDA
PRO AUTO MN INC.
Oil chg, battery, wiper blades, tail light repair - EDA
178.93
02/05/2018
EDA
WALMART
Bottles of water - Mfg appreciation event TigerPath
9.99
02/05/2018
EDA
SUBWAY
Lunches for EDA team meeting.
53.75
02/15/2018
EDA
CASH WISE
Boxes for move of EDA offices to Enterprise Center
10.14
02/16/2018
EDA
SUBWAY
Lunch-Chamber Leadership helping with TigerPath
67.09
02/21/2018
EDA
COSTCO
Breakfast snacks for open house at Enterprise Center.
37.95
02/22/2018
EDA
BENNYS MEAT MARKET
Meat tray for Business after Hours event - Ent Ctr
25.00
02/21/2018
EDA
MAIN STREET SPORTS BAR
Lunches for EDA Board meeting
65.50
02/22/2018
EDA
WM SUPERCENTER
beverage cups for meetings at Enterprise Center
3.78
02/26/2018
EDA
MANUFACTURERS' NEWS INC
2018 Manufacturers Register
155.90
Total - Purchasing Cards
7,794.70
GRAND TOTAL
1,278,666.26
CHECK REGISTER B FOR CITY OF HUTCHINSON
CHECK DATE FROM 03/13/18 - 03/27/18
Check Date
------------------
03/27/2018
Check
----------------
200323
Vendor Name
--------------------------------------------------------------
OUTDOOR MOTION
Description
-------------------------------------------------------------------------
REPLACE BIKE PARTS - READY FOR PATROL SEASON
Amount
-----------------------
1,167.00
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Consideration of Charter Commission Amendments - Second Reading
Department: Administration
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Marc Sebora
Agenda Item Type:
Presenter: Marc Sebora
Reviewed by Staff
Public Hearing
Time Requested (Minutes): 0
License Contingency
Attachments: No
BACKGROUND/EXPLANATION OFAGENDA ITEM:
The City Council reviewed this item and held the first reading of the ordinance at the February 27, 2018, City Council
meeting. State law requires that these amendments be approved by all Council Members. Amendments are
proposed by the Charter Commission to the following sections of the City Charter and are encapsulated in Ordinance
No. 18-718:
Section 2.09 — Vacancies In The Council.
Section 4.02 — Special Elections.
Section 5.06 — Initiative..
Section 5.09 — Recall Election
Upon adoption of this ordinance, the Charter amendments will take effect in 90 days, or June 27, 2018.
BOARD ACTION REQUESTED:
Approve second reading and adoption of Ordinance No. 18-781 - adopting amendments to Sections 2.09, 4.01, 5.06
and 5.09 of City Charter.
Fiscal Impact: Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
Ordinance No. 18-781
Publication No.
AN ORDINANCE ADOPTING REVISIONS TO SECTIONS 2.09, 4.02, 5.06 AND 5.09 OF
HUTCHINSON CITY CHARTER
The City Council hereby ordains:
WHEREAS, the Hutchinson Charter Commission met on November 30, 2017, and
January 31, 2018, to review sections of the City Charter for updating or amending pursuant to
Minnesota law changes related to special elections; and,
WHEREAS, the Hutchinson Charter Commission voted unanimously for revisions to be
made to Sections 2.09, 4.02, 5.06 and 5.09 in order to bring the Charter into compliance with the
amended State special election laws; and,
WHEREAS, Minnesota Statute 410.12, Subd. 7, allows Charter changes to be made by
ordinance,
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
HUTCHINSON, THAT
1. The Hutchinson City Charter be amended as follows:
Section 2.09. VACANCIES IN THE COUNCIL. A vacancy in the council shall be
deemed to exist in case of expiration of the term of any elective officer without an elected
successor, the failure of any elective officer to qualify on or before the date of the second
regular meeting of the new council, or by reason of the death, resignation, removal from
office, removal from the city, continuous absence from the city of more than three
months, conviction of a felony of any such elective officer whether before or after such
qualification, or by reason of the failure of any elective officer without good cause to
perform any of the duties of membership in the council for a period of three months. In
each such case the council shall by resolution declare such vacancy to exist and shall
forthwith appoint an eligible person to fill the same. In the case of a tie vote in the
council, the mayor shall make the appointment. In the event the unexpired term of the
vacant seat is one year or less, such appointee shall complete the unexpired term. In the
event the unexpired term of the vacant seat exceeds one year, a special election shall be
held on the earliest date permitted under Minnesota law at or before the ~w*
to fill the remainder of the vacancy. The city administrator
shall give published notice of such special election in the official newspaper of general
circulation, at least 30 days prior to said special election.
Section 4.02. SPECIAL ELECTIONS. The council may by resolution order a special
election and provide all means for holding it. Except as provided in Section 2.09, the city
administrator shall give at least two weeks' published notice of a special election. The
procedure at such election shall conform as nearly as possible to that prescribed for other
city elections, including a primary municipal election if an elective office is to be filled at
the special election. Special elections shall be held on those dates permitted by
Minnesota law.
Section 5.06. INITIATIVE. Any ordinance, except an ordinance relating to the budget
or capital program, the appropriation of money, the levy of taxes, or the salaries of city
officers or employees, may be proposed by a petition which shall state at the head of each
page or attached thereto the exact text of the proposed ordinance. If the council passes
the proposed ordinance with amendments and a 4/5 majority of the sponsoring committee
do not disapprove the amended form by a statement filed with the city administrator
within 10 days of its passage by the council, the ordinance need not be submitted to the
voters. If the council fails to enact the ordinance in acceptable form within 60 days after
the final determination of sufficiency and regularity of the petition, the ordinance shall be
placed on the ballot at the next election occurring in the city. If no election is to occur
within 120 days after the filing of the petition, the council shall call a special election on
the ordinance to be held on the earliest date permitted under Minnesota law within
sueh period. If a majority of those voting on the ordinance vote in its favor, it shall
become effective 30 days after adoption unless the ordinance specifies a later effective
date.
Section 5.09. RECALL ELECTION. If the petition or amended petition is found
sufficient and regular, the city administrator shall officially notify the person sought to be
recalled of the sufficiency and regularity of the petition and of the pending action. The
council shall at its next meeting, by resolution, provide for the holding of a special recall
election on the earliest date permitted under Minnesota law not less than 30 nor- "'�--�
than 45 days after- stieh meeting, but if tiny other- eleetion is to oeetir- within 60 dwf*
after- sueh meeting, the eouneil may in its diser-etion provide for- the holding of
r-eeall ,.leetio fit that time
2. Changes to the City Charter will take effect 90 days from adoption of this ordinance.
Adopted by the City Council this day of 52018.
Attest:
Matthew Jaunich, City Administrator Gary T. Forcier, Mayor
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Presenting the Proposed Financial Management Plan
Department: Administration
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete
Contact: Matt Jaunich
Agenda Item Type:
Presenter: Matt Jaunich
Reviewed by Staff
Communications, Requests
Time Requested (Minutes): 5
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
On Tuesday, Andy Reid and I will be presenting you with the rough draft of the City's Financial Management Plan. We
are not asking for any action at this time. Staff will be asking for a formal acceptance at your April 24 meeting. This is
being presented at this time for your proper review. Staff will highlight certain areas of the Plan at the meeting
Tuesday night.
The Financial Management Plan is meant to serve as the framework upon which consistent operations may be built
and sustained that guides responsible use of municipal resources and contributes to the City's overall financial health.
The proposed Financial Management Plan serves three distinct purposes. 1) It draws together in single document the
City's major financial policies; and 2) The plan establishes principles to guide both staff and Council members in
making consistent and informed financial decisions; and 3) The plan provides guidelines for ensuring and maintaining
an appropriate level of funds, unreserved and reserved, to sustain the financial integrity of the City.
BOARD ACTION REQUESTED:
No action requested. Discussion only.
Fiscal Impact: $ 0.00 Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
FINANCIAL MANAGEMENT PLAN
Draft for City Council Review
March 27, 2018
-1-
Table of Contents
Page No.
3 ............... Purpose
4 ............... Cash and Investments
8...............Cash Controls & Procedures
11..............Revenue Policy
13..............Operating Budget
15..............Fund Balance / Reserve Policy
18..............Capital Improvement Plan
20..............Debt Management
23..............Purchasing Policy
27..............Procurement Card Policy
32..............Travel & Meal Reimbursement Policy
36..............Fiscal Agent Policy
37..............Exhibit A — List of City funds
-2-
PURPOSE
The City of Hutchinson (City) has a responsibility to provide quality services to its
residents and considers it important to do so in a fiscally responsible fashion designed
to keep services and taxes as consistent as possible over time. This Financial
Management Plan (Plan) is designed to serve as the framework upon which consistent
operations may be built and sustained, which guides responsible use of municipal
resources and contributes to the City's overall financial health.
This Plan serves three main purposes:
1. It draws together the City's major financial policies in a single document.
2. The plan establishes principles to guide both staff and Council members to make
consistent and informed financial decisions.
3. The plan provides guidelines for ensuring and maintaining an appropriate level of
funds, unreserved and reserved, to sustain the financial integrity of the City.
The objectives of this Plan are:
➢ To provide both short term and long term future financial stability by ensuring
adequate funding for the provision of services needed by the community,
➢ To protect the City Council's policy-making ability by ensuring that important
policy decisions are not controlled by financial problems or emergencies,
➢ Prevent financial difficulties in the future,
➢ To provide sound principles to guide the decisions of the City Council and
Administration;
➢ To employ revenue policies which prevent undue or unbalanced reliance on
certain revenues, distribute the cost of municipal services fairly, and provide
funding to operate desired programs;
➢ To provide essential public facilities and prevent deterioration of the City's public
facilities and infrastructure,
➢ To protect and enhance the City's credit rating and prevent default on any
municipal debt,
➢ To create a document that City staff and Council Members can reference during
financial planning, budget preparation and other financial management issues.
-3-
CASH AND INVESTMENTS
PURPOSE
The purpose of this policy is to establish specific guidelines the City of Hutchinson will use in the
investment of City funds. It will be the responsibility of the City Administrator, or his designee, to
invest City Funds in order to attain the highest market rate of return with the maximum security while
meeting the daily cash flow demands of the City and protecting the capital of the overall portfolio.
Investments will be made in accordance with all state and local statutes governing the investment of
public funds.
SCOPE
The City Administrator, or his designee, is responsible for the investing of all financial assets of the
City of Hutchinson, excluding pension funds. These funds are accounted for in the City's
Comprehensive Annual Financial Report and include the following:
➢ General Fund
➢ Special Revenue Funds
➢ Debt Service Funds
➢ Capital Project Funds
➢ Enterprise Funds
➢ Internal Service Funds
➢ Economic Development Authority
PRUDENCE
Investments shall be made with judgment and care, not for speculation, but for investment,
considering the probable safety of the capital as well as the probable income to be derived.
The standard of prudence to be used by investment officials shall be the "prudent person" standard
and shall be applied in the context of managing the overall portfolio. Investment officers acting in
accordance with this policy, with MN Statutes, Chapter 118A, and exercising due diligences shall be
relieved of personal responsibility for an individual security's risk or market price change, provided
that reasonable action is taken to control adverse developments and unexpected deviations are
reported in a timely manner.
OBJECTIVE
1) Safety — Safety of principal is of critical importance to the investment program. Investments of
the City shall be undertaken in a manner that seeks to ensure the preservation of principal in
the overall portfolio. The objective will be to mitigate credit risk and interest rate risk.
a. Credit Risk — the risk of loss due to failure of the security issuer or backer, will be
minimized by:
i. Limiting investments to the types of securities listed in this policy under
Authorized and Suitable Investments.
ii. Pre -qualifying the financial institutions, brokers/dealers, intermediaries, and
advisors with which the City will do business in accordance with this policy under
Authorized Financial Dealers and Institutions.
iii. Diversifying the investment portfolio so that the impact of potential losses from
any one type of security or from any one individual issuer will be minimized.
Insurance or collateral may be required to ensure return of principal.
I'M
b. Interest Rate Risk — the risk that the market value of securities in the portfolio will fall
due to changes in market interest rates will be minimized to:
i. Provide for liquidity by reviewing cash flow requirements and making investments
to meet the shorter cash flow needs, thereby avoiding the need to sell securities
in the open market prior to maturity.
ii. Manage the annual maturity of the overall portfolio to be consistent with the risk
of the City.
2) Liquidity — The City's investment portfolio will remain sufficiently liquid to enable the City to
meet all operating requirements reasonably anticipated. The portfolio will be structured to
emphasize liquidity and consist largely of securities with active secondary or resale markets
(dynamic liquidity). A portion of the portfolio may be placed in money market mutual funds or
local government investment pools that offer same day liquidity for short-term funds.
3) Yield — The City's investment portfolio shall be designed with the objective of attaining a
market rate of return. The core of investments is limited to low-risk securities in anticipation of
earning a fair return relative to the risk being assumed. Securities shall generally be held until
maturity with the following exceptions:
a. A security with declining credit may be sold early to minimize loss of principal.
b. A security swap would improve the quality, yield, or target duration in the portfolio.
c. Liquidity needs of the portfolio require that the security be sold.
DELEGATION OF AUTHORITY
Authority to manage the City's investment program is derived from MS 118A which authorizes the
City to invest any funds not presently needed for other purposes. This law applies to all types of
funds not presently needed, including all general, special revenue, permanent, trust or other funds
regardless of source or purpose. Under this chapter, a city may invest idle funds in state or national
banks, savings and loan associations, or credit unions. No person may engage in an investment
transaction except as provided under the terms of this policy and the procedures established by the
policy.
Management responsibility for the investment program is hereby delegated to the City Administrator,
or his designee, who shall be responsible for all transactions. The City Administrator, or his
designee, shall establish procedures for the operation of the investment program, consistent with this
policy. Such procedures may include delegation of authority to persons responsible for investment
transactions.
ETHICS AND CONFLICTS OF INTEREST
The City Administrator and Finance staff involved in the investment process shall refrain from
conducting personal business activity that could conflict with proper execution of the investment
program, or which could impair their ability to make impartial investment decisions. Investment staff
shall annually disclose to the City Council any material financial interests as required by state statute.
Investment staff shall subordinate their personal investment transactions to those of the City,
particularly with regard to the time of purchases and sales, and shall refrain from undertaking
personal investment transactions with the same individual with whom business is conducted on
behalf of the City.
-5-
AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The City Council will annually approve by resolution the depositories and a list of financial institutions
authorized to provide investment services.
1) Only approved security broker/dealers, selected by creditworthiness, shall be utilized, with a
minimum of $10,000,000 capital and at least five years of operation.
2) Financial institutions must be qualified as a "depository" by the City Council; these may include
"primary" dealers or regional dealers that qualify under Securities & Exchange Commission
Rule 15C3-1 (Uniform Net Capital Rule).
3) All investments must be insured or registered, or securities must be held by the City or its
agent in the City's name.
4) No public deposit shall be made except in a qualified public depository, as established by state
laws.
5) When investments purchased by the City are held in safekeeping by a broker/dealer, they
must provide asset protection of $500,000 through Securities Investor Protection Corporations
(SIPC), and at least another $2,000,000 Supplemental Insurance Protection, provided by the
broker dealer.
6) Before engaging in investment transactions with the City, the supervising officer at the
securities broker/dealer shall submit a certification of "Notification to Broker and Certification by
Broker Pursuant to MN Statute 118A". Said certification will state that the broker/dealer has
reviewed the investment policies and objectives, as well as applicable state law, and agrees to
disclose potential conflicts or risk to public funds that might arise out of business transactions
between the securities broker/dealer firm and the City. All financial institutions shall agree to
undertake reasonable efforts to preclude imprudent transactions involving the City's funds.
AUTHORIZED AND SUITABLE INVESTMENTS
It shall be the policy of the City that available funds be invested to the best rates obtainable at the
time of investment in conformance with the legal and administrative guideline outlined herein. US
Treasury Obligations and Federal Agency Securities will be given preference when the yields are
equal to or greater than alternative investments.
The investments of the City will be made in accordance with Minnesota Statutes, section 118A, which
lists all permissible investments for municipalities.
COLLATERAL
Interest-bearing deposits in authorized depositories must be fully insured or collateralized.
Collateralization will be required on Certificates of Deposits (where the dollar amount is in excess of
FDIC coverage). In order to anticipate market changes and provide a level of security for all funds,
the collateralization level will be 110% of the market value of principal and accrued interest. When
the pledged collateral consists of notes secured by first mortgages, the collateral level will be 140% of
the market value of principal and accrued interest. Collateral shall be deposited in the name of the
City, subject to release by the City Administrator.
SAFEKEEPING AND CUSTODY
Securities purchased shall be held by a third party trustee as a safekeeping agent and in a
segregated account for the City's benefit. The investment dealer or bank in which the security is
purchased shall issue a confirmation ticket to the City listing the specific instrument, issuer, coupon,
maturity, CUSIP number, purchase or sale price, transaction date, and other pertinent information.
The financial service provider that executes the transaction on the City's behalf shall deliver all
securities on a delivery versus payment method (DVP) to the designated third party. Delivery versus
payment (DVP) is a way of controlling the risk to which securities market participants are exposed.
Delivery of securities (i.e. the change in their ownership) is done simultaneously with payment. This
means that neither the buyer nor the seller is exposed to the risk that the other will default. The City
may not invest in securities that are uninsured. Securities will be held in the City's designated
accounts.
Investments, contracts and agreements may be held in safekeeping with:
➢ Any Federal Reserve bank;
➢ Any bank authorized under the laws of the United States or any state to exercise corporate
trust powers, including, but not limited to, the bank from which the investment is purchased.
DIVERSIFICATION
The City Administrator or investment designee will attempt to diversify its investments according to
type and maturity. The City will attempt to match its investments with anticipated cash flow
requirements. Extended maturities may be utilized to take advantage of higher yields. Diversifications
strategies shall be determined and revised periodically by the City Council for all funds.
1) Institutions — Diversity between financial institutions used.
a. The City Administrator or investment designee will attempt to diversify its investments
equally amongst investment companies, keeping in mind that some temporary
fluctuations may occur throughout the year (i.e. tax settlement in June, GO Bonds for
projects, etc.).
b. No funds may be invested in any single investment company in excess of the amount
insured by it.
2) Maturities — Diversity in length of maturities
a. Investments shall be made to assure that funds are constantly available to meet
immediate payment requirements.
b. No investments shall be made with a term of more than 10 years.
3) Investments — The City should maintain a diversity of investments.
a. Depending on market conditions, with the exception of US Treasury Securities,
authorized pools, and Federal Agencies (backed by the full faith and credit of the US
Government or its agencies), no more than 50% of the City's total investment portfolio
may be invested in any one of the following: Certificates of Deposit or Commercial
Paper.
POOLING OF INVESTMENTS
The City shall pool excess cash from all funds into one investment account in order to maximize the
amount of monies available for investment. Monthly investment earnings shall be allocated among
the various funds based on monthly cash balances.
PRIOR POLICY
The policy above supersedes the prior city policy #1.14.
7-
Cash Controls & Procedures
PURPOSE:
To provide reasonable controls for the handling and safeguarding of monies received in the course of
operations at various City facilities, and to protect City assets and minimize the potential for theft,
fraud and discrepancies in cash transaction records. The purpose of this policy is also to protect City
employees from inappropriate charges of mishandling of funds by defining his/her responsibilities in
the cash handling process.
Cash Systems and Records
All cash received in the course of operations, including concessions sales, must be entered into the
City's point-of-sale (POS) system. Each transaction type will have a preset code within the POS
system with predetermined prices set up per City approved pricing amounts. Separate cash drawers
shall be maintained at each point-of-sale location and shall be integrated with the POS system for
formal accounting of each transaction.
All employees authorized to receive cash shall have a separate user ID and password to gain access
to the POS system. Employees shall not share POS access information with others.
Daily reports will be generated from the POS system and forwarded to Finance on a weekly basis
along with the daily cash proofs for each cash drawer and the daily bank deposit proof. Finance will
reconcile submitted documentation to the bank records.
Safeguarding of Cash
The facility will have a cash safe with either a combination or key lock. Access to the safe shall be
restricted to City approved managers. The combination or key shall be changed periodically due to
turnover of authorized personnel or if theft occurs. The cash safe shall be located within a secure
room or office with access limited only to authorized personnel. Ideally, the office shall have
computerized records of access based on an employee access card.
Transporting and counting of monies within the facility must always be done by two authorized
employees and never by only one employee. Cash and deposit counts must always be performed
within the secure office and documented by each of the two employees. Signatures by each
employee on a daily cash log represents approval of the cash count and bank deposit. Discrepancies
between the cash counts and the actual bank deposit shall be directly addressed to the two
employees evidenced on the cash log and the manager of the facility, or their designees.
Employees may be subject to disciplinary action or termination due to cash discrepancies or theft.
Daily Cash Handling Process
1) Cash Drawer start-up cash
a. Each morning prior to opening for business, the facility manager, or the designee, shall
prepare each cash drawer with the preapproved amount of cash and coin.
b. Cash drawers shall remain in the secure location until the start of business.
c. Each employee working a cash drawer shall recount the start-up cash and sign off on
the daily cash log sheet.
d. The manager on duty shall walk each employee to the appropriate cash register and
verify that the cash drawer is placed in service and that the employee logs into the POS
system.
i. Cash drawers shall never be transported by only one employee.
2) Cash Transactions
a. All cash and credit transactions must be entered through the POS system.
i. Acceptance of personal checks will be prohibited at certain facilities. Those
facilities shall have a sign posted informing customers of this policy.
b. A receipt shall be offered to the customer after every transaction.
c. Only the approved managers shall have system authority to process refunds, returns,
voids or over -rings.
3) Cash Drawer Count and Reconciliation
a. At the end of each employee's shift, the manager on duty shall verify that the employee
logs off the POS system.
b. The manager shall remove the cash drawer and walk with the employee to the secure
office.
c. The cash drawer shall be counted immediately by the employee in the direct presence
of the manager and documented on the daily cash log.
i. The cash count shall be compared to a cash register report from the POS system
and any discrepancy shall be noted.
d. The manager shall recount the cash drawer and evidence the cash count on the daily
cash log.
i. Any discrepancies in count between the employee and manager shall be
reconciled prior to finalizing the daily cash log.
ii. If employee and manager are in agreement, both parties sign the daily cash log
and the monies and log sheet are placed in the safe by the manager prior to the
employee leaving the secure room.
4) Bank Deposit Preparation
a. The shift manager, in the presence of the facility manager, or the designee, shall
prepare a total daily bank deposit based on the daily cash logs of each cash drawer.
i. The facility manager, or the designee, verifies that each cash log sheet is
properly approved by employee and shift manager.
ii. The facility manager, or the designee, recounts the cash and verifies that the
total deposit amount is in agreement with the totals of each daily cash log.
b. Start-up cash for the following day's cash drawers are deducted from the daily deposit.
i. The start-up cash is placed in a bank bag and stored in the safe for the
subsequent day cash drawers.
c. The shift manager and facility manager, or their designees, sign the deposit slip, make a
copy for Finance Department, and place the monies and deposit slip in the bank deposit
bag.
L The deposit bag is placed in the safe, witnessed by both employees.
5) Transporting Daily Deposit to the Bank
a. For deposits made at night, an on -duty police officer shall be called to the facility to
transport the shift manager, or the designee, and deposit bag to the bank. The deposit
bag shall be removed from the safe with the police officer present as witness. If the
police are unavailable, two authorized employees shall deliver the deposit to the bank.
b. For deposits made during the day, it is preferable to have two employees deliver the
deposit to the bank.
6) Daily Reports to Finance
a. The facility manager, or the designee, shall be responsible for forwarding the following
information to the Finance Department:
IMI
i. Approved Daily Cash Logs
ii. Daily POS system report with subtotals by cash register
1. POS reports shall be only for the operations of one specific department.
iii. Copy of the approved Daily Bank Deposit slip
1. The facility's deposit shall be made separately from any other related
departmental operations (i.e.- Aquatic Center deposits shall be separate
from Recreation deposits)
iv. Any other reports as may be determined from time to time.
b. Finance shall reconcile facility reports to the bank statement.
Other Cash Controls
1) Currency larger than a twenty -dollar bill ($20) shall be inspected for any signs of being
counterfeit.
2) Only cash or credit cards will be accepted at certain facilities.
3) Credit cards will be processed at the point-of-sale and must not leave the customer's sight. In
no instance will credit card information be written down by City staff or retained in any fashion.
4) A receipt is required to be given to the customer for every transaction.
Cash Operations without a POS System
Some City operations may be conducted in a location where it is not feasible to have a POS system
to account for cash transactions, such as the Roberts Park concession building and offsite events for
the liquor store. This policy is still applicable in those instances with the exception of reconciling the
receipts to a POS system report. Daily cash count sheets must still be maintained and approved, and
deposits shall be made on the next business day. If possible, two employees shall be present when
counting the cash and creating the deposit slip.
Policy Compliance
All employees of the City of Hutchinson, primarily Liquor Hutch and the Aquatic Center, who are
responsible for cash transactions shall be subject to the procedures within this document. The
Finance department acknowledges that certain aspects of this policy may not be practical for all
situations. A deviation from policy may be approved if it is determined that that such deviation does
not present a material risk of mishandling or misreporting cash activity. Any deviation from this policy
must be approved by the Finance Director.
The City's Finance department shall reserve the right to create an internal audit process and to
perform audits as determined necessary.
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REVENUE POLICY
PURPOSE
The City of Hutchinson is committed to maintaining a revenue system that meets the City's immediate
and long-term service delivery needs, protects the City's creditworthiness, and follows best practices
for administration and collection.
REVENUE STRUCTURE AND SOURCES
The City will strive to maintain a stable and diverse revenue system to reduce the effects of short-
term fluctuations in any one revenue source. Services having a city-wide benefit shall be financed
with revenue sources generated from a broad base, such as property taxes, state aids and transfers
from enterprise funds. Services where the customer determines the use shall be financed with user
fees, charges and assessments related to the level of service provided.
1) Property Taxes
Property tax payments are the largest source of revenue in the City's General fund, accounting
for approximately 40% of the total annual revenue. The City will strive to proactively avoid
large increases in property taxes and will explore all other alternatives, including:
➢ Other policy options (debt management, fees & charges, cost allocation, expenditure
cuts and use of reserves).
➢ Budget scenarios for a 0% tax levy, including potential reductions in service levels.
➢ Consideration will be given to staying within the amount of revenue generated by
increased market value with no increase in the tax rate.
If after exhausting these alternatives, a tax increase is required, the goal of the City will be to
keep any property tax rate increase at or below the prevailing inflation rate. City services will
be funded to the maximum extent possible by the increases in market valuation (i.e.; new tax
base growth and valuation increases).
Possible factors for considering an increase in property tax include:
➢ Long-term protection of the City's infrastructure.
➢ Meeting legal mandates imposed by outside agencies.
➢ Maintaining adequate fund balance and reserve funds sufficient to the City's Fund
Balance Policy.
➢ Funding City development and redevelopment projects that will clearly result in future
tax base increases. The expenditures of development and redevelopment funds must
be in accordance with a defined strategy as shown in the City's comprehensive plan,
capital improvement plan, and other council documents.
Property tax increases to meet other purposes will be based on the following criteria:
➢ A clear expression of community need.
➢ The existence of community partnerships willing to share resources.
➢ Establishment of clearly defined objectives and measurements of success, including
appropriate sunset provisions.
2) Fees and Charges
The City will establish fees and charges for services when the cost of services can be
allocated equitably among service users.
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a. General Fund
Tax dollars should support essential City services that benefit and are available to
everyone in the community (such as parks, police and fire protection). For services that
largely or solely benefit individuals, the City should recover full or partial costs of service
delivery through user fees. The user fees must not exceed the full cost of providing the
service.
b. Enterprise Fund User Fees
Customer or user fees for services/products provided by an enterprise fund shall be
determined at a level that fully covers the total direct and indirect costs, including
operating expenses, capital expenditures and debt service. The fees shall also provide
for a positive cash flow and adequate working capital.
c. Fee Schedule
The City's fee schedule shall document all fees charged, or assessed, for services
provided to users or customers. Departments shall review existing fees as part of the
annual budgeting process to ensure that fees keep pace with changes in the service
delivery costs as well as changes in methods or levels of service delivery. Fees for new
services shall also be determined in a manner that equitably charges the user for the
service provided. Administration and Finance shall compile a preliminary fee schedule
and present to city council for approval by December 31 of each year.
REVENUE ESTIMATES
The City will conservatively estimate and budget for its annual revenues using an objective, analytical
process. All existing and potential revenue sources will be re-examined annually.
NON-RECURRING REVENUES
Revenue sources that are non-recurring in nature shall not be used to fund ongoing programs or
operations of the City. This includes revenue such as sales of assets, settlement from a lawsuit,
inter -fund transfers and other one-time payments. These revenue items should be used to build
reserves or for projects that will result in long-term operating costs savings.
Non-recurring revenue may also include grants and donations. These revenue sources should be
dedicated to the use designated by the grantor or donor.
The annual budget shall be prepared in a manner that eliminates, or minimizes, reliance on
unpredictable or non-recurring revenues for on-going operating costs.
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OPERATING BUDGET
PURPOSE:
The objective of the operating budget policy is to ensure that sufficient information is available to
decision makers to provide for adequate levels of funding for essential City services at reasonable
costs.
Budgeting is an essential element of the financial planning, control and evaluation process of
municipal government. The "operating budget" is the City's annual financial operating plan. The
annual budget includes all operating departments of the general fund, other governmental funds and
proprietary funds.
The budget will provide for adequate maintenance of city facilities and equipment and for their orderly
replacement.
The following funds are included within the City's annual budget
GOVERNMENTAL FUNDS:
1) General Fund, which accounts for all financial resources except those required to be
accounted for in another fund, and include basic governmental services, such as Police, Fire,
Parks and Recreation, Streets and Highways, Building Inspections, Cemetery, Airport and
Administrative services.
2) Special Revenue Funds, which account for revenues that are legally restricted or committed
to a specific purpose other than debt service and capital projects. The City currently budgets
for the Economic Development Authority and the H.A.T.S. Facility funds. (See exhibit A)
3) Debt Service Funds, which is used to account for the payment of general obligation bond
principal and interest from the City's debt tax levy and special assessment bond principal and
interest from special assessment levies.
4) Capital Projects Funds, which are used to account for the acquisition or construction of major
capital projects other than those financed by proprietary fund activities.
PROPRIETARY FUNDS:
Proprietary funds will be self-supporting and user rates or fees will be reviewed annually and adjusted
if necessary to ensure adequate funding of operating and capital expenses.
1) Enterprise Funds, which include the City's "business -type" activities. The City budgets for the
Liquor, Water, Wastewater, Storm Water, Compost and Refuse funds.
2) Internal Service Funds, which account for the financing of goods or services provided by one
department to other departments of the City on a cost reimbursement basis. The City budgets
for the Equipment Replacement and Self -Insurance funds.
BASIS OF ACCOUNTING AND OF BUDGETING:
The City accounts and budgets for all Governmental Funds using the modified accrual basis of
accounting. This basis means that revenue is realized in the accounting period in which it becomes
available and measurable, while the expenditures are recognized in the accounting period in which
they are incurred. Exceptions to the modified accrual basis include:
• Grants, which are considered revenue when awarded, not received; and
• Principal and interest on long-term debt, which are recognized when paid.
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The City's Proprietary Funds are accounted and budgeted using the full -accrual basis of accounting.
Under this method, revenues are realized when they are earned and measurable, while expenses are
recognized when they are incurred regardless of timing or related cash flows. The basis for preparing
the budget is the same as the basis for accounting except for principal payments on long-term debt
and capital outlay expense, which are treated as budgeted expenses.
BALANCED BUDGET:
The City Administrator shall submit a balanced General fund budget that provides for all current
expenditures with current revenues, matching ongoing operating expenses with the appropriate
source of ongoing revenues, except in emergency situations or in the event of unforeseen needs.
The City will avoid budgetary procedures that balance current expenditures at the expense of meeting
future years' budgets.
Any inclusion of previous years' excess fund balance in the adopted budget will be intended for one-
time or non-recurring expenses or projects.
The impact on the operating budget from any new programs or activities being proposed should be
minimized by providing funding with newly created revenues wherever possible.
BUDGETARY CONTROLS:
The City Administrator will ensure that a budgetary control system is in place to adhere to the
adopted budget and will provide monthly reports comparing actual revenues and expenditures to the
budgeted amounts. The legal level of budgetary control is at the department level within a fund.
1) Departments shall not exceed the budget within the four main expense categories without City
Administrator approval. Specific expense items within a category may be over budget as long
as the category in total does not exceed the budget. The main expense categories are as
follows..
a. Wages & Benefits
b. Supplies
c. Services & Charges
d. Miscellaneous
2) Surplus departmental revenue may not be used to justify overspending an expenditure without
approval from the City Administrator.
3) The City Administrator is authorized to approve a transfer of funds from one appropriation to
another within the budget of any department of the City. Department means any city function
organized under the direct control of a single department head. Such approval shall be made
by written memorandum setting forth the reasons therefore.
4) No officer or employee of the City shall place any order or make any purchase except for a
purpose and to the amount authorized in the budget resolution, or as authorized by the City
Administrator.
CAPITAL IMPROVEMENT PLAN:
The City Administrator will coordinate the development of the Capital Improvement Plan with the
development of the operating budget. Costs associated with new capital improvements will be
tracked for each project and included in future budget forecasts.
PUBLIC HEARING:
The City's budgeting process allows for public input at various budget workshops as well as the
annual Truth in Taxation hearing.
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FUND BALANCE
Policy Overview:
Fund Balance is defined as the difference between assets and liabilities reported in a governmental
fund. It is essentially the accumulation of all prior years' net surpluses and/or deficits of revenues
over expenditures.
The City of Hutchinson (City) understands it has a responsibility to maintain prudent financial
practices to ensure stable operations for the benefit of city residents and businesses. Fund balance
reserves are an important component in ensuring the overall financial health of a community by giving
the City cushion to meet contingency or cash flow timing needs.
The office of the State Auditor recommends that at year-end, local governments maintain an
unrestricted fund balance in their general fund and special revenue funds of approximately 35 to 50%
of fund operating revenues, or no less than five months of operating expenditures. While the bond
rating agencies do not have recommended fund balance levels, the agencies look favorably on larger
fund balances, which protect against contingencies and cash flow needs.
The purpose of this policy is to establish specific guidelines the City will use to classify fund balances
into categories based primarily on the extent to which the City is bound to honor constraints on the
specific purposes for which amounts in these funds can be spent.
Classification of Fund Balance:
Annual financial statements shall be prepared in accordance with generally accepted accounting
principles establishing fund balance at the end of each year into the following categories:
1) Non -spendable
a. This category includes amounts that are not in a spendable form (i.e.: prepaid expense
or supply inventories). Resources that must be maintained intact pursuant to legal or
contractual requirements are also considered non -spendable.
2) Restricted
a. Amounts subject to externally enforceable legal restrictions (creditors, grantors,
contributors and by law through constitutional provisions or enabling regulations).
3) Unrestricted
The total of committed fund balance, assigned fund balance and unassigned fund balance as
described below:
a. Committed
i. Fund balance that can only be used for the specific purposes determined by the
City Council. The committed amounts cannot be used for any other purpose
unless the City Council removes or changes the specified use by taking the same
type of action it employed to commit those amounts.
i. The City Council will annually, or as deemed necessary, commit specific revenue
sources for specified purposes by resolution. This formal action must occur prior
to the end of the reporting period, however, the amount to be subject to the
constraint, may be determined in the subsequent period.
iii. To remove the constraint on specified use of committed resources, the City
Council shall pass a resolution.
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b. Assigned
i. Amounts that are constrained by the government's intent to use for specified
purposes, but are neither restricted nor committed. Assigned fund balance in the
General fund includes amounts that are intended to be used for specific
purposes.
ii. The City Council has delegated the authority to assign and remove assignments
of fund balance amounts for specific purposes to the City Administrator.
4) Unassigned
a. Unassigned fund balance represents the residual classification for the General fund.
This includes amounts that have not been assigned to other funds and have not been
restricted, committed, or assigned to specific purposes within the General fund. The
General fund should be the only fund that reports a positive unassigned fund balance
amount.
Governmental Funds:
The City's governmental funds include the following fund types:
1) General Fund
a. The City will maintain an unrestricted fund balance in the General fund of an amount not
less than 40% of the next year's General fund budgeted expenditures. This will assist in
maintaining an adequate level of fund balance to provide for cash flow requirements
and contingency needs because major revenues, including property taxes and other
government aid are received in the second half of the City's fiscal year.
b. Fund balance in excess of 40% but less than 50% of next year's budgeted General fund
expenditures shall be designated as Unassigned.
c. Fund balance in excess of 50% shall be reviewed by City Council to determine if such
excess should be transferred to other funds to be used as a financing source for capital
improvements, equipment purchases or other needs as determined by City Council.
2) Special Revenue Funds
a. Special Revenue funds are used to account for and report the proceeds of specific
revenue sources that are restricted or committed to expenditures for specified purposes
other than debt service or capital projects. Governmental accounting standards require
that substantial inflows of revenues into a special revenue fund be either restricted or
committed in order for the fund to be considered a special revenue fund.
3) Debt Service Funds
a. Debt Service fund balances are considered restricted. They are resources that are
being accumulated for payments of principal and interest maturing in the current and
future years.
4) Capital Projects Funds
a. Capital Project fund balances are considered either committed or assigned. They are
resources that are used to account for the acquisition or construction of capital facilities,
infrastructure and equipment, other than those financed by Enterprise funds or the
Equipment Replacement fund.
b. The majority of these funds should be assigned for the Capital Improvement Plan (CIP)
or reserved for a specific project.
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c. Specific Capital Project funds may temporarily have a negative fund balance due to the
timing of federal, state or other funding.
d. Future capital projects must be identified and quantified within the City's five-year CIP,
which shall be included in the City's annual budget document.
e. The City has several capital projects funds, including:
i. Capital Projects fund, Community Improvement fund, Airport Construction fund,
and the annual Capital Improvement Construction funds.
1. The Capital Projects fund accounts mainly for capital improvements
related to General fund facilities and miscellaneous infrastructure
maintenance. The main funding sources are LGA, excess HUC payments
and grants.
2. The Community Improvement fund accounts for city enhancement and
public arts projects as approved by the City Council. The main funding
sources are retired bond funds, grants and donations.
Enterprise Funds:
1) It is the goal of each enterprise fund to cover the costs of operations, including depreciation
and a transfer to the General fund, to maintain a financially healthy enterprise. The City will
maintain cash reserves in the Enterprise funds at a minimum level equal to 25% of the annual
operating costs plus one year of debt service payments.
a. The Liquor fund shall be exempt from this provision since the majority of profits are
transferred to the General fund.
2) The Water, Sewer and Storm Water funds may contribute capital improvement dollars to the
annual Capital Improvement Construction fund as a reimbursement for infrastructure placed in
service in conjunction with roadway and other improvement projects. Contributions shall not
exceed the total cost of the specific infrastructure being capitalized within the enterprise fund.
3) Utility rates will be reviewed annually regarding projected expenses and capital improvements.
The City Council will annually establish rates in accordance to operating cost recovery and the
projected capital improvements.
Order of Fund Balance Spend -Down:
1) When both restricted and unrestricted resources are available for use, it is the City's policy to
first use restricted resources, and then unrestricted, as they are needed.
2) When committed, assigned or unassigned resources are available for use, it is the City's policy
to use resources in the following order; (1) Committed; (2) Assigned; and (3) Unassigned.
3) A negative residual amount may not be reported for restricted, committed, or assigned fund
balances in the General fund.
Monitoring and Reporting:
The City Council shall review fund balance and cash-flow needs during the budget process in
accordance with this policy. Annually, after the audited financial report has been completed, the City
Council shall review fund balance results with the City Administrator, Finance Director and the City's
independent auditor.
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CAPITAL IMPROVEMENT PLAN
VISIONS AND GOALS
Each year, as part of the annual budgeting process, the City of Hutchinson prepares a five-year
Capital Improvement Plan (CIP) that includes the following years' capital budget. The CIP identifies
projects that will support existing and projected needs in the following areas: transportation, parks &
recreation and public safety, etc. It is based upon numerous long range planning documents that are
updated regularly as identified by the Facilities Committee, Fleet Committee, Resource Allocation
Committee and City staff. The CIP prioritizes the use of limited resources that are available for
capital items by identifying which projects will be funded, how they will be paid for and when they will
be purchased. It establishes a comprehensive development program that is used to maximize
outside revenue sources and effectively plan for the growth and maintenance of the City's
infrastructure.
POLICIES
Criteria identified for inclusion of capital items in the CIP plan are as follows:
1) Capital Item must have a minimum cost of $10,000
2) Project must define the year proposed
3) Funding source should be identified
4) Detail should include annual operating costs or savings for proposed capital item
5) Department priority should be established
6) Must have a useful life of three years or greater
The plan encompasses projects using the following priority levels:
Priority 1: (Urgent) Projects currently underway or those that are considered essential to the departments
of City operations, and should not be delayed beyond the year requested. Failure to fund these projects will
seriously jeopardize City's ability to provide service to the residents and/or expose the City to a potential
liability and negative legal exposure.
Priority 2: (Very Important) Projects that are needed by a department or the City to improve or maintain
their operations, and to delay would cause deterioration or further deterioration of their current operation
and/or level of service to the residents of the City. These should not be delayed beyond the year requested.
Priority 3: (Important) Projects that are needed by a department or the City to improve or maintain their
operations, and should be done as soon as funds can reasonably be made available.
Priority 4: (Less Important) Projects, which are desirable, but needing further study.
Priority 5: (Future Consideration) Projects, which sometime in the future will need to be funded to
maintain operations, safety or infrastructure desired within the community.
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CIP PROCESS
1) Finance distributes CIP forms and the prior year's data to departments for updating.
2) Departments add, remove and reprioritize CIP data from the prior year's report.
3) Finance updates the CIP database with recommendations made by the department directors
and the Fleet, Facility and Resource Allocation committees.
4) Initial draft is reviewed with City Administrator and Department directors, corrections or
adjustments are made.
5) Preliminary CIP plan is submitted to City council by August 1St
6) Final CIP plan is reviewed and adopted by City council by year-end.
PROCESS CALENDAR
April/May - Departments work on updating the CIP. Any new capital items should be requested at
this time. The Facilities, Fleet and Resource Allocation Committees begin meeting to review and
prioritize potential improvement projects submitted by Departments.
June/July - Departments return updated CIP items. The Facilities and Fleet Committees submit a
recommended five-year plan to the City Administrator. An initial CIP draft is reviewed with
Department directors and corrections or adjustments are made. Current year CIP items are
incorporated into the early stages of the budgeting process during this time frame.
August 1st - Per Section 7.05 of the Hutchinson City Charter, the City Administrator shall submit to
the council a recommended CIP Plan no later than August 1St of each year.
October/November - Departments and Finance make final adjustments to the preliminary CIP
December 31st - Final CIP is adopted by City council prior to year-end.
CAPITAL PROJECT APPROVAL
The CIP is a planning document comprised of potential capital improvement projects known at a
certain point in time. Projects are not approved simply by being included in the CIP as funding
sources or City priorities may have changed. All capital projects are subject to the City's purchasing
policy, requiring quotes/bids and approvals commensurate to the total cost.
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DEBT MANAGEMENT PLAN
The Finance Department of the City of Hutchinson has developed this Debt Management Policy to
provide guidelines for the issuance of bonds and other forms of indebtedness to finance necessary
land acquisitions, capital construction, equipment and other capital items for the City.
While the issuance of debt is frequently an appropriate method of financing capital projects and major
equipment acquisitions, such issuance must be carefully monitored to preserve the City's credit
strength and to provide the necessary flexibility to fund future capital needs.
The City will strive to maintain a "pay -go" capital funding policy, supporting capital spending without
the use of debt whenever feasible. The City will attempt to pay cash for capital projects that can be
anticipated and planned in advance. Financing capital projects with debt in certain circumstances
may be the most cost-effective means available to the City. City staff will analyze each potential
capital improvement and make a recommendation to City Council to either use cash reserves or issue
debt. The City's 5 -year Capital Improvement Plan will be a valuable planning tool for the financing of
future improvement needs.
The goal of the City's Debt Management Policy is to ensure a stabilized overall debt burden and
future tax levy requirement in addition to ensuring that issued debt can be repaid without weakening
the City's financial condition. Adequate resources must be provided for the repayment of debt, and
the level of debt incurred by the City must be effectively controlled to amounts that are manageable
and within levels that will maintain or enhance the City's credit rating.
With the adoption of this policy, the special property tax debt levy will not exceed the levy limit of
$2,600,000.
Purpose of Financing
The City borrows money primarily to fund long-term capital improvement projects, essential
equipment and vehicle needs and to refinance existing debt. The city will not issue long-term debt to
finance current operations or to finance projects where the debt maturity exceeds the useful life of the
improvement or asset. Debt will be used to finance eligible projects only if it is the most cost-effective
means available to the City.
The four primary borrowing purposes are summarized below:
1. Long -Term Capital Improvements
The City typically issues general obligation bonds to finance improvements to roadways,
infrastructure and city facilities. General obligation bonds generally achieve lower rates of
interest than other financing options since they are considered a lower risk. Debt issued for
this purpose generally will be for a term of at least 15 years.
Inter -fund borrowing is another form of long-term financing available to the City and will be
permitted only in those circumstances in which all of the following conditions are met:
a) The remaining fund reserve in the lending fund is adequate to meet cash flow needs.
b) A repayment schedule will be prepared detailing the annual principal and interest
payments due to the lending fund.
c) The repayment schedule will not exceed 15 years or the useful life of the improvement.
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d) The City Council approves the inter -fund loan and repayment plan via city resolution.
2. Essential Vehicle and Equipment
Certain specialized vehicles and equipment may require the issuance of short-term debt. City
staff will analyze cash reserves, other funding sources and short-term debt for each potential
purchase. Assets potentially financed with short-term debt include fire trucks, jet -vac trucks,
snowplow trucks, wheel loaders and any other specialized equipment as recommended by City
staff. Debt issued for this purpose generally will be for a term of 5 to 10 years.
3. Refinancing/Refunding of Existing Debt
The Finance Director shall periodically review the City's existing debt and recommend
refinancing or early refunding when economically beneficial.
4. Other Allowable
The Finance Director is allowed to pursue other allowable borrowing mechanism as allowed by
Minnesota State Statutes (Section 475, etc.) and approved by the City Council.
Special Property Tax Debt Levy
The City annually issues General Obligation Special Assessment bonds in accordance with
Minnesota Statutes 429 and 475. The annual debt service payments are funded by the city's special
property tax debt levy ("debt levy') and by special assessments paid by property owners. It is the
intent of the City to best manage the debt levy by using the following guidelines to finance annual
roadway and infrastructure improvements.
A. The project costs financed by G.O. Special Assessment Improvement bonds will consist of two
components accounted for in the Debt Service fund:
Project costs not financed by special assessments.
i. The debt associated with this component is repaid by the City's debt levy.
ii. The City will manage this component with an average annual debt limit of
$1,900,000.
iii. The annual debt limit may be increased up or down by city council to account for
changing interest rates and other economic factors.
iv. The City will manage all debt issuances and forecast future issuances to reach a
debt levy of $2,600,000. Based on current assumptions and interest rates, this is
projected to occur for property taxes levied in 2030 for 2031 collection.
2. Private property owner special assessments of at least 20% of the total project costs
financed by the G.O. bonds.
i. The debt associated with this component is repaid by private property owners
over a 10 -year period. The annual installments shall be on a straight-line basis
with simple interest equal to the true interest rate on the debt issuance plus 1%.
The City's debt levy generally is not impacted by special assessments unless
significant assessments are delinquent or deferred indefinitely.
ii. Certain improvement projects may result in a substantial assessment to a
specific large commercial property with the property owner agreeing to prepay
the entire assessment in the year of improvement. In this instance, the prepaid
assessment may be eliminated from the debt issuance and used as a funding
source in the Improvement Construction fund.
B. Future debt issuances will mature after 15 years. In the case of an exception to this guideline,
the debt maturity shall always be shorter than the life of the financed improvement or asset.
C. Debt service will be structured such that the debt levy will be stable over the 15 -year debt term.
This will prevent large fluctuations in the debt levy on a year-to-year basis.
D. Any bond premium received will be used to reduce the par value, ultimately resulting in lower
debt. City staff will review each year for any circumstances that may necessitate a different
treatment of the bond premium.
E. Debt issuances will be in an amount to finance the estimated project costs and professional
fees plus a reasonable construction contingency. The costs to issue debt will also be included
in the total amount financed.
F. Net general obligation debt will not exceed the statutory limit of 3% of the estimated market
value of taxable property in the City as required by Minnesota Statute, Section 475.53.
G. Retired debt service funds will be closed into the City's Community Improvement fund. This
fund will be the primary funding source for any potential debt service shortfalls.
H. City staff will periodically review the annual debt limit and may make recommendations to City
Council to increase the debt limit to address rising construction costs, interest rates or other
unforeseen factors.
I. Future financing may need flexibility in structuring its debt. This policy shall not prevent the
City from deviating from this policy as long as the City adheres to the overall intent of this
policy.
Prior Property Tax Levy Debt Policy
City Council approved resolution 13445 on July 8, 2008, setting guidelines to manage the special
property tax debt levy and the issuance of future debt. The Debt Management Policy above
supersedes the 2008 policy and shall be used as the guideline for all existing and future debt.
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PURCHASING POLICY
Policy Overview
It is the intent of the City of Hutchinson to purchase, in the most efficient and effective manner
possible, those goods and services necessary to conduct City operations. To accomplish this, a
formal set of purchasing procedures has been adopted. This policy recognizes and retains that the
ultimate purchasing authority is that of the City Administrator. This policy delegates purchasing
authority as outlined below.
Public Purpose
The City Council recognizes that public funds may only be spent if the expenditure meets a public
purpose and the expenditure relates to the governmental purpose for which the City of Hutchinson
was created.
The meaning of "public purpose" is constantly evolving. The Minnesota Supreme Court has followed
a broad approach and has generally concluded that "public purpose" means all activity that meets all
of the following standards:
• The activity will benefit the community as a body.
• The activity directly relates to the function of government.
• The activity does not have, as its primary objective, the benefit of a private interest.
Purchasing Agent
The City Administrator shall be the chief purchasing agent of the City. The City Administrator is
responsible for the citywide purchasing function and shall have the authority to delegate powers to
the City Department Directors and Supervisors for purchasing items within their respective budgets.
Purchasing
Purchasing and budgetary control is the responsibility of the department Director. Departments shall
strive to obtain the best possible prices and value, and are encouraged to buy locally whenever
possible or practical.
Each department shall have on file with the Finance department a list of employees authorized to
obligate appropriations of that department. Authorized employees shall be regular full-time or regular
part-time employees of the City. Individual exceptions may be considered by the City Administrator,
Finance Director and Department Director.
In no case shall an employee make a purchase for personal use utilizing his/her city purchasing
authority. Violation of this policy may result in an employee's purchasing authority being revoked.
1) Purchasing Limits:
$ 0 to $ 4,999 Department Director approval, or approved designee
$ 5,000 to $ 24,999 Finance Director or City Administrator approval required
$ 25,000 to $ 49,999 Finance Director and City Administrator approval required
$ 50,000 to $ 99,999 Finance, City Administrator & City Council approval required
$100,000+ Competitive Bidding required (certain exceptions)
2) Written Quotes:
a. Purchases estimated to cost less than $5,000 may be made without seeking more than
one quote, however more than one quote is encouraged.
b. Purchases estimated to cost more than $5,000 but less than $100,000 must have at
least two written quotes. Verbal quotes should not be accepted. The City will maintain
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documentation for a period of at least one year of its efforts to obtain at least two written
quotes as required by state statute 471.345.
c. The City will require competitive bidding on the sale, purchase or rental of supplies,
materials or equipment and on contracts for the construction, alteration, repair or
maintenance of real or personal property estimated to exceed $100,000.
3) Competitive Bidding
Competitive bidding is required for certain contracts estimated to exceed $100,000. The
competitive bidding process may not be avoided by splitting a contract into several smaller
contracts, each of which is under the competitive bidding threshold.
4) State Pricing & Cooperative Purchasing
Contracts or purchases estimated to exceed $25,000 must consider the availability, price and
quantity of supplies, materials, or equipment available through the State's Cooperative
Purchasing Venture (CPV) before buying through another source.
The City may also purchase through a national municipal association's purchasing alliance or
cooperative. The alliance or cooperative must have been created by a joint powers agreement
and must purchase items from more than one source based on a competitive bidding process
or competitive quotations. The City currently is a member of the State's CPV and a national
joint powers alliance called NJPA. Contact the Finance Director with questions on accessing
pricing for these agencies.
5) Purchase Orders
An approved purchase order is required for all purchases estimated to exceed $5,000.
Departments may not place an order without a prior approved purchase order.
a Departmental Responsibility
i. Obtaining at least two written quotes
ii. Preparing and forwarding a purchase requisition to the Finance Director for
review
• Attach the written quote documentation
• Provide a reasonable explanation of the requested purchase
• Include the proper departmental expense coding
• Obtain the department director's approval
iii. Forwarding a copy of the approved purchase order to the vendor, if required.
b Finance Department Responsibility
i. The Finance Director will review each purchase requisition in a timely manner.
ii. An approved purchase order, or an explanation in the case of a denied
requisition, will be provided to the originating department generally within 2-3
business days.
iii. The finance department will maintain scanned images of all approved purchase
orders and corresponding written quotations for compliance with state statute
iv. Finance Director and City Administrator approvals are required prior to seeking
City Council approval on purchases over $50,000.
c Purchases not requiring a Purchase Order
i. Annual Service Contracts —The City shall evaluate the performance of service
contracts at least every three years and determine if the City will renew the
agreement or seek written proposals from service providers.
-24-
ii. Professional Services - Contracts with a total cost of $5,000 to $50,000 to
provide professional services shall be approved by the City Administrator.
Contracts with a total cost over $50,000 shall be approved by City Council. A
purchase order is not required if a contract is executed.
iii. Inventory Purchases - Purchases for inventory assets of certain operations
shall not require a purchase order as doing so would delay purchases and
potentially hinder operations. This shall apply to the Liquor store, Creekside's
bagging production process, Water and Sewer chemical purchases and HATS
fuel purchases. The department directors shall be responsible for ensuring that
the City is receiving favorable pricing.
iv. Emergency Purchases - Purchases required by emergencies which impair the
City's ability to deliver services shall be outside the scope of this policy. In these
rare instances, a purchase order is not required, however the departmental
director shall submit a brief written explanation of the emergency situation and
attach to the invoice presented for payment.
Disbursement Methods
The following disbursement methods are available for departmental approved purchases:
1) City Check — This is the standard disbursement process described in the next section.
2) Departmental Procurement Card — Covered under separate policy; "Procurement Card
Policy".
3) Vendor In -House Charge Accounts — The City currently utilizes charge accounts with
various vendors in the City. The Finance department will maintain a list of departmental
employees authorized to make purchases and will submit updated lists to the vendors at least
annually. Authorized purchasers shall be regular full-time or regular part-time employees.
4) Vendor Charge Cards — The City currently utilizes vendor charge cards for a limited number
of vendors. Departments will control access to these cards to prevent unauthorized use and
will notify the Finance Director immediately of lost/stolen cards or fraudulent activity.
5) Petty Cash — Departmental petty cash funds may be utilized for small purchases. The
department shall maintain detailed receipts for each purchase and periodically submit to the
Finance department for replenishment. Receipts shall be properly coded and contain an
adequate explanation of the expense along with departmental approval.
Disbursement Process
Departments will submit properly coded and director approved invoices to the Accounts Payable
Specialist by 12:00pm on Monday, one week prior to each City Council meeting. In the case of a
Monday holiday, the deadline shall be 12.00pm on the prior Friday. Invoices submitted after the
deadline may be delayed to the next council check run. Checks will be distributed on the Wednesday
after each City Council meeting.
1) Invoices — Content and Approvals
a. Payments will only be made from original mailed or emailed invoices.
i. Payments will not be made from faxes, photocopies, vendor statements or
quotes/estimates.
b. The City of Hutchinson shall be named on the invoice as the purchaser.
i. Invoices naming another entity as the purchaser will not be processed for
payment. The vendor should be contacted to correct the invoice.
c. The invoice date shall accurately reflect the actual date of service or purchase.
d. The invoice is sent directly from the vendor to the City's Accounts Payable Specialist at
City Center.
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i. The A/P Specialist will stamp each invoice with a received date and route to the
appropriate department for approvals.
e. A reasonable description of the purchase or service, shall be included on the invoice.
f. The departmental expense code and director/supervisor approval shall be evidenced
directly on the invoice and not on a separate paper or post -it note.
g. Departments are responsible for ensuring that the merchandise is received or the
services are performed prior to submitting an invoice for payment.
i. The City generally does not provide down payments for merchandise or services.
Progress payments may be made to vendors based upon a reasonable
percentage of completion for the service or project.
ii. Departments shall work directly with the vendor to correct any issues regarding
incorrect or defective merchandise or service.
Prompt Payment of City Bills
Minnesota Statute 471.425 requires cities to pay each vendor obligation according to the terms of the
contract. If no contract terms apply, payment must be made within the standard payment period of 35
days from the date of receipt.
1) Date of receipt is defined as the later of:
a. The completed delivery of the goods or services, or the satisfactory installation,
assembly or specified portion thereof; or
b. The receipt of the invoice for the delivery of goods or services.
2) Invoice Errors
a. The City must notify a vendor within 10 days of the date of receipt if the invoice is
incorrect. The 35 -day standard period begins when a corrected invoice is received.
3) Payment of Interest
a. The City must calculate and pay interest if an invoice is not paid according to the terms
of the contract, or if no contract terms apply, within the standard period of 35 days.
i. Interest rate shall be 1.5% per month or part of month.
ii. The minimum monthly interest penalty that the City shall calculate and pay a
vendor for the unpaid balance of any one overdue bill of $100 or more is $10.
iii. For an unpaid balance of less than $100, the City shall calculate and pay the
actual interest penalty due to the vendor.
4) Prompt payment to Subcontractors
a. Each contract of the City must require the prime contractor to pay any subcontractor
within 10 days of the prime contractor's receipt of payment from the City for undisputed
services provided by the subcontractor.
b. The City's contract must require the prime contractor to pay interest of 1.5% per month
or any part of a month to the subcontractor on any undisputed amount not paid on time
to the subcontractor.
i. The minimum monthly interest penalty payment for an unpaid balance of $100 or
more is $10.
ii. For an unpaid balance of less than $100, the prime contractor shall calculate and
pay the actual interest penalty due to the subcontractor.
Prior Policy
The policy above supersedes the prior city policy #1.11.
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PROCUREMENT CARD POLICY
POLICY:
The purpose of this policy is to provide detailed information regarding the use of procurement cards
authorized by the Hutchinson City Council and assigned by the City Administrator to selected
department directors to purchase goods and services for the City. The use of the procurement card is
an alternate means of payment and is not meant to replace the standard purchasing order system of
the city. The use of procurement cards should only take place when the normal purchasing order
system cannot be used and/or the use of a credit card is the only purchasing mechanism allowed.
STATUE AUTHORITY:
Minnesota Statute 471.382 Credit Cards. "A city council may authorize the use of a credit card by
any city officer or employee otherwise authorized to make a purchase on behalf of the city. If a city
officer or employee makes or directs a purchase by credit card that is not approved by the city
council, the officer or employee is personally liable for the purchase. A purchase by credit card must
otherwise comply with all statutes, rules, or city policy applicable to city purchases."
POLICY ADMINISTRATION:
The City Administrator shall determine the appropriate department directors to be issued City
procurement cards. The Finance Director, with the oversight of the City Administrator, is hereby
designated the responsibility of procurement card issuance, accounting, monitoring of use, retrieval,
payment of all charges, maintenance of a list of authorized users and cards assigned to them and
general compliance with the City's Procurement Card Policy.
MAXIMUM LIMITS:
The monthly maximum card limit per director will be established by the City Administrator and
Finance Director based on the anticipated need.
DOCUMENTATION:
Invoices or receipts are required to support all procurement card purchases since the monthly billing
statements lack sufficient detail to comply with Minnesota Statutes. For purchases in which a receipt
is not normally available, a copy of the completed application or order form should be used as a
receipt (for example, conference registration forms).
CARDHOLDER RESPONSIBILITIES:
1) The Department Director is responsible for the authorized use of the City issued procurement
card and for any purchases made on it.
2) Ensure that the procurement card is used in compliance with the City's Purchasing Policy.
a. Purchases must be budgeted.
b. Use of the procurement card for personal purchases is strictly prohibited. If the
procurement card is inadvertently used for a personal purchase, contact the Finance
Director/City Administrator immediately. Not reporting inadvertent personal purchases
will result in immediate revocation of the procurement card and the cardholder may be
subject to disciplinary and/or legal actions. The cardholder will be personally
responsible for reimbursing the City for any inadvertent personal purchases.
3) The procurement card may only be used for the purchase of goods or services for official City
business.
-27-
a. The procurement card may not be used for cash advances or any other type of
purchase not permitted under the City's Purchasing Policy. No cardholder shall be
allowed to make any purchases for personal use through the City. Use of card for
personal use or inappropriate purchases as deemed by the City Administrator may
result in discipline, including reimbursement of the purchase to the City. Two or more
inappropriate purchases may be cause for revocation of the credit/procurement card.
b. Purchase of motor fuels is prohibited, with the exception of extended travel with a city
owned vehicle. Fuel for personal vehicles used for official city business is reimbursed to
the employee based on the IRS mileage reimbursement through the Employee Expense
Reimbursement process covered under separate policy.
c. Cardholders shall verify with the Finance Department and notify vendors if the
transaction is exempt from Minnesota sales tax. All transactions should be exempt from
all local sales tax.
4) Authorized cardholders are responsible for the secure custody of the procurement card and
protection against theft, misuse and fraud.
a. Notify the Finance Director immediately if the procurement card is lost or stolen and
when fraudulent activity is suspected.
b. When fraudulent activity is suspected, immediately contact the procurement card
company at the phone number listed on the back of the card. The procurement card
must not be used again until the situation is resolved. A new procurement card will be
issued if the activity was in fact fraudulent.
c. To prevent fraudulent activity, the cardholder shall not make transactions over
unsecured websites. Giving out procurement card information over the telephone is not
recommended and should only be done in rare instances where the order cannot be
completed in any other manner.
5) Monthly review, approval and reporting of transactions:
a. At the end of each month, department directors shall have 10 days to review and
approve the prior month purchases via the Wells Fargo online portal.
i. Each transaction shall be evidenced by a detailed receipt or order confirmation.
ii. Directors shall code each purchase to the correct departmental expense account
and provide an adequate description of the expense within the online portal.
iii. Directors shall print from the online portal a listing of all purchases made during
the month and submit to the Finance department along with all detailed receipts
supporting the purchases. Finance shall receive this information by the 11th day
of the month, or next business day if the 11th falls on a weekend.
b. The Finance department will review all transactions and provide the final approval to
Wells Fargo to deduct from the City's bank account the total payment amount to cover
all authorized purchases.
6) Returns or Disputed Transactions:
a. It is the cardholder's initial responsibility to work directly with the merchant to receive
proper credit on returned merchandise or disputed transactions.
b. Finance Department will be available to assist cardholders with returns or disputed
transactions if initial contact by the cardholder is unsuccessful.
7) The cardholder must immediately surrender the procurement card to the Finance Director
upon retirement or termination of employment. All receipts for current purchases shall be
coded and submitted to the Finance Director when the credit card is surrendered.
8) Any exceptions to this policy must be approved in advance by the City Administrator.
SUSPENSION OR REVOCATION OF CARDS:
If any of the following occur, immediate suspension and/or revocation of the procurement card
privileges may result, including discipline, as determined by the City Administrator:
1) Use of the card for personal purchases or cash advances.
2) Unauthorized use of card.
3) Failure to notify the procurement card company and Finance Director of a lost or stolen card,
and fraudulent activity.
4) Repeated failure to submit in a timely manner the monthly billing statement with proper
receipts/support for payment.
5) Repeated failure in which the attached receipts do not match the item description or dollar
amounts listed on the monthly billing statement with no explanation.
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Applicant:
City of Hutchinson
Request for Procurement Card
Department:
Requested Monthly Card Limit: $2,000 $5,000 $10,000 Other: $
By requesting a City procurement card, I acknowledge the following:
1. The procurement card is to be used only to make purchases in compliance with Minnesota
Statutes and the City's Purchasing Policy.
2. The card must be used in accordance with the City's Procurement Card Policy.
3. Violation of the Procurement Card Policy may result in suspension or revocation of use
privileges. Employees found to have inappropriately used the procurement card will be
subject to discipline, including potentially the requirement to reimburse the City for all costs
associated with such improper use.
Director Signature:
Authorization Information
Approved Monthly Card Limit: $
City Administrator Approval:
Finance Director Approval:
Date:
Date:
Date:
This fully approved request gives the Finance Director authorization to issue a City of Hutchinson
procurement card in the name of the applicant with a monthly card limit as approved by the City
Administrator.
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City of Hutchinson
Acknowledgement of Receipt of Procurement Card
I acknowledge that on the date indicated below, I received my City of Hutchinson Procurement
Card. I have previously received a copy of the Procurement Card Policy explaining the use and
responsibilities of the procurement card. I understand that:
1) The procurement card is a cost-effective method for the purchase and payment of small
dollar material transactions and is limited to $ per month.
2) The procurement card is to be used solely for City business purchases; not personal
purchases.
3) 1 am responsible for reconciling monthly statements and maintaining accurate accounting
records.
4) 1 must attach the itemized receipt with my statement each month.
5) Should my employment with the City of Hutchinson terminate, I am responsible for
returning the procurement card to the City Administrator or Finance Director, along with all
receipts for purchases within the current billing cycle.
If the procurement card is used for personal purchases, for unauthorized items, or used by someone
not authorized to do so, I hereby agree to personally pay the City for such purchases and hereby
authorize the City, if necessary, to withhold from my paycheck any amount necessary to pay these
charges.
This acknowledgement will be kept in my personnel file and I may be subject to discipline or
termination from employment for violation of this policy.
Procurement Card #:
Unique #: (used to activate card and ID purposes with Wells Fargo customer service)
Employee Name:
(please print)
Employee Signature:
Date:
Wells Fargo Customer Service: 1-800-932-0036
-31-
TRAVEL & MEAL EXPENSE REIMBURSEMENT POLICY
Policy Overview
This policy recognizes the fact that certain travel for official city business may require employees or
elected officials to incur expenses subject to reimbursement by the City. Reasonable travel costs for
out of town business meetings, conferences and training seminars may qualify for reimbursement as
provided by this policy. To be reimbursed by public funds, expenditures must meet a "public
purpose", defined by Minnesota Supreme Court as meeting all of the following:
➢ The activity will benefit the community as a body.
➢ The activity directly relates to the function of government.
➢ The activity does not have, as its primary objective, the benefit of a private interest.
This policy is intended to provide guidelines regarding which travel related expenditures are for public
purpose and authorized in accordance with the City's annual budget.
The City Administrator and Finance Director shall review all employee expense reimbursement
requests and will determine if an expense does not meet a public purpose and is not subject to City
reimbursement.
Travel Approval
Each department director is responsible for ensuring that employee travel is for City business and is
consistent with City policy. Department Directors are responsible for approving all travel requests
within his/her respective departments and will ensure that departmental budget dollars are sufficient
to cover requested travel prior to approving. Requests for travel by Directors shall have prior
approval by the City Administrator. The following approvals are needed prior to employee travel:
1) Same Day & Overnight Travel - Department Director approval is required.
2) Out of State - All out-of-state travel exceeding a 300 -mile radius from Hutchinson must be
approved within the annual budget process and approved separately by City Council. The
frequency of this out-of-state travel shall not exceed once every other year. In the event an
additional conference or seminar presents itself, the council may use its discretion in
considering the request.
3) Out of State - All out-of-state travel within a 300 -mile radius of Hutchinson shall be approved
by the City Administrator and does not require City Council approval.
Reimbursable Expenses
1) Transportation
Several means of transportation exist and each travel request shall consider the least -cost
method. For the majority of travel requests, a City vehicle provides the least -cost to the City
and shall be considered before any other means. Vehicles from other departments may be
available and shall be a consideration.
a) City Vehicle — All direct expenses incurred will be reimbursed, including fuel, oil and
maintenance/repair expenses. Only City employees are authorized and insured to drive
a city owned vehicle.
b) Personal Vehicle — When a city vehicle is not available, a personal vehicle may be
authorized for use. City reimbursement for the use of a personal vehicle is based on
the current IRS approved mileage rate using the shortest route. If the travel originates
from home, the mileage reported for reimbursement should be from the home or the
employee's normal City work facility, whichever is less. An employee's normal
commute mileage will not be reimbursed.
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c) Airplane/Other — travel by any means other than by vehicle shall be approved by the
City Administrator.
d) Other related costs — Reasonable parking fees, car rental and fares for rail, bus, taxis
and shuttles are all subject to reimbursement if related to City business. Taxis and
shuttles reimbursement may include a maximum gratuity of 20%. Gratuities in excess
of 20% will not be reimbursed by the City. A standard model sedan shall be used when
renting a car unless unusual circumstances dictate otherwise.
2) Lodging
The City will reimburse the reasonable cost of lodging for training, seminars or conventions of
two or more days if the event site is outside a 50 -mile radius of Hutchinson.
All employees shall ask for a standard room. In the event that a standard room is not
available, other lodging establishments shall be contacted prior to booking a non-standard
room. A non-standard room is reimbursable if it is at a contract rate through the event, offered
at the same rate as a standard room or if no other options are available within a reasonable
distance from the event.
An increase in lodging rate due to family members staying is not reimbursable. The employee
will be reimbursed only for a standard room.
Entertainment expenses incurred will not be reimbursed, such as in -room movies, mini -bar and
optional entertainment -type events provided at conferences.
3) Meals
The City will reimburse the cost of job-related meals only if an employee's travel requires an
overnight stay or if a business meeting is held during typical meal hours. The following limits
are in place for each meal:
Breakfast:
$15
— Travel begins
before 6:OOam and extends beyond 9:OOam
Lunch:
$20
— Travel begins
before 11:00am and extends beyond 2:OOpm
Dinner:
$30
— Travel begins
before 4:OOpm and extends beyond 7:OOpm
a) Meetings scheduled and held during typical meal hours do not automatically necessitate
that a meal will be provided at City expense. Per IRS regulations, a meal must have a
clear business purpose in order to be reimbursed.
b) The maximum amounts listed above apply to the meal, non-alcoholic beverage, sales
tax and gratuity.
c) Gratuities paid by the employee over 20% will not be reimbursed.
d) The above dollar amounts cannot be combined in any fashion in order to reimburse an
employee for a meal costing more than the maximum amount listed per specific meal.
For example, an employee cannot use the breakfast and lunch amounts to justify
reimbursement of a $60 dinner.
e) Employees are expected to take advantage of meals provided by the conference or
seminar. The City will not reimburse an employee for a purchased meal when a meal
was provided by the event.
f) If more than one employee is present at a job-related meal, one employee may pay for
the entire meal cost of all employees. The reimbursement request shall clearly identify
each employee present for the meal.
g) If non -city personnel are present at a job-related meal, the city may reimburse the
paying employee for the cost of the meal(s) of the individual(s) if an itemized receipt and
a form indicating who attended, where the meal was held and the city -related purpose
for the meal is submitted and approved by the Department Director and City
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Administrator. Reimbursement of a non -employee's meal is subject to the same dollar
limit as the employee.
h) When family members are present, a separate detailed receipt for the employee's meal
shall be requested.
i) The daily meal limits may be adjusted for out-of-state travel by the Finance Director
based on current IRS per diem guidelines.
4) Registration or Membership Cost
The City will reimburse the costs for registration, training and membership incurred to attend
conferences, seminars or training sessions. A check request shall be submitted to the City's
accounts payable department prior to the event as the primary option for payment of this type
of cost. The request shall include the necessary documentation evidencing the amount
payable and provide sufficient time to process a check prior to any payment due date. A
departmental purchasing card may also be used for payment based upon receipt of all
necessary travel approvals prior to making payment. Departments shall strive to utilize any
early registration discounts.
5) Non -Reimbursable Costs
a. Alcoholic beverages — whether consumed by an employee or a non-employee
b. Gratuities exceeding 20%. An employee will be required to reimburse the City for
gratuities in excess of 20% if a department purchasing card was used.
c. Snacks and other food/beverages outside of the daily meal reimbursements
d. Meals or events for spouses or family members traveling with an employee
e. Meals when an event provides for a meal
f. Private automobile expenses, including gas, oil, repairs
g. Traffic citations or fines
h. Travel between an employee's home and work facility
i. Entertainment expenses
j. In -room movies, mini -bar or other hotel services not required for City business
k. Optional entertainment events unless included as part of the overall conference
registration fee (e.g. optional golf rounds, sporting events, concerts)
I. Personal losses incurred while on City business
m. Other costs that do not meet the public purpose definition as determined by the City
Administrator and Finance Director
Employee Expense Reimbursement Form
The Finance Department shall annually provide an updated Employee Expense Reimbursement
Form (Exhibit B) to all employees. This form shall be used for all reimbursement requests related to
approved travel or work-related expenses paid by an employee .
1) Detailed Receipts — each item submitted for City reimbursement must be supported by an
itemized receipt indicating a reasonable explanation for the expense. All receipts shall be
attached to each reimbursement request.
a. Meals will be reimbursed based on a detailed itemized receipt. When a credit card is
used to purchase the meal, both an itemized receipt and a credit card charge slip
indicating the tip amount shall be submitted.
b. Receipts for parking and taxis may not be available and may be submitted for
reimbursement without a receipt.
c. Mileage reimbursement for the use of a personal vehicle shall detail not only the
mileage but also the location traveled and the business reason for travel.
d. Proper departmental expense codes shall be used for each line item.
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e. Unsupported expenses will not be reimbursed. If an employee is unable to get a
detailed receipt or the receipt is lost, a signed statement by the employee detailing the
purchased item, the business reason for the expense and certifying that the claim is
accurate must be submitted and approved by the Department Director. A copy of the
employee's credit card statement may also be provided to help support the dollar
amount being reimbursed.
2) Employees shall submit an employee expense reimbursement form with all necessary
supporting documentation to the appropriate Department Director for review and approval.
3) A Director approved employee expense reimbursement form shall be forwarded to the
Accounts Payable Clerk who will route to the Finance Director and City Administrator for
approval prior to payment. Any issues will be communicated back to the employee for
correction/clarification.
4) The Finance department will make necessary corrections to reimbursement requests for
mathematical errors, gratuities in excess of 20%, to remove any alcoholic beverages and other
changes that may be necessary to comply with this policy.
5) Reimbursement will be made with the next City Council check register.
6) Employees shall submit an expense reimbursement claim no later than 60 days from the date
the expense was paid or incurred. If employee expenses are submitted for reimbursement
more than 60 days after the expense is incurred, the reimbursement may be taxable and
appropriate withholdings would need to be made through the payroll system.
Cash Advances
An employee may request a cash advance prior to an overnight business trip. The cash advance
shall be used only for expenditures related to official City business as specified within this policy. An
employee expense reimbursement form shall be completed upon the employee's return, detailing the
expenses subject to reimbursement, less the cash amount advanced. Expenses paid by the
employee above and beyond the cash advance amount will be subject to employee reimbursement
per this policy. Any portion of the cash advance that was not expended for a City related purpose
must be reimbursed to the City within 60 days.
The employee shall be responsible for any cash advance that is lost or stolen. In such instances, the
employee must reimburse the City within 60 days.
City Representation
Employees shall be aware at all times that they are representing the City of Hutchinson while
traveling out-of-town for official City business. Employees given the opportunity to be away from their
regular work and having their expenses paid are expected to perform in a similar manner as if they
were still at work. Conduct improper for a city employee will be treated as if it occurred during regular
working hours. At no times shall alcoholic beverages be consumed by any person(s) driving or riding
in a City of Hutchinson vehicle.
Prior Policy
The policy above supersedes the prior city policies #3.22 and #3.23.
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FISCAL AGENT POLICY
Purpose
This policy defines the parameters necessary for the City of Hutchinson (City) to act as the fiscal
agent for a non -501(c)(3) organization (Other Entity) in order to secure grants or donations on behalf
of the Other Entity.
City Authority
All requests for the City to serve as fiscal agent shall be approved by the City Administrator. The City
Finance Director shall be made aware of all details related to approved fiscal agent projects for
proper accounting of proceeds and expenditures.
City Purchasing Policy
The City's purchasing policy must be followed in order to comply with the State of Minnesota
purchasing and contracting statutes. Vendor quotes shall be received, if required by policy, and the
contract shall be awarded to the lowest responsible bidder. Invoices paid by the City must be billed to
the City of Hutchinson and not another entity.
Public Purpose Expenditures
The City expenditure made on behalf of the Other Entity must meet a "public purpose", defined by the
Minnesota Supreme Court as meeting all of the following:
1) The activity will benefit the community as a body.
2) The activity directly relates to the function of government.
3) The activity does not have, as its primary objective, the benefit of a private interest.
The Minnesota Supreme Court further clarifies that activities that promote the following objectives for
the benefit of all the city's residents further a public purpose:
• Public Health
• Safety
• General welfare
• Security
• Prosperity
• Contentment
Donations
Donations related to a project with the City serving as fiscal agent shall be made directly to the City of
Hutchinson. The Hutchinson City Council shall formally accept all donations by resolution prior to
those funds being used for the designated purpose.
Grants
The Other Entity shall be responsible for the preparation of all grant documentation and grant
compliance, including reporting requirements. The City shall, upon request from the Other Entity,
supply supporting documentation or reports related to transactions incurred within the City's financial
system.
Other
The City shall not expend funds in excess of donations or grant proceeds received without City
Council or City Administrator approval.
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EXHIBIT A
List of City Funds
Governmental Funds:
1.
General Fund
2.
Special
Revenue Funds
a.
Rural Fire Department
b.
H.A.T.S.Operation
c.
Hutchinson Enterprise Center
d.
Economic Development Loan Funds
e.
HRA Loan Fund
f.
Tax Increment funds
g.
Public Sites Fund
3.
Debt
Service Funds
a.
Special Assessment Bonds Debt Service Funds
b.
Tax Increment Debt Service Funds
4.
Capital Projects Funds
a.
Capital Projects Fund
b.
Community Improvement Fund
c.
Airport Construction Fund
d.
Special Assessment Capital Improvement Funds
e.
Municipal State Aid Fund
Proprietary
Funds:
1.
Enterprise Funds:
a.
Liquor Fund
b.
Compost Fund
c.
Refuse Fund
d.
Water Fund
e.
Wastewater Fund
f.
Storm Water Fund
g.
Hutchinson Utilities Commission
2.
Internal Service Funds:
a.
Equipment Replacement Fund
b.
Self -Insurance Fund
Component Units:
1. Hutchinson Economic Development Authority
2. Hutchinson Housing Redevelopment Authority
-37-
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Ordinance No. 18-782 - Noise Ordinance Exemption for Schroeder Wedding
Department: Police
LICENSE SECTION
Meeting Date: 3/13/2018
Application Complete N/A
Contact: Daniel T. Hatten
Agenda Item Type:
Presenter: Daniel T. Hatten
Reviewed by Staff
Unfinished Business
Time Requested (Minutes): 2
License Contingency
Attachments: No
BACKGROUND/EXPLANATION OFAGENDA ITEM:
Mr. Joshua Schroeder and his bride are planning a wedding on May 12, 2018, between the hours of 9:00 am and
11:00 pm. The wedding will take place in West River Park on the Riversong stage. They are planning to have a music
festival including several bands and plan to have amplified music throughout the day with the ceremony to take place
around 1 pm. While the music will be amplified the music will range from polka, bluegrass and country.
The wedding party is requesting they be granted an exemption to the city ordinances to allow the music until 11 pm.
they intend to tell the closing band to end at 10:40 pm so that should a final song be requested the music will end by
11 pm.
Mr. Schroeder has met with me to review the plans and usage of the park. The wedding party has agreed to take the
necessary measures to ensure all guests receive a wrist band and pass through a "gate" where they will have their
identification checked to verify legal drinking age. Those guests 21 and over will receive an additional wrist band so
that those serving beer will easily be able to identify guests of legal drinking age. The beer tent will be manned at all
times and placed in a secure location to ensure all guests consuming beer will be served by an attendant and at no
time will beer be self serve.
I have attached a diagram the wedding party has provided to show how this event will be situated within the park on
the day of the event. Mr. Schroeder has already been in contact with the Parks Department and has reserved the
necessary park facilities. The camping facility will be open for public usage but the wedding guests have been
advised to reserve the camping sites. It is anticipated the majority of the camping sites will be reserved by guests of
the wedding party. The remainder of the park will be open to the public including the trails. Mr. Schroeder and his
fiancee would like to thank you for your consideration on this matter. I have met with Mr. Schroeder and approve of
their security and parking plans for the event.
No changes have been made to the proposed ordinance since the first reading held at the last Council meeting.
BOARD ACTION REQUESTED:
Recommend Council approval and second reading and adoption of Ordinance No. 18-782.
Fiscal Impact: $ 0.00 Funding Source: n/a
FTE Impact: 0.00 Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
ORDINANCE NO. 18-782
AN ORDINANCE SUSPENDING ENFORCEMENT OF HUTCHINSON CITY
ORDINANCE 92.018 PERTAINING TO HOURS OF USE OF SOUND
AMPLIFICATION EQUIPMENT
Findings of the City Council:
That Joshua Schroeder is holding his wedding and reception on May 12, 2018, at West
River Park;
That part of the wedding festivities include a music festival including several bands
beginning from 1:00 p.m. and running until 11:00 p.m.;
That sound amplification equipment will be used as part of this wedding event;
That pursuant to Hutchinson City Code §92.018 V(1)(d) this equipment may only be used
until 10:00 p.m.
Therefore, the Council of the City of Hutchinson does hereby ordain that Hutchinson City
Code §92.018 or any other City ordinance pertaining to noise shall not be enforced until 11:00
p.m. for the outdoor wedding/musical festival being held on May 12, 2018, at West river Park for
the Schroeder wedding event.
Adopted by the City Council this 27th day of March, 2018.
Attest:
Matthew Jaunich, City Administrator Gary T. Forcier, Mayor
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Amendment to the 2018 General Fund Budget
Department: Finance
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Andy Reid
Agenda Item Type:
Presenter:
Reviewed by Staff
New Business
Time Requested (Minutes): 3
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
City staff is recommending three amendments to the 2018 General fund budget.
1) Amendment to eliminate the Tree Disease Infestation and Mitigation activity from the General fund budget.
Services and Charges Expenditures within the Streets department will be reduced by $25,000, which is the annual
budget assumption for addressing diseased trees. Fund Balance Revenue of $25,000 will also be eliminated. This
line item represented the use of reserves to fund the expenditures.
2) Amendment to transfer the Tree Disease Mitigation fund balance of $401,288 out of the General fund and into the
the new Tree Disease Mitigation fund.
Attached is a memo from Andy Reid regarding a change in accounting for the Tree Disease Infestation and Mitigation
funds. It is being proposed to account for this activity in a new Special Revenue fund rather than the General fund.
3) Amendment to increase Building Inspection expenses by $25,000. The increased budget would allow for the
hiring of an outside company to electronically scan the Building Inspection files currently stored in the mechanical
filing system on the south side of City Center. This project would not include files located in the Administration filing
system located on the north side of City Center. The scanned files would be incorporated into the City's laserfiche
filing system for staff to access via computer. All future permit activity will be saved electronically by city staff rather
than filing paper copies. Future maintenance costs of the current, aging filing system will be avoided due to this
project. The source identified to fund the additional expense is an increase in budgeted Building Permit revenue.
Through February, permit revenue is already tracking higher than budget with permits paid for the Cobblestone hotel
and the third phase of Highfield Apartments.
Attached are memos from Dan Jochum and Tom Kloss regarding the project.
BOARD ACTION REQUESTED:
Approve resolution 14868 amending the 2018 general fund budget as proposed.
Fiscal Impact: Funding Source:
FTE Impact: Budget Change: Yes
Included in current budget: No
PROJECT SECTION:
Total Project Cost: $ 25,000.00
Total City Cost: $ 25,000.00 Funding Source: Surplus 2018 Building Permit Revenue
Remaining Cost: $ 0.00 Funding Source:
CITY OF HUTCHINSON
RESOLUTION NO. 14868
RESOLUTION AMENDING THE GENERAL FUND BUDGET FOR FISCAL YEAR 2018
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA:
THAT the annual General Fund budget of the City of Hutchinson for fiscal year 2018 is amended
to include contracted services to electronically scan the Building Inspection files.
Expenditures have increased $25,000 due to the project and Licenses & Permit Revenues have
been increased $25,000 to fund the project cost, and:
THAT $25,000 of Revenues and Expenditures have been removed from the 2018 budget as a
result of moving the Tree Disease Mitigation activity from the General fund to a new Special Revenue
fund; the Tree Disease Mitigation fund, and:
THAT $401,288 of Tree Disease Mitigation fund balance is transferred to the Tree Disease
Mitigation fund.
GENERALFUND
REVENUES
Taxes
Other Taxes
Licenses & Permits - Building Permits
Intergovernmental Revenue
Charges for Services
Fines & Forfeitures
Miscellaneous Revenues
Transfers -In
Fund Balance - tree disease mitigation
TOTAL REVENUES
EXPENDITURES
Wages & Benefits
Supplies
Services & Charges - scanning project
Services & Charges - tree disease mitigation
Miscellaneous Expenses
Transfers -Out
Capital Outlay
TOTAL EXPENDITURES
NET REVENUE OVER /
(UNDER) EXPENDITURES
Original Amended
Budget Amendment Budget
$ 4,925,466
$ 4,925,466
305,000
305,000
318,050
25,000 343,050
1,555,161
1,555,161
2,840,534
2,840,534
55,000
55,000
319,500
319,500
2,515,092
2,515,092
25,000
(25,000) -
$ 12,858,803 $
- $ 12,858,803
$ 8,657,896
$
8,657,896
878,840
878,840
2,649,777
25,000
(25,000)
2,649,777
562,290
562,290
100,000
401,288
501,288
10,000
10,000
$ 12,858,803 $
401,288 $
13,260,091
$ - $ (401,288) $ (401,288)
Adopted by the City Council this 27th day of March 2018.
ATTESTED:
Matthew Jaunich
City Administrator
Gary T. Forcier
Mayor
Memorandum
TO: City Council
FROM: Andy Reid
CC: Matt Jaunich
DATE: March 20, 2018
RE: Tree Disease Infestation & Mitigation Fund
N
Starting in 2010, the City has annually funded $55,000 from the Refuse fund to the General fund as a
mechanism to deal with diseased trees. The Tree Disease fund balance at the end of 2017 is $401,288.
These reserve funds have become a larger percentage of the General fund balance and will continue to
grow over the next few years, essentially distorting our true general fund balance. The 2017 General
fund balance of 52.2% is actually only 49.1% after accounting for the Tree Disease reserve funds of
3.1%.
I believe it is in our best interests to account for the Tree Disease funding and expenses in a separate
Special Revenue fund, not only to prevent potential fund balance issues, but also to allow for more
transparent reporting of the tree disease mitigation program. As a special revenue fund, the fund
balance will be restricted for the fund's purpose, tree disease mitigation.
The following action items are being presented to the city council for consideration:
1. Amend Resolution 13853 to transfer $55,000 annually from the Refuse fund to a new Special
Revenue fund (Tree Disease Mitigation fund) as opposed to the General fund.
2. Approve the transfer of fund balance ($401,288) from the General fund to the Tree Disease
Mitigation fund for fiscal year 2018.
3. Amend the 2018 General fund budget to remove the $25,000 of expense related to tree disease
mitigation. The $25,000 of reserve funding revenue would also be removed from the budget.
Also, amend the budget to reflect the $401,288 transfer of fund balance out of the General fund.
Thank you.
Memorandum
To: Andy Reid — Finance Director
CC: Matt Jaunich — City Administrator, Tom Kloss — IT Director
From: Dan Jochum — Planning Director
Date: 3/16/2018
Re: Scanning Project
As recently discussed, the Building Department would like to move forward with scanning our
address files into electronic format The filing system that is in place now was installed in 2001 and
is inadequate to meet the needs of the Building Department. This filing system is full and we have
approximately six large boxes of files that do not fit in the filing system. I feel the best long-term
solution is to scan all of the files electronically and move to an electronic filing system.
I am anticipating that building permit revenues will once again be over the budgeted revenue amount
and will cover the cost of this project.
Please contact me if you need further information.
Thank you.
N"i E M U R A N P U M -
TO:
Matt Jaunich, City Administrator
Andy Reid, Finance Director
FROM: Tom Kloss, Director of Information Technology
RE: Mass Scanning Project
DATE: 3/19/2018
The first large scale scanning project for the City of Hutchinson was the conversion of the City
Council Minutes and Agenda's. The project was completed by staff and took over S years.
The companies we interviewed for a scanning outsource option all have an assembly line process
for managing large scale scanning projects. Due to their expertise and abilities to process mass
amounts of paper in a short amount of time, it makes for a more efficient cost effective solution.
I would recommend that the City of Hutchinson outsource the scanning of documents in the
rotary file system(s) at City Center.
HUTCHINSON CITY COUNCIL Cityaf
A
a L�
Request for Board Action
Amendment #14870 Amending Resolution #13853 Authorizing Funding of an Emerald
Agenda Item: Ash Borer Fund
Department: Finance
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete
Contact: Andy Reid
Agenda Item Type:
Presenter:
Reviewed by Staff
New Business
Time Requested (Minutes): 1
License Contingency iN,
Attachments: Yes
BACKGROUND/EXPLANATION OF AGENDA ITEM:
Please see attached memo regarding the proposed change in accounting for revenues and expenditures related to
the Tree Disease and Infestation Mitigation fund. Resolution #13853 is also attached for reference.
This resolution proposes that City Council amend the original funding resolution, #13853, to transfer the annual
$55,000 from the Refuse fund to a new special revenue fund rather than the to General fund.
This resolution also proposes that City Council approve the transfer of the Tree Disease Mitigation fund balance of
$401,288 from the General fund to the new special revenue fund.
BOARD ACTION REQUESTED:
Approve resolution #14870
Fiscal Impact: $ 0.00 Funding Source:
FTE Impact: Budget Change: No
Included in current budget: Yes
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source: N/A
Remaining Cost: $ 0.00 Funding Source: N/A
CITY OF HUTCHINSON
RESOLUTION NO. 14870
A RESOLUTION AMENDING RESOLUTION NO. 13853 AUTHORIZING FUNDING
OF AN EMERALD ASH BORER FUND IN THE CITY OF HUTCHINSON
WHEREAS, the City of Hutchinson established an Emerald Ash Borer fund to start earmarking
funds in anticipation of a city-wide infestation, and:
WHEREAS, the funding commenced for calendar year 2010 and is funded by the
discontinuation of the recycling credit program in 2010, and:
WHEREAS, this funding source will allow, at least in part, for a large-scale removal, treatment
and replacement program to restore the tree canopy in the City of Hutchinson back to an appropriate
level as it was before the infestation, as well as providing funding for proactive steps in diversifying the
tree species, and:
WHEREAS, $55,000 annually from the City's Refuse fund shall be transferred to the General
fund for the purpose of creating a funding mechanism for the future replacement, treatment and removal
of infected trees.
NOW THEREFORE BE IT RESOLVED THAT THE CITY OF HUTCHINSON:
THAT, commencing with calendar year 2018, the $55,000 annual funding from the City's
Refuse fund shall be transferred to a special revenue fund (Tree Disease Mitigation fund) rather than the
General fund, and:
THAT, the Tree Disease Mitigation fund will account for revenues and expenditures related to
the future replacement, treatment and removal of infected trees, and:
THAT, the Tree Disease Mitigation fund balance of $401,288, as of December 31, 2017, shall
be transferred from the General fund to the Tree Disease Mitigation fund in the 2018 fiscal year.
Adopted by City Council this 27th day of March 2018.
Gary Forcier
Mayor
ATTESTED:
Matthew Jaunich
City Administrator
Memorandum
TO: City Council
FROM: Andy Reid
CC: Matt Jaunich
DATE: March 20, 2018
RE: Tree Disease Infestation & Mitigation Fund
N
Starting in 2010, the City has annually funded $55,000 from the Refuse fund to the General fund as a
mechanism to deal with diseased trees. The Tree Disease fund balance at the end of 2017 is $401,288.
These reserve funds have become a larger percentage of the General fund balance and will continue to
grow over the next few years, essentially distorting our true general fund balance. The 2017 General
fund balance of 52.2% is actually only 49.1% after accounting for the Tree Disease reserve funds of
3.1%.
I believe it is in our best interests to account for the Tree Disease funding and expenses in a separate
Special Revenue fund, not only to prevent potential fund balance issues, but also to allow for more
transparent reporting of the tree disease mitigation program. As a special revenue fund, the fund
balance will be restricted for the fund's purpose, tree disease mitigation.
The following action items are being presented to the city council for consideration:
1. Amend Resolution 13853 to transfer $55,000 annually from the Refuse fund to a new Special
Revenue fund (Tree Disease Mitigation fund) as opposed to the General fund.
2. Approve the transfer of fund balance ($401,288) from the General fund to the Tree Disease
Mitigation fund for fiscal year 2018.
3. Amend the 2018 General fund budget to remove the $25,000 of expense related to tree disease
mitigation. The $25,000 of reserve funding revenue would also be removed from the budget.
Thank you.
RESOLUTION NO. 13853
A RESOLUTION AUTHORIZING ESTABLISHMENT OF AN EMERALD ASH BORER
FUND IN THE CITY OF HUTCHINSON
Whereas, The City of Hutchinson is establishing an Emerald Ash Borer fund to start
earmarking funds in anticipation of a city-wide infestation, and:
Whereas, the funding will commence for calendar year 2010 and be funded by the
discontinuation of the recycling credit program in 2010, and:
Whereas, This funding source will allow, at least in part, for a large scale removal,
treatment and replacement program to restore the tree canopy in the City of Hutchinson back
to an appropriate level as it was before the infestation, as well as providing; funding for
proactive steps in diversifying the tree species.
NOW THEREFORE BE IT RESOLVED THAT THE CITY OF HUTCHINSON
(1) That $55,000 annually from the City's Refuse fund shall be transferred to the General
Fund for the purpose of creating a funding mechanism for the future replacement,
treatment, and removal of infected trees.
(2) That a future Emerald Ash Borer internal spending policy will be put in place to identify
the specific activities and expenses eligible for use of these funds. All expenditures will
be documented and tracked for policy compliance.
Adopted by the City Council this 22nd day of February, 2011.
ATTEST:
Steven W. Cook, Mayor Jeremy J. C er, City administrator
HUTCHINSON CITY COUNCIL CityafA
Request for Board Action
Agenda Item: Approve/Deny Resolution 14871 - Amended and Restated Hospital Lease
Department: Administration
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Matt Jaunich/Marc Sebora
Agenda Item Type:
Presenter: Matt Jaunich/Marc Sebora
Reviewed by Staff
New Business
Time Requested (Minutes): 10
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
As previously discussed, Hutchinson Health is becoming part of the Park Nicollet/HealthPartners organization. Under
our existing lease, this transaction would have resulted in our termination of the lease and conveyance of all the
property to Hutchinson Health in exchange for a payment equal to the net present value of the future rent payments.
Based on calculations done by our financial advisors the parties have agreed on $6.2 million as the net present value.
In our consultations with Hutchinson Health, we learned that there could be an advantage to keep the property subject
to the lease and have worked with them to find a low risk approach to accommodating that. I believe staff has worked
to minimize risk to the City in the lease amendment as outlined in the City Attorney's memo (enclosed). In short, the
City will receive the expected cash payment, has the right to terminate the lease and convey the property to
Hutchinson Health at any time, and has guarantees from Park Nicollet Health System backing up the indemnification
obligation of Hutchinson Health, and the obligation to take a conveyance of the property whenever the City feels that
would be necessary (Hutchinson health can also terminate the lease at any time and take a conveyance of the
property).
We believe that material risks associated with the ongoing lease have been effectively mitigated and that the goals of
the 2012 amendment have been achieved in this new form. We also feel this approach is supportive of our local
health care institution and its mission of providing access to great care in Hutchinson and the surrounding
communities. Staff (including Paul Torgerson) would recommend approval of the resolution.
Attached you will find (along with Marc's memo) a clean copy of the proposed amended lease and a red -lined copy
that shows the changes from last week. There is a second red -lined document that includes all of the other changes
from the initial 2007 lease. I also included a copy of the 2012 amendment under which the City gave up a number of
its prior rights in exchange for a cash payment and put in place the mechanism for what would happen in the event of
a change in control of Hutchinson Health. The amended and restated lease would completely remove (strike -out) the
provisions stated within the 2012 amendment since those provisions have been met.
BOARD ACTION REQUESTED:
Approve/Deny Resolution 14871 Amending and Restating the Hospital Lease Agreement with Hutchinson Health
Fiscal Impact: $ 0.00 Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
Memo
To: Mayor and City Council
From: Matt Jaunich, City Administrator
Date: 3/23/18
Re: Packet Information on Hospital Lease
Office of the City Administrator
111 Hassan Street SF
Hutchinson, NIN 55350-2522
320-234-4241/Fax 320-234-4240
Included in your council packet are several different documents relating to the Hospital Lease
Agenda item. To hopefully avoid any confusion, I wanted to walk you through the different
documents:
1. The first document is Marc's cover letter summarizing our work on this Lease
2. The second document is the resolution that we are asking you to approve authorizing the
Mayor and I to enter into the Lease Agreement
3. The third document is the final amended -restated lease redlined with noted changes from
the document you first saw on Friday, March 16
4. The fourth document is the final amended -restated lease redlined to the original lease
from 2007. This is the document that was sent to you on Friday, March 16
5. The fifth document is the First Amendment to the Hospital Lease from 2012. While this
is being enclosed for reference purposes, this entire document will be completely
removed (strike -out) from the final clean version since those provisions have been met
6. The sixth document is the Final amended -restated lease — the clean version. This will be
the version that gets signed.
7. The last document is the legal descriptions to be included as "Exhibit A"
Matt
C
Marc A. Sebora, City Attorney
Office of the City Attorney 111 Hassan Street SE
Hutchinson, MIDI 55350-2522
320-587-51511Fax 320-234-4201
Memorandum
To: Mayor and City Council
From: Office of the City Attorney
Date: March 22, 2018
Re: Update on Hutchinson Health Transaction
As you know, Hutchinson Health plans to close a transaction with HealthPartners/Park
Nicollet on April 1, 2018, pursuant to which HealthPartners will become the sole corporate
member of Hutchinson Health. Hutchinson Health will continue as a separate legal entity, but
will ultimately be controlled by HealthPartners. The council held a workshop to discuss the
proposed arrangement January g, 2018 and there was broad council support for the arrangement.
Since 2007, the City has been the landlord for most of the facilities that Hutchinson
Health uses in providing its health care services to the Hutchinson and regional communities.
Under the terms of the lease (which has about 20 years remaining in its initial term) as amended
in 2012 by the First Amendment, Hutchinson Health was to acquire the leased property in the
event of a change in control of Hutchinson Health and to do so, it would at that time pay the City
the present value of the lease payments for the remainder of the initial term.
Under current statutory and regulatory provisions, Hutchinson Health has determined that
it would be advantageous for it to continue in a lease structure, at least in the near term. In
consultations among the City, Hutchinson Health and HealthPartners, the City believes it can
accommodate the request without creating material new risk for the City, provided that the City
receives prepayment for the rent as it would have under the terms of the original lease, is given
the right to convey the leased property to Hutchinson Health at any time it chooses to do so
during the remaining lease term, and if Park Nicollet Health System guarantees certain of
Hutchinson Health's obligations under the lease (indemnification of the City for any exposure to
liability from Hutchinson Health's operations and property it uses, agreement to accept
conveyance of the property from the City any time the City wishes). Accommodating the
request is also seen by the City as an opportunity to support Hutchinson Health's mission for the
community and surrounding areas. The proposed arrangement also eliminates any interest rate
— Printed on recycled paper
risk that the City might have in connection with the timing of the conveyances under the original
lease (given the potential for interest rate hikes in the short-term).
Accordingly, Hutchinson Health and the City are proposing to amend the lease to accomplish
their mutual interests. The City's independent financial advisor, Ehlers, made a recommendation
to the City regarding parameters for the present value payment called for under the lease and
provided a range of values that it believed should be acceptable to the City. The City averaged
the various approaches and Hutchinson Health has accepted the City's proposed value ($6.2
million). Hutchinson Health has also agreed to reimburse the City for its costs in connection
with the lease amendment and future real estate conveyances.
Under the proposed amendment, Hutchinson Health will make the full prepayment of the
lease amounts now, will reimburse the City for its costs in connection with the lease
amendments, and reimburse future costs incurred when the City eventually conveys title to the
health care properties to Hutchinson Health. Hutchinson Health will continue to indemnify the
City against costs and liabilities associated with operation of the health care services and other
facilities by Hutchinson Health, now also guaranteed by Park Nicollet Health System. There are
two properties that the City has agreed to convey to Hutchinson Health as soon as practical after
the transaction closes (the Auxiliary property downtown and the Fremont Avenue property). The
remaining health care property will continue to be subject to the amended lease as of the April 1
closing date for the Hutchinson Health — HealthPartners transaction and until such time as either
the City or Hutchinson Health exercise their respective right to cause the transfer of the property
at any time prior to expiration of the lease term. The amended lease acknowledges that the First
Amendment has been satisfied in this process and is no longer needed and a number of other
provisions that are no longer necessary in the amended structure have been eliminated.
Resolution No. 14871
RESOLUTION AMENDING AND RESTATING LEASE AGREEMENT WITH
HUTCHINSON HEALTH
Whereas, on September 11, 2007,the Hutchinson City Council took action approving
leasing of certain land, buildings and other property to Hutchinson Health Care (now
"Hutchinson Health"); and,
Whereas, on October 23, 2012,the Hutchinson City Council took action to amend the
2007 lease with Hutchinson Health to facilitate the integration of Hutchinson Health and the
Hutchinson Medical Clinic, P.A.; and,
Whereas, Hutchinson Health and Park Nicollet Health Services/HealthPartners have
formed a business relationship which will continue to maintain a strong health care system in the
City of Hutchinson; and,
Whereas, in order to maintain the strength, independence, flexibility and stability of the
health care operations in the City of Hutchinson and the relationship between Park Nicollet
Health Services/HealthPartners and Hutchinson Health, all of the parties are desirous of
maintaining the leasehold relationship between them and have consequently agreed to amend the
terms of the lease to provide for, among other things,:
1. A prepayment by Hutchinson Health to the City of Hutchinson of the present value of the
remaining rent due under the lease to the City of Hutchinson in the amount of six million
two hundred thousand dollars ($6,200,000) and payment to the City for all administrative
and legal costs associated with the formation of this amended and restated lease
agreement.
2. Elimination of Hutchinson Health's operating parameters under the existing lease and
amendment thereto,
3. The continuation of the right of Hutchinson Health to purchase the health care system
real property with the addition of the ability of Park Nicollet to exercise that option under
some circumstances,
4. The conveyance of real estate known as the "Regional Eye Land" on Freemont Avenue
and the "Auxiliary Land" on Main Street in the near future,
The ability to renew the lease for an additional 30 years should all parties agree.
The terms of which are more fully set out in the lease amendment attached hereto as "Exhibit A".
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF HUTCHINSON, MINNESOTA, THAT THE LEASE AGREEMENT WITH
HUTCHINSON HEALTH CARE NOW KNOWN AS HUTCHINSON HEALTH IS HEREBY
AMENDED AND RESTATED TO READ AS ATTACHED IN EXHIBIT A TO THIS
RESOLUTION. BE IT FURTHER RESOLVED THAT THE MAYOR AND/OR CITY
ADMINISTRATOR ARE HEREBY AUTHORIZED TO EXECUTE ANY AND ALL
DOCUMENTS NECESSARY TO ENTER INTO THIS AGREEMENT WITH HUTCHINSON
HEALTH AND PARK NICOLLET HEALTH SERVICES/HEALTHPARTNERS AND THAT
THE CITY ADMINISTRATOR IS AUTHORIZED TO MAKE ANY TECHNICAL OR
NONSUBSTANTIVE CHANGES TO THE DOCUMENTS IN THIS TRANSACTION THAT
HE DEEMS PROPER AND NECESSARY
Adopted by the City Council of this 27th day of March, 2018
Attest:
Matthew Jaunich, City Administrator Gary Forcier, Mayor
AMENDED AND RESTATED
LEASE AND AGREEMENT
between
CITY OF HUTCHINSON
and
HUTCHINSON HEALTH
April 1, 2018
US.116746500.11
TABLE OF CONTENTS
Article
Page
Article1. Definitions................................................................................................................ 2
1.1 Agreement or Lease........................................................................................... 2
1.2 Alteration........................................................................................................... 2
1.3 Annual Rent....................................................................................................... 2
1.4 Assigned Contracts............................................................................................ 2
1.5 Assumed Liabilities........................................................................................... 2
1.6 Auxiliary Improvements.................................................. 3
1.7 Auxiliary Landlt4ef4ieffafly emitte ................................................................. 3
1.8 Auxiliary Property........................................................... 3
1.9 Intentionally Omitted......................................................................................... 3
1.10 Dassel Medical Center Improvements............................................................... 3
1.11 Dassel Medical Center Land.............................................................................. 3
1.12 Dassel Medical Center Property........................................................................ 4
1.13 Intentionally Omitted......................................................................................... 4
1.14 Event of Default................................................................................................. 4
1.15 Excluded Assets................................................................................................. 4
1.16 Excluded Liabilities........................................................................................... 4
1.17 Intentionally Omitted......................................................................................... 4
1.18 Intentionally Omitted......................................................................................... 4
1.19 Hazardous Material............................................................................................ 4
1.20 Hazardous Materials Laws................................................................................ 5
1.21 Health Care System........................................................................................... 5
US. 116746500.11
1.22
Health Care System Employees ........................................ 5
1.23
Health Care System Funds................................................................................. 5
1.24
Health Care Systems Operations....................................................................... 5
1.25
Health Care System Personal Property.............................................................. 5
1.26
Health Care System Real Property.................................................................... 7
1.27
Hospital Improvements......................................................................................7
1.28
Hospital Land..................................................................................................... 7
1.29
Hospital Leases.................................................................................................. 7
1.30
Hospital Property............................................................................................... 7
1.31
Improvements.................................................................................................... 7
1.32
Intentionally Omitted......................................................................................... 7
1.33
Inventories and Supplies.................................................................................... 7
1.34
Land................................................................................................................... 7
1.35
Medical Office Building Improvements............................................................ 7
1.36
Medical Office Building Land........................................................................... 8
1.37
Medical Office Building Leases........................................................................ 8
1.38
Medical Office Building Property..................................................................... 8
1.39
Intentionally Omitted......................................................................................... 8
1.40
Intentionally Omitted......................................................................................... 8
1.41
Intentionally Omitted......................................................................................... 8
1.42
Original Effective Date...................................................................................... 8
1.43
Purchase Option................................................................................................. 8
1.44
Freemont Avenue Improvements ..................................... 8
1.45
Freemont Avenue Land .................................................... 8
1.46
Freemont Avenue Propertyifftefffieffally effiitted .............................................. 8
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US. 116746500.11
1.47 Restore or Restoration....................................................................................... 8
1.48
Shopping Center Improvements........................................................................ 9
1.49
Shopping Center Land....................................................................................... 9
1.50
Shopping Center Leases.................................................................................... 9
1.51
Shopping Center Property.................................................................................. 9
1.52
Taking................................................................................................................9
1.53
Intentionally Omitted......................................................................................... 9
1.54
Term...................................................................................................................9
1.55 Unavoidable Delays........................................................................................... 9
Article 2. Lease, Transfer of Health Care System.................................................................... 9
2.1 Lease of Health Care Center Real Property....................................................... 9
2.2 Transfer of Health Care System Personal Property ......................................... 10
Article 3. Rent; Consideration................................................................................................ 10
3.1 Annual Rent..................................................................................................... 10
3.2 Assumed Obligations....................................................................................... 11
3.3 Additional Costs.............................................................................................. 12
Article 4. Payment of Taxes................................................................................................... 12
Article 5. Repairs and Maintenance........................................................................................ 12
Article6. Insurance................................................................................................................. 12
6.1 Property Insurance........................................................................................... 12
6.2 Liability Insurance........................................................................................... 13
6.3 Intentionally Omitted....................................................................................... 13
6.4 Intentionally Omitted....................................................................................... 13
6.5 Intentionally Omitted....................................................................................... 13
6.6 Intentionally Omitted........................................................................................... 13
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US. 116746500.11
6.7 Policy Requirements........................................................................................
13
6.8 HH's Insurance................................................................................................
14
6.9 Certificate of Insurance....................................................................................
14
Article 7. Damage To or Destruction of the Improvements...................................................
14
7.1 Notice; Restoration..........................................................................................
14
7.2 Payment of Costs; Application of Proceeds ....................................................
14
7.3 No Abatement..................................................................................................
14
7.4 Mutual Release................................................................................................
14
Article8. Condemnation.........................................................................................................
15
8.1 Total Taking.....................................................................................................
15
8.2 Partial Taking...................................................................................................
15
8.3 Determination of Partial Taking......................................................................
15
Article9. Alterations...............................................................................................................
16
9.1 General.............................................................................................................16
9.2 Permitted Alterations.......................................................................................
16
9.3 Permits.............................................................................................................16
Article 10. Discharge of Liens................................................................................................
16
Article 11. Use of Health Care System Real Property............................................................
16
Article 12. Entry on Property by City.....................................................................................
17
Article13. Utilities.................................................................................................................
17
Article 14. Indemnification.....................................................................................................
17
Article15. Transfers...............................................................................................................
17
15.1 By City.............................................................................................................
17
15.2 By HH..............................................................................................................
18
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US.] 16746500.11
Article 16. Estoppel Certificates.............................................................................................
19
Article 17. Representations and Covenants of City................................................................
20
17.1
Power and Authority........................................................................................
20
17.2
Agreement Valid and Binding.........................................................................
20
17.3
Intentionally Omitted.......................................................................................
20
17.4
Intentionally Omitted.......................................................................................
20
17.5
Assigned Contracts; Consents.........................................................................
20
17.6
Cooperation......................................................................................................20
17.7
Trade Secrets...................................................................................................
20
17.8
Environmental Condition.................................................................................
20
17.9
Intentionally Omitted.......................................................................................
21
17.10
Intentionally Omitted.......................................................................................
21
Article 18. Representations and Covenants of HH.................................................................
21
18.1
Formation of HH..............................................................................................
21
18.2
Power and Authority........................................................................................
21
18.3
Agreement Valid and Binding.........................................................................
22
18.4
Nonprofit Status...............................................................................................
22
18.5
Intentionally Omitted.......................................................................................
22
18.6
Intentionally Omitted.......................................................................................
23
18.7
Intentionally Omitted.......................................................................................
23
18.8
Intentionally Omitted.......................................................................................
24
18.9
Intentionally Omitted.......................................................................................
24
18.10
Intentionally Omitted.......................................................................................
24
18.11
Intentionally Omitted.......................................................................................
24
18.12
Operating Expenses and Taxes........................................................................
25
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US.] 16746500.11
18.13 Intentionally Omitted.......................................................................................
25
18.14 Intentionally Omitted.......................................................................................
25
18.15 Intentionally Omitted.......................................................................................
25
18.16 Intentionally Omitted.......................................................................................
26
Article 19. Condition of Property...........................................................................................
26
Article 20. Events of Default; Termination............................................................................
26
20.1 Events of Default............................................................................................. 26
20.2 Consequences of Default................................................................................. 27
20.3 Intentionally Omitted....................................................................................... 27
20.4 Intentionally Omitted....................................................................................... 27
20.5 No Waiver........................................................................................................ 27
20.6 Exercise of Rights While in Default................................................................ 28
Article 21. Conveyance Upon Termination; Performance by Park Nicollet .......................... 28
21.1 Conveyance Upon Termination....................................................................... 28
21.2 Performance by Park Nicollet.......................................................................... 28
Article 22. No Merger of Title................................................................................................ 28
Article 23. Quiet Enjoyment................................................................................................... 29
Article24. Notices.................................................................................................................. 29
Article25. Contests................................................................................................................. 30
25.1 Contest............................................................................................................. 30
25.2 Suspension of Obligation................................................................................. 30
25.3 Procedure......................................................................................................... 30
Article 26. Purchase Option and City Conveyance Right ...................................................... 30
26.1 Grant................................................................................................................ 30
26.2 Title.................................................................................................................. 31
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US.116746500.11
26.3 Closing............................................................................................................. 31
26.4 Effect of Non-Exercise.................................................................................... 31
Article 27. Miscellaneous....................................................................................................... 31
27.1 Consent............................................................................................................ 31
27.2 Relationship of Parties..................................................................................... 32
27.3 Miscellaneous.................................................................................................. 32
27.4 Recording.........................................................................................................32
27.5 Non -Delegation and Lack of Control.............................................................. 32
Exhibit A — Legal Description of the Land
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US.116746500.11
AMENDED AND RESTATED
LEASE AND AGREEMENT
This Amended and Restated Lease and Agreement is dated as of April 1, 2018 (the
"Amended Effective Date") by and between the City of Hutchinson, a Minnesota municipal
corporation ("City"), and Hutchinson Health, a Minnesota nonprofit corporation ("HH").
Park Nicollet Health Services, a Minnesota nonprofit corporation and the sole Member of
HH as of the Amended Effective Date ("Park Nicollet"), is a party to this Agreement for the
limited purposes set forth in Articles 14 and 21.
RECITALS
WHEREAS, the City and Hutchinson Health (formerly known as Hutchinson Health
Care) executed that certain Lease and Agreement dated December 31, 2007, as amended by
that certain First Amendment to Lease and Agreement ("First Amendment") dated December
19, 2012 (collectively, the "Original Agreement").
WHEREAS, City owns the Hospital Property, the Medical Office Building Property,
the Shopping Center Property, the Dassel Medical Center Property, the Freemont Avenue
Property, and the Auxiliary Property (each as hereinafter individually defined and
collectively referred to as the "Health Care System Real Property").
WHEREAS, prior to the Original Effective Date, the Health Care System Real
Property was operated by City as elements of a coordinated Health Care System, as
hereinafter defined.
WHEREAS, as of the Original Effective Date, City transferred ownership of the
Health Care System operations and assets (other than the Health Care System Real Property
and certain Excluded Assets) to HH, a nonprofit corporation that was organized under the
laws of the State of Minnesota for the purpose of acquiring and operating the Health Care
System.
WHEREAS, under the First Amendment, in exchange for a cash payment and other
consideration, the City gave up its right to approve specific "change in control" transactions,
but retained a consultation right, the right that if a change of control transaction occurred,
rent payments due under the lease would be fully prepaid, and the right to terminate the lease
and convey all the leased property to HH; and
WHEREAS, HH has entered into a change of control transaction with HealthPartners,
Inc., by and through Park Nicollet, an affiliate of HealthPartners, Inc., which would cause the
parties to execute the provisions of the First Amendment, and the proposed transaction was
described to the Hutchinson City Council at its workshop on January 9, 2018; and
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US.116746500.11
WHEREAS, HH believes that it would be advantageous to maintain the lease
structure for a period of time and the City, after the required consultations with HH,
concluded it would be in the community's interests to accommodate HH's request and to
further amend the lease on the terms set forth herein, rather than to require the immediate
conveyance of all the leased property; and
WHEREAS, City has the statutory power and authority, pursuant to Minnesota
Statutes §§ 144.581 and 447.47, to lease the Health Care System Real Property to HH.
WHEREAS, b its
execution and delivery of this Lease to;
HH. the City acknowledges that HH has paid to the City is a lump -sum amount of Six
Million Two Hundred Thousand Dollars ($6.200.000), which the parties agree isayfnefft to
City iff an atneufl.A equal to the present value of the monthly rent that would have been
payable to City for the remainder of the Term of the Original Agreement. Accordingly, the
parties acknowledge that the First Amendment will be deemed satisfied and will no longer be
applicable and that a number of provisions in the Original Agreement are no longer
necessary and will be referenced in this Amended and Restated Lease and Agreement as
"omitted" simply for convenience rather than renumbering the entire Original Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth
herein, and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
Article 1.
Definitions
The following terms shall have the meanings set forth in this Article:
1.1 Agreement or Lease. This Amended and Restated Lease and Agreement,
including the following exhibits attached hereto and made a part hereof:
Exhibit A — Legal Description of the Land
1.2 Alteration. Construction, reconstruction, replacement, repairs, renewals,
alterations, changes, additions, improvements and demolitions of or to the Improvements and
all excavations at any time made or to be made in, or on about the Land, or any part thereof.
1.3 Annual Rent. The Annual Rent at the per annum rate provided for in Section
3.1 of this Agreement.
1.4 Assigned Contracts. All service and maintenance contracts, commitments,
guarantees, indentures, insurance policies and contracts, leases and other contracts regarding
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US.116746500.11
the Health Care System Real Property and the Health Care System Operations, but excluding
any contracts that are part of the Excluded Assets, that were assigned to HH by the City as of
the Original Effective Date.
1.5 Assumed Liabilities. All of the following debts, obligations, accounts payable,
claims and other liabilities of City (excluding, in each case, any Excluded Liabilities)
assumed by HH as of the Original Effective Date:
(a) All payment obligations, other obligations and liabilities arising under
the Assigned Contracts;
(b) Any materialmen, mechanics or other liens against the Health Care
System Real Property;
(c) All employee liabilities arising from Health Care System Operations,
including but not limited to any costs, settlement amounts, insurance deductibles and
other expenses associated with any employment-related legal claims brought by City
employees arising from the termination of their employment for Health Care System
Operations;
(d) Any fines, penalties or other payments, or repayments, required to be
made to any governmental entity in connection with Health Care System Operations
prior to the Original Effective Date;
(e) Claims relating to generation, manufacture, storage or release of
Hazardous Materials on or about the Health Care System Real Property or with
respect to the Health Care System Operations; and
(f) All other liabilities and obligations of City, whether known or
unknown, contingent or otherwise, incurred or arising in connection with Health Care
System Operations prior to the Original Effective Date.
1.6 Auxiliary Improvements. The building, fixtures and other improvements now
or hereafter located on the Auxiliary Land and all alterations and additions thereto and
replacements thereof, including by reason of Restoration.
1.7 Auxiliary Land. The land, but not any Improvements, situated in McLeod
County, Minnesota, and legally described on Exhibit A attached hereto, together with all
easements, appurtenances and hereditaments pertaining thereto.
1.8 Auxiliary Property. The Auxiliary Land and the Auxiliary Improvements,
collectively.
1.9 Intentionally omitted.
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US.116746500.11
1. 10 Dassel Medical Center Improvements. The building, fixtures and other
improvements now or hereafter located on the Dassel Medical Center Land and all
alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.11 Dassel Medical Center Land. The land, but not any Improvements, situated in
Meeker County, Minnesota, and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.12 Dassel Medical Center Property. The Dassel Medical Center Land the Dassel
Medical Center Improvements, collectively.
1.13 Intentionally omitted.
1.14 Event of Default. As defined in Section 20.1 of this Agreement.
1.15 Intentionally omitted.
1.16 Excluded Liabilities. Any and all debts, obligations, claims, and other
liabilities of City:
(a) to the extent such debts, obligations, claims or other liabilities of City
are covered by an existing insurance policy maintained by City;
(b) to the extent that the assumption of which by HH would eliminate or
limit the governmental immunity which would otherwise be available in regard to
such debt, obligation, claim or other liability (and nothing herein shall grant to any
person not a party hereto any right to payment or indemnification for any event
occurring prior to the Original Effective Date which would not have existed had City
not entered into the transactions contemplated hereby);
(c) which results from any act or omission of City (or any of its elected
officials, employees, contractors, or agents) acting in, or in furtherance of, City's
governmental function, and not in connection with, or in furtherance of, the Health
Care System or Health Care System Operations; or
(d) which results from a breach of this Agreement by City or the existence
of which constitutes a misrepresentation by City under this Agreement.
1.17 Intentionally omitted.
1.18 Intentionally omitted.
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US.116746500.11
1. 19 Hazardous Material. Any substance, chemical, waste or material that is or
becomes regulated under applicable law because of its toxicity, infectiousness, radioactivity,
explosiveness, ignitability, corrosiveness or reactivity, including asbestos, urea
formaldehyde, polychlorinated biphenyls, nuclear fuel or materials, radioactive materials,
explosives, known carcinogens, petroleum products and by-products and any substance,
chemical, waste or material regulated by any Hazardous Material Law.
1.20 Hazardous Materials Laws. Each federal, state, county, municipal, local or
other law, statute, code, ordinance, rule or regulation which relates to or deals with human
health or the environment in the jurisdiction in which the Health Care System, or any part
thereof, is located.
1.21 Health Care System. The Health Care System Real Property, the Health Care
System Personal Property acquired by HH from City as of the Original Effective Date, and
all other real or personal property purchased, leased or otherwise acquired by HH (or by
City, with respect to any real property acquired by City for the use of HH and inclusion with
the Health Care System Real Property) on or after the Original Effective Date, together with
the operations, infrastructure, systems, processes, assembled work force and other intangibles
necessary for the conduct of a healthcare delivery system of the scope and nature as that
operated by City prior to the Original Effective Date.
1.22 Health Care System Employees. All full and part time employees of the
Health Care System who became employees of HH as of the Original Effective Date or have
been employed by HH after the Original Effective Date.
1.23 Health Care System Funds. All of City's right, title and interest in or to all
cash, bank accounts, savings and loan accounts, certificates of deposit, money market
accounts, treasury bills, investments (whether debt or equity, liquid or illiquid), reserves or
other cash items held in the name of, or on behalf of, City in connection with Health Care
System Operations.
1.24 Health Care Systems Operations. The operation of the Health Care System,
including operation of its various components as an acute care hospital, a surgical center, a
medical office building, an outpatient clinic, and administrative facilities, together with all
activities related to or arising from such operations.
1.25 Health Care System Personal Property. All right, title and interest of City in
and to the following property (excluding, in each case, the Excluded Property) that was
transferred to HH as of the Original Effective Date:
(a) All machinery, furniture and equipment, including hospital, medical
and office equipment, and other fixed assets owned by City and used in connection
with the operation of the Health Care System Real Property, or any part thereof,
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US.116746500.11
(b) All motor vehicles owned by City and used in connection with the
operation of the Health Care System Real Property;
(c) All trademarks, service marks and names owned by City and used in
connection with the operation of the Health Care System Real Property, Health Care
System Operations, or any part or combination thereof,
(d) All accounts receivable and other amounts owed to City or its health
care operating units and arising out of the use, operation or ownership of the Health
Care System Real Property or arising from Health Care System Operations;
(e) The benefit, but not outright ownership, of the gifts, bequests,
donations or other endowments specifically given for the benefit of or restricted to the
use of the Health Care System Real Property, Health Care System Operations, or any
part or combination thereof,
(f) All rights under the Assigned Contracts, including all rights to receive
goods or services, to use and occupy personal and leased real property or to receive
payment for goods or services rendered, or other benefits arising under such
contracts;
(g) All Inventories and Supplies;
(h) All trade secrets and other confidential information concerning Health
Care System Operations not in the public domain and in existence on the Original
Effective Date;
(i) All medical records of Health Care System patients in existence on the
Original Effective Date;
0) All business records arising from the use of the Health Care System
Real Property or Health Care System Operations in existence on the Original
Effective Date;
(k) All Health Care System Funds;
(1) Any prepaid expenses arising from the operation or use of the Health
Care System Real Property or from Health Care System Operations in existence on
the Original Effective Date;
(m) any and all shares, member interests, partnership interests, member
control agreements or other interests held by City in any joint venture, partnership,
limited liability company, corporation, or other entity or organization formed in
relation to, in support of, or otherwise in connection with the Health Care System
Real Property or Health Care System Operations, including, without limitation, City's
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US.116746500.11
interests in the joint ventures known as ConnectCare operating from the Birchwood
Property and Hutchinson Diagnostic Center;
(n) The right to any and all recovery from all collection cases in progress
on the Original Effective Date for goods furnished or services rendered in connection
with Health Care System Operations;
and all of such other assets owned by City in connection with the operation of the Health
Care System Real Property, other than the Excluded Assets, as of the Original Effective
Date. Further, for purposes of this Agreement, the term "Health Care System Personal
Property" shall (i) include all additions, alterations, changes, and substitutions in and to all or
any part of the Health Care System Personal Property made after the Original Effective Date,
and (ii) exclude all Health Care System Personal Property transferred or sold in accordance
with Article 15 hereof on or after the Original Effective Date.
1.26 Health Care System Real Property. As defined in the Recitals hereof
1.27 Hospital Improvements. The building, fixtures and other improvements now
or hereafter located on the Hospital Land and all alterations and additions thereto and
replacements thereof, including by reason of Restoration.
1.28 Hospital Land. The land, but not any Improvements, situated in McLeod
County, Minnesota and legally described on Exhibit A attached hereto, together with all
easements, appurtenances and hereditaments pertaining thereto.
1.29 Hospital Leases. Any and all tenant leases with respect to the Hospital Land
or Hospital Improvements in effect on the Amended Effective Date.
1.30 Hospital Property. The Hospital Land, the Hospital Improvements, and the
Hospital Leases, collectively.
1.31 Improvements. The Hospital Improvements, the Medical Office Building
Improvements, the Shopping Center Improvements, the Dassel Medical Center
Improvements, the Freemont Avenue Improvements, and the Auxiliary Improvements,
collectively.
1.32 Intentionally Omitted.
1.33 Inventories and Supplies. All items of consumable personal property owned
by City or held by City in connection with the Health Care System Operations.
1.34 Land. The Hospital Land, the Medical Office Building Land, the Shopping
Center Land, the Dassel Medical Center Land, the Freemont Avenue Land, and the Auxiliary
Land, collectively.
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US.116746500.11
1.35 Medical Office Building Improvements. The building, fixtures and other
improvements now or hereafter located on the Medical Office Building Land and all
alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.36 Medical Office Building Land. The land, but not any Improvements, situated
in McLeod County, Minnesota and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.37 Medical Office Building Leases. Any and all tenant leases with respect to the
Medical Office Building Land or Medical Office Building Improvements in effect as of the
Amended Effective Date.
1.38 Medical Office Building Property. The Medical Office Building Land, the
Medical Office Building Improvements, and the Medical Office Building Leases,
collectively.
1.39 Intentionally Omitted
1.40 Intentionally Omitted
1.41 Intentionally Omitted
1.42 Original Effective Date. December 31, 2007 at 11:59:59 P.M.
1.43 Purchase Option. HH's right to purchase City's interest in the Health Care
System Real Property in accordance with Article 26.
1.44 Freemont Avenue Improvements. The building, fixtures and other
improvements now or hereafter located on the Freemont Avenue Land and all alterations and
additions thereto and replacements thereof, including by reason of Restoration.
1.45 Freemont Avenue Land. The land, but not any Improvements, situated in
McLeod County, Minnesota, and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.46 Freemont Avenue Property. The Freemont Avenue Land and the Freemont
Avenue Improvements, collectively.
1.47 Restore or Restoration. The repair, restoration or rebuilding of the Health
Care System or any part thereof following any Taking, damage to or destruction of the same
by fire or other casualty, in accordance with applicable legal requirements, with such
Alterations as may be determined by HH, together with any temporary repairs and property
protection pending completion of the work.
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US.116746500.11
1.48 Shopping Center Improvements. The building, fixtures and other
improvements now or hereafter located on the Shopping Center Land and all alterations and
additions thereto and replacements thereof, including by reason of Restoration.
1.49 Shopping Center Land. The land, but not any Improvements, situated in
McLeod County, Minnesota and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.50 Shopping Center Leases. Any and all tenant leases with respect to the
Shopping Center Land or Shopping Center Improvements in effect as of the Amended
Effective Date.
1.51 Shopping Center Property. The Shopping Center Land, the Shopping Center
Improvements, and the Shopping Center Leases, collectively.
1.52 Taking. A taking of all or any part of the Health Care System Real Property,
or any interest therein or right accruing thereto, including, without limitation, any right of
access thereto existing on the date of this Agreement, as the result of or in lieu or in
anticipation of the exercise of the right of condemnation or eminent domain. The Taking
shall be deemed to occur on the date on which the condemning authority takes possession.
1.53 Intentionally omitted.
1.54 Term. The term of this Agreement as provided in Article 2.
1.55 Unavoidable Delays. Acts of God, casualties, war, civil commotion, embargo,
riots, strikes, unavailability of materials (but not unavailability of funds), contractor defaults
and any other events which are not within the reasonable control of the party in question to
prevent, control or correct.
Article 2.
Lease, Transfer of Health Care System
2.1 Lease of Health Care System Real Property. City does hereby demise and
lease to HH, and HH does hereby take and hire, upon and subject to the terms and conditions
of this Agreement, the Health Care System Real Property for a term commencing on the
Original Effective Date and ending thirty (30) years thereafter. Thereafter, this Agreement
may be renewed for one additional thirty (30) year term by mutual agreement of the parties.
At any time during the term of this Agreement, (i) HH may exercise the Purchase Option
described in Section 26.1 of this Agreement in accordance with the terms and conditions set
forth in Article 26; or (ii) City may exercise its right to convey the entire Health Care System
Real Property or any separate and discrete parcel within the Health Care System Real
Property to HH as set forth in Article 26. If this Agreement is not renewed for an additional
thirty (30) year term, HH shall exercise the Purchase Option as set forth in Article 26.
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US.116746500.11
2.2 Transfer of Health Care System Personal Property. The parties acknowledge
that as of the Original Effective Date, City conveyed all of its right, title and interest in and to
the Health Care System Personal Property and that HH is the owner of the Health Care
System Personal Property.
Article 3.
Rent; Consideration
3.1 Annual Rent.
(a) The parties acknowledge that Annual Rent established as of the
Original Effective Date has been paid in full by HH as it came due up to the Amended
Effective Date and in advance through the remainder of the Term of the Original
Agreement. Commencing on the Amended Effective Date and continuing through the
remainder of the Term of this Agreement, the Annual Rent payable by HH shall be an
amount equal to One and no/100ths Dollars ($1.00) per annum, which shall be
payable upon the Amended Effective Date and each anniversary thereof during the
remainder of the Term. HH shall also be responsible for paying as additional rent to
City, an amount equal to all expenses, including reasonable legal fees, incurred by
City in order to enforce any obligation materially breached by HH under this
Agreement, and any reasonable, direct, out of pocket transaction expenses, including
reasonable legal fees and consulting fees, incurred by City in connection with this
Amended and Restated Lease and Agreement and any transfer of all or any portion of
the Health Care System Real Property to HH during the Term, or any other transfer,
sublet, sale, assignment, release or other transaction involving any Health Care
System Real Property under Article 15. Such amounts, if any shall be payable in the
ordinary course of business following receipt of an invoice from City or copies of
applicable vendor invoices, but in any event not more than sixty (60) days following
receipt by HH of such invoices.
(b) All Annual Rent shall be paid by HH to City at the address of City set
forth in Section 24, or to such other address as City may direct by written notice to
HH.
(c) It is the purpose and intent of City and HH that the Annual Rent shall
be net to City and that HH shall pay Annual Rent and other amounts payable by HH
under this Agreement without notice or demand and without abatement, deduction or
setoff, except as otherwise provided in this Agreement.
3.2 Assumed Obligations. In consideration of the leases made by City to HH
pursuant to Article 2 hereof, HH hereby agrees to continue to operate the Health Care
System in accordance with the covenants set forth in this Agreement, including, without
limitation, the covenants set forth in Article 18 hereof. To the extent still outstanding as of
the Amended Effective Date, HH shall pay, or otherwise cause to be satisfied or discharged,
all Assumed Liabilities when due under their terms. HH may, at its expense and in its own
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US.116746500.11
name and behalf, or, to the extent lawful, in the name and behalf of City, in good faith,
contest the payment of any such Assumed Liabilities and, in the event of any such contest,
permit any such Assumed Liabilities to remain unpaid during the period of such contest and
any appeal therefrom. City will cooperate fully with HH, at HH's expense, in any such
contest. City shall continue to be responsible for the Excluded Liabilities, except as
specifically provided herein.
Article 4.
Payment of Taxes
City and HH anticipate that some or all of the Health Care System Real Property is or
will be exempt from real estate taxation. However, if and to the extent that real estate taxes
or installments of special assessments became due and payable with respect to the Health
Care System Real Property during the Term (including without limitation, assessments for
street and/or sidewalk improvements), HH agrees to pay all such amounts. City and HH
agree that HH's agreement to pay all applicable real estate taxes and special assessments
does not constitute a waiver of any exemption from said taxes or assessments to which the
Health Care System Real Property or HH may be entitled.
Article 5.
Repairs and Maintenance
Throughout the Term, HH, at its sole cost and expense, shall take good care of the
Health Care System Real Property, and shall at all times keep the same in good order and
condition, ordinary wear and tear excepted, and make all necessary repairs thereto, interior
and exterior, structural and non-structural. All repairs by HH shall be effected with due
diligence and in a workmanlike manner in compliance with all legal requirements and shall
be fully paid for by HH.
Article 6.
Insurance
6.1 Property Insurance. HH, at its cost, shall procure and maintain or cause to be
procured and maintained during the Term a so called "all-risk" property insurance policy
including the perils associated with mechanical breakdown (boiler and machinery) insuring
the full replacement cost of the Improvements. The property policy shall also provide "all
risk" coverage insuring at full replacement cost values for the improvements & betterments
and personal property. Such insurance shall name City as an additional insured.
6.2 Liability Insurance. HH, at its cost, shall procure and maintain or cause to be
procured and maintained during the Term commercial general public liability and
professional liability insurance or a program of self-insurance against claims of bodily injury,
death, personal injury or property damage occurring on, in or about the Health Care System
Real Property, with a combined single limit of not less than $2,000,000 each
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claim/occurrence and an aggregate limit of not less than $4,000,000, naming City as an
additional insured on any policies of insurance.
6.3 Intentionally omitted.
6.4 Intentionally omitted.
6.5 Intentionally omitted.
6.6 Intentionally omitted.
6.7 Policy Requirements. All insurance provided for in this Article 6 shall:
(a) be issued by insurance companies carrying an A M Best policyholder
rating of at least A- and a financial size rating of at least VIII or subject to acceptance
by the City, or be provided under a plan of self-insurance; and
(b) provide that, in the case of the property insurance required by Section
6. 1, losses shall be adjusted with the insurers and/or underwriters by City and HH,
unless HH Restores the Improvement, in which event HH shall be authorized
exclusively to adjust the loss and receive the proceeds to pay for Restoration as
Restoration progresses in accordance with this Agreement.
6.8 HH's Insurance. Proceeds of any insurance carried by HH on the Health Care
System Personal Property shall be payable directly to HH and HH shall have the exclusive
right to adjust and settle losses with respect thereto.
6.9 Certificate of Insurance. Upon the City's reasonable request, HH shall provide
to City original certificates from the issuing insurance companies evidencing that the policies
required to be carried by HH are in full force and effect.
Article 7.
Damage To or Destruction of the Improvements
7.1 Notice; Restoration. In case of any material damage to or destruction of any
part of the Improvements, HH shall give notice thereof to City and HH shall promptly and
with all diligence at HH's expense, commence and complete Restoration of such portion of
the Improvements so damaged or destroyed. Unless City otherwise consents, any
replacement building(s) to be constructed shall be of a quality not less than the quality of the
Improvement, as the same existed immediately prior to such damage or destruction.
7.2 Payment of Costs; Application of Proceeds. The costs of any Restoration
performed by HH in accordance with Section 7.1 shall be paid by HH, and any insurance
proceeds that are received by it in accordance with subsection 6.ZLb*) on account of any
damage to or destruction of the Improvements or any part thereof shall be used for that
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purpose. Any insurance proceeds remaining following the payment of all costs of
Restoration shall be retained by HH, for its use in the operation of the Health Care System,
and otherwise for its use in a manner consistent with its mission and purpose.
7.3 No Abatement. There shall be no abatement of Annual Rent in the event of
any damage or destruction to all or any part of the Health Care System.
7.4 Mutual Release. Notwithstanding any other provision of this Agreement, each
party hereby releases the other (and each party for which such other may be responsible) of
liability for any damage to the Improvements and the Health Care System Personal Property
which is coverable by the insurance described in Section 6.1 above (or which could be
covered by such insurance if HH were to carry insurance on the Health Care System Personal
Property), whether or not such damage is caused by the negligence or other fault of the party
so released or any party for which it may be responsible.
Article 8.
Condemnation
8.1 Total Taking. In the event of a Taking of the whole or substantially all of the
Health Care System Real Property, this Agreement shall terminate on the date of such
Taking, and the Annual Rent and all other sums and charges required to be paid by HH
hereunder shall be apportioned and paid to the date of such Taking. In the event of any such
Taking and notwithstanding the termination of this Agreement, and provided City is not the
party which commenced the Taking, City and HH shall together make one claim for an
award for their combined interests and the net award received shall be allocated between City
and HH on the basis of their respective interests therein, including in the case of City the
value of its reversion interest in the Health Care System Real Property and, in the case of
HH, the bargain value, if any, of its leasehold estate computed as though the Agreement had
not been terminated, and damages sustained as a result of termination of the Agreement prior
to the end of the Term. In addition, HH shall be entitled to any award made in respect of or
allocable to the Health Care System Personal Property and for moving, relocation and other
statutory benefits.
8.2 Partial Taking. In the event of a Taking of less than substantially all of the
Health Care System Real Property, this Agreement shall continue in full force and effect, and
HH shall at HH's expense with reasonable diligence (subject to Unavoidable Delays)
commence and complete Restoration, except to the extent made unfeasible by any reduction
in area of the Land or Improvement caused by such Taking. All awards made in respect of
or allocable to the Health Care System Real Property shall be distributed as follows and in
the following order:
(a) For the purpose of Restoration, in accordance Section 7.2, including the
last sentence thereof, as if the same were insurance proceeds; and
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(b) HH shall receive the balance of the award, for its use in the operation of
the Health Care System, and otherwise for its use in a manner consistent with its
mission and purpose.
8.3 Determination of Partial Taking. As used herein, a Taking of substantially all
of the Health Care System Real Property shall mean a Taking of such portion as renders it in
HH's good faith business judgment uneconomical or unfeasible to operate the Health Care
System Real Property for the purpose for which the Health Care System Real Property was
operated prior to such Taking.
Article 9.
Alterations
9.1 General. HH shall have the right from time to time during the Term to make,
at its expense, Alterations in or to the Improvements, subject in all cases to the further
provisions of this Article 9 and to all other applicable provisions of this Agreement.
9.2 Permitted Alterations. Subject to any applicable provisions of this Agreement,
HH shall have the right at any time during the Term to make such reasonable changes in and
additions and alterations, structural or otherwise, to the Health Care System Real Property as
HH shall deem necessary or desirable for its operation of the Health Care System, provided
that:
(a) the work is performed in a good and workmanlike manner and in
accordance with all applicable laws, ordinances, rules and regulations; and
(b) no change, alteration, modification, or addition shall at any time be
made that shall impair the structural soundness or diminish the value of any
improvement.
9.3 Permits. Before any Alterations are begun, HH shall procure, at its expense,
all necessary licenses, permits, approvals and authorizations from all governmental
authorities and shall, on demand, deliver photocopies thereof to City. Upon HH's request,
City shall join in the application for such licenses, permits, approvals and authorizations
whenever such action is necessary. All Alterations shall be made and completed in
accordance with all legal requirements.
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Article 10.
Discharge of Liens
Each of City and HH agrees not to create, and shall discharge, liens or notices of
claims of liens of mechanics and materialmen for work or materials contracted to be supplied
to the Health Care System Real Property by City or HH, respectively, subject to contest by
HH in accordance with Article 25.
Article 11.
Use of Health Care System Real Property
HH may use and occupy the Health Care System Real Property for Health Care
System Operations, and any other lawful purposes.
Article 12.
Entry on Property by City
HH shall permit City and its authorized representatives to enter the Health Care
System Real Property at all reasonable times following reasonable advance notice for the
purpose of inspecting the same.
Article 13.
Utilities
HH shall pay all charges for the use at the Health Care System Real Property of
water, sewer, electricity, heating, air conditioning and all other utilities consumed during the
Term.
Article 14.
Indemnification
Subject to Section 7.4, HH and Park Nicollet shall defend, indemnify and save City
harmless from and against all liabilities, claims, judgments, costs and expenses, including,
but not limited to, reasonable attorneys' fees, to the extent arising by reason of or relating to
the Health Care System, Health Care System Operations (including personal injuries or
damage to property arising from Health Care System Operations), Health Care System
Employees, or breach of this Agreement by HH or Park Nicollet, whether known or
unknown, whether arising before or after the Amended Effective Date, excluding, in each
case, all liabilities, claims, judgments, costs and expenses that constitute Excluded
Liabilities.
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Article 15.
Trnnef-rc
15.1 By City. The City agrees as follows with respect to its interest in the Health
Care System Real Property:
(a) City agrees not to transfer, mortgage, pledge, lease, or encumber all or
any part of its interest in the Health Care System Real Property or its rights under this
Agreement, except with the prior written consent of HH, or otherwise as provided in
this Section and Article 26.
(b) If HH proposes to sell or transfer a portion or portions constituting less
than all or substantially all of the Health Care System Real Property, including, but
not limited to, a transfer of a portion of the Health Care System Real Property to HH,
City agrees, following sixty (60) days prior notice by HH, to cooperate with such sale
or transfer, including by executing and delivering such reasonable and customary
agreements and instruments as may be necessary or desirable (i) to release from this
Agreement that part of the Health Care System Real Property proposed to be sold or
transferred by HH; (ii) to transfer and convey the interest of City in that portion of the
Health Care System Real Property proposed to be sold or transferred by HH, and (iii)
to permit HH to apply any net proceeds of sale or transfer to further the mission and
purposes of the Health Care System. Notwithstanding the foregoing, if during the
sixty day notice period, the City notifies HH that the City wishes that the subject
property be released from the Lease and returned to City control, City and HH will
cooperate to accomplish that result provided that HH shall receive from the City at the
time of the release an amount equal to the net proceeds anticipated by HH from the
transaction referenced in the initial notice to the City, such that HH continues to have
resources equivalent to the released property available for the mission and purposes of
the Health Care System.
(c) City and HH agree that the Freemonff+em-e� Avenue Property and
Auxiliary Property will be conveyed to HH as soon as practical following execution
of this Agreement.
15.2 By HH. HH and City agree as follows with respect to HH's interest in the
Health Care System Real Property:
(a) HH's interest in the Health Care System Real Property may be sublet
without City's consent, in whole or in part, provided that no such sublease shall
extend beyond the Term and shall not be inconsistent with HH's mission. Any
sublease not meeting the requirements of this Section 15.2(a) may not be entered into
without City's written consent. City agrees to execute a reasonable non -disturbance
agreement as may be requested by the subtenant under any such sublease.
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(b) HH's interest in the Health Care System Real Property may be assigned
without City's consent, provided that no such assignment shall extend beyond the
Term and shall not be inconsistent with HH's mission. Any assignment not meeting
the requirements of this Section 15.2(b) may not be entered into without City's
written consent.
(c) HH shall have the right to mortgage, pledge, or otherwise encumber as
collateral or security for debt held by an institutional lender or bond trustee all or any
part of its interest in the Health Care System, provided that no right, title or interest of
City shall be encumbered thereby. City agrees to cooperate reasonably with HH in
connection with any such financing, including the signing of such additional
documents as may be required to obtain such financing.
(d) Upon the closing of any sale or transfer of any portion of the Health
Care System Real Property pursuant to this Section, such portion shall cease to be a
part of the Health Care System Real Property under this Agreement.
Article 16.
Estoppel Certificates
Each party hereto agrees from time to time, upon not less than twenty (20) days' prior
notice from the other, to execute, acknowledge and deliver, without charge, to the other or its
designee, a statement in writing, certifying that this Agreement is unmodified and in full
force and effect (or if there have been modifications, identifying the same by the date thereof
and specifying the nature thereof), the dates to which the Annual Rent and other sums and
charges payable hereunder have been paid, the amount of the Annual Rent, that to its actual
knowledge there are no claims against the other hereunder (or if there are any such claims,
specifying the same) and that to its actual knowledge the other party is not in default and
there exists no circumstance which with the giving of notice or lapse of time, or both, would
constitute a default (or if such party is aware of any such default or circumstance specifying
the same).
Article 17.
Representations and Covenants of City
17.1 Power and Authority. City has the power and authority to execute and deliver
this Agreement, and to carry out the transactions contemplated herein. The Hutchinson City
Council, acting on behalf of City in connection with this Agreement, is the properly
appointed, acting and duly authorized governing body of City, and is acting in accordance
with the provisions of all applicable laws and regulations.
17.2 Agreement Valid and Binding. The Agreement is duly executed and delivered
and is a valid and legally binding obligation of City enforceable in accordance with its terms.
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The execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, result in the creation of any lien, charge or
encumbrance or the acceleration of any indebtedness or other obligation of City, and are not
prohibited by, in violation of or in conflict with any provisions of, and will not result in a
default under or a breach of (i) any constitutional provision affecting City; (ii) any ordinance,
law or regulation; or (iii) any order, decree or judgment or any court of governmental agency
to which City or the Health Care System is a party or is bound.
17.3 Intentionally omitted.
17.4 Intentionally omitted.
17.5 Intentionally omitted.
17.6 Cooperation. City, at HH's expense, shall cooperate reasonably with HH in
any manner necessary to enable HH to fulfill HH's obligations and exercise HH's rights
under this Agreement.
17.7 Trade Secrets. City understands that certain records that are defined as "trade
secret information" pursuant to Minnesota law are of substantial value of HH, and, except as
otherwise required by law, are and have been maintained in the strictest confidence as trade
secrets, and agrees, except as otherwise required by law, not to divulge, furnish, or make
accessible to anyone (other than HH and its designees) any trade secrets at any time.
17.8 Environmental Condition. Except for Hazardous Materials used by City in the
ordinary course of operating the Health Care System and in accordance with Hazardous
Substance Laws: (a) City has not generated, manufactured, stored or released any Hazardous
Materials on or about the Health Care System Real Property, and has permitted no other
party to do any of the same; and (b) City has received no notice of and has no knowledge (i)
that any Hazardous Material are or have ever been generated, manufactured, stored or
released about the Health Care System Real Property, (ii) of any, requests, notices,
investigations, demands, administrative proceedings, hearings, litigation or other action
proposed, threatened or pending relating to any of the Health Care System Real Property
alleging non-compliance with or liability under any Hazardous Material Law, or (iii) that any
above -ground or underground storage tanks or other containment facilities of any kind
containing any Hazardous Materials are or have ever been located about the Health Care
System Real Property.
17.9 Intentionally omitted.
17.10 Intentionally omitted.
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Article 18.
Representations and Covenants of HH
18.1 Formation of HH. HH is a nonprofit corporation duly organized and in good
standing under the laws of the State of Minnesota. HH has the power to lease and to own
assets and to carry on its business as contemplated under this Agreement.
18.2 Power and Authority. HH has the power to execute and deliver this
Agreement and to carry out the transactions contemplated herein. All corporate actions
required to be taken by HH to authorize the execution, delivery and performance of this
Agreement and all transactions contemplated hereby have been duly and properly taken.
18.3 Agreement Valid and Binding. The Agreement is duly executed and delivered
and is a valid and legally binding obligation of HH enforceable in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, result in the creation of any lien, charge or
encumbrance or the acceleration of any indebtedness or other obligation of HH, and are not
prohibited by, in violation of or in conflict with any provisions of, and will not result in a
default under or a breach of (i) any contract, agreement or other instrument to which HH is a
party or is bound; (ii) any ordinance, law or regulation; or (iii) any order, decree or judgment
or any court of governmental agency to which HH is a party or is bound.
18.4 Nonprofit Status; Principal Office; Primary Service Area. HH shall remain
throughout the Term qualified to do business as a Minnesota nonprofit corporation.
18.5 Intentionally omitted.
18.6 Intentionally omitted.
18.7 Intentionally omitted.
18.8 Intentionally omitted.
18.9 Intentionally omitted.
18.10 Intentionally omitted.
18.11 Intentionally omitted.
18.12 Operating Expenses and Taxes. In addition to HH's agreement to pay certain
taxes, maintenance expenses and insurance associated with the Health Care System Real
Property pursuant to Articles 4, 5 and 6 hereof, HH shall pay, or otherwise cause to be paid,
all Operating Expenses, whenever incurred. For purposes of this Agreement, the term
"Operating Expenses" means all costs associated with operation of the Health Care System
including, but not limited to, the costs of maintenance and repair, utilities, equipment rental,
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professional fees, salaries, wages, employee benefits, permit fees, license fees, and, as the
same respectively become due, all taxes, assessments and governmental charges that may be
lawfully assessed or levied against or otherwise attributable to the Health Care System
during the Term. HH may, at its expense and in its own name and behalf, or, to the extent
lawful, in the name and behalf of City, in good faith, contest any such taxes, assessments and
governmental charges in accordance with Article 25 hereof.
18.13 Intentionally omitted.
18.14 Indigent Care. HH shall operate the Hospital Property as a hospital open to
the general public providing emergency and acute care services, from time to time at no
charge or at reduced charges consistent with HH's charitable purposes approved by HH's
board of directors, in accordance with the financial assistance policy of HH and in
compliance with any applicable federal, state and City statute or ordinance and regulations
with respect thereto.
18.15 Intentionally omitted.
18.16 Intentionally omitted.
Article 19.
Condition of Property
19.1 Except as expressly stated herein, City does not make any representations or
warranties regarding the Health Care System. HH agrees that it is leasing and acquiring the
Health Care System on an "AS IS", "WHERE IS" and "WITH ALL FAULTS" basis, based
upon its own judgment. CITY MAKES NO WARRANTY WITH RESPECT TO THE
HEALTH CARE SYSTEM OR ANY PART THEREOF, EXPRESS OR IMPLIED, AND
CITY SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY AND
OF FITNESS FOR A PARTICULAR PURPOSE AND ANY LIABILITY FOR
CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF OR THE INABILITY
TO USE THE HEALTH CARE SYSTEM OR ANY PART THEREOF.
Article 20.
Events of Default; Termination
20.1 Events of Default. If any one or more of the following events ("Events of
Default") shall happen, and if neither party has exercised rights they have under Article 26 to
cause a conveyance of the Health Care System Real Property, then and in any such event,
City may give notice to HH specifying such Event or Events of Default and stating that this
Agreement and the Term shall expire and terminate on the date specified in such notice, and
on such date, unless such specified Event or Events of Default shall have been cured, this
Agreement shall terminate and HH shall remain liable as hereinafter provided:
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(a) HH defaults in the payment of any Annual Rent payable under this
Agreement and HH does not cure such default within fifteen (15) days after actual
receipt of notice thereof, or
(b) HH fails to pay any other monetary obligation when due or observe or
perform any of the other terms, conditions, covenants or agreements required to be
observed or performed by it under this Agreement and such failure shall continue for
a period of, in the case of a monetary obligation, thirty (30) days or, in the case of a
non -monetary obligation, sixty (60) days, following actual receipt of written notice of
such failure by HH, or, in the case of a non -monetary default which cannot with due
diligence be cured within such period of sixty (60) days, HH fails to proceed with due
diligence within such period of sixty (60) days to commence to cure the same and
thereafter to prosecute the curing of such default with due diligence.
20.2 Consequences of Default. If this Agreement is terminated pursuant to Section
20. 1, HH shall exercise and fulfill the requirements of the Purchase Option in accordance
with Article 26. If HH is unable to exercise and fulfill the requirements of the Purchase
Option, then Section 21.2 of this Agreement shall apply.
20.3 Intentionally omitted.
20.4 Intentionally omitted.
20.5 No Waiver. No failure by any party to insist upon the strict performance of
any term hereof or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term.
20.6 Exercise of Rights While in Default. HH may exercise and continue to
exercise all of its rights under this Agreement upon the occurrence and during the
continuance of any default and Event of Default under this Agreement up to the point of
termination of this Agreement, including but not limited to the Purchase Option.
Article 21.
Conveyance Upon Termination; Performance by Park Nicollet
21.1 Conveyance Upon Termination. In the event HH does not exercise and fulfill
the requirements of the Purchase Option or the City has not exercised its right to convey all
the Health Care System Real Property by the expiration of the Term, upon the expiration,
City shall convey any remaining Health Care System Real Property subject to this
Agreement to HH in the manner as provided for exercise of HH's or City's rights under
Article 26, provided, however, that if HH and City agree that the remaining Health Care
System Real Property should be returned to City instead, HH shall quit and surrender such
Health Care System Real Property , in the condition required to be maintained in accordance
with this Agreement (subject to ordinary wear and tear and damage by fire or other casualty
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excepted), to City, without any payment therefor by City, without delay, free and clear of all
lettings and occupancies (other than assignments and subleases entered into as permitted
under this Agreement).
21.2 Performance by Park Nicollet. In the event HH is unable to exercise and
fulfill the requirements of the Purchase Option or to receive conveyances from City of all or
portions of the Health Care System Real Property as and when required under this
Agreement, Park Nicollet agrees to directly perform on behalf of HH any such obligations to
exercise and fulfill the requirements of the Purchase Option or to receive conveyances from
City of all or portions of the Health Care System Real Property as defined in this Agreement
in the circumstances requiring such conveyances under this Agreement..
Article 22.
No Merger of Title
There shall be no merger of HH's interest in this Agreement nor of the leasehold
estate created by this Agreement with the fee estate in the Health Care System Real Property
or any part thereof by reason of the fact that the same person may acquire or own or hold,
directly or indirectly, (a) HH's interest in this Agreement or the leasehold estate created by
this Agreement or any interest therein and (b) the fee estate in the Health Care System Real
Property or any part thereof or any interest therein, and no such merger shall occur unless
and until all persons then having an interest in, which interest shall have been voluntarily
created by the holders of, the ownership interests described in (a) and (b) above, shall join in
a written instrument effecting such merger and shall duly record the same.
Article 23.
Quiet Enjoyment
City covenants that HH shall quietly have, hold and enjoy the Health Care System
Real Property during the Term without hindrance or molestation, subject only to Article 20.
City represents, warrants and covenants to HH as of the Amended Effective Date that the
Health Care System is free and clear of all prior liens and encumbrances except for the
Medical Office Building Leases, the Hospital Leases, and the Shopping Center Leases that
were assigned to HH as of the Original Effective Date or entered into by HH after the
Original Effective Date.
Article 24.
Nnti ces
All notices, requests, demands, consents, approvals, and other communications that
may or are required to be served or given hereunder (for the purposes of this Article
collectively called 'Notices") shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or by nationally
recognized overnight courier, addressed to the party to receive such Notice at the following
addresses:
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If to City: City of Hutchinson
111 Hassan St. SE
Hutchinson, Minnesota 55350
Attention: City Attorney
If to HH: Hutchinson Health
1095 Highway 15 S.
Hutchinson, Minnesota 55350-5000
Attention: President
With copy to: HealthPartners
Attention: General Counsel
PO Box 1309
Mail Stop 21114A
Minneapolis, MN 55440
Either party may, by Notice given as aforesaid, change its address for all subsequent Notices,
except that neither party may require Notices to it to be sent to more than two addresses.
Mailed Notices shall be deemed given when mailed in the manner aforesaid, provided that in
the case of a notice of default to HH the same shall be deemed given only upon actual receipt
by HH.
Article 25.
Contests
25.1 Contest. After written notice to City, HH may at its expense contest, by
appropriate proceedings conducted in good faith and with due diligence (all such proceedings
together with appeals therefrom being hereinafter referred to as "Contests") the amount,
validity or application, in whole or in part, of any tax, assessment, mechanics' lien,
encumbrance, charge or any other adverse claim for which HH is responsible under this
Agreement (hereinafter collectively "claims") provided that:
(a) In the case of an unpaid claim, such Contest shall operate to suspend
the collection of the same from City and HH therein;
(b) HH shall have furnished such security, if any, as may be required in the
proceedings or reasonably required by City; and
(c) No part of the Health Care System or any interest therein shall be, in
the reasonable opinion of City, in imminent danger of being forfeited or lost.
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25.2 Suspension of Obligation. During the period HH carries forward any such
Contest in good faith, HH shall be relieved from its obligations herein contained to pay the
claims, or to clear the liens with respect to which such contest is conducted. If and to the
extent HH shall not prevail in any such Contest, HH shall immediately pay and discharge the
claim in question to such extent.
25.3 Procedure. All such Contests may be brought by HH in the name of HH or, if
reasonably necessary, in the name of City or HH and City, as may be appropriate. Each party
agrees to cooperate with the other in such Contests, short of the payment of money with
respect thereto, except where this Agreement otherwise requires payment. Each party will
endorse such pleadings, checks and other documents as will be appropriate to carry out the
purposes of this Article 25.
Article 26.
Purchase Option and City Conveyance Right
26.1 Grant. Notwithstanding any other provision in this Agreement to the contrary,
HH shall have the option to purchase the Health Care System Real Property from City at any
time for a purchase price equal to one dollar ($1.00). HH must give City written notice of its
intent to exercise its Purchase Option at least one hundred eighty (180) days prior to the
earlier of the expiration of the Term or the date HH elects to close on the Purchase Option.
Notwithstanding any other provision in this Agreement to the contrary, City shall have the
right to convey to HH all or any separate and discrete portion of the Health Care System Real
Property to HH at any time and for each such transaction, HH shall pay City a purchase price
equal to one dollar ($1.00). City must give HH written notice of its intent to exercise its
conveyance right at least one hundred eighty (180) days prior to the earlier of the expiration
of the Term or the date City elects to close on its conveyance right.
26.2 Title. Upon proper exercise of the Purchase Option by HH, or the City
conveyance right by City, City agrees to convey the Health Care System Real Property or
portion thereof to HH free and clear of all liens and encumbrances, except for the Medical
Office Building Leases, the Hospital Leases, and the Shopping Center Leases that were
assigned to HH as of the Original Effective Date or entered into by HH after the Original
Effective Date, and any other lien or lease created, suffered or granted by HH (or those
claiming by, through or under HH). In connection with exercising the Purchase Option, HH
may, at its expense, obtain a title insurance commitment. If such commitment reflects any
matter affecting title to the Health Care System Real Property that is objectionable to HH
(other than this Agreement and any encumbrances created on or after the date hereof by HH
or those claiming by, through or under HH), then HH may give written notice to City of such
matter. If HH gives City such notice prior to closing, City shall at its expense within sixty
(60) days cause all encumbrances not permitted as provided above to be removed and
corrected of record. If City fails to do so within sixty (60) days, time being of the essence,
HH may at its option: (a) attempt to cause such encumbrances to be removed, or (b) proceed
to close without waiving any rights to damages hereunder. If HH elects alternative (a)
above, closing shall be postponed until the encumbrances in question are removed and, if HH
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is unable within a further period of sixty (60) days to cause such encumbrances to be
removed, HH may then elect alternative (b) above. No such postponement shall alter the
purchase price. All costs and expenses incurred by HH in causing or attempting to cause
such encumbrances to be removed, including reasonable attorneys fees, shall be payable by
City if attributable to any fault or action by City.
26.3 Closing. Except as postponed pursuant to Section 26.2, the closing shall take
place at the date, time and place agreed to by City and HH. At the Closing, City and HH
shall execute and deliver such reasonable and customary documents and instruments as may
be necessary or desirable to convey City's interest in the Health Care System Real Property
to HH, as herein provided. This Agreement and all of the terms and provisions hereof shall
remain in full force and effect until the purchase has closed, except as otherwise provided in
this Agreement.
26.4 Effect of Non -Exercise. If HH does not exercise its Purchase Option upon
termination of this Agreement, Article 21 shall apply.
Article 27.
Miscellaneous
27.1 Consent. In any case under this Agreement which requires consent or
approval such consent or approval shall not be unreasonably withheld, conditioned or
delayed unless otherwise specified.
27.2 Relationship of Parties. It is agreed that nothing herein contained is intended
or should be construed in any manner as creating or establishing the relationship of joint
venturers or as constituting HH or any of its employees or agents as the employees or agents
of City, except as otherwise provided herein.
27.3 Miscellaneous. This Agreement shall be governed by the laws of the State of
Minnesota. If any term of this Agreement or any application thereof shall be invalid or
unenforceable, the remainder of this Agreement and any other application of such term shall
not be affected thereby. This Agreement may be changed, waived, discharged or terminated
only by an instrument in writing signed by the then owners of City and HH interests herein.
This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. The headings of this Agreement are
for purposes of reference only and shall not limit or define the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which is an original, but
all of which shall constitute one and the same instrument.
27.4 Recording. This Agreement, or a short form of this Agreement, may be
recorded in the real estate records of the Counties in which the Health Care System Real
Property is situated. HH and City agree to cooperate with each other in the preparation and
recordation of any such short form of this Agreement.
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27.5 Non -Delegation and Lack of Control. No provision of this Agreement shall be
construed as a delegation by City to HH of any governmental function of City. Further, HH
and City have determined that the rights of City under this Agreement do not, and are not
intended to, give City direct or indirect control over the conduct of the Health Care System
or its operations.
27.6 Amended and Restated Lease and Agreement. This Amended and Restated
Lease and Agreement amends and restates the Original Agreement (including the First
Amendment) in its entirety as of Amended Effective Date and the parties acknowledge that
the terms of the First Amendment have been satisfied and that such First Amendment has no
further force or effect.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this instrument under
seal as of the day and year first above written.
CITY OF HUTCHINSON
STATE OF
) ss.
COUNTY OF
By:
Its:
And by:
Its:
The foregoing instrument was acknowledged before me this day of
2018, by and , the
and , respectively, of the City of
Hutchinson, a Minnesota municipal corporation, on behalf of the municipal corporation.
Notary Public
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HUTCHINSON HEALTH
By:
Its:
And by:
STATE OF )
ss.
COUNTY OF )
Its:
The foregoing instrument was acknowledged before me this day of
2018, by and
the and , respectively, of Hutchinson
Health, a Minnesota nonprofit corporation, on behalf of the nonprofit corporation.
Notary Public
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STATE OF
COUNTY OF
PARK NICOLLET HEALTH SERVICES
By:
Its:
) ss.
The foregoing instrument was acknowledged before me this
2018, by , the
day of
of
Park Nicollet Health Services, a Minnesota nonprofit corporation, on behalf of the nonprofit
corporation.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Phone: (612) 766-7000
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EXHIBIT A
Legal Description of the Land
Hospital Land:
Medical Office Building Land:
Shopping Center Land:
Dassel Medical Center Land:
Auxiliary Land
reemont Avenue Land
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AMENDED AND RESTATED
LEASE AND AGREEMENT
between
CITY OF HUTCHINSON
and
HUTCHINSON HEALTH CARE
April 1.2018
Dated. Deeeffimbef 31, 2007
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TABLE OF CONTENTS
Article -
Page
Article1. Definitions................................................................................................................ 2
1.1 Agreement..........................................................................................................2
1.2 Alteration........................................................................................................... 2
1.3 Annual Rent....................................................................................................... 2
1.4 Assigned Contracts-------------------------------------------------------------------------------------------- 2
1.5
Assumed Liabilities........................................................................................... 2
1.6
Intentionally omitted .................................................. 3
1.7
Intentionally omittedi................................................................. 3
1.8
Intentionally omitted .3
1.9
Intentionally Omitted........................................................ 3
1.10
Dassel Medical Center Improvements............................................................... 3
1.11 Dassel Medical Center Land.............................................................................. 3
1.12 Dassel Medical Center Property........................................................................ 4
1.13 Intentionally Omitted1--fr^,2&;-- r a,e.................................................................. 4
1.14 Event of Default................................................................................................. 4
1.15 Excluded Assets................................................................................................. 4
1.16 Excluded Liabilities........................................................................................... 4
1.17 Intentionally Omitted .............................................. 4
1.18 Intentionally Omitted€�................................................................ 4
1.19 Hazardous Material............................................................................................ 4
1.20 Hazardous Materials Laws................................................................................ 5
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1.21
Health Care System........................................................................................... 5
1.22
Intentionally Omitted ...................................... 5
1.23
Health Care System Funds................................................................................. 5
1.24
Health Care Systems Operations....................................................................... 5
1.25
Health Care System Personal Property.............................................................. 5
1.26
Health Care System Real Property.................................................................... 7
1.27
Hospital Improvements......................................................................................7
1.28
Hospital Land..................................................................................................... 7
1.29
Hospital Leases.................................................................................................. 7
1.30
Hospital Property............................................................................................... 7
1.31
Improvements.................................................................................................... 7
1.32
Intentionally OmittedTfftef: a Re ,,,f,,,, Gede.................................................... 7
1.33
Inventories and Supplies.................................................................................... 7
1.34
Land................................................................................................................... 7
1.35
Medical Office Building Improvements............................................................ 7
1.36
Medical Office Building Land........................................................................... 8
1.37
Medical Office Building Leases........................................................................ 8
1.38
Medical Office Building Property..................................................................... 8
1.39
Intentionally Omitted ......................................... 8
1.40
Intentionally Omitted........................................................ 8
1.41
Intentionally Omitted .................................................. 8
1.42
Original Effective Date ................................................... 8
1.43
Purchase Option................................................................................................. 8
1.44
Intentionally omitted ............................................ 8
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1.45 Intentiona y omitte v -, .—
,�-JEye haii..........................................................8
1.46 Intentionally omitted..................................................... 8
1.47 Restore or Restoration....................................................................................... 8
1.48
Shopping Center Improvements........................................................................ 9
1.49
Shopping Center Land.......................................................................................9
1.50
Shopping Center Leases.................................................................................... 9
1.51
Shopping Center Property.................................................................................. 9
1.52
Taking................................................................................................................ 9
1.53
Intentionally OmittedTffli E .......................................................... 9
1.54
Term...................................................................................................................9
1.55 Unavoidable Delays........................................................................................... 9
Article 2. Lease, Transfer of Health Care System.................................................................... 9
2.1 Lease of Health Care Center Real Property....................................................... 9
2.2 Transfer of Health Care System Personal Property ......................................... 10
Article 3. Rent; Consideration................................................................................................ 10
3.1 Annual Rent..................................................................................................... 10
3.2 Assumed Obligations....................................................................................... 11
3.3 Additional Costs.............................................................................................. 12
Article 4. Payment of Taxes................................................................................................... 12
Article 5. Repairs and Maintenance........................................................................................ 12
Article6. Insurance................................................................................................................. 12
6.1 Property Insurance........................................................................................... 12
6.2 Liability Insurance........................................................................................... 13
6.3 Intentionally OmittedDifeeter,'O ffieef Trs„r, aee............................................ 13
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6.4
Intentionally Omitted...............................................
13
6.5
Intentionally Omitted A „4e,Y„ebile Trs„r nee...................................................
13
6.6
Intentionally OmittedGr-i e Fide +y.................................................................
13
6.7
Policy Requirements........................................................................................
13
6.8
HH'stT� Insurance.....................................................................................
14
6.9
Certificate of Insurance....................................................................................
14
Article 7. Damage To or Destruction of the Improvements...................................................
14
7.1
Notice; Restoration..........................................................................................
14
7.2
Payment of Costs; Application of Proceeds....................................................
14
7.3
No Abatement..................................................................................................
14
7.4
Mutual Release................................................................................................
14
Article8. Condemnation.........................................................................................................
15
8.1
Total Taking.....................................................................................................
15
8.2
Partial Taking...................................................................................................
15
8.3
Determination of Partial Taking......................................................................
15
Article9. Alterations
...............................................................................................................
16
9.1
General.............................................................................................................16
9.2
Permitted Alterations.......................................................................................
16
9.3
Permits.............................................................................................................16
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Article 10. Discharge of Liens................................................................................................ 16
Article 11. Use of Health Care System Real Property............................................................ 16
Article 12. Entry on Property by City..................................................................................... 17
Article13. Utilities................................................................................................................. 17
Article 14. Indemnification..................................................................................................... 17
Article15. Transfers............................................................................................................... 17
15.1 By City............................................................................................................. 17
15.2 By HH..................................................................................................... 18
Article 16. Estoppel Certificates............................................................................................. 19
Article 17. Representations and Covenants of City................................................................ 20
17.1 Power and Authority........................................................................................ 20
17.2 Agreement Valid and Binding......................................................................... 20
17.3 Intentionally Omitted....................................................... 20
17.4 Intentionally OmittedExi.............................................................. 20
17.5 Assigned Contracts; Consents......................................................................... 20
17.6 Cooperation......................................................................................................20
17.7 Trade Secrets................................................................................................... 20
17.8 Environmental Condition................................................................................. 20
17.9 Intentionally OmittedE layees..................................................................... 21
17.10 Intentionally Omitted]Pt4 ife Fiffan inns.......................................................... 21
Article 18. Representations and Covenants of HHS ........................................................ 21
18.1 Formation of HH..................................................................................... 21
18.2 Power and Authority........................................................................................ 21
18.3 Agreement Valid and Binding......................................................................... 22
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18.4
Nonprofit Status; ..............................
22
18.5
Intentionally
Omitted.......................................................
22
Intentionally Omitted.................................................................
18.6
Intentionally
Omitted€ -..............................................................
23
18.16
18.7
Intentionally
Omittedl4ealth rare rieeffses.....................................................
23
Article 20. Events of Default; Termination............................................................................
18.8
Intentionally
Omitted"' edieafe reffif ea4ie..................................................
24
20.2
18.9
Intentionally
Omitted n ee feditati.................................................................
24
18.10
Intentionally
Omltte,'Me'al—I Qta.................................................................
24
No Waiver--------------------------------------------------------------------------------------------------------
18.11
Intentionally
Omitted ;
28
biabilities.........................................................................................................
24
18.12
Operating Expenses and Taxes........................................................................
25
18.13
Intentionally Omitted ...............................................
25
18.14
Intentionally Omitted.................................................................
25
18.15
Intentionally Omitted ....................................................
25
18.16
Intentionally OmittedTr-�e�t3...................................................................
26
Article 19. Condition of Property...........................................................................................
26
Article 20. Events of Default; Termination............................................................................
26
20.1
Events of Default.............................................................................................
26
20.2
Consequences of Default............................................................
27
20.3
Intentionally Omitted
20.4
Intentionally OmittedRe le4iiig. ..............
27
20.5
No Waiver--------------------------------------------------------------------------------------------------------
27
20.6
Exercise of Rights While in Default................................................................
28
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Article 21. Conveyance Upon Termination_ Performance by Park NicolletStff ender of the
Pfepe4y....................................................................................................................... 28
21.1 Conveyance Upon Termination
......................................................................................................................... 28
21.2 Performance by Park Nicollet
Article 22. No Merger of Title................................................................................................ 28
Article 23. Quiet Enjoyment................................................................................................... 29
Article24. Notices.................................................................................................................. 29
Article25. Contests................................................................................................................. 30
25.1 Contest............................................................................................................. 30
25.2 Suspension of Obligation................................................................................. 30
25.3 Procedure......................................................................................................... 30
Article 26. Purchase Option and City Conveyance Right ...................................................... 30
26.1 Grant................................................................................................................ 30
26.2 Title.................................................................................................................. 31
26.3 Closing............................................................................................................. 31
26.4 Effect of Non-Exercise.................................................................................... 31
Article 27. Miscellaneous....................................................................................................... 31
27.1 Consent............................................................................................................ 31
27.2 Relationship of Parties..................................................................................... 32
27.3 Miscellaneous.................................................................................................. 32
27.4 Recording.........................................................................................................32
27.5 Non -Delegation and Lack of Control.............................................................. 32
Exhibit A — Legal Description of the Land
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AMENDED AND RESTATEDE*hibit B &ieltided Assets
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LEASE AND AGREEMENT
This Amended and Restated Lease and Agreement is datedmade aiid eiitefed ;rte as
of April 1.20 18 (the "Amended Effective Date: ; by and between the City of Hutchinson, a
Minnesota municipal corporation ("City"), and Hutchinson Health, a Minnesota nonprofit
corporation ("HH"). Park Nicollet Health Services_ a Minnesota nonprofit corporation and
the sole Member of HH as of the Amended Effective Date ("Park Nicollet" 1. is a party to this
Agreement for the limited purposes set forth in Articles 14 and 21. Cafe, a M;r iese. a
fieflPfefit ("1414G").
RECITALS
WHEREAS_ the City and Hutchinson Health (formerly known as Hutchinson Health
Carel executed that certain Lease and Agreement dated December 31. 2007_ as amended by
that certain First Amendment to Lease and Agreement ("First Amendment") dated December
19, 2012 (collectively, the "Original Agreement" 1.
WHEREAS_ City owns the Hospital WHEREAS, City ew4is the Hospital
Pfepet4y, the �siiig Home Property, the Medical Office Building Property, the Shopping
Center Property, the Dassel Medical Center Property, the Freemont Avenug— _gieiaal E.)'_
Property, and the Auxiliary Property=–each as hereinafter individually defined and
collectively referred to as the "Health Care System Real Property" 1. -,
WHEREAS,n�the Original Effective DateLlespital Pfopefty, the
"Health Care System Real Property was" operated by City as
elements of a coordinated Health Care System, as hereinafter defined.
WHEREAS, as of the Original Effective Date_ City transferred ownershipla�i
deteftnitiea tha4 it ; iii the best ;merest of the delivefy of health eafe to fesidefi4s of the City
Health Care System tionste lease an
and assets other thane€ the Health Care System Real Property and
certain Excluded Assetsl to HH.te a privftte–,nonprofit, iieii gevefmiien4a corporation that
was -
organized under the laws of the State of
Minnesota for the purpose of acquiring and operating the Health Care System.
WHEREAS_ under the First Amendment_ in exchange for a cash payment and other
consideration_ the City gave up its right to approve specific "change in control" transactions
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but retained a consultation right_ the right that if a change of control transaction occurred_
rent payments due under the lease would be fully prepaid_ and the right to terminate the lease
and convey all the leased property to HH: and
WHEREAS_ HH has entered into a change of control transaction with HealthPartners_
Inc._ by and through Park Nicollet_ an affiliate of HealthPartners_ Inc._ which would cause the
parties to execute the provisions of the First Amendment_ and the proposed transaction was
described to the Hutchinson City Council at its workshop on January 9, 2018: and
WHEREAS_ HH believes that it would be advantageous to maintain the lease
structure for a period of time and the City___ after the required consultations with HH.
concluded it would be in the community's interests to accommodate HH's request and to
further amend the lease on the terms set forth herein_ rather than to reauire the immediate
conveyance of all the leased property: and
WHEREAS, City has the statutory power and authority, pursuant to Minnesota
Statutes §§ 144.581 and 447.47, to lease and tfans f r the Health Care System Real Property
to HHS.
WHEREAS_ pursuant to that certain Prepayment of Rent Agreement entered into
between the parties contemporaneously with the execution of this Lease_ HH is paying a
lump -sum payment to City in an amount equal to the present value of the monthly rent that
would have been payable to City for the remainder of the Term of the Original Agreement.
Accordingly_ the parties acknowledge that the First Amendment will be deemed satisfied and
will no longer be applicable and that a number of provisions in the Original Agreement are
no longer necessary and will be referenced in this Amended and Restated Lease and
Agreement as "omitted" simply for convenience rather than renumbering the entire Original
Agreement.
._ PA
M I M rMe��ss
Vol
_
I�I I
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NOW, THEREFORE, in consideration of the premises, covenants and agreements set
forth herein_ and other good and valuable consideration_ the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
Article 1.
Definitions
The following terms shall have the meanings set forth in this Article:
1.1 Agreement or Lease. This Amended and Restated Lease and Agreement,
including the following exhibits attached hereto and made a part hereof
Exhibit A — Legal Description of the Land
1.2 Alteration. Construction, reconstruction, replacement, repairs, renewals,
alterations, changes, additions, improvements and demolitions of or to the Improvements and
all excavations at any time made or to be made in, or on about the Land, or any part thereof
1.3 Annual Rent. The Annual Rent at the per annum rate provided for in Section
3.1 of this Agreement.
1.4 Assigned Contracts. All service and maintenance contracts, commitments,
guarantees, indentures, insurance policies and contracts, leases and other contracts regarding
the Health Care System Real Property and the Health Care System Operations, but excluding
any contracts that are part of the Excluded Assets, that were assigned to HH by the City as of
the Original Effective Date.
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1.5 Assumed Liabilities. All of the following debts, obligations, accounts payable,
claims and other liabilities of City (excluding, in each case, any Excluded Liabilities]
assumed by HH as of the Original Effective Dater
(a) All payment obligations, other obligations and liabilities arising under
the Assigned Contracts;
(b) Any materialmen, mechanics or other liens against the Health Care
System Real Property;
(c) All employee liabilities arising from Health Care System Operations,
including but not limited to any costs, settlement amounts, insurance deductibles and
other expenses associated with any employment-related legal claims brought by City
employees arising from the termination of their employment for Health Care System
Operations;
(d) Any fines, penalties or other payments, or repayments, required to be
made to any governmental entity in connection with Health Care System Operations
prior to the Original Effective Date;
(e) Claims relating to generation, manufacture, storage or release of
Hazardous Materials on or about the Health Care System Real Property or with
respect to the Health Care System Operations; and
(f) All other liabilities and obligations of City, whether known or
unknown, contingent or otherwise, incurred or arising in connection with Health Care
System Operations prior to the Original Effective Date.
1.6 Auxiliary Improvements. The building, fixtures and other improvements now
or hereafter located on the Auxiliary Land and all alterations and additions thereto and
replacements thereof, including by reason of Restoration.
1.7 Auxiliary Land. The land, but not any Improvements, situated in McLeod
County, Minnesota, and legally described on Exhibit A attached hereto, together with all
easements, appurtenances and hereditaments pertaining thereto.
1.8 Auxiliary Property. The Auxiliary Land and the Auxiliary Improvements,
collectively.
1.9 Intentionally omitted.
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1.10 Dassel Medical Center Improvements. The building, fixtures and other
improvements now or hereafter located on the Dassel Medical Center Land and all
alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.11 Dassel Medical Center Land. The land, but not any Improvements, situated in
Meeker County, Minnesota, and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.12 Dassel Medical Center Property. The Dassel Medical Center Land the Dassel
Medical Center Improvements, collectively.
1.13 Intentionally omitted.
1.13 E ee i'e e Daae. Deeeffiber31, 2007 a4 11-59.59 n M..
1.14 Event of Default. As defined in Section 20.1 of this Agreement.
1.15 Excluded Assets. Those assets owned by City as of the Original Effective
Date which remainedshall be and remai the assets of City and were not leased or transferred
to HHS pursuant to the Originalt4s Agreement,
1.16 Excluded Liabilities. Any and all debts, obligations, claims, and other
liabilities of City:
(a) to the extent such debts, obligations, claims or other liabilities of City
are covered by an existing insurance policy maintained by City;
(b) to the extent that the assumption of which by HHS would eliminate
or limit the governmental immunity which would otherwise be available in regard to
such debt, obligation, claim or other liability (and nothing herein shall grant to any
person not a party hereto any right to payment or indemnification for any event
occurring prior to the Original Effective Date which would not have existed had City
not entered into the transactions contemplated hereby);
(c) which results from any act or omission of City (or any of its elected
officials, employees, contractors, or agents) acting in, or in furtherance of, City's
governmental function, and not in connection with, or in furtherance of, the Health
Care System or Health Care System Operations; or
(d) which results from a breach of this Agreement by City or the existence
of which constitutes a misrepresentation by City under this Agreement.
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1.17 Intentionally omitted.
Ill Mr. a
WI
1.19 Hazardous Material. Any substance, chemical, waste or material that is or
becomes regulated under applicable law because of its toxicity, infectiousness, radioactivity,
explosiveness, ignitability, corrosiveness or reactivity, including asbestos, urea
formaldehyde, polychlorinated biphenyls, nuclear fuel or materials, radioactive materials,
explosives, known carcinogens, petroleum products and by-products and any substance,
chemical, waste or material regulated by any Hazardous Material Law.
1.20 Hazardous Materials Laws. Each federal, state, county, municipal, local or
other law, statute, code, ordinance, rule or regulation which relates to or deals with human
health or the environment in the jurisdiction in which the Health Care System, or any part
thereof, is located.
1.21 Health Care System. The Health Care System Real Property, the Health Care
System Personal Property acquired by HH from City as of the Original Effective Date, and
all other real or personal property purchased, leased or otherwise acquired by HHS (or by
City, with respect to any real property acquired by City for the use of HH49G and inclusion
with the Health Care System Real Property) on or after the Original Effective Date, together
with the operations, infrastructure, systems, processes, assembled work force and other
intangibles necessary for the conduct of a healthcare delivery system of the scope and nature
as that operated by City prior to the Original Effective Date.
1.22 Health Care System Employees. All full and part time employees of the
Health Care System who became employees of HH as of the Original Effective Date or have
been employed by HH after the 0 a of the Effective Date.
1.23 Health Care System Funds. All of City's right, title and interest in or to all
cash, bank accounts, savings and loan accounts, certificates of deposit, money market
accounts, treasury bills, investments (whether debt or equity, liquid or illiquid), reserves or
other cash items held in the name of, or on behalf of, City in connection with Health Care
System Operations.
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1.24 Health Care Systems Operations. The operation of the Health Care System,
including operation of its various components as an acute care hospital, a surgical center, a
skilled ffufsifig medical office building, an outpatient clinic, and administrative
facilities, together with all activities related to or arising from such operations.
1.25 Health Care System Personal Property. All right, title and interest of City in
and to the following property (excluding, in each case, the Excluded Property that was
transferred to HH as of the Original Effective Dater
(a) All machinery, furniture and equipment, including hospital, medical
and office equipment, and other fixed assets owned by City and used in connection
with the operation of the Health Care System Real Property, or any part thereof,
(b) All motor vehicles owned by City and used in connection with the
operation of the Health Care System Real Property,
metef vehieles listed off the a4aehed Exhibit G;
(c) All trademarks, service marksse -vieef adE and names owned by City
and used in connection with the operation of the Health Care System Real Property,
Health Care System Operations, or any part or combination thereof,
(d) All accounts receivable and other amounts owed to City or its health
care operating units and arising out of the use, operation or ownership of the Health
Care System Real Property or arising from Health Care System Operations;
(e) The benefit, but not outright ownership, of the gifts, bequests,
donations or other endowments specifically given for the benefit of or restricted to the
use of the Health Care System Real Property, Health Care System Operations, or any
part or combination thereof,
(f) All rights under the Assigned Contracts, including all rights to receive
goods or services, to use and occupy personal and leased real property or to receive
payment for goods or services rendered, or other benefits arising under such
contracts;
(g) All Inventories and Supplies;
(h) All trade secrets and other confidential information concerning Health
Care System Operations not in the public domain and in existence on the Original
Effective Date;
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(i) All medical records of Health Care System patients in existence on the
Original Effective Date;
0) All business records arising from the use of the Health Care System
Real Property or Health Care System Operations in existence on the Original
Effective Date;
(k) All Health Care System Funds;
(1) Any prepaid expenses arising from the operation or use of the Health
Care System Real Property or from Health Care System Operations in existence on
the Original Effective Date;
(m) any and all shares, member interests, partnership interests, member
control agreements or other interests held by City in any joint venture, partnership,
limited liability company, corporation, or other entity or organization formed in
relation to, in support of, or otherwise in connection with the Health Care System
Real Property or Health Care System Operations, including, without limitation, City's
interests in the joint ventures known as ConnectCare operating from the Birchwood
Property and Hutchinson Diagnostic Center;
(n) The right to any and all recovery from all collection cases in progress
on the Original Effective Date for goods furnished or services rendered in connection
with Health Care System Operations;
and all of such other assets owned by City in connection with the operation of the Health
Care System Real Property, other than the Excluded Assets, as of the Original Effective
Date. Further, for purposes of this Agreement, the term "Health Care System Personal
Property" shall (i) include all additions, alterations, changes, and substitutions in and to all or
any part of the Health Care System Personal Property made after the Original Effective Date,
and (ii) exclude all Health Care System Personal Property transferred or sold in accordance
with Article 15 hereof on or after the Original Effective Date.
1.26 Health Care System Real Property. As defined in the Recitals hereof
1.27 Hospital Improvements. The building, fixtures and other improvements now
or hereafter located on the Hospital Land and all alterations and additions thereto and
replacements thereof, including by reason of Restoration.
1.28 Hospital Land. The land, but not any Improvements, situated in McLeod
County, Minnesota and legally described on Exhibit A attached hereto, together with all
easements, appurtenances and hereditaments pertaining thereto.
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1.29 Hospital Leases. Any and all tenant leases with respect to the Hospital Land
or Hospital Improvements in effect on the Amended Effective Date.
1.30 Hospital Property. The Hospital Land, the Hospital Improvements, and the
Hospital Leases, collectively.
1.31 Improvements. The Hospital Improvements, the Medical Office Building
Improvements, the Shopping Center Improvements, the
Dassel Medical Center Improvements, the Freemont Avenue Improvements,
and the Auxiliary Improvements, collectively.
1.32 Intentionallv Omitted.
1.32 iffteftial Revefpde Code. The iffteftial Revefi-ue Code of 1986, as ametided,
1.33 Inventories and Supplies. All items of consumable personal property owned
by City or held by City in connection with the Health Care System Operations.
1.34 Land. The Hospital Land, the Medical Office
Building Land, the Shopping Center Land, the Dassel Medical Center Land, the Freemont
Avenuq _gieiiai E'•;,_ Land, and the Auxiliary Land, collectively.
1.35 Medical Office Building Improvements. The building, fixtures and other
improvements now or hereafter located on the Medical Office Building Land and all
alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.36 Medical Office Building Land. The land, but not any Improvements, situated
in McLeod County, Minnesota and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.37 Medical Office Building Leases. Any and all tenant leases with respect to the
Medical Office Building Land or Medical Office Building Improvements in effect as of the
Amended Effective Date.
1.38 Medical Office Building Property. The Medical Office Building Land, the
Medical Office Building Improvements, and the Medical Office Building Leases,
collectively.
1.39 Intentionallv Omitted-
1.40
mitted
1.40 Intentionallv Omitted
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1.41 Intentionally Omitted
Nuts r,. 14eme
1.42 Original Effective Date. December 31, 2007 at 11:59:59 P.M.
1.43 Purchase Option. HH's right to purchase City's interest in the Health Care
System Real Property in accordance with Article 26.
1.44 Freemont Avenue Improvements. The building, fixtures and other
improvements now or hereafter located on the Freemont AvenuP1hPdfsiog Home Land and all
alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.45 Freemont AvenueRe,4iaffal Ew Land. The land, but not any Improvements,
situated in McLeod County, Minnesota, and legally described on Exhibit A attached hereto,
together with all easements, appurtenances and hereditaments pertaining thereto.
1.46 Freemont AvenueD e : i er a1 E. Property. The Freemont AvenueD eg era 1 E.,
Land and the Freemont AvenueDegietial Ee Improvements, collectively.
1.47 Restore or Restoration. The repair, restoration or rebuilding of the Health
Care System or any part thereof following any Taking, damage to or destruction of the same
by fire or other casualty, in accordance with applicable legal requirements, with such
Alterations as may be determined by HH, together with any temporary repairs and
property protection pending completion of the work.
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MI
W11111
11 111 1
1111111.
1.45 Freemont AvenueRe,4iaffal Ew Land. The land, but not any Improvements,
situated in McLeod County, Minnesota, and legally described on Exhibit A attached hereto,
together with all easements, appurtenances and hereditaments pertaining thereto.
1.46 Freemont AvenueD e : i er a1 E. Property. The Freemont AvenueD eg era 1 E.,
Land and the Freemont AvenueDegietial Ee Improvements, collectively.
1.47 Restore or Restoration. The repair, restoration or rebuilding of the Health
Care System or any part thereof following any Taking, damage to or destruction of the same
by fire or other casualty, in accordance with applicable legal requirements, with such
Alterations as may be determined by HH, together with any temporary repairs and
property protection pending completion of the work.
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1.48 Shopping Center Improvements. The building, fixtures and other
improvements now or hereafter located on the Shopping Center Land and all alterations and
additions thereto and replacements thereof, including by reason of Restoration.
1.49 Shopping Center Land. The land, but not any Improvements, situated in
McLeod County, Minnesota and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.50 Shopping Center Leases. Any and all tenant leases with respect to the
Shopping Center Land or Shopping Center Improvements in effect as of the Amended
Effective Date.
1.51 Shopping Center Property. The Shopping Center Land, the Shopping Center
Improvements, and the Shopping Center Leases, collectively.
1.52 Taking. A taking of all or any part of the Health Care System Real Property,
or any interest therein or right accruing thereto, including, without limitation, any right of
access thereto existing on the date of this Agreement, as the result of or in lieu or in
anticipation of the exercise of the right of condemnation or eminent domain. The Taking
shall be deemed to occur on the date on which the condemning authority takes possession.
1.54 Term. The term of this Agreement as provided in Article 2.
1.55 Unavoidable Delays. Acts of God, casualties, war, civil commotion, embargo,
riots, strikes, unavailability of materials (but not unavailability of funds), contractor defaults
and any other events which are not within the reasonable control of the party in question to
prevent, control or correct.
Article 2.
Lease, Transfer of Health Care System
tem
2.1 Lease of Health Care System Real Property. City does hereby demise and
lease to HH, and HHHW does hereby take and hire, upon and subject to the terms and
conditions of this Agreement, the Health Care System Real Property for a term commencing
on the Original Effective Date and ending thirty (30) years thereafter. Thereafter, afief the
this Agreement aiid a4 ai+y ti
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th year zgreement-�may be renewednefify City
for one additional thirty (30) year term by mutual agreement of the parties. At any time
during the term of this Agreement_ (i) HH mayer exercise the Purchase Option described in
Section 26.1 of this Agreement in accordance with the terms and conditions set forth in
Article 26: or (ii) Citv may exercise its right to convev the entire Health Care Svstem Real
Property or any separate and discrete parcel within€the Health Care System Real
Property to HH as set forth in Article 26. If this Agreement is not renewed for an additional
thirty (30) year term, HH shall exercisee*pifa4i ii of the Purchase Option as set forth in
Article 26.r;�;�r
2.2 Transfer of Health Care System Personal Property. The parties acknowledge
that as of the Original Effective Date
City conveve ,
all of itsfity's right, title and interest in and to the Health Care
System Personal Property and that HH is the owner of the Health Care System Personal
Article 3.
Rent; Consideration
3.1 Annual Rent.
(a) The parties acknowledge that Fef the Health Cafe Systefn Real
Annual Rent established as of the Original Effective Date has been paid
in full by HH as it came due up to the Amended Effective Date and in advance
through the remainder of the Term of the Original Agreement. Commencing on the
Amended Effective Date and continuing through the remainder of the Term of this
Agreement, the Annual Rent payable by HH shall be an amount equal to One &&41+9
and no/100ths Dollars
($1460,NO.00) per annum ,
2008, which pef affffuffi ameufA shall be payable upon the Amended Effective
Date , and each anniversary thereof
during the remainder , iii eaeh ealeiidaf yeaf,
105-4 of the Term. HH shall also be responsible for t+e
ffn
paying . agefA fees,
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the Exisfitig Bends and a" additional rent to Tax Exempt Beiids of ethef
;
an amount equal to all expenses, including reasonable legal fees,
incurred by City in order to enforce any obligation materially breached by
HHS under this Agreement3; and
(5) an ameuiI4 eqiial any reasonable, direct, out _-of -pocket
transaction expenses, including reasonable legal fees and consulting fees,
incurred by City in connection with this Amended and Restated Lease and
Agreement and anv transfer of all or anv portion of the Health Care Svstem
Real Property to HH during the Term_ or any others transfer, sublet, sale,
assignment, release or other transaction involving any Health Care System
Real Property under Article 15. Such amounts, if any shall be
34-, payable in the ordinary course of business following receipt of an invoice from
City or copies of applicable vendor invoices, but in any event not more than sixty (60)
days following receipt by HHN4G of such invoices_
P 1111 11, 111111111
--mmu-m-m-m-
I O,N
--
i-
34-, payable in the ordinary course of business following receipt of an invoice from
City or copies of applicable vendor invoices, but in any event not more than sixty (60)
days following receipt by HHN4G of such invoices_
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M -M.M. -3 TM
(e) All Annual Rent shall be paid by HHS to City at the address of City
set forth in Section 24, or to such other address as City may direct by written notice to
HHS.
(ed) It is the purpose and intent of City and HHS that the Annual Rent
shall be net to City and that HHS shall pay Annual Rent and other amounts
payable by HHHW under this Agreement without notice or demand and without
abatement, deduction or setoff, except as otherwise provided in this Agreement.
3.2 Assumed Obligations. In consideration of the leases aiid tfaiisf fs made by
City to HHS pursuant to Article 2 hereof, HHHW hereby agrees (0 to continue
to
operate the Health Care System in accordance with the covenants set forth in this Agreement,
including, without limitation, the covenants set forth in Article 18 hereof To the extent still
outstanding as of the Amended Effective Date _MH1M4G shall pay, or otherwise cause to be
satisfied or discharged, all Assumed Liabilities when due under their terms. HHS may,
at its expense and in its own name and behalf, or, to the extent lawful, in the name and behalf
of City, in good faith, contest the payment of any such Assumed Liabilities and, in the event
of any such contest, permit any such Assumed Liabilities to remain unpaid during the period
of such contest and any appeal therefrom. City will cooperate fully with HH, at
HH'stT� expense, in any such contest. City shall continue to be responsible for the
Excluded Liabilities, except as specifically provided herein.
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Article 4.
Payment of Taxes
City and HHS anticipate that some or all of the Health Care System Real Property
is or will be exempt from real estate taxation. However, if and to the extent that real estate
taxes or installments of special assessments became due and payable with respect to the
Health Care System Real Property during the Term (including without limitation.
assessments for street and/or sidewalk improvements), HHS agrees to pay all such
amounts_, City and HHS agree that
HH'ss agreement to pay all applicable real estate taxes and special assessments does
not constitute a waiver of any exemption from said taxes or assessments to which the Health
Care System Real Property or HHS may be entitled.
Article 5.
Repairs and Maintenance
Throughout the Term, HHS, at its sole cost and expense, shall take good care of
the Health Care System Real Property, and shall at all times keep the same in good order and
condition, ordinary wear and tear excepted, and make all necessary repairs thereto, interior
and exterior, structural and non-structural. All repairs by HHS shall be effected with due
diligence and in a workmanlike manner in compliance with all legal requirements and shall
be fully paid for by HHS.
Article 6.
Insurance
6.1 Property Insurance. HHS, at its cost, shall procure and maintain or cause
to be procured and maintained during the Term a so called "all-risk" property insurance
policy including the perils associated with mechanical breakdown (boiler and machinery)
insuring the full replacement cost of the Improvements. The property policy shall also
provide "all risk" coverage insuring at full replacement cost values for the improvements &
betterments and personal property. Such insurance shall name City Cas an
additional insureditisttfeds as theif ifAefest may appeaf.
6.2 Liability Insurance. HHS, at its cost, shall procure and maintain or cause
to be procured and maintained during the Term commercial general public liability and
professional liability insurance or a program of self-insurance against claims of bodily injury,
death, personal injury or property damage occurring on, in or about the Health Care System
Real Property, with a combined single limit of not less than $2,000,000 each
claim/occurrence and an aggregate limit of not less than $4,000,000, naming City as an
additional insured on any policies of insurance.
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6.3 Intentionally omitted.
6.4 Intentionally omitted.
6.5 Intentionally omitted.
_.
_ -
ME SEE
- provi•-•for in this
Article •
(a) be issued by insurance companies carrying an A M Best policyholder
rating of at least A- and a financial size rating of at least VIII or subject to acceptance
by the City, or be provided under a plan of self-insurance; and
•
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(e) provide that, in the case of the property insurance required by Section
6. 1, losses shall be adjusted with the insurers and/or underwriters by City and
HHS, unless HHS Restores the Improvement, in which event HHS shall
be authorized exclusively to adjust the loss and receive the proceeds to pay for
Restoration as Restoration progresses in accordance with this Agreement.
6.8 HH'stT� Insurance. Proceeds of any insurance carried by HHS on the
Health Care System Personal Property shall be payable directly to HHS and HHS
shall have the exclusive right to adjust and settle losses with respect thereto.
6.9 Certificate of Insurance. Upon the City's reasonable request. HHr'r & of re
shall provide to City original certificates from the issuing insurance companies evidencing
that the policies required to be carried by HHS are in full force and effect.
Article 7.
Damage To or Destruction of the Improvements
7.1 Notice; Restoration. In case of any material damage to or destruction of any
part of the Improvements, HHS shall give notice thereof to City and HHS shall
promptly and with all diligence at HH'stT� expense, commence and complete
Restoration of such portion of the Improvements so damaged or destroyed. Unless City
otherwise consents, any replacement building(s) to be constructed shall be of a quality not
less than the quality of the Improvement, as the same existed immediately prior to such
damage or destruction.
7.2 Payment of Costs; Application of Proceeds. The costs of any Restoration
performed by HH49G in accordance with Section 7.1 shall be paid by HHS, and any
insurance proceeds that are received by it in accordance with subsection 6.6(c) on account of
any damage to or destruction of the Improvements or any part thereof shall be used for that
purpose. Any insurance proceeds remaining following the payment of all costs of
Restoration shall be retained by HH, for its use in the operation of the Health Care
System, and otherwise for its use in a manner consistent with its mission and purpose.
7.3 No Abatement. There shall be no abatement of Annual Rent in the event of
any damage or destruction to all or any part of the Health Care System.
7.4 Mutual Release. Notwithstanding any other provision of this Agreement, each
party hereby releases the other (and each party for which such other may be responsible) of
liability for any damage to the Improvements and the Health Care System Personal Property
which is coverable by the insurance described in Section 6.1 above (or which could be
covered by such insurance if HHHW were to carry insurance on the Health Care System
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Personal Property), whether or not such damage is caused by the negligence or other fault of
the party so released or any party for which it may be responsible.
Article 8.
Condemnation
8.1 Total Taking. In the event of a Taking of the whole or substantially all of the
Health Care System Real Property, this Agreement shall terminate on the date of such
Taking, and the Annual Rent and all other sums and charges required to be paid by HHS
hereunder shall be apportioned and paid to the date of such Taking. In the event of any such
Taking and notwithstanding the termination of this Agreement, and provided City is not the
party which commenced the Taking, City and HHS shall together make one claim for an
award for their combined interests and the net award received shall be allocated between City
and HHS on the basis of their respective interests therein, including in the case of City
the value of its reversion interest in the Health Care System Real Property and, in the case of
HH, the bargain value, if any, of its leasehold estate computed as though the Agreement
had not been terminated, and damages sustained as a result of termination of the Agreement
prior to the end of the Term. In addition, HHS shall be entitled to any award made in
respect of or allocable to the Health Care System Personal Property and for moving,
relocation and other statutory benefits.
8.2 Partial Taking. In the event of a Taking of less than substantially all of the
Health Care System Real Property, this Agreement shall continue in full force and effect, and
HHS shall at HH'stT� expense with reasonable diligence (subject to Unavoidable
Delays) commence and complete Restoration, except to the extent made unfeasible by any
reduction in area of the Land or Improvement caused by such Taking. All awards made in
respect of or allocable to the Health Care System Real Property shall be distributed as
follows and in the following order:
(a) For the purpose of Restoration, in accordance Section 7.2, including the
last sentence thereof, as if the same were insurance proceeds; and
(b) HHS shall receive the balance of the award, for its use in the
operation of the Health Care System, and otherwise for its use in a manner consistent
with its mission and purpose.
8.3 Determination of Partial Taking. As used herein, a Taking of substantially all
of the Health Care System Real Property shall mean a Taking of such portion as renders it in
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OWN MEMO -
8.3 Determination of Partial Taking. As used herein, a Taking of substantially all
of the Health Care System Real Property shall mean a Taking of such portion as renders it in
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HH'stT� good faith business judgment uneconomical or unfeasible to operate the Health
Care System Real Property for the purpose for which the Health Care System Real Property
was operated prior to such Taking.
Article 9.
A lterati ons
9.1 General. HHS shall have the right from time to time during the Term to
make, at its expense, Alterations in or to the Improvements, subject in all cases to the further
provisions of this Article 9 and to all other applicable provisions of this Agreement.
9.2 Permitted Alterations. Subject to any applicable provisions of this Agreement,
HHS shall have the right at any time during the Term to make such reasonable changes in
and additions and alterations, structural or otherwise, to the Health Care System Real
Property as HHHW shall deem necessary or desirable for its operation of the Health Care
System, provided that:
(a) the work is performed in a good and workmanlike manner and in
accordance with all applicable laws, ordinances, rules and regulations; and
(b) no change, alteration, modification, or addition shall at any time be
made that shall impair the structural soundness or diminish the value of any
improvement.
9.3 Permits. Before any Alterations are begun, HHS shall procure, at its
expense, all necessary licenses, permits, approvals and authorizations from all governmental
authorities and shall, on demand, deliver photocopies thereof to City. Upon HH'sI4
request, City shall join in the application for such licenses, permits, approvals and
authorizations whenever such action is necessary. All Alterations shall be made and
completed in accordance with all legal requirements.
Article 10.
Discharge of Liens
Each of City and HHS agrees not to create, and shall discharge, liens or notices of
claims of liens of mechanics and materialmen for work or materials contracted to be supplied
to the Health Care System Real Property by City or HHS, respectively, subject to contest
by HHI4HG in accordance with Article 25.
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Article 11.
Use of Health Care System Real Property
HHS may use and occupy the Health Care System Real Property for Health Care
System Operations, and any other lawful purposes, subjeet to the feEtttifemen4s ef 1414G's
Article 12.
Entry on Property by City
HHS shall permit City and its authorized representatives to enter the Health Care
System Real Property at all reasonable times following reasonable advance notice for the
purpose of inspecting the same,
the last six (6) fnefidis of the Tefm efily) tefiafA-R.
Article 13.
Utilities
HHS shall pay all charges for the use at the Health Care System Real Property of
water, sewer, electricity, heating, air conditioning and all other utilities consumed during the
Term.
Article 14.
Indemnification
Subject to Section 7.4, HH and Park Nicollet4MG shall defend, indemnify and save
City harmless from and against all liabilities, claims, judgments, costs and expenses,
including, but not limited to, reasonable attorneys' fees, to the extent arising by reason of or
relating to the Health Care System, Health Care System Operations including personal
or damage to property arising from Health Care System Operations)_ Health Care
System Employees, or breach of this Agreement by HH or Park Nicollet_ whether known or
unknown, whether arising before or after the Amended Effective Date, excluding, in each
case, all liabilities, claims, judgments, costs and expenses that constitute Excluded
Liabilities.
Article 15.
Transfer-,
15.1 By City. The City agrees as follows with respect to its interest in the Health
Care System Real Property:
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(a) City agrees not to transfer, mortgage, pledge, lease, or encumber all or
any part of its interest in the Health CareSmGef4e Real Property or its rights
under this Agreement, except with the prior written consent of HH, or otherwise as
provided in this Section and Article 26.
(b) If HH ,
..alts e tfa-nsaetieff, uur proposes to sell or transfer a portion or portions constituting
less than all or substantially all of the Health Care System Real Property. including.
but not limited to, a transfer of a portion of the Health Care System Real Property to
HH. ' , City agrees, following sixty (60) days prior
notice by HHS, to cooperate with such sale or transfer, including by executing
and delivering such reasonable and customary agreements and instruments as may be
necessary or desirable (i) to release from this Agreement that part of the Health Care
System Real Property proposed to be sold or transferred by HH; (ii) to transfer
and convey the interest of City in that portion of the Health Care System Real
Property proposed to be sold or transferred by HH, and (iii) to permit HH to
annly any net proceeds of sale or transfer to further the mission and
p=oses of the Health Care System.'
Notwithstanding the foregoing, if during the sixty day notice period, the City notifies
HHS that the City wishes that the subject property be released from the Lease and
returned to City control, City and HHS will cooperate to accomplish that result
provided that HHS shall receive from the City at the time of the release an amount
equal to the net proceeds anticipated by HHS from the transaction referenced in
the initial notice to the City, such that HHHW continues to have resources equivalent
to the released property available for the mission and purposes of the Health Care
System.
(c) City and HH agree that the Fremont Avenue Property and Auxiliary
Property will be conveyed to HH as soon as practical following execution of this
Agreement.
15.2 By HH. HHHHC-.44HG and City agree as follows with respect to
HH'stT� interest in the Health Care System Real Property:
(a) HH'stT� interest in the Health Care System Real Property may,
be sublet without City's consent, in whole or in
part, provided that.
no such sublease shall extend beyond the Term; and
(2) tie stteh s4lease shall not be inconsistent with HH'sH
mission
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sublease snot meeting the reauireme ifi-vn
e*eess of this Section 15.2(a) may not be entered into without City's written
consent.
the eef4ifPditig pfitnaf�-fele of 1414C-.)
City agrees to execute a reasonable non -disturbance agreement
as may be requested by the subtenant under any such
sublease.
(b) HH'stT� interest in the Health Care System Real Property mav�
be assigned without City's consent, provided that
{+—no such assignment shall extend beyond the Term; and
shall not be inconsistent with HH'stT� mission. Anv
assignment not meeting thereauirements of this Section 15.2(bl may not be entered
into without City's written consent.
c HH
(e) 1414C shall have the right to mortgage, pledge, or otherwise encumber
as collateral or security for debt held by an institutional lender or bond trustee all or
any part of its interest in the Health Care System_ provided
that no right,
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1111M M r:TTINes
(e) 1414C shall have the right to mortgage, pledge, or otherwise encumber
as collateral or security for debt held by an institutional lender or bond trustee all or
any part of its interest in the Health Care System_ provided
that no right,
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title or interest of City shall be encumbered thereby. City agrees to cooperate
reasonably with HHS in connection with any such financing, including the
signing of such additional documents as may be required to obtain such financing.
,
pfeeleeds festihifig ffem a sale of tfa-nsfef allowed tiffIdef See6effs 15.1 shall b -e iis_p—d *E-A
Deetxmeffts. Upon the closing of any sale or transfer of any portion of the Health
Care System Real Property pursuant to this Section, such portion shall cease to be a
part of the Health Care System Real Property under this Agreement.
Article 16.
Estoppel Certificates
Each party hereto agrees from time to time, upon not less than twenty (20) days' prior
notice from the other, to execute, acknowledge and deliver, without charge, to the other or its
designee, a statement in writing, certifying that this Agreement is unmodified and in full
force and effect (or if there have been modifications, identifying the same by the date thereof
and specifying the nature thereof), the dates to which the Annual Rent and other sums and
charges payable hereunder have been paid, the amount of the Annual Rent, that to its actual
knowledge there are no claims against the other hereunder (or if there are any such claims,
specifying the same) and that to its actual knowledge the other party is not in default and
there exists no circumstance which with the giving of notice or lapse of time, or both, would
constitute a default (or if such party is aware of any such default or circumstance specifying
the same).
Article 17.
Representations and Covenants of City
17.1 Power and Authority. City has the power and authority to execute and deliver
this Agreement, and to carry out the transactions contemplated herein. The Hutchinson City
Council, acting on behalf of City in connection with this Agreement, is the properly
appointed, acting and duly authorized governing body of City, and is acting in accordance
with the provisions of all applicable laws and regulations.
17.2 Agreement Valid and Binding. The Agreement is duly executed and delivered
and is a valid and legally binding obligation of City enforceable in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of the
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transactions contemplated hereby will not, result in the creation of any lien, charge or
encumbrance or the acceleration of any indebtedness or other obligation of City, and are not
prohibited by, in violation of or in conflict with any provisions of, and will not result in a
default under or a breach of (i) any constitutional provision affecting City; (ii) any ordinance,
law or regulation; or (iii) any order, decree or judgment or any court of governmental agency
to which City or the Health Care System is a party or is bound.
17.3 Intentionally omitted.
17.4 Intentionally omitted.
omitted.17.5 Intentionally
s ng
17.3 Ta* Exemut._
17.6 Cooperation. City, at HH'stT� expense, shall cooperate reasonably with
HHS in any manner necessary to enable HHS to fulfill HH'0414G's obligations and
exercise HH'stT� rights under this Agreement.
17.7 Trade Secrets. City understands that certain records that are defined as "trade
secret information" pursuant to Minnesota law are of substantial value of HHS, and,
except as otherwise required by law, are and have been maintained in the strictest confidence
as trade secrets, and agrees, except as otherwise required by law, not to divulge, furnish, or
make accessible to anyone (other than HHHW and its designees) any trade secrets at any
time.
17.8 Environmental Condition. Except for Hazardous Materials used by City in the
ordinary course of operating the Health Care System and in accordance with Hazardous
Substance Laws: (a) City has not generated, manufactured, stored or released any Hazardous
Materials on or about the Health Care System Real Property, and has permitted no other
party to do any of the same; and (b) City has received no notice of and has no knowledge (i)
that any Hazardous Material are or have ever been generated, manufactured, stored or
released about the Health Care System Real Property, (ii) of any, requests, notices,
investigations, demands, administrative proceedings, hearings, litigation or other action
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proposed, threatened or pending relating to any of the Health Care System Real Property
alleging non-compliance with or liability under any Hazardous Material Law, or (iii) that any
above -ground or underground storage tanks or other containment facilities of any kind
containing any Hazardous Materials are or have ever been located about the Health Care
System Real Property.
17.9 Intentionally omitted.
Article 18.
Representations and Covenants of HHHNG
18.1 Formation of HH. HHuur uur is a nonprofit corporation duly organized
and in good standing under the laws of the State of Minnesota. HHS has the power to
lease and to own assets and to carry on its business as contemplated under this Agreement.
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18.2 Power and Authority. HHS has the power to execute and deliver this
Agreement and to carry out the transactions contemplated herein. All corporate actions
required to be taken by HHS to authorize the execution, delivery and performance of this
Agreement and all transactions contemplated hereby have been duly and properly taken.
18.3 Agreement Valid and Binding. The Agreement is duly executed and delivered
and is a valid and legally binding obligation of HHS enforceable in accordance with its
terms. The execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, result in the creation of any lien, charge or
encumbrance or the acceleration of any indebtedness or other obligation of HHS, and are
not prohibited by, in violation of or in conflict with any provisions of, and will not result in a
default under or a breach of (i) any contract, agreement or other instrument to which
HHS is a party or is bound; (ii) any ordinance, law or regulation; or (iii) any order,
decree or judgment or any court of governmental agency to which HHS is a party or is
bound.
18.4 Nonprofit Status; Principal Office; Primary Service Area. HHS shall
remain throughout the Term qualified to do business as a Minnesota nonprofit corporation.
Afea as tha4 tetzm is defifted a4 the date hefeef iii the Bylaws of 1414&
18.5 Intentionally omitted.
18.6 Intentionally omitted.
18.7 Intentionally omitted.
18.8 Intentionally omitted.
18.9 Intentionally omitted.
18.10 Intentionally omitted.
18.11 Intentionally omitted.
The paftiesifteii4 �he 44efe4 paid e the TfflE
E�Eeffip� Boods will oe� be iffelttded iff �he gross iffeeffie of �he holders thefeef for- fedefal
,
f6fegoifig
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18.12 Operating Expenses and Taxes. In addition to HH'stT� agreement to pay
certain taxes, maintenance expenses and insurance associated with the Health Care System
Real Property pursuant to Articles 4, 5 and 6 hereof, HHHW shall pay, or otherwise cause
to be paid, all Operating Expenses, whenever incurred. For purposes of this Agreement, the
term "Operating Expenses" means all costs associated with operation of the Health Care
System including, but not limited to, the costs of maintenance and repair, utilities, equipment
rental, professional fees, salaries, wages, employee benefits, permit fees, license fees, and, as
the same respectively become due, all taxes, assessments and governmental charges that may
be lawfully assessed or levied against or otherwise attributable to the Health Care System
during the Term. HH; ,
may, at its expense and in its own name and behalf, or, to the extent lawful, in the
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18.12 Operating Expenses and Taxes. In addition to HH'stT� agreement to pay
certain taxes, maintenance expenses and insurance associated with the Health Care System
Real Property pursuant to Articles 4, 5 and 6 hereof, HHHW shall pay, or otherwise cause
to be paid, all Operating Expenses, whenever incurred. For purposes of this Agreement, the
term "Operating Expenses" means all costs associated with operation of the Health Care
System including, but not limited to, the costs of maintenance and repair, utilities, equipment
rental, professional fees, salaries, wages, employee benefits, permit fees, license fees, and, as
the same respectively become due, all taxes, assessments and governmental charges that may
be lawfully assessed or levied against or otherwise attributable to the Health Care System
during the Term. HH; ,
may, at its expense and in its own name and behalf, or, to the extent lawful, in the
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name and behalf of City, in good faith, contest any such taxes, assessments and
governmental charges in accordance with Article 25 hereof.
18.14 Indigent Care. HHS shall operate the Hospital Property as a hospital open
to the general public providing emergency and acute care services, from time to time at no
charge or at reduced charges ' ,
consistent with HH'stT� charitable purposes approved by HH'su
board of directors in accordance with the financial assistance policy of HH and in
compliance with any applicable federal, state and City statute or ordinance and regulations
with respect thereto.
18.15 Intentionally omitted.
• Intentionally omitted.
._
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.•....... ......
Article 19.
Condition of Property
19.1 Except as expressly stated herein, City does not make any representations or
warranties regarding the Health Care System. HHH4G agrees that it is leasing and acquiring
the Health Care System on an "AS IS", "WHERE IS" and "WITH ALL FAULTS" basis,
based upon its own judgment. CITY MAKES NO WARRANTY WITH RESPECT TO
THE HEALTH CARE SYSTEM OR ANY PART THEREOF, EXPRESS OR IMPLIED,
AND CITY SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY
AND OF FITNESS FOR A PARTICULAR PURPOSE AND ANY LIABILITY FOR
CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF OR THE INABILITY
TO USE THE HEALTH CARE SYSTEM OR ANY PART THEREOF.
Article 20.
Events of Default; Termination
20.1 Events of Default. If any one or more of the following events ("Events of
Default") shall happen, and if neither party has exercised rights they have under Article 26 to
cause a conveyance of the Health Care System Real Property_ then and in any such event,
City may give notice to HHS specifying such Event or Events of Default and stating that
this Agreement and the Term shall expire and terminate on the date specified in such notice,
and on such date, unless such specified Event or Events of Default shall have been cured, this
Agreement shall terminate and HHS shall remain liable as hereinafter provided:
(a) HHS defaults in the payment of any Annual Rent payable under
this Agreement and HHS does not cure such default within fifteen (15) days after
actual receipt of notice thereof, or
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(e) 1414C fails to pay any other monetary obligation when due or observe or
perform any of the other terms, conditions, covenants or agreements required to be
observed or performed by it under this Agreement and such failure shall continue for
a period of, in the case of a monetary obligation, thirty (30) days or, in the case of a
non -monetary obligation, sixty (60) days, following actual receipt of written notice of
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such failure by HH, or, in the case of a non -monetary default which cannot with
due diligence be cured within such period of sixty (60) days, HHS fails to proceed
with due diligence within such period of sixty (60) days to commence to cure the
same and thereafter to prosecute the curing of such default with due diligence.
20.2 Consequences of Defaulf.Repessessi If this Agreement is terminated
pursuant to Section 20. 1, HH shall exercisgGity may efftef upe and fulfillfepessess the
requirements of the Purchase Option in accordance with Article 26. If HH is unable
Cafe System Real Pfe ef�y (said f �iiaftef fefeff to exerciseffs
"Repessessiei "4 by legal pfeeess and fulfill the requirements of the Purchase Option. then
Section 21.2
20.3 Gefftiffued Liability. No teftniffa4ieii of this Agreement ptifsttafA to Seetieii
MIN 1�
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20.3 Intentionally omitted.
20.5 No Waiver. No failure by any party to insist upon the strict performance of
any term hereof or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term.
20.6 Exercise of Rights While in Default. HHI414C may exercise and continue to
exercise all of its rights under this Agreement upon the occurrence and during the
continuance of any default and Event of Default under this Agreement up to the point of
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termination of this Agreement aiid aetual Repossessieff, including but not limited to the
Purchase Option.
Article 21.
Conveyance Upon Termination_ Performance by Park Nicollet
21.1 Conveyance Upon Termination.c,,,.,.o„ae,- ofNeakt, Cafe Systew, -Rp ft
�e In the event HHS does not exercise and fulfill the requirements of the Purchase
Option or the City has not exercised its right to convey all the Health Care System Real
Property by the expiration of the Term, upon the expiration, City shall convey any remaining
Health Care
System Real Propertyc1leased te it pttfsttafft to this Agreement to HH in the manner as
provided for exercise of HH's or City's rights under Article 26_ provided_ however_ that if
HH and City agree that the remaining Health Care System Real Property should be returned
to City instead_ HH shall quit and surrender such Health Care System Real Property , in the
condition required to be maintained in accordance with this Agreement (subject to ordinary
wear and tear and damage by fire or other casualty excepted), to City, without any payment
therefor by City, without delay, free and clear of all lettings and occupancies (other than
assignments and subleases entered into as permitted under this Agreement).
21.2 Performance by Park Nicollet. In the event HH is unable to exercise and
fulfill the requirements of the Purchase Option or to receive convevances from City of all or
portions of the Health Care System Real Property as and when required under this
Agreement_ Park Nicollet agrees to directiv_perform on behalf of HH any such obligations to
exercise and fulfill thereauirements of the Purchase Option or to receive conveyances from
City of all or portions of the Health Care System Real Property as defined in this Agreement
in the circumstances requiring such conveyances under this Agreement..
w-hieh eetild aff-eet the disposifieti of the assets of the Health Cafe System upeft tefmiiia4iefl..
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Article 22.
No Merger of Title
There shall be no merger of HH'stT� interest in this Agreement nor of the
leasehold estate created by this Agreement with the fee estate in the Health Care System Real
Property or any part thereof by reason of the fact that the same person may acquire or own or
hold, directly or indirectly, (a) HH'0414G's interest in this Agreement or the leasehold estate
created by this Agreement or any interest therein and (b) the fee estate in the Health Care
System Real Property or any part thereof or any interest therein, and no such merger shall
occur unless and until all persons then having an interest in, which interest shall have been
voluntarily created by the holders of, the ownership interests described in (a) and (b) above,
shall join in a written instrument effecting such merger and shall duly record the same.
Article 23.
Quiet Enjoyment
City covenants that HHS shall quietly have, hold and enjoy the Health Care
System Real Property during the Term without hindrance or molestation, subject only to
Article 20. City represents, warrants and covenants to HH as of the Amended Effective
Dated that the Health Care System is free and clear of all prior liens and encumbrances
except for the Medical Office Building Leases, the Hospital Leases, and the Shopping Center
Leases, Etiad exeept to the exten that were assigned to HH as of the Original Effective
DateExistifig Befid Deetitneffts efea4e any lietis or entered into by HH after the Original
Effective Dateerettffbfaiiee .
Article 24.
Notices
All notices, requests, demands, consents, approvals, and other communications that
may or are required to be served or given hereunder (for the purposes of this Article
collectively called 'Notices") shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or by nationally
recognized overnight courier, addressed to the party to receive such Notice at the following
addresses:
If to City: City of Hutchinson
111 Hassan St. SE
Hutchinson, Minnesota 55350
Attention: City Attorney
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If to HHS: Hutchinson Health-C-afe
1095 Highway 15 S.
Hutchinson, Minnesota 55350-5000
Attention: PresidentChief E ,eetitive O ffieef
With copy to: HealthPartners
Attention: General Counsel
PO Box 1309
Mail Stop 21114A
Minneapolis_ MN 55440
Either party may, by Notice given as aforesaid, change its address for all subsequent Notices,
except that neither party may require Notices to it to be sent to more than two addresses.
Mailed Notices shall be deemed given when mailed in the manner aforesaid, provided that in
the case of a notice of default to HHS the same shall be deemed given only upon actual
receipt by HH.
Article 25.
Contests
25.1 Contest. After written notice to City, HHS may at its expense contest, by
appropriate proceedings conducted in good faith and with due diligence (all such proceedings
together with appeals therefrom being hereinafter referred to as "Contests") the amount,
validity or application, in whole or in part, of any tax, assessment, mechanics' lien,
encumbrance, charge or any other adverse claim for which HH14HG is responsible under this
Agreement (hereinafter collectively "claims") provided that:
(a) In the case of an unpaid claim, such Contest shall operate to suspend
the collection of the same from City and HHS therein;
(b) HHS shall have furnished such security, if any, as may be required
in the proceedings or reasonably required by City; and
(c) No part of the Health Care System or any interest therein shall be, in
the reasonable opinion of City, in imminent danger of being forfeited or lost.
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25.2 Suspension of Obligation. During the period HHS carries forward any
such Contest in good faith, HHS shall be relieved from its obligations herein contained to
pay the claims, or to clear the liens with respect to which such contest is conducted. If and to
the extent HHS shall not prevail in any such Contest, HHS shall immediately pay and
discharge the claim in question to such extent.
25.3 Procedure. All such Contests may be brought by HHHW in the name of
HHS or, if reasonably necessary, in the name of City or HHS and City, as may be
appropriate. Each party agrees to cooperate with the other in such Contests, short of the
payment of money with respect thereto, except where this Agreement otherwise requires
payment. Each party will endorse such pleadings, checks and other documents as will be
appropriate to carry out the purposes of this Article 25.
Article 26.
Purchase Option and City Conve ance Ri ht
26.1 Grant. Notwithstanding any other provision in this Agreement to the contrary,
HHS shall have the option to purchase the Health Care System Real Property from City
at anv time for a purchase price equal to the gfea4ef of (i) the
one dollar
($1.00). HHS must give City written notice of its intent to exercise its Purchase Option
at least one hundred eighty (I80fi-Hiety9) days prior to the earlier of the expiration of the
Term or the date HH elects to close on the Purchase Option. Notwithstanding any other
provision in this Agreement to the contrary_ City shall have the right to convey to HH all or
any separate and discrete portion of the Health Care System Real Property to HH at any time
and for each such transaction_ HH shall pay City a purchase price equal to one dollar 1.001.
City must give HH written notice of its intent to exercise its conveyance right at least one
hundred eighty (180) days prior to the earlier of the expiration of the Term or the date City
elects to close on its conveyance right.
26.2 Title. Upon proper exercise of the Purchase Option by HH_ or the City
conveyance right by City, City agrees to convey the Health Care System Real Property
or portion thereof to HHS free and clear of all liens and encumbrances, except for the
Medical Office Building Leases, the Hospital Leases_ and the Shopping Center Leases that
were assigned to HH as of the Original Effective Date or entered into by HH after the
Original Effective Date, and any other lien or lease created, suffered or granted by HHS
(or those claiming by, through or under HHS). In connection with exercising the
Purchase Option, HHS may, at its expense, obtain a title insurance commitment. If such
commitment reflects any matter affecting title to the Health Care System Real Property that
is objectionable to HHS (other than this Agreement and any encumbrances created on or
after the date hereof by WHHW or those claiming by, through or under HHS), then
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HHS may give written notice to City of such matter. If HHS gives City such notice
prior to closing, City shall at its expense within sixty (60) days cause all encumbrances not
permitted as provided above to be removed and corrected of record. If City fails to do so
within sixty (60) days, time being of the essence, HHS may at its option: (a) attempt to
cause such encumbrances to be removed, or (b) proceed to close without waiving any rights
to damages hereunder__,
. If HHHW elects
alternative (a) above, closing shall be postponed until the encumbrances in question are
removed and, if HHS is unable within a further period of sixty (60) days to cause such
encumbrances to be removed, HHS may then elect eithef alternative (b) of (e) above. No
such postponement shall alter the purchase price. All costs and expenses incurred by
HHS in causing or attempting to cause such encumbrances to be removed, including
reasonable attorneys fees, shall be payable by City if attributable to any fault or action by
City.
26.3 Closing. Except as postponed pursuant to Section 26.2, the closing shall take
place at the date_ time and place agreed to by City and HH.ts
days of the T-efm. At the Closing, City and HHS shall execute and deliver such
reasonable and customary documents and instruments as may be necessary or desirable to
convey City's interest in the Health Care System Real Property to HHS, as herein
provided. This Agreement and all of the terms and provisions hereof shall remain in full
force and effect until the purchase has closed, except as otherwise provided in this
Agreement.
26.4 Effect of Non -Exercise. If HHHW does not exercise its Purchase Option;
upon termination of thistle Agreement3 1414C shall suffeiadef the Health Cafe System
Article 21 shall apply.
Article 27.
Miscellaneous
27.1 Consent. In any case under this Agreement which requires consent or
approval such consent or approval shall not be unreasonably withheld, conditioned or
delayed unless otherwise specified;
w-hieh a vote of City Getineil of City Eleetef -d, the deeisieti ef stieh bedy shall
iie� be deemed tHffeaseffable, eaff&ieffed of delayed.
27.2 Relationship of Parties. It is agreed that nothing herein contained is intended
or should be construed in any manner as creating or establishing the relationship of joint
venturers or as constituting !WHW or any of its employees or agents as the employees or
agents of City, except as otherwise provided herein.
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27.3 Miscellaneous. This Agreement shall be governed by the laws of the State of
Minnesota. If any term of this Agreement or any application thereof shall be invalid or
unenforceable, the remainder of this Agreement and any other application of such term shall
not be affected thereby. This Agreement may be changed, waived, discharged or terminated
only by an instrument in writing signed by the then owners of City and HHS interests
herein. This Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto. The headings of this
Agreement are for purposes of reference only and shall not limit or define the meaning
hereof. This Agreement may be executed in any number of counterparts, each of which is an
original, but all of which shall constitute one and the same instrument. The pa-14ies
27.4 Recording. This Agreement, or a short form of this Agreement, may be
recorded in the real estate records of the Counties in which the Health Care Svstemsy4efa
Real Property is situated. HHHW and City agree to cooperate with each other in the
preparation and recordation of any such short form of this Agreement.
27.5 Non -Delegation and Lack of Control. No provision of this Agreement shall be
construed as a delegation by City to HHS of any governmental function of City. Further,
HHS and City have determined that the rights of City under this Agreement -&1+e
do not, and are
not intended to, give City direct or indirect control over the conduct of the Health Care
System or its operations.
27.6 Amended and Restated Lease and Agreement. This Amended and Restated
Lease and Agreement amends and restates the Original Agreement (including the First
Amendment) in its entirety as of Amended Effective Date and the parties acknowledge that
the terms of the First Amendment have been satisfied and that such First Amendment has no
further force or effect
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this instrument under
seal as of the day and year first above written.
STATE OF
COUNTY OF
CITY OF HUTCHINSON
By:
Its:
And by:
) ss.
Its:
The foregoing instrument was acknowledged before me this day of
, 2018200:7, by and
the and ,
respectively, of the City of Hutchinson, a Minnesota municipal corporation, on behalf of the
municipal corporation.
Notary Public
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HUTCHINSON HEALTH CARE
By:
Its:
And by:
STATE OF )
ss.
COUNTY OF )
Its:
The foregoing instrument was acknowledged before me this day of
, 201820&7, by and
, the and
respectively, of Hutchinson Health a Minnesota nonprofit corporation, on behalf of the
nonprofit corooration.
Notary Public
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PARK NICOLLET HEALTH SERVICES
By:
Its:
STATE OF 1
ss.
COUNTY OF 1
The foregoing instrument was acknowledged before me this day of
2018, by , the of
Park Nicollet Health ServicesCafe, a Minnesota nonprofit corporation, on behalf of the
nonprofit corporation.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Faegre Baker Daniels& Beiaseia LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Phone: (612) 766-7000
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EXHIBIT A
Legal Description of the Land
Hospital Land:
Medical Office Building Land:
Shopping Center Land:
Dassel Medical Center Land:
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Ordinance No. 12-696
Publication No.
AN ORDINANCE AMENDING ORDINANCE NO. 07-0473 — LEASING OF CERTAIN LAND,
BUILDINGS AND OTHER PROPERTY TO HUTCHINSON HEALTH CARE
The City of Hutchinson hereby ordains that:
WHEREAS, on September 11, 2007, the Hutchinson City Council adopted Ordinance No. 07-0473
approving leasing of certain land, buildings and other property to Hutchinson Health Care; and,
WHEREAS, Hutchinson Health Care and Hutchinson Medical Clinic, P.A. have made the decision to
integrate their enterprises to more effectively deliver heath care services to the community; and,
WHEREAS, the City of Hutchinson believes this integration will promote the independence, flexibility
and stability of health care services in the community and therefore supports this integration; and,
WHEREAS, the City of Hutchinson and Hutchinson Health Care have agreed to amend the terms of the
lease agreement to provide for, among other things,:
I. A payment of Two Million dollars (2,000,000.00) to the City of Hutchinson,
2. Prepayment of the City of Hutchinson's bonded indebtedness by Hutchinson Health Care,
3. Modification of the City of Hutchinson's membership rights under the exiting lease,
4. Modification of Hutchinson Health Care's operating parameters under the existing lease
The terms of which are more fully set out in the lease amendment attached hereto as "exhibit A"
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON,
MINNESOTA, THAT THE LEASE AGREEMENT WITH HUTCHINSON AREA HEALTH CARE IS
HEREBY AMENDED TO READ AS ATTACHED IN EXHIBIT A TO THIS ORDINANCE.
Adopted by the City Council this 23rd day of October, 2012.
Attest:
Jeremy J.ertaL' r�City Administrator Steven. Cook, Mayor
FIRST AMENDMENT
TO
LEASE AND AGREEMENT
This First Amendment to Lease and Agreement ("First Amendment") is
made and entered into as of/,2 /
2, ,2012, by and between the City of
Hutchinson, a Minnesota municipal corporation ("City"), as landlord, and Hutchinson
Health Care, a Minnesota nonprofit corporation ("HHC"), as tenant.
RECITALS
WHEREAS, City and HHC are parties to that certain Lease and Agreement
dated effective December 31, 2007 (the "Lease and Agreement") relating to certain
leased property which is described in the Lease and Agreement, and the City has
certain rights under the Articles of Incorporation and Restated Bylaws of HHC
adopted and made effective by HHC as of December 31, 2007 (collectively, the
"Privatization Documents") which were intended by the Parties to carry out a
"Privatization" of HHC and its health care delivery services and related activities to
the extent set forth therein.
WHEREAS, since the effective date of the Privatization Documents, further
and significant changes have occurred within the health care industry, most of which
intent and encourage still further integration among health care providers.
WHEREAS, specifically, HHC and Hutchinson Medical Clinic P.A.
("HMC") (the physicians of which constitute the majority of the medical staff of
HHC} believe fuller integration of their respective activities could provide a more
stable and sustainable platform from which health care can best be provided to
residents of Hutchinson and the surrounding communities.
WHEREAS, HHC and HMC have reached agreement with respect to a
transaction in which HMC assets essential in the operation of the clinic will be
acquired by HHC and the employees, other than physician employees, of HMC will
become employees of HHC and HHC will concurrently contract with HMC to
provide HMC's entire physician capacity to HHC for the operation of a hospital
owned, provider -based clinic (the "Transaction").
WHEREAS, City believes that for the foreseeable future, the interests of its
citizens in local availability of a wide range of health care services can best be met by
facilitating and supporting the Transaction and the fuller integration of HHC and
HMC.
WHEREAS, the City has evaluated the various rights it holds under the
Privatization Documents, the potential value of those rights, the potential volatility of
such value, potential risks the City may have faced if it were ever to have re-entered
the health care enterprise in the event of a default under the Privatization Documents,
and the range of amounts and the variety of transactions entered into by other
municipalities in similar and other privatization circumstances.
WHEREAS, the City obtained input from its independent financial advisors
in connection with the economic effects of this First Amendment and proposed
operating performance parameters, and City personnel evaluated the impact of the
proposed payments to the City contemplated under this First Amendment on the
vitality and sustainability of HHC and evaluated generally the prospects for local
delivery of care under a variety of market and regulatory scenarios.
WHEREAS, the City reaffirms its views that (1) a more integratcd and
independent community based nonprofit health care corporation creates the most
flexibility to proactively address the health care needs in Hutchinson and the
surrounding communities and to react to the rapid changes occurring in the industry
and make the necessary resource allocation decisions in that environment, (2) the
Board of Directors, management and medical staff of HHC have the necessary
capabilities to conduct and oversee the local health care activities and make
reasonable decisions regarding future strategic direction, and (3) entering into this
First Amendment, with the City retaining the ongoing rights reflected herein, leaves
all Parties in the best position to effectively and efficiently carry out their respective
missions and duties. Moreover, the City believes that the additional consideration set
forth herein is reasonable and sufficient to warrant the resignation of certain rights as
described herein.
WHEREAS, under this First Amendment, the City will continue as a landlord
of HHC under the terms of the Lease, and the parties wish to modify the financial and
performance commitments of HHC to align with and protect the City's interests as a
landlord.
WHEREAS, HHC is a nonprofit corporation organized under the laws of the
State of Minnesota and is exempt from federal income taxes as an organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), and HHC intends to operate consistent with its charitable purposes.
NOW, THEREFORE, in consideration of the premises, covenants and
agreements set forth herein, the parties hereto hereby amend the Lease and
Agreement as follows:
1. Definitions. The following definitions set forth in Article 1 of the Lease and
Agreement are amended to read in their entirety as follows:
2
"1.1 Agreement. This Lease and Agreement and First Amendment to Lease and
Agreement, including the following exhibits attached hereto and made a part hereof:
Exhibit A
— Legal Description of the Land
Exhibit B
— Excluded Assets
Exhibit C
-- Motor Vehicles
Exhibit D
— Operating Parameters
Exhibit E
— 2013 Bylaws
1.18 Existing Bonds. The following bonds issued by City: General Obligation
Taxable Medical Facilities Revenue Refunding Bonds, Series 1998; General
Obligation Medical Facilities Revenue Refunding Bonds, Series 2009C; General
Obligation Medical Facilities Revenue Refunding Bonds, Series 201 OA and General
Obligation Medical Facilities Revenue Refunding Bonds, Series 2010B, together with
Future Financings, if any, as to which the City has any Iiability.
1.42 Operating Parameters and Revised Operating Parameters. The financial,
quality, operating and other parameters initially set forth in Exhibit A to the Amended
and Restated Bylaws of HHC, as now updated and completely restated as Exhibit D,
attached to the First Amendment. For purposes of treasuring compliance with such
operating parameters, Harmony River financial information will be excluded.
However, HHC will also calculate the operating parameters without excluding
Harmony River financial information and forward that information to the City at the
same time for informational purposes. This is consistent with the current practice at
the time the First Amendment was adopted."
Capitalized terms not defined in this First Amendment shall have the same meaning
assigned to them in the Lease and Agreement.
2. Annual Rent. Section 3.1 of the Lease and Agreement is hereby amended by
the addition of the following new subsection (e) to read as follows:
"(e) On or before the Effective Date defined in Section 12 of the First Amendment,
HHC shall irrevocably prepay in whole that part of the Annual Rent specified in
Section 3.1(a)(2), to the same extent and upon the same terms as the City has the right
to prepay or defease its obligations with respect to the Existing Bonds, in accordance
with the terms of the Existing Bond Documents."
3. Additional Consideration. Article 3 of the Lease and Agreement is hereby
amended by the insertion of a new Section 3.4 to read in its entirety as follows :
"3.4 Additional Consideration. (a) In consideration of the City resigning its
Member rights and other rights and interests it held in connection with HHC under the
Amended and Restated Bylaws, HHC shall pay to the City as additional rent (in
addition to Annual Rent and other Rent payments clue to City under the Lease and
3
Agreement), the amount of Two Million Dollars ($2,000,000.00) (the "Additional
Consideration"), payable at the times set forth herein.
(a) $666,666.66 on the Effective Date of the First Amendment; and
(b) the balance in two equal installments payable on or before each of the next
two anniversary dates of such Effective Date.
The pro -ration provision of Section 3.1 shall not apply to the Additional
Consideration. The City agrees to use the Additional Consideration to promote
community health, wellness and/or recreation opportunities."
4. No Future Bonding Obligations. Article 17, Section 17.10 is hereby amended
by adding the following sentence at the end thereof:
"Notwithstanding the foregoing, with the adoption of the First Amendment
and the modifications to the HHC Bylaws implemented under the 2013 Bylaws, the
Parties do not anticipate that in the future the City would issue General Obligation
Bonds or otherwise have any direct obligations with respect to future HHC
financings."
5. Section Reference Correction. Article 18, Section 18.15 is amended to
substitute 17.10 for the reference to 17.11 in such section,
6. Default. Section 20.1(a) and (b) are hereby amended to read in their entirety
as follows:
"(a) HHC defaults in the payment of any Annual Rent, Additional Costs
described in Section 3.3, or Additional Consideration set forth in Section 3.4, payable
under this Agreement or the First Amendment and HHC does not cure such default
within fifteen (15) days after actual receipt of notice thereof."
"(b) HHC fails to satisfy an Operating Parameter set forth in Exhibit D and
the failure is not cured as required or in the manner set forth in Exhibit D."
7. Chan a in Control,• Transfer or Disposition of Health Care System. Section
21.2 is amended to read in its entirety as follows:
"21.2 Change in Control, Transfer or Disposition of Health Care System.
The parties acknowledge that the Lease and Agreement and related arrangements
under the HHC Bylaws were premised, among other things, on the concept that HHC
would be locally controlled and that the City would have a role in any decision to
alter the local control features. With the payment of the Additional Consideration,
and under other provisions of the First Amendment, the City relinquishes its role in
such future determinations of structure and control; except for the consultation and
pre -condition rights provided herein -
4
(a) HHC agrees that it will consult with the City regarding any proposal to
transfer ultimate control or ownership to one or more third parties (regardless of how
or what form is utilized to achieve such transfer) (a "Change of Control"). Such
consultation will be sufficiently in advance of the HHC Board taking action on the
Change of Control to reasonably permit the City to consider the proposed change and
to provide input, if the City desires, for the HHC Board within a reasonable time
period. For purposes of this Section 21.2, HHC agrees that Change of Control will be
broadly defined, and will include, without limitation, any transaction, affiliation,
amendments to HHC's Articles of Incorporation or Bylaws, Board make-up
alteration, or any agreement, the result of which would be that the majority of the
HHC Board was not made up of independent residents of HHC's Geographic Service
Area (as defined in its Amended and Restated Bylaws) or that any matter considered
or decided by the HHC Board required approval of any other party before having the
effect of a final act or decision of the Board (whether by Board supermajority, board
overlap, membership rights, joint venture rights, other ownership rights, or other
agreement rights of any other nature, officer positions (whether appointed or ex
officio), or any other arrangement through which the actions of HHC's Board are
directly or indirectly controlled by another party).
(b) HHC agrees and covenants that any Change in Control approved by
HHC, shall be conditioned upon, and shall not take effect until: (i) payment of all
remaining amounts due under Section 3.4, as amended by the First Amendment to
Lease and Agreement, and (ii) prepayment (calculated at present value by a financial
advisor of the City's choosing) of all remaining payments due under Section 3,1(a)
through the next date on which HHC would be permitted to exercise the Purchase
Option under the first sentence of Section 26.1 (the "First Option Date"). Such
present value calculation shall be based on an investment rate based on what the City
could reasonably be expected to achieve at the time under the criteria of Minn. Stat.
Chapter 118A as if the funds were to be invested through the First Option Date.
(Such investment rate is used for purposes of calculating the present value amount
only and does not obligate the City to invest the fund in any particular manner or limit
the City's ability to otherwise use the funds.) Notwithstanding the foregoing, in the
event HHC objects to the City's present value calculation, then each party shall select
a financial advisor and those two shall agree on a third financial advisor. The advisor
selected by the other two shall make the present value calculation which shall be final
and binding on the parties. The costs of the "third" financial advisor utilized in the
event HHC objects to the City's initial present value calculation shall be borne
equally by HHC and the City.
(c) Upon completion of a Change of Control transaction and payment of
the amounts described in (b) above to the City, HHC shall exercise the Purchase
Option and carry out all required related steps as set forth in Article 26 of the Lease
Agreement.
5
(d) Notwithstanding any other provision to the contrary, the City shall have
an independent right to enforce Section 21.2, including, in its sole discretion, pursuit
of injunctive relief in addition to any other remedy it may have."
S. Exercise of D tion. Article 26 is amended by adding before the last sentence
of Section 26. 1, the following sentence:
"In addition, upon the occurrence of a Change in Control as described in Section 21.2
and payment to the City of the amounts set forth in Section 21.2(b), HHC shall
exercise the Option described in Article 26 and the Parties agree to take all steps
which are necessary or required to transfer title to Healthcare System Real Property to
HHC under the provisions of Article 26."
9. Miscellaneous. Article 27 is hereby amended by adding at the end thereof the
following new sections which read in their entirety as follows:
"27.6 Resignation of City Rights Under HHC Bylaws. City does hereby
resign any and all member rights, other rights, and other interests it holds, if any,
under the current Amended and Restated Bylaws and consents to the adoption of the
Second Amended and Restated Bylaws adopted by HHC as of the Effective Date (the
"2013 Bylaws")."
27.7 Contractual Right to Elect HHC Director. During the period between
the Effective Date of the First Amendment and until the later of the following events
occurs: (a) termination of the Lease and Agreement as a result of the exercise by
HHC of the Purchase Option, or (b) payoff of all the Existing Bonds, the City shall
have the right to elect one (1) member of the Board of Directors of HHC who is not a
member of HHC's medical staff (and, in the City's sole discretion, to remove and
replace such Board member in compliance with Section 1.5 of the 2013 Bylaws, a
copy of which is reproduced and attached hereto as Exhibit E) and HHC agrees that
such right shall, in addition, be set forth in any future amended or restated bylaws of
HHC, until the later of the two foregoing conditions occurs.
27.8 Additional Communications. City and HHC acknowledge the value of
ongoing direct communication between City representatives and HHC to limit
circumstances in which their independent actions, intended to benefit the community,
could be in conflict. In recognition of the longstanding relationship of HHC and the
City and the City's rights to appoint a director of HHC, HHC acknowledges that the
City appointer) director should be free to communicate with the City about issues of
mutual interest to the parties, and the City acknowledges that appropriate
confidentiality and fiduciary duties principles will apply in connection with such
communications. In addition, HHC and the City, at the reasonable call of either the
CED or Mayor/City Administrator, respectively, agree to meet to discuss matters of
mutual interest and coordinate actions when either Party believes it would be
desirable to do so, provided however, that in furtherance of this Section, neither the
6
City appointed director or HHC is obligated to provide information in a form that
would subject such information to public disclosure as a result of the City's
obligations as a municipality, and further provided, that neither party shall be
obligated under this provision to meet more than twice in any calendar year. Further,
in addition, during any period in which there are Existing Bonds outstanding, the
HHC Board of Directors agrees to exercise its committee appointment authority in a
manner such that at all times during that period, an individual concurrently serving in
one of the following roles at the City (Mayor, City Administrator, City Finance
Director or City Controller) and selected by the City is also serving as a member of
the HHC audit committee. HHC shall have the right to remove the appointed audit
committee appointee for reasonable cause, provided however, that the removed
committee member is immediately replaced on the committee by another individual
holding another of the qualified roles at the City as the City shall select.
10. Representations and Covenants of City. City hereby makes the following
representations and covenants as of the date of this First Amendment and on the
Effective Date of this First Amendment.
10.1 Power and Authority. City has the power and authority to execute and
deliver this First Amendment, and to carry out the transactions contemplated herein.
The Hutchinson City Council, acting on behalf of City in connection with this
Agreement, is the properly appointed, acting and duly authorized governing body of
City, and is acting in accordance with the provisions of all applicable laws and
regulations.
10.2 First Amendment Valid and -Binding. This First Amendment is duly
executed and delivered and is a valid and legally binding obligation of City
enforceable in accordance with its terms. The execution and delivery of this First
Amendment does not, and the consummation of the transactions contemplated hereby
will not, result in the creation of any lien, charge or encumbrance or the acceleration
of any indebtedness or other obligation of City, and are not prohibited by, in violation
of or in conflict with any provisions of, and will not result in a default under or a
breach of (i) any constitutional provision affecting City; (ii) any ordinance, law or
regulation; or (iii) any order, decree or judgment or any court of governmental agency
to which City or the Health Care System is a party or is bound_
11. Representations and Covenants of HHC. HHC hereby makes the following
representations and covenants as of the date of this First Amendment and on the
Effective Date of this First Amendment:
11.1 Formation of HHC. HHC is a nonprofit corporation duly organized
and in good standing under the laws of the State of Minnesota. HHC has the power to
lease and to own assets and to carry on its business as contemplated under this First
Amendment.
7
11 .2 Power and Authorit . HHC has the power to execute and deliver this
First Amendment and to carry out the transactions contemplated herein. All corporate
actions required to be taken by HHC to authorize the execution, delivery and
performance of this First Amendment and all transactions contemplated hereby have
been duly and properly taken.
11.3 First Amendment Valid and Binding. The First Amendment has been
duly executed and delivered and is a valid and legally binding obligation of HHC
enforceable in accordance with its terms. The execution and delivery of this First
Amendment does not, and the consummation of the transactions contemplated hereby
will not, result in the creation of any lien, charge or encumbrance or the acceleration
of any indebtedness or other obligation of HHC, and are not prohibited by, in
violation of or in conflict with any provisions of, and will not result in a default under
or a breach of (i) any contract, agreement or other instrument to which HHC is a party
or is bound; (ii) any ordinance, law or regulation; or (iii) any order, decree or
judgment or any court of governmental agency to which HHC is a party or is bound.
12. Condition Precedent to Effectiveness of First Amendment. The effectiveness
of this First Amendment is expressly conditioned upon the consummation of the
Transaction, which is currently anticipated to occur on January 1, 2013, and the
prepayment contemplated in Section 2 of the First Amendment (the "Prepayment").
On the date the Transaction is consummated (the "Effective Date"), and provided the
Prepayment has occurred, this First Amendment shall automatically become
operative. Neither Party shall have any obligations to the other under this First
Amendment until the Effective Date. Upon request, each Party agrees to sign a
declaration confirming the Effective Date of this First Amendment
13. Ci 's Costs of Entering First Amendment. On or before the Effective Date of
the First Amendment, HHC shall pay City's reasonable, direct, out of pocket
transaction expenses, including reasonable legal and consulting fees incurred by the
City in connection with the negotiations and transactions in connection with this First
Amendment.
14. Ratification. Except to the extent specifically set forth in this First
Amendment, all provisions of the Lease and Agreement remain unmodified and in
full force and effect.
15. Successors and Assign. This First Amendment shall be binding upon and be
enforceable by City and HHC and their successors and assigns.
16. Indemnification. In the event that the interest on any Tax Exempt Bonds is
included in gross income of the holders for federal income tax purposes for any
reason, and that fact results in expenses or costs of any kind being incurred by City,
HHC agrees to indemnify the City with respect to any such expenses or costs and to
8
reimburse the City within 60 days following receipt of notice from the City that such
expenses or costs have been incurred.
IT Count s. This First Amendment may be executed in any number of
counterparts, all of which shall be considered one and the same First Amendment,
even though all parties hereto have not signed the same counterpart. Any party shall,
however, deliver an original signature for this First Amendment to the other party
upon request.
0
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the day and year first above written.
JOLEEN R. RUNKE
MO ARY FUBLIC-MINNF40TA
`int, Comm. Emp. Jan. 31, 2015
4 may]
------------
STACYEHEROUTNOTARYACOM. , 2(314
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dms.us.49117792.08
CITY OF HUTCHINSON
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10
EXHIBIT D
Operating Parameters
On or before the 150th day after the end of HHC's Fiscal Year, HHC will submit to the City
its computations and certification of compliance with each of the following parameters (the
"Operating Parameters") based on financial results audited by a firm of qualified Certified
Public Accountants:
(1) Maximum Annual Debt Coverage Ratio of at least 1.3 times.
(2) Days Cash on Hand of 50 days.
If HHC is not in compliance with any of these Operating Parameters when such
computations are due, the City may require HHC to engage, within forty-five (45) days of
the City's written notice, a management consultant mutually selected by the City and HHC
(the "Consultant") for the purpose of reviewing the deficiency and making recommendations
regarding the operation and administration of the health care system. HHC shall give full
and prompt consideration to the Consultant's recommendations and, to the fullest extent
feasible and consistent with HHC's charitable mission, its obligations under this Agreement,
and the interests of the community it serves, HHC shall undertake its best efforts to
implement such recommendations. Notwithstanding the foregoing, HHC shall take no action
pursuant to its Workplan or in response to the Consultant's recommendations that would
jeopardize HHC's 501(c)(3) status, compliance with bond covenants under any Existing
Bonds or any future financing issued pursuant to Section 17.10 of the Lease as amended, or
its adherence to legal, regulatory or accreditation standards and requirements. So Iong as
HHC fails to satisfy any of the Operating Parameters, HHC will provide to the City, not later
than on the last day of each fiscal quarter, or at such other interval as HHC and the City may
agree, a letter from the Consultant (if engaged) to the effect that in his or her judgment, HHG
is implementing such recommendations in orderly fashion. HHC's adherence to the
requirements of this paragraph, including HHC's continued best efforts to implement any
recommendations of the Consultant, shall be deemed to cure any failure to satisfy the
Operating Parameters.
Amendments
The parties acknowledge that the Operating Parameters have been designed as indicators of
financial or quality jeopardy under current market conditions. It is also acknowledged that
the Operating Parameters are also based on Generally Accepted Accounting Principles
("GAAP") that currently exists. HHC and the City shall, from time to time, amend the
Operating Parameters as necessitated by changes in GAAP and market conditions in order to
maintain their status as indicators of financial or quality jeopardy, taking into consideration
the performance of similarly situated nonprofit corporations having comparable operations to
HHC's.
Certain Definitions:
Days Cash on Hand: means the result of dividing the Unrestricted Liquid Funds of HHC by
daily operating expenses. Daily operating expenses is computed by dividing Total Operating
Expenses less depreciation and amortization expense for such Fiscal Year by the number of
days in that Fiscal Year.
Existing Bonds: The Bonds defined under Section 1.18 of the Lease as amended.
Fiscal Year: Each 12 month period ending on the date specified in the Bylaws of HHC.
Currently, the fiscal year ends on December 31.
Generally Accepted Accounting Principles (GAAP): GAAP is the standard framework of
guidelines for financial accounting, as established in the United States of America. It
includes the standards, conventions, and rules accountants follow in recording and
summarizing transactions, and in the preparation of financial statements. GAAP for this
purpose means those guidelines and rules applicable to HHC.
Lease: That certain Lease dated December 31, 2007 by and between City of Hutchinson and
Hutchinson Health Care, as amended by the First Amendment and any subsequent
amendments adopted by the parties to such Lease.
Long -Term Debt: All obligations which appear as a long-term liability on HHC's financial
statement in accordance with GAAP, including but not limited to revenue bonds, capital
leases, bank or installment debt, and contracts for deed, plus or minus any amounts for
unamortized discounts/premiums or deferred losses on refunding. However, Long -Term
Debt excludes the debt to the City related to the payment required in Section 3.1 of the Lease
Agreement.
Maximum Annual Debt Coverage Ratio: Net Revenues for a Fiscal Year divided by the
Maximum Annual Principal and Interest Requirement due in future fiscal years. The ratio is
to be computed based on HHC's audited financial statements. For any computation that
requires reference to one or more Fiscal Years prior to the effective date of the Lease
Agreement, the ratio is to be computed using the Net Revenues and Maximum Principal and
Interest Requirement from the applicable Fiscal Year audited financial statements of the City
enterprise Hutchinson Area Health Care.
Maximum Annual Principal and Interest Requirement: The sum of the maximum
principal and interest payments required to be paid in any future Fiscal Year on Long -Term
Debt. If a Long -Term Debt issue has a balloon payment, for the purposes of this
computation that balloon payment is to be amortized over a period of years equal to the
lesser of 30 years less the total number of years that the issue has been outstanding (from
inception) prior to the date of the balloon payment, or the remaining useful life of the asset
being financed. For purposes of the preceding sentence, the "remaining useful life" shall be
defined as the number of years remaining until the asset is fully depreciated per the
depreciation schedule maintained by HHC in accordance with GAAP. The interest rate to be
applied during this period is equal to the rate required to be paid on the issue in the fiscal
year preceding the galloon payment. The principal and interest amortization for the Fiscal
Years including and subsequent to the balloon payment is to be computed assuming an equal
annual amortization. If Long-term Debt includes a debt issue that has a variable interest rate,
for purposes of computing future year interest requirements, the interest rate to be used is the
rate in effect at the end of the Fiscal Year for which this computation is being made.
Net Revenues: The aggregate of all operating and nonoperating revenues less Total
Operating Expenses, except excluding (1) depreciation (2) amortization and (3) interest
expense of HHC, all determined in accordance with GAAP, for a Fiscal Year. However, Net
Revenues are to exclude any (1) contribution or investment income that has been restricted
by its donor for endowment (permanently restricted) purposes (2) unrealized gains and losses
on investments (3) extraordinary or non-recurring items including gains or losses on
refinancing, extinguishment of indebtedness, gains or losses of sales or other dispositions of
property not in the ordinary course of business.
Total Operating Expenses: All expenses reported as operating expenses, in accordance with
GAAP, that HHC reports for a Fiscal Year, including (1) depreciation (2) amortization and
(3) interest expense.
Unrestricted Liquid Funds: means (i) unrestricted cash, (ii) cash equivalents, (iii) escrow
funds, if any, under that certain Escrow Agreement effective December 31, 2007 by and
between HHC and the City of Hutchinson, and (iv) board designated marketable debt and
equity securities, but excluding and exclusive of (1) all trustee -held funds; and (2) borrowed
funds that are entrusted with a lender.
EXMIT E
(2013 Bylaws)
AMENDED AND RESTATED
LEASE AND AGREEMENT
between
CITY OF HUTCHINSON
and
HUTCHINSON HEALTH
April 1, 2018
US.116746500.11
TABLE OF CONTENTS
Article
Page
Article1. Definitions................................................................................................................ 2
1.1
Agreement or Lease........................................................................................... 2
1.2
Alteration........................................................................................................... 2
1.3
Annual Rent....................................................................................................... 2
1.4
Assigned Contracts............................................................................................ 2
1.5
Assumed Liabilities........................................................................................... 2
1.6
Auxiliary Improvements.................................................................................... 3
1.7
Auxiliary Land................................................................................................... 3
1.8
Auxiliary Property............................................................................................. 3
1.9
Intentionally Omitted......................................................................................... 3
1.10
Dassel Medical Center Improvements............................................................... 3
1.11
Dassel Medical Center Land.............................................................................. 3
1.12
Dassel Medical Center Property ........................................................................ 4
1.13
Intentionally Omitted......................................................................................... 4
1.14
Event of Default................................................................................................. 4
1.15
Excluded Assets................................................................................................. 4
1.16
Excluded Liabilities........................................................................................... 4
1.17
Intentionally Omitted......................................................................................... 4
1.18
Intentionally Omitted......................................................................................... 4
1.19
Hazardous Material............................................................................................ 4
1.20
Hazardous Materials Laws................................................................................ 5
1.21
Health Care System........................................................................................... 5
-1-
US.116746500.11
1.22
Health Care System Employees........................................................................... 5
1.23
Health Care System Funds................................................................................. 5
1.24
Health Care Systems Operations....................................................................... 5
1.25
Health Care System Personal Property.............................................................. 5
1.26
Health Care System Real Property.................................................................... 7
1.27
Hospital Improvements......................................................................................7
1.28
Hospital Land..................................................................................................... 7
1.29
Hospital Leases.................................................................................................. 7
1.30
Hospital Property............................................................................................... 7
1.31
Improvements.................................................................................................... 7
1.32
Intentionally Omitted......................................................................................... 7
1.33
Inventories and Supplies.................................................................................... 7
1.34
Land................................................................................................................... 7
1.35
Medical Office Building Improvements............................................................ 7
1.36
Medical Office Building Land........................................................................... 8
1.37
Medical Office Building Leases........................................................................ 8
1.38
Medical Office Building Property..................................................................... 8
1.39
Intentionally Omitted......................................................................................... 8
1.40
Intentionally Omitted......................................................................................... 8
1.41
Intentionally Omitted......................................................................................... 8
1.42
Original Effective Date...................................................................................... 8
1.43
Purchase Option................................................................................................. 8
1.44
Freemont Avenue Improvements...................................................................... 8
1.45
Freemont Avenue Land..................................................................................... 8
1.46
Freemont Avenue Property................................................................................ 8
US.116746500.11
1.47 Restore or Restoration....................................................................................... 8
1.48
Shopping Center Improvements........................................................................ 9
1.49
Shopping Center Land....................................................................................... 9
1.50
Shopping Center Leases.................................................................................... 9
1.51
Shopping Center Property.................................................................................. 9
1.52
Taking................................................................................................................9
1.53
Intentionally Omitted......................................................................................... 9
1.54 Term...................................................................................................................9
1.55 Unavoidable Delays........................................................................................... 9
Article 2. Lease, Transfer of Health Care System.................................................................... 9
2.1 Lease of Health Care Center Real Property....................................................... 9
2.2 Transfer of Health Care System Personal Property ......................................... 10
Article 3. Rent; Consideration................................................................................................ 10
3.1 Annual Rent..................................................................................................... 10
3.2 Assumed Obligations....................................................................................... 11
3.3 Additional Costs.............................................................................................. 12
Article 4. Payment of Taxes................................................................................................... 12
Article 5. Repairs and Maintenance........................................................................................ 12
Article6. Insurance................................................................................................................. 12
6.1 Property Insurance........................................................................................... 12
6.2 Liability Insurance........................................................................................... 13
6.3 Intentionally Omitted....................................................................................... 13
6.4 Intentionally Omitted....................................................................................... 13
6.5 Intentionally Omitted....................................................................................... 13
6.6 Intentionally Omitted........................................................................................... 13
-iii-
US.116746500.11
6.7 Policy Requirements........................................................................................
13
6.8 HH's Insurance................................................................................................
14
6.9 Certificate of Insurance....................................................................................
14
Article 7. Damage To or Destruction of the Improvements...................................................
14
7.1 Notice; Restoration..........................................................................................
14
7.2 Payment of Costs; Application of Proceeds ....................................................
14
7.3 No Abatement..................................................................................................
14
7.4 Mutual Release................................................................................................
14
Article8. Condemnation.........................................................................................................
15
8.1 Total Taking.....................................................................................................
15
8.2 Partial Taking...................................................................................................
15
8.3 Determination of Partial Taking......................................................................
15
Article9. Alterations...............................................................................................................
16
9.1 General.............................................................................................................16
9.2 Permitted Alterations.......................................................................................
16
9.3 Permits.............................................................................................................16
Article 10. Discharge of Liens................................................................................................
16
Article 11. Use of Health Care System Real Property............................................................
16
Article 12. Entry on Property by City.....................................................................................
17
Article13. Utilities.................................................................................................................
17
Article 14. Indemnification.....................................................................................................
17
Article15. Transfers...............................................................................................................
17
15.1 By City.............................................................................................................
17
15.2 By HH..............................................................................................................
18
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Article 16. Estoppel Certificates............................................................................................. 19
Article 17. Representations and Covenants of City................................................................ 20
17.1 Power and Authority........................................................................................ 20
17.2 Agreement Valid and Binding......................................................................... 20
17.3 Intentionally Omitted....................................................................................... 20
17.4 Intentionally Omitted....................................................................................... 20
17.5 Assigned Contracts; Consents......................................................................... 20
17.6 Cooperation......................................................................................................20
17.7 Trade Secrets................................................................................................... 20
17.8 Environmental Condition................................................................................. 20
17.9 Intentionally Omitted....................................................................................... 21
17.10 Intentionally Omitted....................................................................................... 21
Article 18. Representations and Covenants of HH................................................................. 21
18.1 Formation of HH.............................................................................................. 21
18.2 Power and Authority........................................................................................ 21
18.3 Agreement Valid and Binding......................................................................... 22
18.4 Nonprofit Status............................................................................................... 22
18.5
Intentionally Omitted.......................................................................................
22
18.6
Intentionally Omitted.......................................................................................
23
18.7
Intentionally Omitted.......................................................................................
23
18.8
Intentionally Omitted.......................................................................................
24
18.9
Intentionally Omitted.......................................................................................
24
18.10
Intentionally Omitted.......................................................................................
24
18.11
Intentionally Omitted.......................................................................................
24
18.12
Operating Expenses and Taxes........................................................................
25
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18.13 Intentionally Omitted.......................................................................................
25
18.14 Intentionally Omitted.......................................................................................
25
18.15 Intentionally Omitted.......................................................................................
25
18.16 Intentionally Omitted.......................................................................................
26
Article 19. Condition of Property...........................................................................................
26
Article 20. Events of Default; Termination............................................................................
26
20.1 Events of Default............................................................................................. 26
20.2 Consequences of Default................................................................................. 27
20.3 Intentionally Omitted....................................................................................... 27
20.4 Intentionally Omitted....................................................................................... 27
20.5 No Waiver........................................................................................................ 27
20.6 Exercise of Rights While in Default................................................................ 28
Article 21. Conveyance Upon Termination; Performance by Park Nicollet .......................... 28
21.1 Conveyance Upon Termination....................................................................... 28
21.2 Performance by Park Nicollet.......................................................................... 28
Article 22. No Merger of Title................................................................................................ 28
Article 23. Quiet Enjoyment................................................................................................... 29
Article24. Notices.................................................................................................................. 29
Article25. Contests................................................................................................................ 30
25.1 Contest............................................................................................................. 30
25.2 Suspension of Obligation................................................................................. 30
25.3 Procedure......................................................................................................... 30
Article 26. Purchase Option and City Conveyance Right ...................................................... 30
26.1 Grant................................................................................................................ 30
26.2 Title..................................................................................................................31
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26.3 Closing............................................................................................................. 31
26.4 Effect of Non-Exercise.................................................................................... 31
Article 27. Miscellaneous....................................................................................................... 31
27.1 Consent............................................................................................................ 31
27.2 Relationship of Parties..................................................................................... 32
27.3 Miscellaneous.................................................................................................. 32
27.4 Recording.........................................................................................................32
27.5 Non -Delegation and Lack of Control.............................................................. 32
Exhibit A — Legal Description of the Land
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AMENDED AND RESTATED
LEASE AND AGREEMENT
This Amended and Restated Lease and Agreement is dated as of April 1, 2018 (the
"Amended Effective Date") by and between the City of Hutchinson, a Minnesota municipal
corporation ("City"), and Hutchinson Health, a Minnesota nonprofit corporation ("HH").
Park Nicollet Health Services, a Minnesota nonprofit corporation and the sole Member of
HH as of the Amended Effective Date ("Park Nicollet"), is a party to this Agreement for the
limited purposes set forth in Articles 14 and 21.
RECITALS
WHEREAS, the City and Hutchinson Health (formerly known as Hutchinson Health
Care) executed that certain Lease and Agreement dated December 31, 2007, as amended by
that certain First Amendment to Lease and Agreement ("First Amendment") dated December
19, 2012 (collectively, the "Original Agreement").
WHEREAS, City owns the Hospital Property, the Medical Office Building Property,
the Shopping Center Property, the Dassel Medical Center Property, the Freemont Avenue
Property, and the Auxiliary Property (each as hereinafter individually defined and
collectively referred to as the "Health Care System Real Property").
WHEREAS, prior to the Original Effective Date, the Health Care System Real
Property was operated by City as elements of a coordinated Health Care System, as
hereinafter defined.
WHEREAS, as of the Original Effective Date, City transferred ownership of the
Health Care System operations and assets (other than the Health Care System Real Property
and certain Excluded Assets) to HH, a nonprofit corporation that was organized under the
laws of the State of Minnesota for the purpose of acquiring and operating the Health Care
System.
WHEREAS, under the First Amendment, in exchange for a cash payment and other
consideration, the City gave up its right to approve specific "change in control" transactions,
but retained a consultation right, the right that if a change of control transaction occurred,
rent payments due under the lease would be fully prepaid, and the right to terminate the lease
and convey all the leased property to HH; and
WHEREAS, HH has entered into a change of control transaction with HealthPartners,
Inc., by and through Park Nicollet, an affiliate of HealthPartners, Inc., which would cause the
parties to execute the provisions of the First Amendment, and the proposed transaction was
described to the Hutchinson City Council at its workshop on January 9, 2018; and
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WHEREAS, HH believes that it would be advantageous to maintain the lease
structure for a period of time and the City, after the required consultations with HH,
concluded it would be in the community's interests to accommodate HH's request and to
further amend the lease on the terms set forth herein, rather than to require the immediate
conveyance of all the leased property; and
WHEREAS, City has the statutory power and authority, pursuant to Minnesota
Statutes §§ 144.581 and 447.47, to lease the Health Care System Real Property to HH.
WHEREAS, by its execution and delivery of this Lease to HH, the City
acknowledges that HH has paid to the City a lump -sum amount of Six Million Two Hundred
Thousand Dollars ($6,200,000), which the parties agree is equal to the present value of the
monthly rent that would have been payable to City for the remainder of the Term of the
Original Agreement. Accordingly, the parties acknowledge that the First Amendment will be
deemed satisfied and will no longer be applicable and that a number of provisions in the
Original Agreement are no longer necessary and will be referenced in this Amended and
Restated Lease and Agreement as "omitted" simply for convenience rather than renumbering
the entire Original Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth
herein, and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
Article 1.
Definitions
The following terms shall have the meanings set forth in this Article:
1.1 Agreement or Lease. This Amended and Restated Lease and Agreement,
including the following exhibits attached hereto and made a part hereof:
Exhibit A — Legal Description of the Land
1.2 Alteration. Construction, reconstruction, replacement, repairs, renewals,
alterations, changes, additions, improvements and demolitions of or to the Improvements and
all excavations at any time made or to be made in, or on about the Land, or any part thereof.
1.3 Annual Rent. The Annual Rent at the per annum rate provided for in Section
3.1 of this Agreement.
1.4 Assigned Contracts. All service and maintenance contracts, commitments,
guarantees, indentures, insurance policies and contracts, leases and other contracts regarding
the Health Care System Real Property and the Health Care System Operations, but excluding
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any contracts that are part of the Excluded Assets, that were assigned to HH by the City as of
the Original Effective Date.
1.5 Assumed Liabilities. All of the following debts, obligations, accounts payable,
claims and other liabilities of City (excluding, in each case, any Excluded Liabilities)
assumed by HH as of the Original Effective Date:
(a) All payment obligations, other obligations and liabilities arising under
the Assigned Contracts;
(b) Any materialmen, mechanics or other liens against the Health Care
System Real Property;
(c) All employee liabilities arising from Health Care System Operations,
including but not limited to any costs, settlement amounts, insurance deductibles and
other expenses associated with any employment-related legal claims brought by City
employees arising from the termination of their employment for Health Care System
Operations;
(d) Any fines, penalties or other payments, or repayments, required to be
made to any governmental entity in connection with Health Care System Operations
prior to the Original Effective Date;
(e) Claims relating to generation, manufacture, storage or release of
Hazardous Materials on or about the Health Care System Real Property or with
respect to the Health Care System Operations; and
(f) All other liabilities and obligations of City, whether known or
unknown, contingent or otherwise, incurred or arising in connection with Health Care
System Operations prior to the Original Effective Date.
1.6 Auxiliary Improvements. The building, fixtures and other improvements now
or hereafter located on the Auxiliary Land and all alterations and additions thereto and
replacements thereof, including by reason of Restoration.
1.7 Auxiliary Land. The land, but not any Improvements, situated in McLeod
County, Minnesota, and legally described on Exhibit A attached hereto, together with all
easements, appurtenances and hereditaments pertaining thereto.
1.8 Auxiliary Property. The Auxiliary Land and the Auxiliary Improvements,
collectively.
1.9 Intentionally omitted.
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1. 10 Dassel Medical Center Improvements. The building, fixtures and other
improvements now or hereafter located on the Dassel Medical Center Land and all
alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.11 Dassel Medical Center Land. The land, but not any Improvements, situated in
Meeker County, Minnesota, and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.12 Dassel Medical Center Property. The Dassel Medical Center Land the Dassel
Medical Center Improvements, collectively.
1.13 Intentionally omitted.
1.14 Event of Default. As defined in Section 20.1 of this Agreement.
1.15 Intentionally omitted.
1.16 Excluded Liabilities. Any and all debts, obligations, claims, and other
liabilities of City:
(a) to the extent such debts, obligations, claims or other liabilities of City
are covered by an existing insurance policy maintained by City;
(b) to the extent that the assumption of which by HH would eliminate or
limit the governmental immunity which would otherwise be available in regard to
such debt, obligation, claim or other liability (and nothing herein shall grant to any
person not a party hereto any right to payment or indemnification for any event
occurring prior to the Original Effective Date which would not have existed had City
not entered into the transactions contemplated hereby);
(c) which results from any act or omission of City (or any of its elected
officials, employees, contractors, or agents) acting in, or in furtherance of, City's
governmental function, and not in connection with, or in furtherance of, the Health
Care System or Health Care System Operations; or
(d) which results from a breach of this Agreement by City or the existence
of which constitutes a misrepresentation by City under this Agreement.
1.17 Intentionally omitted.
1.18 Intentionally omitted.
1.19 Hazardous Material. Any substance, chemical, waste or material that is or
becomes regulated under applicable law because of its toxicity, infectiousness, radioactivity,
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explosiveness, ignitability, corrosiveness or reactivity, including asbestos, urea
formaldehyde, polychlorinated biphenyls, nuclear fuel or materials, radioactive materials,
explosives, known carcinogens, petroleum products and by-products and any substance,
chemical, waste or material regulated by any Hazardous Material Law.
1.20 Hazardous Materials Laws. Each federal, state, county, municipal, local or
other law, statute, code, ordinance, rule or regulation which relates to or deals with human
health or the environment in the jurisdiction in which the Health Care System, or any part
thereof, is located.
1.21 Health Care System. The Health Care System Real Property, the Health Care
System Personal Property acquired by HH from City as of the Original Effective Date, and
all other real or personal property purchased, leased or otherwise acquired by HH (or by
City, with respect to any real property acquired by City for the use of HH and inclusion with
the Health Care System Real Property) on or after the Original Effective Date, together with
the operations, infrastructure, systems, processes, assembled work force and other intangibles
necessary for the conduct of a healthcare delivery system of the scope and nature as that
operated by City prior to the Original Effective Date.
1.22 Health Care System Employees. All full and part time employees of the
Health Care System who became employees of HH as of the Original Effective Date or have
been employed by HH after the Original Effective Date.
1.23 Health Care System Funds. All of City's right, title and interest in or to all
cash, bank accounts, savings and loan accounts, certificates of deposit, money market
accounts, treasury bills, investments (whether debt or equity, liquid or illiquid), reserves or
other cash items held in the name of, or on behalf of, City in connection with Health Care
System Operations.
1.24 Health Care Systems Operations. The operation of the Health Care System,
including operation of its various components as an acute care hospital, a surgical center, a
medical office building, an outpatient clinic, and administrative facilities, together with all
activities related to or arising from such operations.
1.25 Health Care System Personal Property. All right, title and interest of City in
and to the following property (excluding, in each case, the Excluded Property) that was
transferred to HH as of the Original Effective Date:
(a) All machinery, furniture and equipment, including hospital, medical
and office equipment, and other fixed assets owned by City and used in connection
with the operation of the Health Care System Real Property, or any part thereof,
(b) All motor vehicles owned by City and used in connection with the
operation of the Health Care System Real Property;
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(c) All trademarks, service marks and names owned by City and used in
connection with the operation of the Health Care System Real Property, Health Care
System Operations, or any part or combination thereof,
(d) All accounts receivable and other amounts owed to City or its health
care operating units and arising out of the use, operation or ownership of the Health
Care System Real Property or arising from Health Care System Operations;
(e) The benefit, but not outright ownership, of the gifts, bequests,
donations or other endowments specifically given for the benefit of or restricted to the
use of the Health Care System Real Property, Health Care System Operations, or any
part or combination thereof,
(f) All rights under the Assigned Contracts, including all rights to receive
goods or services, to use and occupy personal and leased real property or to receive
payment for goods or services rendered, or other benefits arising under such
contracts;
(g) All Inventories and Supplies;
(h) All trade secrets and other confidential information concerning Health
Care System Operations not in the public domain and in existence on the Original
Effective Date;
(i) All medical records of Health Care System patients in existence on the
Original Effective Date;
0) All business records arising from the use of the Health Care System
Real Property or Health Care System Operations in existence on the Original
Effective Date;
(k) All Health Care System Funds;
(1) Any prepaid expenses arising from the operation or use of the Health
Care System Real Property or from Health Care System Operations in existence on
the Original Effective Date;
(m) any and all shares, member interests, partnership interests, member
control agreements or other interests held by City in any joint venture, partnership,
limited liability company, corporation, or other entity or organization formed in
relation to, in support of, or otherwise in connection with the Health Care System
Real Property or Health Care System Operations, including, without limitation, City's
interests in the joint ventures known as ConnectCare operating from the Birchwood
Property and Hutchinson Diagnostic Center;
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(n) The right to any and all recovery from all collection cases in progress
on the Original Effective Date for goods furnished or services rendered in connection
with Health Care System Operations;
and all of such other assets owned by City in connection with the operation of the Health
Care System Real Property, other than the Excluded Assets, as of the Original Effective
Date. Further, for purposes of this Agreement, the term "Health Care System Personal
Property" shall (i) include all additions, alterations, changes, and substitutions in and to all or
any part of the Health Care System Personal Property made after the Original Effective Date,
and (ii) exclude all Health Care System Personal Property transferred or sold in accordance
with Article 15 hereof on or after the Original Effective Date.
1.26 Health Care System Real Property. As defined in the Recitals hereof
1.27 Hospital Improvements. The building, fixtures and other improvements now
or hereafter located on the Hospital Land and all alterations and additions thereto and
replacements thereof, including by reason of Restoration.
1.28 Hospital Land. The land, but not any Improvements, situated in McLeod
County, Minnesota and legally described on Exhibit A attached hereto, together with all
easements, appurtenances and hereditaments pertaining thereto.
1.29 Hospital Leases. Any and all tenant leases with respect to the Hospital Land
or Hospital Improvements in effect on the Amended Effective Date.
1.30 Hospital Property. The Hospital Land, the Hospital Improvements, and the
Hospital Leases, collectively.
1.31 Improvements. The Hospital Improvements, the Medical Office Building
Improvements, the Shopping Center Improvements, the Dassel Medical Center
Improvements, the Freemont Avenue Improvements, and the Auxiliary Improvements,
collectively.
1.32 Intentionally Omitted.
1.33 Inventories and Supplies. All items of consumable personal property owned
by City or held by City in connection with the Health Care System Operations.
1.34 Land. The Hospital Land, the Medical Office Building Land, the Shopping
Center Land, the Dassel Medical Center Land, the Freemont Avenue Land, and the Auxiliary
Land, collectively.
1.35 Medical Office Building Improvements. The building, fixtures and other
improvements now or hereafter located on the Medical Office Building Land and all
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alterations and additions thereto and replacements thereof, including by reason of
Restoration.
1.36 Medical Office Building Land. The land, but not any Improvements, situated
in McLeod County, Minnesota and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.37 Medical Office Building Leases. Any and all tenant leases with respect to the
Medical Office Building Land or Medical Office Building Improvements in effect as of the
Amended Effective Date.
1.38 Medical Office Building Property. The Medical Office Building Land, the
Medical Office Building Improvements, and the Medical Office Building Leases,
collectively.
1.39 Intentionally Omitted
1.40 Intentionally Omitted
1.41 Intentionally Omitted
1.42 Original Effective Date. December 31, 2007 at 11:59:59 P.M.
1.43 Purchase Option. HH's right to purchase City's interest in the Health Care
System Real Property in accordance with Article 26.
1.44 Freemont Avenue Improvements. The building, fixtures and other
improvements now or hereafter located on the Freemont Avenue Land and all alterations and
additions thereto and replacements thereof, including by reason of Restoration.
1.45 Freemont Avenue Land. The land, but not any Improvements, situated in
McLeod County, Minnesota, and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.46 Freemont Avenue Property. The Freemont Avenue Land and the Freemont
Avenue Improvements, collectively.
1.47 Restore or Restoration. The repair, restoration or rebuilding of the Health
Care System or any part thereof following any Taking, damage to or destruction of the same
by fire or other casualty, in accordance with applicable legal requirements, with such
Alterations as may be determined by HH, together with any temporary repairs and property
protection pending completion of the work.
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1.48 Shopping Center Improvements. The building, fixtures and other
improvements now or hereafter located on the Shopping Center Land and all alterations and
additions thereto and replacements thereof, including by reason of Restoration.
1.49 Shopping Center Land. The land, but not any Improvements, situated in
McLeod County, Minnesota and legally described on Exhibit A attached hereto, together
with all easements, appurtenances and hereditaments pertaining thereto.
1.50 Shopping Center Leases. Any and all tenant leases with respect to the
Shopping Center Land or Shopping Center Improvements in effect as of the Amended
Effective Date.
1.51 Shopping Center Property. The Shopping Center Land, the Shopping Center
Improvements, and the Shopping Center Leases, collectively.
1.52 Taking. A taking of all or any part of the Health Care System Real Property,
or any interest therein or right accruing thereto, including, without limitation, any right of
access thereto existing on the date of this Agreement, as the result of or in lieu or in
anticipation of the exercise of the right of condemnation or eminent domain. The Taking
shall be deemed to occur on the date on which the condemning authority takes possession.
1.53 Intentionally omitted.
1.54 Term. The term of this Agreement as provided in Article 2.
1.55 Unavoidable Delays. Acts of God, casualties, war, civil commotion, embargo,
riots, strikes, unavailability of materials (but not unavailability of funds), contractor defaults
and any other events which are not within the reasonable control of the party in question to
prevent, control or correct.
Article 2.
Lease, Transfer of Health Care System
2.1 Lease of Health Care System Real Property. City does hereby demise and
lease to HH, and HH does hereby take and hire, upon and subject to the terms and conditions
of this Agreement, the Health Care System Real Property for a term commencing on the
Original Effective Date and ending thirty (30) years thereafter. Thereafter, this Agreement
may be renewed for one additional thirty (30) year term by mutual agreement of the parties.
At any time during the term of this Agreement, (i) HH may exercise the Purchase Option
described in Section 26.1 of this Agreement in accordance with the terms and conditions set
forth in Article 26; or (ii) City may exercise its right to convey the entire Health Care System
Real Property or any separate and discrete parcel within the Health Care System Real
Property to HH as set forth in Article 26. If this Agreement is not renewed for an additional
thirty (30) year term, HH shall exercise the Purchase Option as set forth in Article 26.
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2.2 Transfer of Health Care System Personal Property. The parties acknowledge
that as of the Original Effective Date, City conveyed all of its right, title and interest in and to
the Health Care System Personal Property and that HH is the owner of the Health Care
System Personal Property.
Article 3.
Rent; Consideration
3.1 Annual Rent.
(a) The parties acknowledge that Annual Rent established as of the
Original Effective Date has been paid in full by HH as it came due up to the Amended
Effective Date and in advance through the remainder of the Term of the Original
Agreement. Commencing on the Amended Effective Date and continuing through the
remainder of the Term of this Agreement, the Annual Rent payable by HH shall be an
amount equal to One and no/100ths Dollars ($1.00) per annum, which shall be
payable upon the Amended Effective Date and each anniversary thereof during the
remainder of the Term. HH shall also be responsible for paying as additional rent to
City, an amount equal to all expenses, including reasonable legal fees, incurred by
City in order to enforce any obligation materially breached by HH under this
Agreement, and any reasonable, direct, out of pocket transaction expenses, including
reasonable legal fees and consulting fees, incurred by City in connection with this
Amended and Restated Lease and Agreement and any transfer of all or any portion of
the Health Care System Real Property to HH during the Term, or any other transfer,
sublet, sale, assignment, release or other transaction involving any Health Care
System Real Property under Article 15. Such amounts, if any shall be payable in the
ordinary course of business following receipt of an invoice from City or copies of
applicable vendor invoices, but in any event not more than sixty (60) days following
receipt by HH of such invoices.
(b) All Annual Rent shall be paid by HH to City at the address of City set
forth in Section 24, or to such other address as City may direct by written notice to
HH.
(c) It is the purpose and intent of City and HH that the Annual Rent shall
be net to City and that HH shall pay Annual Rent and other amounts payable by HH
under this Agreement without notice or demand and without abatement, deduction or
setoff, except as otherwise provided in this Agreement.
3.2 Assumed Obligations. In consideration of the leases made by City to HH
pursuant to Article 2 hereof, HH hereby agrees to continue to operate the Health Care
System in accordance with the covenants set forth in this Agreement, including, without
limitation, the covenants set forth in Article 18 hereof. To the extent still outstanding as of
the Amended Effective Date, HH shall pay, or otherwise cause to be satisfied or discharged,
all Assumed Liabilities when due under their terms. HH may, at its expense and in its own
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name and behalf, or, to the extent lawful, in the name and behalf of City, in good faith,
contest the payment of any such Assumed Liabilities and, in the event of any such contest,
permit any such Assumed Liabilities to remain unpaid during the period of such contest and
any appeal therefrom. City will cooperate fully with HH, at HH's expense, in any such
contest. City shall continue to be responsible for the Excluded Liabilities, except as
specifically provided herein.
Article 4.
Payment of Taxes
City and HH anticipate that some or all of the Health Care System Real Property is or
will be exempt from real estate taxation. However, if and to the extent that real estate taxes
or installments of special assessments became due and payable with respect to the Health
Care System Real Property during the Term (including without limitation, assessments for
street and/or sidewalk improvements), HH agrees to pay all such amounts. City and HH
agree that HH's agreement to pay all applicable real estate taxes and special assessments
does not constitute a waiver of any exemption from said taxes or assessments to which the
Health Care System Real Property or HH may be entitled.
Article 5.
Repairs and Maintenance
Throughout the Term, HH, at its sole cost and expense, shall take good care of the
Health Care System Real Property, and shall at all times keep the same in good order and
condition, ordinary wear and tear excepted, and make all necessary repairs thereto, interior
and exterior, structural and non-structural. All repairs by HH shall be effected with due
diligence and in a workmanlike manner in compliance with all legal requirements and shall
be fully paid for by HH.
Article 6.
Insurance
6.1 Property Insurance. HH, at its cost, shall procure and maintain or cause to be
procured and maintained during the Term a so called "all-risk" property insurance policy
including the perils associated with mechanical breakdown (boiler and machinery) insuring
the full replacement cost of the Improvements. The property policy shall also provide "all
risk" coverage insuring at full replacement cost values for the improvements & betterments
and personal property. Such insurance shall name City as an additional insured.
6.2 Liability Insurance. HH, at its cost, shall procure and maintain or cause to be
procured and maintained during the Term commercial general public liability and
professional liability insurance or a program of self-insurance against claims of bodily injury,
death, personal injury or property damage occurring on, in or about the Health Care System
Real Property, with a combined single limit of not less than $2,000,000 each
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claim/occurrence and an aggregate limit of not less than $4,000,000, naming City as an
additional insured on any policies of insurance.
6.3 Intentionally omitted.
6.4 Intentionally omitted.
6.5 Intentionally omitted.
6.6 Intentionally omitted.
6.7 Policy Requirements. All insurance provided for in this Article 6 shall:
(a) be issued by insurance companies carrying an A M Best policyholder
rating of at least A- and a financial size rating of at least VIII or subject to acceptance
by the City, or be provided under a plan of self-insurance; and
(b) provide that, in the case of the property insurance required by Section
6. 1, losses shall be adjusted with the insurers and/or underwriters by City and HH,
unless HH Restores the Improvement, in which event HH shall be authorized
exclusively to adjust the loss and receive the proceeds to pay for Restoration as
Restoration progresses in accordance with this Agreement.
6.8 HH's Insurance. Proceeds of any insurance carried by HH on the Health Care
System Personal Property shall be payable directly to HH and HH shall have the exclusive
right to adjust and settle losses with respect thereto.
6.9 Certificate of Insurance. Upon the City's reasonable request, HH shall provide
to City original certificates from the issuing insurance companies evidencing that the policies
required to be carried by HH are in full force and effect.
Article 7.
Damage To or Destruction of the Improvements
7.1 Notice; Restoration. In case of any material damage to or destruction of any
part of the Improvements, HH shall give notice thereof to City and HH shall promptly and
with all diligence at HH's expense, commence and complete Restoration of such portion of
the Improvements so damaged or destroyed. Unless City otherwise consents, any
replacement building(s) to be constructed shall be of a quality not less than the quality of the
Improvement, as the same existed immediately prior to such damage or destruction.
7.2 Payment of Costs; Application of Proceeds. The costs of any Restoration
performed by HH in accordance with Section 7.1 shall be paid by HH, and any insurance
proceeds that are received by it in accordance with subsection 6.7(b) on account of any
damage to or destruction of the Improvements or any part thereof shall be used for that
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purpose. Any insurance proceeds remaining following the payment of all costs of
Restoration shall be retained by HH, for its use in the operation of the Health Care System,
and otherwise for its use in a manner consistent with its mission and purpose.
7.3 No Abatement. There shall be no abatement of Annual Rent in the event of
any damage or destruction to all or any part of the Health Care System.
7.4 Mutual Release. Notwithstanding any other provision of this Agreement, each
party hereby releases the other (and each party for which such other may be responsible) of
liability for any damage to the Improvements and the Health Care System Personal Property
which is coverable by the insurance described in Section 6.1 above (or which could be
covered by such insurance if HH were to carry insurance on the Health Care System Personal
Property), whether or not such damage is caused by the negligence or other fault of the party
so released or any party for which it may be responsible.
Article 8.
Condemnation
8.1 Total Taking. In the event of a Taking of the whole or substantially all of the
Health Care System Real Property, this Agreement shall terminate on the date of such
Taking, and the Annual Rent and all other sums and charges required to be paid by HH
hereunder shall be apportioned and paid to the date of such Taking. In the event of any such
Taking and notwithstanding the termination of this Agreement, and provided City is not the
party which commenced the Taking, City and HH shall together make one claim for an
award for their combined interests and the net award received shall be allocated between City
and HH on the basis of their respective interests therein, including in the case of City the
value of its reversion interest in the Health Care System Real Property and, in the case of
HH, the bargain value, if any, of its leasehold estate computed as though the Agreement had
not been terminated, and damages sustained as a result of termination of the Agreement prior
to the end of the Term. In addition, HH shall be entitled to any award made in respect of or
allocable to the Health Care System Personal Property and for moving, relocation and other
statutory benefits.
8.2 Partial Taking. In the event of a Taking of less than substantially all of the
Health Care System Real Property, this Agreement shall continue in full force and effect, and
HH shall at HH's expense with reasonable diligence (subject to Unavoidable Delays)
commence and complete Restoration, except to the extent made unfeasible by any reduction
in area of the Land or Improvement caused by such Taking. All awards made in respect of
or allocable to the Health Care System Real Property shall be distributed as follows and in
the following order:
(a) For the purpose of Restoration, in accordance Section 7.2, including the
last sentence thereof, as if the same were insurance proceeds; and
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(b) HH shall receive the balance of the award, for its use in the operation of
the Health Care System, and otherwise for its use in a manner consistent with its
mission and purpose.
8.3 Determination of Partial Taking. As used herein, a Taking of substantially all
of the Health Care System Real Property shall mean a Taking of such portion as renders it in
HH's good faith business judgment uneconomical or unfeasible to operate the Health Care
System Real Property for the purpose for which the Health Care System Real Property was
operated prior to such Taking.
Article 9.
Alterations
9.1 General. HH shall have the right from time to time during the Term to make,
at its expense, Alterations in or to the Improvements, subject in all cases to the further
provisions of this Article 9 and to all other applicable provisions of this Agreement.
9.2 Permitted Alterations. Subject to any applicable provisions of this Agreement,
HH shall have the right at any time during the Term to make such reasonable changes in and
additions and alterations, structural or otherwise, to the Health Care System Real Property as
HH shall deem necessary or desirable for its operation of the Health Care System, provided
that:
(a) the work is performed in a good and workmanlike manner and in
accordance with all applicable laws, ordinances, rules and regulations; and
(b) no change, alteration, modification, or addition shall at any time be
made that shall impair the structural soundness or diminish the value of any
improvement.
9.3 Permits. Before any Alterations are begun, HH shall procure, at its expense,
all necessary licenses, permits, approvals and authorizations from all governmental
authorities and shall, on demand, deliver photocopies thereof to City. Upon HH's request,
City shall join in the application for such licenses, permits, approvals and authorizations
whenever such action is necessary. All Alterations shall be made and completed in
accordance with all legal requirements.
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Article 10.
Discharge of Liens
Each of City and HH agrees not to create, and shall discharge, liens or notices of
claims of liens of mechanics and materialmen for work or materials contracted to be supplied
to the Health Care System Real Property by City or HH, respectively, subject to contest by
HH in accordance with Article 25.
Article 11.
Use of Health Care System Real Property
HH may use and occupy the Health Care System Real Property for Health Care
System Operations, and any other lawful purposes.
Article 12.
Entry on Property by City
HH shall permit City and its authorized representatives to enter the Health Care
System Real Property at all reasonable times following reasonable advance notice for the
purpose of inspecting the same.
Article 13.
Utilities
HH shall pay all charges for the use at the Health Care System Real Property of
water, sewer, electricity, heating, air conditioning and all other utilities consumed during the
Term.
Article 14.
Indemnification
Subject to Section 7.4, HH and Park Nicollet shall defend, indemnify and save City
harmless from and against all liabilities, claims, judgments, costs and expenses, including,
but not limited to, reasonable attorneys' fees, to the extent arising by reason of or relating to
the Health Care System, Health Care System Operations (including personal injuries or
damage to property arising from Health Care System Operations), Health Care System
Employees, or breach of this Agreement by HH or Park Nicollet, whether known or
unknown, whether arising before or after the Amended Effective Date, excluding, in each
case, all liabilities, claims, judgments, costs and expenses that constitute Excluded
Liabilities.
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Article 15.
Transfers
15.1 By City. The City agrees as follows with respect to its interest in the Health
Care System Real Property:
(a) City agrees not to transfer, mortgage, pledge, lease, or encumber all or
any part of its interest in the Health Care System Real Property or its rights under this
Agreement, except with the prior written consent of HH, or otherwise as provided in
this Section and Article 26.
(b) If HH proposes to sell or transfer a portion or portions constituting less
than all or substantially all of the Health Care System Real Property, including, but
not limited to, a transfer of a portion of the Health Care System Real Property to HH,
City agrees, following sixty (60) days prior notice by HH, to cooperate with such sale
or transfer, including by executing and delivering such reasonable and customary
agreements and instruments as may be necessary or desirable (i) to release from this
Agreement that part of the Health Care System Real Property proposed to be sold or
transferred by HH; (ii) to transfer and convey the interest of City in that portion of the
Health Care System Real Property proposed to be sold or transferred by HH, and (iii)
to permit HH to apply any net proceeds of sale or transfer to further the mission and
purposes of the Health Care System. Notwithstanding the foregoing, if during the
sixty day notice period, the City notifies HH that the City wishes that the subject
property be released from the Lease and returned to City control, City and HH will
cooperate to accomplish that result provided that HH shall receive from the City at the
time of the release an amount equal to the net proceeds anticipated by HH from the
transaction referenced in the initial notice to the City, such that HH continues to have
resources equivalent to the released property available for the mission and purposes of
the Health Care System.
(c) City and HH agree that the Freemont Avenue Property and Auxiliary
Property will be conveyed to HH as soon as practical following execution of this
Agreement.
15.2 By HH. HH and City agree as follows with respect to HH's interest in the
Health Care System Real Property:
(a) HH's interest in the Health Care System Real Property may be sublet
without City's consent, in whole or in part, provided that no such sublease shall
extend beyond the Term and shall not be inconsistent with HH's mission. Any
sublease not meeting the requirements of this Section 15.2(a) may not be entered into
without City's written consent. City agrees to execute a reasonable non -disturbance
agreement as may be requested by the subtenant under any such sublease.
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(b) HH's interest in the Health Care System Real Property may be assigned
without City's consent, provided that no such assignment shall extend beyond the
Term and shall not be inconsistent with HH's mission. Any assignment not meeting
the requirements of this Section 15.2(b) may not be entered into without City's
written consent.
(c) HH shall have the right to mortgage, pledge, or otherwise encumber as
collateral or security for debt held by an institutional lender or bond trustee all or any
part of its interest in the Health Care System, provided that no right, title or interest of
City shall be encumbered thereby. City agrees to cooperate reasonably with HH in
connection with any such financing, including the signing of such additional
documents as may be required to obtain such financing.
(d) Upon the closing of any sale or transfer of any portion of the Health
Care System Real Property pursuant to this Section, such portion shall cease to be a
part of the Health Care System Real Property under this Agreement.
Article 16.
Estoppel Certificates
Each party hereto agrees from time to time, upon not less than twenty (20) days' prior
notice from the other, to execute, acknowledge and deliver, without charge, to the other or its
designee, a statement in writing, certifying that this Agreement is unmodified and in full
force and effect (or if there have been modifications, identifying the same by the date thereof
and specifying the nature thereof), the dates to which the Annual Rent and other sums and
charges payable hereunder have been paid, the amount of the Annual Rent, that to its actual
knowledge there are no claims against the other hereunder (or if there are any such claims,
specifying the same) and that to its actual knowledge the other party is not in default and
there exists no circumstance which with the giving of notice or lapse of time, or both, would
constitute a default (or if such party is aware of any such default or circumstance specifying
the same).
Article 17.
Representations and Covenants of City
17.1 Power and Authority. City has the power and authority to execute and deliver
this Agreement, and to carry out the transactions contemplated herein. The Hutchinson City
Council, acting on behalf of City in connection with this Agreement, is the properly
appointed, acting and duly authorized governing body of City, and is acting in accordance
with the provisions of all applicable laws and regulations.
17.2 Agreement Valid and Binding. The Agreement is duly executed and delivered
and is a valid and legally binding obligation of City enforceable in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, result in the creation of any lien, charge or
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encumbrance or the acceleration of any indebtedness or other obligation of City, and are not
prohibited by, in violation of or in conflict with any provisions of, and will not result in a
default under or a breach of (i) any constitutional provision affecting City; (ii) any ordinance,
law or regulation; or (iii) any order, decree or judgment or any court of governmental agency
to which City or the Health Care System is a party or is bound.
17.3 Intentionally omitted.
17.4 Intentionally omitted.
17.5 Intentionally omitted.
17.6 Cooperation. City, at HH's expense, shall cooperate reasonably with HH in
any manner necessary to enable HH to fulfill HH's obligations and exercise HH's rights
under this Agreement.
17.7 Trade Secrets. City understands that certain records that are defined as "trade
secret information" pursuant to Minnesota law are of substantial value of HH, and, except as
otherwise required by law, are and have been maintained in the strictest confidence as trade
secrets, and agrees, except as otherwise required by law, not to divulge, furnish, or make
accessible to anyone (other than HH and its designees) any trade secrets at any time.
17.8 Environmental Condition. Except for Hazardous Materials used by City in the
ordinary course of operating the Health Care System and in accordance with Hazardous
Substance Laws: (a) City has not generated, manufactured, stored or released any Hazardous
Materials on or about the Health Care System Real Property, and has permitted no other
party to do any of the same; and (b) City has received no notice of and has no knowledge (i)
that any Hazardous Material are or have ever been generated, manufactured, stored or
released about the Health Care System Real Property, (ii) of any, requests, notices,
investigations, demands, administrative proceedings, hearings, litigation or other action
proposed, threatened or pending relating to any of the Health Care System Real Property
alleging non-compliance with or liability under any Hazardous Material Law, or (iii) that any
above -ground or underground storage tanks or other containment facilities of any kind
containing any Hazardous Materials are or have ever been located about the Health Care
System Real Property.
17.9 Intentionally omitted.
17.10 Intentionally omitted.
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Article 18.
Representations and Covenants of HH
18.1 Formation of HH. HH is a nonprofit corporation duly organized and in good
standing under the laws of the State of Minnesota. HH has the power to lease and to own
assets and to carry on its business as contemplated under this Agreement.
18.2 Power and Authority. HH has the power to execute and deliver this
Agreement and to carry out the transactions contemplated herein. All corporate actions
required to be taken by HH to authorize the execution, delivery and performance of this
Agreement and all transactions contemplated hereby have been duly and properly taken.
18.3 Agreement Valid and Binding. The Agreement is duly executed and delivered
and is a valid and legally binding obligation of HH enforceable in accordance with its terms.
The execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, result in the creation of any lien, charge or
encumbrance or the acceleration of any indebtedness or other obligation of HH, and are not
prohibited by, in violation of or in conflict with any provisions of, and will not result in a
default under or a breach of (i) any contract, agreement or other instrument to which HH is a
party or is bound; (ii) any ordinance, law or regulation; or (iii) any order, decree or judgment
or any court of governmental agency to which HH is a party or is bound.
18.4 Nonprofit Status; Principal Office; Primary Service Area. HH shall remain
throughout the Term qualified to do business as a Minnesota nonprofit corporation.
18.5 Intentionally omitted.
18.6 Intentionally omitted.
18.7 Intentionally omitted.
18.8 Intentionally omitted.
18.9 Intentionally omitted.
18.10 Intentionally omitted.
18.11 Intentionally omitted.
18.12 Operating Expenses and Taxes. In addition to HH's agreement to pay certain
taxes, maintenance expenses and insurance associated with the Health Care System Real
Property pursuant to Articles 4, 5 and 6 hereof, HH shall pay, or otherwise cause to be paid,
all Operating Expenses, whenever incurred. For purposes of this Agreement, the term
"Operating Expenses" means all costs associated with operation of the Health Care System
including, but not limited to, the costs of maintenance and repair, utilities, equipment rental,
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professional fees, salaries, wages, employee benefits, permit fees, license fees, and, as the
same respectively become due, all taxes, assessments and governmental charges that may be
lawfully assessed or levied against or otherwise attributable to the Health Care System
during the Term. HH may, at its expense and in its own name and behalf, or, to the extent
lawful, in the name and behalf of City, in good faith, contest any such taxes, assessments and
governmental charges in accordance with Article 25 hereof.
18.13 Intentionally omitted.
18.14 Indigent Care. HH shall operate the Hospital Property as a hospital open to
the general public providing emergency and acute care services, from time to time at no
charge or at reduced charges consistent with HH's charitable purposes approved by HH's
board of directors, in accordance with the financial assistance policy of HH and in
compliance with any applicable federal, state and City statute or ordinance and regulations
with respect thereto.
18.15 Intentionally omitted.
18.16 Intentionally omitted.
Article 19.
Condition of Property
19.1 Except as expressly stated herein, City does not make any representations or
warranties regarding the Health Care System. HH agrees that it is leasing and acquiring the
Health Care System on an "AS IS", "WHERE IS" and "WITH ALL FAULTS" basis, based
upon its own judgment. CITY MAKES NO WARRANTY WITH RESPECT TO THE
HEALTH CARE SYSTEM OR ANY PART THEREOF, EXPRESS OR IMPLIED, AND
CITY SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY AND
OF FITNESS FOR A PARTICULAR PURPOSE AND ANY LIABILITY FOR
CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OF OR THE INABILITY
TO USE THE HEALTH CARE SYSTEM OR ANY PART THEREOF.
Article 20.
Events of Default; Termination
20.1 Events of Default. If any one or more of the following events ("Events of
Default") shall happen, and if neither party has exercised rights they have under Article 26 to
cause a conveyance of the Health Care System Real Property, then and in any such event,
City may give notice to HH specifying such Event or Events of Default and stating that this
Agreement and the Term shall expire and terminate on the date specified in such notice, and
on such date, unless such specified Event or Events of Default shall have been cured, this
Agreement shall terminate and HH shall remain liable as hereinafter provided:
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(a) HH defaults in the payment of any Annual Rent payable under this
Agreement and HH does not cure such default within fifteen (15) days after actual
receipt of notice thereof, or
(b) HH fails to pay any other monetary obligation when due or observe or
perform any of the other terms, conditions, covenants or agreements required to be
observed or performed by it under this Agreement and such failure shall continue for
a period of, in the case of a monetary obligation, thirty (30) days or, in the case of a
non -monetary obligation, sixty (60) days, following actual receipt of written notice of
such failure by HH, or, in the case of a non -monetary default which cannot with due
diligence be cured within such period of sixty (60) days, HH fails to proceed with due
diligence within such period of sixty (60) days to commence to cure the same and
thereafter to prosecute the curing of such default with due diligence.
20.2 Consequences of Default. If this Agreement is terminated pursuant to Section
20. 1, HH shall exercise and fulfill the requirements of the Purchase Option in accordance
with Article 26. If HH is unable to exercise and fulfill the requirements of the Purchase
Option, then Section 21.2 of this Agreement shall apply.
20.3 Intentionally omitted.
20.4 Intentionally omitted.
20.5 No Waiver. No failure by any party to insist upon the strict performance of
any term hereof or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term.
20.6 Exercise of Rights While in Default. HH may exercise and continue to
exercise all of its rights under this Agreement upon the occurrence and during the
continuance of any default and Event of Default under this Agreement up to the point of
termination of this Agreement, including but not limited to the Purchase Option.
Article 21.
Conveyance Upon Termination; Performance by Park Nicollet
21.1 Conveyance Upon Termination. In the event HH does not exercise and fulfill
the requirements of the Purchase Option or the City has not exercised its right to convey all
the Health Care System Real Property by the expiration of the Term, upon the expiration,
City shall convey any remaining Health Care System Real Property subject to this
Agreement to HH in the manner as provided for exercise of HH's or City's rights under
Article 26, provided, however, that if HH and City agree that the remaining Health Care
System Real Property should be returned to City instead, HH shall quit and surrender such
Health Care System Real Property , in the condition required to be maintained in accordance
with this Agreement (subject to ordinary wear and tear and damage by fire or other casualty
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excepted), to City, without any payment therefor by City, without delay, free and clear of all
lettings and occupancies (other than assignments and subleases entered into as permitted
under this Agreement).
21.2 Performance by Park Nicollet. In the event HH is unable to exercise and
fulfill the requirements of the Purchase Option or to receive conveyances from City of all or
portions of the Health Care System Real Property as and when required under this
Agreement, Park Nicollet agrees to directly perform on behalf of HH any such obligations to
exercise and fulfill the requirements of the Purchase Option or to receive conveyances from
City of all or portions of the Health Care System Real Property as defined in this Agreement
in the circumstances requiring such conveyances under this Agreement..
Article 22.
No Merger of Title
There shall be no merger of HH's interest in this Agreement nor of the leasehold
estate created by this Agreement with the fee estate in the Health Care System Real Property
or any part thereof by reason of the fact that the same person may acquire or own or hold,
directly or indirectly, (a) HH's interest in this Agreement or the leasehold estate created by
this Agreement or any interest therein and (b) the fee estate in the Health Care System Real
Property or any part thereof or any interest therein, and no such merger shall occur unless
and until all persons then having an interest in, which interest shall have been voluntarily
created by the holders of, the ownership interests described in (a) and (b) above, shall join in
a written instrument effecting such merger and shall duly record the same.
Article 23.
Quiet Enjoyment
City covenants that HH shall quietly have, hold and enjoy the Health Care System
Real Property during the Term without hindrance or molestation, subject only to Article 20.
City represents, warrants and covenants to HH as of the Amended Effective Date that the
Health Care System is free and clear of all prior liens and encumbrances except for the
Medical Office Building Leases, the Hospital Leases, and the Shopping Center Leases that
were assigned to HH as of the Original Effective Date or entered into by HH after the
Original Effective Date.
Article 24.
Notices
All notices, requests, demands, consents, approvals, and other communications that
may or are required to be served or given hereunder (for the purposes of this Article
collectively called "Notices") shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or by nationally
recognized overnight courier, addressed to the party to receive such Notice at the following
addresses:
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If to City: City of Hutchinson
111 Hassan St. SE
Hutchinson, Minnesota 55350
Attention: City Attorney
If to HH: Hutchinson Health
1095 Highway 15 S.
Hutchinson, Minnesota 55350-5000
Attention: President
With copy to: HealthPartners
Attention: General Counsel
PO Box 1309
Mail Stop 21114A
Minneapolis, MN 55440
Either party may, by Notice given as aforesaid, change its address for all subsequent Notices,
except that neither party may require Notices to it to be sent to more than two addresses.
Mailed Notices shall be deemed given when mailed in the manner aforesaid, provided that in
the case of a notice of default to HH the same shall be deemed given only upon actual receipt
by HH.
Article 25.
Contests
25.1 Contest. After written notice to City, HH may at its expense contest, by
appropriate proceedings conducted in good faith and with due diligence (all such proceedings
together with appeals therefrom being hereinafter referred to as "Contests") the amount,
validity or application, in whole or in part, of any tax, assessment, mechanics' lien,
encumbrance, charge or any other adverse claim for which HH is responsible under this
Agreement (hereinafter collectively "claims") provided that:
(a) In the case of an unpaid claim, such Contest shall operate to suspend
the collection of the same from City and HH therein;
(b) HH shall have furnished such security, if any, as may be required in the
proceedings or reasonably required by City; and
(c) No part of the Health Care System or any interest therein shall be, in
the reasonable opinion of City, in imminent danger of being forfeited or lost.
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25.2 Suspension of Obligation. During the period HH carries forward any such
Contest in good faith, HH shall be relieved from its obligations herein contained to pay the
claims, or to clear the liens with respect to which such contest is conducted. If and to the
extent HH shall not prevail in any such Contest, HH shall immediately pay and discharge the
claim in question to such extent.
25.3 Procedure. All such Contests may be brought by HH in the name of HH or, if
reasonably necessary, in the name of City or HH and City, as may be appropriate. Each party
agrees to cooperate with the other in such Contests, short of the payment of money with
respect thereto, except where this Agreement otherwise requires payment. Each party will
endorse such pleadings, checks and other documents as will be appropriate to carry out the
purposes of this Article 25.
Article 26.
Purchase Option and City Conveyance Right
26.1 Grant. Notwithstanding any other provision in this Agreement to the contrary,
HH shall have the option to purchase the Health Care System Real Property from City at any
time for a purchase price equal to one dollar ($1.00). HH must give City written notice of its
intent to exercise its Purchase Option at least one hundred eighty (180) days prior to the
earlier of the expiration of the Term or the date HH elects to close on the Purchase Option.
Notwithstanding any other provision in this Agreement to the contrary, City shall have the
right to convey to HH all or any separate and discrete portion of the Health Care System Real
Property to HH at any time and for each such transaction, HH shall pay City a purchase price
equal to one dollar ($1.00). City must give HH written notice of its intent to exercise its
conveyance right at least one hundred eighty (180) days prior to the earlier of the expiration
of the Term or the date City elects to close on its conveyance right.
26.2 Title. Upon proper exercise of the Purchase Option by HH, or the City
conveyance right by City, City agrees to convey the Health Care System Real Property or
portion thereof to HH free and clear of all liens and encumbrances, except for the Medical
Office Building Leases, the Hospital Leases, and the Shopping Center Leases that were
assigned to HH as of the Original Effective Date or entered into by HH after the Original
Effective Date, and any other lien or lease created, suffered or granted by HH (or those
claiming by, through or under HH). In connection with exercising the Purchase Option, HH
may, at its expense, obtain a title insurance commitment. If such commitment reflects any
matter affecting title to the Health Care System Real Property that is objectionable to HH
(other than this Agreement and any encumbrances created on or after the date hereof by HH
or those claiming by, through or under HH), then HH may give written notice to City of such
matter. If HH gives City such notice prior to closing, City shall at its expense within sixty
(60) days cause all encumbrances not permitted as provided above to be removed and
corrected of record. If City fails to do so within sixty (60) days, time being of the essence,
HH may at its option: (a) attempt to cause such encumbrances to be removed, or (b) proceed
to close without waiving any rights to damages hereunder. If HH elects alternative (a)
above, closing shall be postponed until the encumbrances in question are removed and, if HH
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US.116746500.11
is unable within a further period of sixty (60) days to cause such encumbrances to be
removed, HH may then elect alternative (b) above. No such postponement shall alter the
purchase price. All costs and expenses incurred by HH in causing or attempting to cause
such encumbrances to be removed, including reasonable attorneys fees, shall be payable by
City if attributable to any fault or action by City.
26.3 Closing. Except as postponed pursuant to Section 26.2, the closing shall take
place at the date, time and place agreed to by City and HH. At the Closing, City and HH
shall execute and deliver such reasonable and customary documents and instruments as may
be necessary or desirable to convey City's interest in the Health Care System Real Property
to HH, as herein provided. This Agreement and all of the terms and provisions hereof shall
remain in full force and effect until the purchase has closed, except as otherwise provided in
this Agreement.
26.4 Effect of Non -Exercise. If HH does not exercise its Purchase Option upon
termination of this Agreement, Article 21 shall apply.
Article 27.
Miscellaneous
27.1 Consent. In any case under this Agreement which requires consent or
approval such consent or approval shall not be unreasonably withheld, conditioned or
delayed unless otherwise specified.
27.2 Relationship of Parties. It is agreed that nothing herein contained is intended
or should be construed in any manner as creating or establishing the relationship of joint
venturers or as constituting HH or any of its employees or agents as the employees or agents
of City, except as otherwise provided herein.
27.3 Miscellaneous. This Agreement shall be governed by the laws of the State of
Minnesota. If any term of this Agreement or any application thereof shall be invalid or
unenforceable, the remainder of this Agreement and any other application of such term shall
not be affected thereby. This Agreement may be changed, waived, discharged or terminated
only by an instrument in writing signed by the then owners of City and HH interests herein.
This Agreement shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. The headings of this Agreement are
for purposes of reference only and shall not limit or define the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which is an original, but
all of which shall constitute one and the same instrument.
27.4 Recording. This Agreement, or a short form of this Agreement, may be
recorded in the real estate records of the Counties in which the Health Care System Real
Property is situated. HH and City agree to cooperate with each other in the preparation and
recordation of any such short form of this Agreement.
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27.5 Non -Delegation and Lack of Control. No provision of this Agreement shall be
construed as a delegation by City to HH of any governmental function of City. Further, HH
and City have determined that the rights of City under this Agreement do not, and are not
intended to, give City direct or indirect control over the conduct of the Health Care System
or its operations.
27.6 Amended and Restated Lease and Agreement. This Amended and Restated
Lease and Agreement amends and restates the Original Agreement (including the First
Amendment) in its entirety as of Amended Effective Date and the parties acknowledge that
the terms of the First Amendment have been satisfied and that such First Amendment has no
further force or effect.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this instrument under
seal as of the day and year first above written.
CITY OF HUTCHINSON
By:
Its:
And by:
STATE OF )
ss.
COUNTY OF )
Its:
The foregoing instrument was acknowledged before me this day of
2018, by and , the
and , respectively, of the City of
Hutchinson, a Minnesota municipal corporation, on behalf of the municipal corporation.
Notary Public
US.116746500.11
HUTCHINSON HEALTH
By:
Its:
And by:
STATE OF
) ss.
COUNTY OF )
Its:
The foregoing instrument was acknowledged before me this day of
2018, by and ,
the and , respectively, of Hutchinson
Health, a Minnesota nonprofit corporation, on behalf of the nonprofit corporation.
Notary Public
US.116746500.11
PARK NICOLLET HEALTH SERVICES
By:
Its:
STATE OF )
ss.
COUNTY OF
The foregoing instrument was acknowledged before me this
2018, by , the
day of
of
Park Nicollet Health Services, a Minnesota nonprofit corporation, on behalf of the nonprofit
corporation.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Phone: (612) 766-7000
US.116746500.11
EXHIBIT A
Legal Description of the Land
Hospital Land:
Medical Office Building Land:
Shopping Center Land:
Dassel Medical Center Land:
Auxiliary Land
Freemont Avenue Land
US.116746500.11
EXHIBIT A
Legal Description of the Land
Hospital Land (which also encompasses Medical Office Building Land):
Beginning at the Northwest corner of the Northwest Quarter of Section 7, Township 116 N.,
Range 29 W. Thence South along the West line of the Northwest Quarter a distance of 633
feet to the point of the beginning of the parcel to be described. Thence, continuing South
along the West line of the Northwest Quarter a distance of 493.5 feet to the westerly
extension of the North Right of Way line of Century Avenue SE. Thence Easterly, along the
north Right of Way line of Century Avenue SE a distance of 1218.3 feet. Thence North, a
distance of 500.2 feet to the centerline of Freemont Avenue SE. Thence West, along the
centerline of Freemont Avenue SE, a distance of 122 1. 1 feet to the point of beginning and
there terminating. Exclusive of existing road right-of-way.
Shopping Center Land:
Lots One (1) and Two (2) in Block One (1) in Cedar Acres Subdivision, according to the plat
thereof on file and of record in the office of the Registrar of Titles, McLeod County,
Minnesota, excepting therefrom the following described tract:
Beginning at the Northwest corner of said Lot 1, thence Easterly, along the North line of said
Lot 1 a distance of 222.71 feet; thence Southerly, deflecting to the right 89 degrees and 18
minutes 43 seconds 200.01 feet to the South line of the North 200.00 feet of said Lot 1;
thence Westerly, along the South line of the North 200.00 feet of Lot 1 a distance of 222.57
feet to the West line of said Lot 1; thence Northerly, along said West line of Lot 1 a distance
of 200.02 feet to the point of beginning.
Dassel Medical Center Land:
Lots 14 & 15, Block 6, Village of Dassel
Lots 16 & 17, Block 6, Village of Dassel
Auxiliary Land
22 feet north of Southern 22 feet 8 inches, Lot 8, Block 49, North Half of City
Regional Eye Land
Lot 8, Block 2, Cedar Acres Subdivision
Snow Removal -Ice Control
by the numbers
FEBRUARY 2018 2017 2016 2015 2014
)ays with operations 15 2 10 9 20
actual snowfall (inches) 13.3 - 9.9 4.4 10.3
average snowfall (inches) 7.2 7.2 7.2 7.2 7.2
Days with below 00 temps
14
- 4
14
21
Actual average high temp
24
40 32
20
17
Actual average low temp
1
22 17
2
(6)
Average high temp
28
28 28
28
28
Average low temp
8
8 8
g
8
-ity employees utilized
18
2 18
17
17
'ontractors utilized
7
- 6
1
8
Fotal personnel hours
759.5
4.0 354.3
240.0
797.8
City equipment units used
25
2 21
24
23
Contractor equipment units used
8
- 6
1
8
Total equipment hours
782.5
4.0 359.3
240.0
837.3
Gallons of fuel used
2,464.4
- 944.9
662.8
2,578.5
,alt brine used (gallons)
3,250.0
- 1,450.0
2,445.0 1,730.0
,and -Salt used (tons)
352.9
- 149.1
288.1 264.5
)e -icing salt used (tons)
17.4
18.9
27.0 -
02/01/17
Sanding
6
Personnel
6
Equip
107.00
340.00
Sand /
De-ice
-6
-
02/02/17
Operators
hours
Equip
hours
Fuel
Salt brine
Salt
salt
High
Low
Precip
Snow
Date
Description
(ea)
(hrs)
(ea)
(hrs)
(gal)
(gal)
(ton)
(ton)
temp (F)
temp (F)
(in.)
6
02/01/17
Sanding
6
21.50
6
21.50
107.00
340.00
46.20
7
-6
-
02/02/17
15
-10
-
-
02/03/17
Plow
12
53.25
12
53.25
138.78
270.00
51.95
19
8
0.05
0.70
02/04/17
Sanding
6
12.50
6
12.50
40.00
280.00
37.35
8
-9
-
-
02/05/17
Sanding/Sidewalks
8
26.50
9
26.50
152.00
70.00
-
17
-7
-
-
02/06/17
Cleanup
11 1
41.25
11
41.25
112.60
-
-
10
-12
-
-
02/07/17
Sanding
7
21.00
7
21.00
80.00
370.00
46.85 6.85
13
-6
-
0.10
02/08/17
16
-3
-
0.20
02/09/17
Sanding
6
13.50
6
13.50
63.00
340.00
31.85 4.05
12
-5
-
02/10/17
13
-7
-
-
02/11/17
23
-5
-
-
02/12/17
12
-7
-
02/13/17
311
6
02/14/17
43
11
02/15/17
34
7
02/16/17
24
-1
-
-
02/17/17
38
13
-
02/18/17
46
14
-
02/19/17
Sanding
5
10.00
5
10.00
42.00
360.00
34.30 6.50
25
17
0.08
1.00
02/20/17
Plow
15
78.25
16
78.25
337.71
390.00
27.00 -
19
0
0.08
0.80
02/21/17
Cleanup
9
31.00
11
31.00
88.50
10.00
-
20
-7
-
-
02/22/171
28
0
0.24
4.00
02/23/17
Plow
18
119.25
21
119.25
445.82
380.00
56.40
27
6
0.07
0.50
02/24/17
Snow removal
18
87.25
20
94.75
190.01
50.00
-
27
-11
0.40
6.00
02/25/17
Plow
15
100.00
16
100.00
310.11
340.00
36.50
31
11
-
02/26/17
Cleanup
17
138.25
21
153.75
356.85
50.00
-
38
3
-
02/27/17
Cleanup
2
6.00
2
6.00
-
-
(15.50)
40
5
-
02/28/17
1
40
it
Month: 14 days below zero; Season: 33 days below zero
FEBRUARY 24 759.50 27 782.50 2,464.38 3,250.00 352.90 17.40 24 1 0.92 13.30
28 8 Avg temp
Averoge month snowfall = 7.20
SEASON TO -DATE NOV--FES) 60 1,712 2,735 5,660 56I0 1,065 105 1.82 26.00
Employee Department Primary role
Nov. 2017 Dec. 2017 Jan. 2018 Feb. 2018 Mar. 2018 Apr. 2018 Total
Burmeister, Jerome
PW -
Operations
Route SW1
28.00
30.00
37.50
95.50
Carter, Randy
PRCE
Hansen Gravel
Schools, PRCE, trails
26.00
28.50
26.00
80.50
Carter, Ron
PRCE
7.00
Schools, PRCE, trails
27.00
29.50
46.50
103.00
Dehn, Pete
PW -
Operations
Route SW2
42.50
41.50
54.00
138.00
Fenske, Bruce
Franek, Cory
PW -
PW -
Operations
Wastewater
Route SE1
Downtown, Snow removal
3.00 30.00
14.50
29.50
18.00
41.75
37.00
104.25
69.50
Hutton, Chris
PRCE
Snow removal
Downtown, Schools, PRCE
21.50
30.25
47.25
99.00
Inselmann, Eric
PW -
Operations
Downtown, Snow removal
25.50
23.25
40.75
89.50
Keller, Matthew
PW -
Wastewater
Downtown E
8.50
16.50
17.25
42.25
Magnusson, Brian
PRCE
Alleys, Schools, trails
9.00
16.00
31.50
1 56.50
Moore, Eric
PW -
Wastewater
Backup operator
1.00
1.00
Muchow, Chad
PW -
Engineering
Backup operator
4.00
Navratil, Jim
PW -
Water
Downtown W
4.25
12.75
16.75
33.75
Olson, John
PW -
Operations
Airport
28.00
19.00
49.50
96.50
Schelitzche, Jay
PRCE
Schools, PRCE, trails
20.00
26.00
22.25
68.25
Schuette, Donovan
PW -
Operations
Airport, Downtown
23.00
27.50
35.75
86.25
Thompson, DeNeil
PW -
Operations
Route NW1
5.00 41.50
38.50
54.00
139.00
Thompson, Mitchell
PW -
Operations
Route NE1
47.25
40.50
59.00
Trnka, James
PW -
Operations
Cul-de-sac, dead ends
3.00 46.50
37.75
45.25
132.50
Wichterman, Ken
PW -
Operations
Downtown route
10.00
18.50
21.50
50.00
Hansen Gravel
Bulldozer
Snow storage sites
Hansen Gravel
Dump truck 206
Snow removal
Hansen Gravel
Dump truck 207
Snow removal
11.50
11.50
Hansen Gravel
Dump truck 208
Snow removal
7.00
7.00
Hansen Gravel
Dump truck 212
Snow removal
11.50
11.50
Hanson - Vasek
Dump truck
Snow removal
11.50
11.50
Jeff Kosek
Large dump truck
Snow removal
11.50
11.50
Juul
I Dump truck 444
Snow removal
11.50
11.50
Juul
I Dump truck 666
Snow removal
11.50
11.50
TOTAL PERSONNEL HOURS 11.00 454.00 487.50 759.50 �� 1,561.25
HOURS
EQUIP p YEAR MAKE DESCRIPTION SNOW ATTACH Nov. 2017 Dec. 2017 Jan. 2018 Feb. 2018 Mar. 2018 Apr. 2018 Total
I lahr Tru Ire
I PARK-221-TK1
E E
Sn wnEnw
I LTK I
2009 Ford
Pickup, 1/2 ton 4x4
Snowplow
26.00 14.00
40.00
2 PARK-664-TK1
LTK
20161 Ford
Pickup, 1 ton 4x4
Snowplow
14.50 2600
40.50
3 STRT-156-TK1
LTK
1999 Ford
ITruck, 1 ton 4x4 w/ dump box
Snowplow
HTK
20031 Mack
4 STRT-170-TK1
LTK
2008 Ford
I Pickup, 1 ton 4x4
Snowplow
9.00 1250
21.50
5 STRT-660-TK1
LTK
_20041 Ford
jPickup, 1 ton 4x4
Snowplow
4.00
4.00
T, L.
1 STRT-115-HTK
HTK
1996 Ford
Trogk,S/A w/ dump box
Snowplow, wing, sander
5.00 10.00
3.50
16.75
35.25
2 STRT-441-HTK
HTK
2005 Ford
Truck, S/A w/ hooklift
Snowplow, wing, sander
37.00
31.75
33.50
102.25
3 STRT-522-HTK
HTK
20031 Mack
Truck, S/A w/ dump box
Snowplow, wing, sander
3.00 42.75
35.00
40,50
121.25
4 5TRT-613-HTK
HTK
1999 Mack
Truck, S/A w/ dump box
Snowplow, wing, sander, underbody
3,00 27.50
30.50
30.75
91.75
6 STRT-781-HTK
HTK
2005 Ford
Truck, S/A w/hooklift
ISnowplow, wing, sander
13.00
27.50
19.00
59.50
7 STRT-812-HTK
HTK
2014 Mack
Truck, S/A w/ dump box
ISnowplow, wing, sander
31.50
24.50
37.00
93.00
8 STRT-894-HTK
121-
HTK
HTK
2007 Frei htliner
Truck, SIA w/ dump box
Snowplow, wing, sander, underbody
28.50
26.50
31.50
86.50
5
HTK
2017 Mack
Truck, S/A w/ dump box
Snowplow, wing. sander
34,00
27.50
46.50
108.00
CLIA er 4 -A.- fA - 1
1 CEMT-412-SKD
SKID
2011 Bobcat
Toolcat
Snowplow, blower
4.50
9.50
8.50
22,50
2 PARK-032-SKD
SKID
2006 Bobcat
Skid steer, 5250
Snowplow, blower
20.00
26.00
22.25
68.25
3 PARK-032-SKD
SKID
2006 Bobcat
Toolcat
Snowplow, blower
9.00
8.00
22.00
39.00
4 PARK-211-SKD
SKID
2009 Bobcat
Skid steer, 5250
Snowplow, blower
21.50
30.25
47.25
99.00
4 STRT-592-SKD
SKID
2017 Bobcat
Skid steer, A770
Snowplow
13.00
27.50
19.00
59.50
T-1- fa na i
I AIRP-055-TRC
TRC
20121 New Holland
Tractor. TV6070
HLA snow wing, snow blower
26.00
19.00
49.50
94.50
3 STRT-390-HEQ
TRC
2006 Trackless
Tractor, MT5
Snow blower, plow
Contractors
Hansen Gravel 207
none
Q STWT-013-TRC
TRC
2016 John Deere
Tractor,612SR
HLA snow wing
7.00
18.25
23.25
48.50
5 STWT-014-TRC
TRC
2016 John Deere
Tractor, 6125R
HLA snow win
12.75
16.50
17.25
46.50
6 STWT-184-TRC
TRC
2016 John Deere
Tractor, 6125R
HLA snow wing
27.00
28.50
43.50
99,00
Wheal Loaders 6 ea.
STRT-447-LDR LDR I 2001 Case Wheel loader, 621C Snowplow, wing 13.50 1 17.50 40.75 1 1 71.7
STRT-750-UDR JUDIR I 2003 Case Wheel loader, 621D 15nowplow, wing 26.00 26.75 40.75 93.5
STRT-969-UDR ILDR I 2003 Case jWheel Loader, 621D ISnowplow, wing 24.00 29.00 46.50 99.5
1 STRT-116-HEQ HEQ 2015 Fair Mf Snowblower Wheel loader mounted 15.00 15.00
2 MCLD-409-HEQ HEQ Backup snow blower McLeod County 8.00 8.00
Snnw 14anlina T-rL,
1 STRT-218-HTK HTK 1 1999 Sterling
Truck, T/A w/ dump box
none
8.00 6.50 23.50
38.00
2 STRT-972-HTK HTK 1997 Mack
Truck, T/A w/ dump box
none
4.50 3.50 4.50
12.50
Contractors
Hansen Gravel 206
none
Contractors
Hansen Gravel 207
none
11.50
11,50
Contractors
Hansen Gravel 208
inone
7.00
7.00
Contractors
Hansen Gravel 212
none
11.50
11.50
Contractors
Hanson & Vasek
none
11.50
11.50
Contractors
Juul Contracting 444
none
11.50
11.50
Contractors
luul Contracting 666
none
11.50
11.50
Contractors
Kosek, Jeff
Inone
11.50
11.50
Contractors
Hansen Gravel Dozer
inone
-
11.00 45400 487.50 78250 - - 1,735.00
HUTCHINSON CITY COUNCIL
ci=v-f�
Request for Board Action
7AL =-ft
Agenda Item: February 2018 Financial and Investment Reports
Department: Finance
LICENSE SECTION
Meeting Date: 3/27/2018
Application Complete N/A
Contact: Andy Reid
Agenda Item Type:
Presenter:
Reviewed by Staff
Governance
Time Requested (Minutes): 0
License Contingency
Attachments: Yes
BACKGROUND/EXPLANATION OFAGENDA ITEM:
For Council review, attached are the February Financial Reports for the general fund
and enterprise funds. Also
attached is the February Investment Report.
Feel free to contact me with any questions. Thank you.
BOARD ACTION REQUESTED:
Fiscal Impact: Funding Source:
FTE Impact: Budget Change: No
Included in current budget: No
PROJECT SECTION:
Total Project Cost:
Total City Cost: Funding Source:
Remaining Cost: $ 0.00 Funding Source:
General Fund
Taxes
Other Taxes
Licenses & Permits
Intergovernmental Revenue
Charges for Services
Miscellaneous Revenues
Transfers -In
Fines & Forfeitures
Capital Contributions
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Transfers -Out
Capital Outlay
NET REVENUE
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
2018 ACTUALS
FEBRUARY YTD
2018 AVAILABLE
BUDGET BALANCE
2017
% BDGT 2017 YTD
USED ACTUAL
2017
BUDGET
2017
% BDGT
USED
-
-
4,925,466
4,925,466
-
-
4,763,796
-
5,726
5,726
305,000
299,274
1.9
4,950
300,000
1.7
25,308
104,084
318,050
213,966
32.7
267,024
283,550
94.2
7,241
21,881
1,555,161
1,533,280
1.4
49,033
1,423,830
3.4
107,317
297,471
2,840,534
2,543,063
10.5
291,709
2,817,291
10.4
28,528
53,244
319,500
266,256
16.7
27,680
339,500
8.2
-
-
2,515,092
2,515,092
-
-
2,292,161
-
5,295
5,295
55,000
49,705
9.6
7,516
55,000
13.7
-
-
25,000
25,000
-
-
25,000
-
179,415
487,700
12,858,803
12,371,103
3.8
647,912
12,300,128
5.3
643,470
986,720
8,657,896
7,671,176
11.4
918,768
8,175,052
11.2
43,807
90,750
878,840
788,090
10.3
70,909
866,545
8.2
86,300
310,675
2,649,777
2,339,102
11.7
269,673
2,596,456
10.4
9,622
63,735
562,290
498,555
11.3
42,747
552,075
7.7
-
-
100,000
100,000
-
-
600,000
-
-
-
10,000
10,000
-
1,720
10,000
17.2
783,199
1,451,880
12, 858, 803
11, 406, 923
11.3
1,303,818
12, 800,128
10.2
(603,784)
(964,180)
-
964,180
(655,906)
(500,000)
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
2018 ACTUALS
FEBRUARY YTD
General Fund Expense by Department
2018 AVAILABLE
BUDGET BALANCE
2017
% BDGT 2017 YTD
USED ACTUAL
2017
BUDGET
2017
% BDGT
USED
Mayor & City Council
3,167
5,024
49,922
44,898
10.1
4,804
49,962
9.6
City Administrator
32,490
50,024
411,990
361,966
12.1
49,571
395,266
12.5
Elections
-
-
23,100
23,100
-
-
6,850
-
Finance Department
22,155
36,791
359,527
322,736
10.2
34,000
355,653
9.6
Motor Vehicle
17,453
27,065
264,832
237,767
10.2
25,799
217,890
11.8
Assessing
-
-
61,131
61,131
-
-
46,496
-
Legal
24,294
34,304
313,858
279,554
10.9
31,818
294,100
10.8
Planning
10,836
15,701
149,212
133,511
10.5
18,949
151,585
12.5
Information Services
41,653
69,822
560,588
490,766
12.5
81,090
535,168
15.2
City Hall Building
8,363
18,170
167,556
149,386
10.8
20,100
173,368
11.6
Police Department
264,228
430,730
3,331,215
2,900,485
12.9
371,929
3,216,585
11.6
Hospital Security
24,428
37,940
311,394
273,454
12.2
38,465
296,977
13.0
Emergency Management
623
3,694
22,180
18,486
16.7
7,034
10,000
70.3
Safety Committee
-
8,663
10,800
2,137
80.2
8,796
10,000
88.0
Fire Department
29,584
37,807
332,858
295,051
11.4
30,548
343,461
8.9
Protective Inspections
13,687
24,105
340,062
315,957
7.1
28,645
236,552
12.1
Engineering
32,821
57,862
457,087
399,225
12.7
54,619
418,877
13.0
Streets &Alleys
58,957
103,266
1,607,983
1,504,717
6.4
107,046
1,548,036
6.9
Park/Recreation Administration
18,341
30,660
260,339
229,679
11.8
37,327
233,898
16.0
Recreation
12,304
28,993
247,593
218,600
11.7
29,360
232,724
12.6
Senior Citizen Center
9,107
13,350
86,779
73,429
15.4
11,264
84,801
13.3
Civic Arena
26,300
69,155
338,878
269,723
20.4
49,704
333,284
14.9
Park Department
70,429
106,567
904,484
797,917
11.8
90,723
879,100
10.3
Recreation Building
16,537
31,117
225,236
194,119
13.8
21,944
211,726
10.4
Events Center
22,006
39,405
253,808
214,403
15.5
33,384
259,478
12.9
Evergreen Building
1,132
3,322
26,650
23,328
12.5
3,967
26,225
15.1
Library
2,627
49,801
216,091
166,290
23.0
6,306
211,842
3.0
Waterpark
776
2,934
398,741
395,807
0.7
6,382
424,753
1.5
Cemetery
6,972
15,383
141,517
126,134
10.9
14,679
132,974
11.0
Airport
920
5,050
113,640
108,590
4.4
6,671
103,679
6.4
Unallocated General Expense
11,008
95,173
869,752
774,579
10.9
78,894
1,358,818
5.8
TOTAL EXPENDITURES
783,199
1,451,880
12,858,803
11,406,923
11.3
1,303,818
12,800,128
10.2
Liquor Fund
Sales
Miscellaneous Revenues
TOTAL REVENUES
Cost of Sales
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Transfers -Out
Capital Outlay
Depreciation Expense
Debt Service
1ri11If_10*/»kiU]III r11:1*1
NET REVENUE
Comments
Liquor Sales Revenue
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
2018 ACTUALS
FEBRUARY YTD
2018 AVAILABLE
BUDGET BALANCE
2017
% BDGT 2017 YTD
USED ACTUAL
2017
BUDGET
2017
% BDGT
USED
399,832
807,623
6,245,000
5,437,377 12.9
768,859
6,123,000 12.6
521
545
4,000
3,455 13.6
571
4,000 14.3
400,353
808,168
6,249,000
5,440,832 12.9
769,430
6,127,000 12.6
294,642
605,744
4,691,290
4,085,546
12.9
586,896
4,591,390
12.8
48,860
75,565
671,021
595,456
11.3
69,266
662,377
10.5
682
2,052
27,750
25,698
7.4
1,653
24,250
6.8
10,262
36,271
225,800
189,529
16.1
30,116
218,550
13.8
-
-
5,850
5,850
-
120
5,850
2.1
-
-
500,000
500,000
-
-
500,000
-
-
-
25,000
25,000
-
-
20,000
-
-
-
85,000
85,000
-
-
80,000
-
-
-
128,045
128,045
-
-
127,635
-
354,446
719,632
6,359,756
5,640,124
11.3
688,050
6,230,052
11.0
45,907
88,536
(110,756)
(199,292)
81,380
(103,052)
Customer Count
Average Sale per Customer $
Gross Margin on Sales
Labor to Sales Ratio
34,103 32,431 5.2%
23.68 $ 23.71 -0.1%
25.0% 24.9%
9.4% 10.7%
February Sales
2018
Year to Date Sales
Change
144,385
2018
2017
Change
Liquor
290,374
277,915
4.5%
Beer
368,483
350,120
5.2%
Wine
133,412
127,160
4.9%
Other
15,354
13,665
12.4%
807,623
768,859
5.0%
Customer Count
Average Sale per Customer $
Gross Margin on Sales
Labor to Sales Ratio
34,103 32,431 5.2%
23.68 $ 23.71 -0.1%
25.0% 24.9%
9.4% 10.7%
February Sales
2018
2017
Change
144,385
138,777
4.0%
180,345
177,953
1.3%
67,012
64,747
3.5%
8,090
7,332
10.3%
399,832
388,809
2.8%
16,798 16,344 2.8%
$ 23.80 $ 23.79 0.1%
23.7% 25.0%
9.0% 10.8%
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
Water Fund
Sales
Sales - Other
Local Sales Tax
Intergovernmental Revenue
Charges for Services
Miscellaneous Revenues
Capital Contributions
TOTAL REVENUES
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Transfers -Out
Capital Outlay
Depreciation Expense
Debt Service
111i11If_10*/»kiU]III r11:1*1
NET of REVENUES & EXPENDITURES
35,457
56,370
478,638
422,268
2017
55,833
461,635
2017
2018 ACTUALS
13,090
2018
AVAILABLE
% BDGT
2017 YTD
2017
% BDGT
FEBRUARY
YTD
BUDGET
BALANCE
USED
ACTUAL
BUDGET
USED
202
7,522
14,700
7,178
51.2
6,821
12,200
55.9
133,297
265,891
1,880,000
1,614,109
14.1
275,593
1,870,000
14.7
40,163
125,849
516,750
390,901
24.4
106,011
514,950
20.6
56,061
55,940
640,000
584,060
8.7
1,841
625,000
0.3
2,103
32,709
55,000
22,291
59.5
31,805
50,000
63.6
4,317
9,852
104,500
94,648
9.4
5,605
92,000
6.1
235,940
490,241
3,196,250
2,706,009
15.3
420,855
3,151,950
13.4
35,457
56,370
478,638
422,268
11.8
55,833
461,635
12.1
7,399
13,090
132,300
119,210
9.9
14,844
126,600
11.7
13,119
41,282
535,960
494,678
7.7
35,620
522,250
6.8
202
7,522
14,700
7,178
51.2
6,821
12,200
55.9
-
-
60,000
60,000
-
-
60,000
-
-
-
350,000
350,000
-
-
250,000
-
-
-
1,100,000
1,100,000
-
-
1,205,000
-
109,502
200,680
1,485,627
1,284,947
13.5
194,921
1,481,305
13.2
165,679
318,943
4,157,225
3,838,282
7.7
308,040
4,118,990
7.5
70,262
171,298
(960,975)
(1,132,273)
112,814
(967,040)
Year to Date Water Sales
Comments
2018
2017
Change
Water Sales Revenue: Residential
175,545
177,118
-0.9%
Commercial
49,190
48,450
1.5%
Industrial
41,156
50,025
-17.7%
Water Sales
265,891
275,593
-3.5%
Base Charge
70,508
69,655
1.2%
WAC Charge
44,048
19,548
125.3%
Other
11,294
16,809
-32.8%
Other Sales
125,849
106,011
18.7%
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
Sewer Fund
Sales
Sales - Other
Local Sales Tax
Intergovernmental Revenue
Licenses & Permits
Charges for Services
Miscellaneous Revenues
Capital Contributions
TOTAL REVENUES
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Transfers -Out
Capital Outlay
Depreciation Expense
Debt Service
TOTAL EXPENDITURES
NET of REVENUES & EXPENDITURES
Comments
Sewer Sales Revenue
2018 ACTUALS
FEBRUARY YTD
2018
BUDGET
AVAILABLE
BALANCE
2017
% BDGT
USED
2017 YTD
ACTUAL
2017
BUDGET
2017
% BDGT
USED
221,985
436,438
2,920,000
2,483,562
14.9
484,144
2,920,000
16.6
34,066
122,014
410,000
287,986
29.8
88,095
410,000
21.5
56,061
55,940
640,000
584,060
8.7
1,841
625,000
0.3
-
5,100
6,500
1,400
78.5
5,100
6,500
78.5
-
-
3,500
3,500
-
-
3,500
-
7,084
13,312
140,000
126,688
9.5
8,909
123,000
7.2
319,196
632,803
4,120,000
3,487,197
15.4
588,089
4,088,000
14.4
52,141
81,155
678,838
597,683
12.0
66,425
655,584
10.1
10,780
19,862
219,700
199,838
9.0
16,665
219,650
7.6
12,837
75,255
800,830
725,575
9.4
98,687
780,450
12.6
3,708
8,659
32,500
23,841
26.6
274
32,500
0.8
-
-
60,000
60,000
-
-
60,000
-
3,970
98,039
650,000
551,961
15.1
52,312
350,000
14.9
-
-
1,450,000
1,450,000
-
-
1,623,000
-
82,216
392,498
1,458,251
1,065,754
26.9
384,986
1,460,650
26.4
165,652
675,467
5,350,119
4,674,652
12.6
619,348
5,181,834
12.0
153,543
(42,663)
(1,230,119)
(1,187,456)
(31,259)
(1,093,834)
Year to Date Sewer Sales
2018
2017
Change
Residential
258,047
262,264
-1.6%
Commercial
71,106
72,540
-2.0%
Industrial - Flow
73,076
(57,855)
-226.3%
Industrial - Violation Surcharges
34,209
207,195
-83.5%
Sewer Sales
436,438
484,144
-9.9%
Base Charge
61,211
60,632
1.0%
SAC Charge
57,891
25,691
125.3%
Other
2,912
1,772
64.4%
Other Sales
122,014
88,095
38.5%
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
Refuse Fund
Sales
Sales - Other
Intergovernmental Revenue
Miscellaneous Revenues
TOTAL REVENUES
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Transfers -Out
Capital Outlay
Depreciation Expense
Debt Service
1ri11If_10*/»kiU]III r11:1*1
NET of REVENUES & EXPENDITURES
2018 ACTUALS
FEBRUARY YTD
2018 AVAILABLE
BUDGET BALANCE
2017
% BDGT 2017 YTD
USED ACTUAL
2017
BUDGET
2017
% BDGT
USED
95,082
190,952
1,154,000
963,048 16.5
188,311
1,151,900 16.3
3,695
7,414
43,550
36,136 17.0
6,643
41,400 16.0
-
-
12,500
12,500 -
-
12,500 -
1,658
3,068
12,500
9,432 24.5
1,815
7,000 25.9
100,434
201,434
1,222,550
1,021,116 16.5
196,769
1,212,800 16.2
11,265
17,504
187,401
169,897
9.3
17,437
188,733
9.2
13,737
14,797
58,400
43,603
25.3
11,793
62,400
18.9
56,700
69,134
736,190
667,056
9.4
68,377
731,550
9.3
-
564
6,500
5,936
8.7
571
5,750
9.9
-
-
55,000
55,000
-
-
805,000
-
-
-
85,000
85,000
-
-
190,374
-
-
-
144,000
144,000
-
-
138,000
-
-
-
-
-
-
(580)
24,261
(2.4)
81,701
102,000
1,272,491
1,170,491
8.0
97,599
2,146,068
4.5
18,733
99,434
(49,941)
(149,375)
99,170
(933,268)
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
2018 ACTUALS
FEBRUARY YTD
2018 AVAILABLE
BUDGET BALANCE
2017
% BDGT 2017 YTD
USED ACTUAL
2017
BUDGET
2017
% BDGT
USED
Compost Fund
103,986
1,316,600
1,212,614
7.9
Sales
99,631 165,890
2,003,975
1,838,085 8.3
288,342 1,991,476 14.5
Charges for Services
- 5
82,500
82,495 0.0
- 58,500 -
Miscellaneous Revenues
2,257 4,303
26,400
22,097 16.3
2,919 7,000 41.7
TOTAL REVENUES
101,888 170,198
2,112,875
1,942,677 8.1
291,261 2,056,976 14.2
Cost of Sales
Inventory Cost Adjustment
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Transfers -Out
Capital Outlay
Depreciation Expense
Debt Service
TOTAL EXPENDITURES
64,465
103,986
1,316,600
1,212,614
7.9
174,020
1,348,002
12.9
(16,255)
(47,804)
(494,200)
(446,396)
9.7
(32,259)
(538,028)
6.0
40,346
68,957
610,345
541,388
11.3
61,363
582,363
10.5
6,176
9,951
65,300
55,349
15.2
8,083
78,626
10.3
11,025
20,623
243,440
222,817
8.5
29,843
231,004
12.9
546
1,159
11,500
10,341
10.1
1,435
14,000
10.2
-
-
110,000
110,000
-
-
110,000
-
-
-
139,227
139,227
-
-
623,000
-
-
-
207,000
207,000
-
-
174,000
-
-
-
87,833
87,833
-
-
-
-
106,304
156,872
2,297,045
2,140,173
6.8
242,485
2,622,967
9.2
(4,416)
13,326
(184,170)
(197,496)
48,776
(565,991)
Year to Date Sales
Comments 2018 2017 Change
Compost Sales Bagged 162,901 281,267 -42.1
77
Bulk 1,091 738 47.9%
Other 1,898 6,338 -70.0%
Total 165,890 288,342 -42.5%
Storm Water Utilit
Sales
Sales - Other
Licenses & Permits
Charges for Services
Miscellaneous Revenues
Capital Contributions
TOTAL REVENUES
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
2017 2017
2018 ACTUALS 2018 AVAILABLE % BDGT 2017 YTD 2017 % BDGT
FEBRUARY YTD BUDGET BALANCE USED ACTUAL BUDGET USED
76,164
150,310
904,600
754,290
16.6
145,526
879,275
16.6
292
481
3,000
2,519
16.0
233
2,200
10.6
170
370
4,000
3,630
9.3
100
1,500
6.7
1,355
2,469
13,750
11,281
18.0
2,663
7,000
38.0
77,980 153,630 925,350 771,720 16.6 148,522 889,975 16.7
Wages & Benefits
21,052
33,025
276,489
243,464
11.9
30,047
256,432
11.7
Supplies
-
95
38,800
38,705
0.2
99
38,800
0.3
Services & Charges
1,296
2,097
165,600
163,503
1.3
7,609
163,600
4.7
Miscellaneous Expenses
760
810
11,250
10,440
7.2
194
11,250
1.7
Transfers -Out
-
-
125,000
125,000
-
-
-
-
CapitalOutlay
-
-
200,000
200,000
-
-
170,000
-
Depreciation Expense
-
-
157,000
157,000
-
-
153,000
-
Debt Service
-
150,508
154,750
4,242
93.5
285,750
160,550
70.2
TOTAL EXPENDITURES
23,108
186,535
1,128,889
942,354
16.5
323,699
953,632
33.9
NET of REVENUES & EXPENDITURES
54,872
(32,905)
(203,539)
(170,634)
(175,178)
(63,657)
HATS Operation
Intergovernmental Revenue
Charges for Services
Miscellaneous Revenues
Transfers -In
TOTAL REVENUES
Wages & Benefits
Supplies
Services & Charges
Miscellaneous Expenses
Capital Outlay
TOTAL EXPENDITURES
Comments
Charges for Services
REVENUE AND EXPENDITURE REPORT for CITY of HUTCHINSON
PERIOD ENDING FEBRUARY 28, 2018
2018 ACTUALS
FEBRUARY YTD
2018 AVAILABLE
BUDGET BALANCE
2017
% BDGT 2017 YTD
USED ACTUAL
2017
BUDGET
2017
% BDGT
USED
7,333
14,667
176,000
161,333 8.3
13,300
162,280 8.2
16,098
38,886
267,500
228,614 14.5
33,374
325,000 10.3
288
537
3,500
2,963 15.4
300
3,500 8.6
-
-
100,000
100,000 -
-
100,000 -
23,720
54,090
547,000
492,910 9.9
46,974
590,780 8.0
2,362
3,743
38,151
34,408 9.8
2,912
39,495 7.4
17,946
51,111
273,650
222,539 18.7
49,536
341,650 14.5
3,228
15,216
157,160
141,944 9.7
19,939
162,000 12.3
-
-
5,600
5,600 -
-
5,600 -
-
-
76,612
76,612 -
-
42,035 -
23,536
70,071
551,173
481,102 12.7
72,387
590,780 12.3
184
(15,981)
(4,173)
11,808
(25,413)
-
The main activity in this category is the sale of fuel to City departments, the State, County and Hutchinson Utilities.
Supplies The main activity in this category is the cost of fuel for the fueling system.
Oppenheimer & Co. Inc.
OkPPENHEME 85 Brad Street STATEMENT OF
New York N10004
(212) 668-8000 0 ACCOUNT
Transacts Business on All Principal Exchanges
News and Information
ADVANTAGE BANK DEPOSIT PROGRAM NOTICE: In accordance with the Terms and Conditions
of the Advantage Bank Deposit Program, the composition of our Deposit Bank List is subject to
change over time. First Choice Bank [Cerritos, CA], Fremont Bank [Fremont, CA] and USAmeriBank
[Clearwater, FL] are no longer participating Deposit Banks. In the coming weeks or months, we may
amend the Deposit Bank List to include one or more of the following banks: Beal Bank USA [Las
Vegas, NV]; City National Bank of Florida [Miami, FL]; First Western Bank and Trust [Minot, ND];
Wells Fargo Bank, National Association [Sioux Falls, SD]. To determine the Deposit Bank List in
effect at any time, please contact your Financial Advisor or visit our website at www.opco.com/ABD.
As always, kindly notify your Financial Advisor if you wish to designate any Deposit Bank(s) as
ineligible to receive your funds.
Portfolio Summary
This
Period
02/28/18
Mutual Funds
$4,915,203.33
Government Agency Bonds
2,451,675.00
Municipal Bonds
5,472,057.60
Certificates of Deposit
8,944,814.19
Cash Account Balance
416.16
Previous
Period
01/31/18
$4,635,499.00
2,459,250.00
5,487,828.40
9,219,963.07
0.02
Estimated
Annual Income
$59,734.46
48, 500.00
130,200.40
160,713.50
Total Asset Value $21,784,166.28 $21,802,540.49 $399,148.36
Net Value of Accrued Interest $70,628.92 $71,616.05
Total Asset Value does not include Direct Investments, Accrued Interest or unpriced securities.
Cash Activity Summary
Openinq Cash Balance $0.02
Net Buy and Sell Transactions -519,492.24
Net Miscellaneous Credits/Debits 488,399.41
Net Income Activity 31,508.97
Closina Cash Balance $416.16
Account Number: D25-5019707
For the Period: 02/01/18 - 02/28/18
Tax ED Number: ON FILE
Last Statement: 01/31/18
Page 1 of 11
CITY OF HUTCHINSON MINNESOTA
III HASSAN ST SE
HUTCHINSON MN 55350-2522
Financial Advisor
SULLIVAN/SULLIVAN
X2J
(800) 258-3387
Internet Address: www.opco.com
Income Summary
Reportable
Advantage Bank Dep Interest
Corporate Interest
Municipal Interest
Government Interest
Dividends
Office Serving Your Account
50 SOUTH SIXTH STREET
SUITE 1300
NIINNEAPOLIS, MN 55402
This Period
$0.02
7,934.36
13,362.50
5,000.00
5,212.09
Year to Date
$0.05
14,128.30
13,362.50
20,500.00
11,746.96
Total Reportable $31,508.97 $59,737.81
PPENHEI,IEI
TOTAL POSITIONS
Original Face Value
Current Face Value
Est Annual Income
$17,511,000.00
$17,511,000.00
$346,613.90
PORTFOLIO OVERVIEW
Multiple Portfolios
report as of 3/1/18
POSITIONS INCLUDED IN PORTFOLIO ANALYSIS
Estimated Portfolio Totals
Estimated Portfolio Averages
Includes all positions with recognized CUSIP, quantity and market price on report date
Original Face: the original dollar value at issuance
Current Face: the dollar value after the current factor is applied
Includes all positions with recognized CUSIP, quantity, market price and derived calculations on report date.
Coupon and Market Price weighted by Current Face Value, all others weighted by Market Value.
Please see the last page of this report for detail.
Page 2 of 42
Original Face Value
$17,511,000.00
Coupon
1.98%
Valid Positions
51
Current Face Value
$17,511,000.00
Maturity
2.92 yrs
Exceptions
0
Market Value
$17,264,000.79
Effective Maturity
2.66 yrs
Total Positions
51
Accrued Interest
$74,304.50
Modified Duration
2.52
Includes all positions with recognized CUSIP and valid quantity provided
Total Market Value
$17,338,305.29
Yield to Maturity
2.55
Please see exception report for positions not included in reports.
Yield to Worst
2.49%
POSITIONS W/ MARKET PRICE
Positions
51 of 51
Market Price
98.59
Priced Orig. Face Value
$17,511,000.00
Rating
Priced Current Face Value
$17,511,000.00
a
a
a
Priced Positions
51 of 51
Priced Market Principal
$17,264,000.79
Average Coupon
1.98%
Average Price
98.59
Includes all positions with recognized CUSIP, quantity and market price on report date
Original Face: the original dollar value at issuance
Current Face: the dollar value after the current factor is applied
Includes all positions with recognized CUSIP, quantity, market price and derived calculations on report date.
Coupon and Market Price weighted by Current Face Value, all others weighted by Market Value.
Please see the last page of this report for detail.
Page 2 of 42
I 1V 1: 1'�J. 1'!11,
PORTFOLIO SUMMARY - CURRENT FACE VALUE WEIGHTED - ALL SECURITY TYPES
Multiple
Portfolios
report as of 3/1/18
PORTFOLIO SUMMARY
HOLDINGS BY SECURITY TYPE
Portfolio Totals
Fed Exempt Fed Taxable
Total
Positions Face 10001
%Face
Current Face Value
$17,511,000
$17,511,000
Agency
4 $2,500.0
14.3%
Positions
51
51 of 51
Asset Backed
-
-
Accrued Interest
$74,304
$74,304
CD
39 $9,451.0
54.0%
Est Annual Income
$346,614
$346,614
CEF
-
-
CMO
* Portfolio Average
Corp
- -
-
Avg Coupon Rate
1.979%
1.979%
Muni
8 $5,560.0
31.8%
Avg Maturity
2.9yrs
2.9yrs
Pass Thru
-
-
Preferred
Treas
-
-
Total
51 $17,511.0
100.0%
* Current Face Value -weighted.
For Avg Maturity calculations, perpetual securities assume 40 yrs
* Current Face Value -weighted
PORTFOLIO RATING SUMMARY
RATING DISTRIBUTION
**Rating
Positions Face 10001
% Face
AAA
6 $3,500.0
20.0%
3 AAA
20
11
AA 4 $2,000.0 11.4%
> AA
A
2 $2,560.0
14.6%
u
U
BAA
-
-
.LL. A
15
Below BAA
-
-
BAA
NR
39 $9,451.0
54.0%
0
M
Total
51 $17,511.0
100.0%
i.i
C Below
a)
BAA
L
a
NR
0 30 20
30
40
50
60
** Best of Short/Long term equivalent
Moody's or Standard & Poor's Rating. Current Face Value
-weighted.
Best of Short/Long
term equivalent
Moody's or Standard
& Poor's Rating.
Current Face
Value
- weighted.
Please see the last page of this report for detail.
Page 4 of 42
PORTFOLIO SUMMARY - CURRENT FACE VALUE WEIGHTED - ALL SECURITY TYPES
Multiple Portfolios
report as of 3/1/18
28
24
20
U 16
Q
a 12
0
8
4
0
1
Current Face Value -weighted.
MATURITY EXPOSURE
Q
MATURITY SCHEDULE
Year
Face (0001
% Year Face (0001
2018
$1,465.0
8.4% 2032 -
2019
$4,162.0
23.8% 2033
2020
$3,265.0
18.6% 2034
2021
$2,470.0
14.1% 2035
2022
$4,664.0
26.6% 2036
2023
$245.0
1.4% 2037
2024
$1,000.0
5.7% 2038
2025
$240.0
1.4% 2039
2026
-
- 2040
2027
$9,496
2041
2028
Muni:Non AMT
2042+
2029
-
Perpetual
2030
- -
-
2031
-
Muni:Subj AMT
28
24
20
U 16
Q
a 12
0
8
4
0
1
Current Face Value -weighted.
MATURITY EXPOSURE
Q
Reflects extended cash flow estimates assuming portfolio composition as of report date. Please refer to Definitions for more complete explanation.
Please see the last page of this report for detail.
Page 5 of 42
ESTIMATED COUPON CASH FLOW SUMMARY
Jan
Feb Mar
ADr
Mav Jun
Jul
Aug Seo
Oct
Nov Dec
Total
Agency
$15,500
$5,000 -
$3,750
- -
$15,500
$5,000 -
$3,750
- -
$48,500
CD
$7,008
$12,007 $16,813
$9,496
$23,308 $15,325
$7,008
$12,007 $16,813
$9,496
$23,308 $15,325
$167,914
Muni:Non AMT
-
- -
-
- -
-
- -
-
- -
-
Muni:Subj AMT
-
-
-
-
-
-
-
-
-
Muni:Taxable
$23,000
$13,363 -
$7,095
$21,643 -
$23,000
$13,363 -
$7,095
$21,643 -
$130,200
Total
$45,508
$30,370 $16,813
$20,341
$44,950 $15,325
$45,508
$30,370 $16,813
$20,341
$44,950 $15,325
$346,614
Reflects extended cash flow estimates assuming portfolio composition as of report date. Please refer to Definitions for more complete explanation.
Please see the last page of this report for detail.
Page 5 of 42
PPEIHEIEI PORTFOLIO SUMMARY - MARKET VALUE WEIGHTED - ALL SECURITY TYPES
Multiple Portfolios
report as of 3/1/18
PORTFOLIO SUMMARY
Portfolio Totals Fed Exempt
Fed Taxable
Total
Priced Current Face
$17,511,000
$17,511,000
Positions
51
51 of 51
Market Value
$17,264,001
$17,264,001
Accrued Interest
$74,304
$74,304
Total Market Value
$17,338,305
$17,338,305
Est Annual Income
$346,614
$346,614
Portfolio Averages
■ Treas
0.0%
** Coupon Rate
1.979%
1.979%
Maturity
2.9yrs
2.9yrs
Effective Maturity
2.7yrs
2.7yrs
Modified Duration
2.5
2.5
Yield To Maturity
2.55%
2.55%
Yield To Worst
2.49%
2.49%
** Market Price
98.589
98.589
** Par Value wtd, other avgs Mkt Value wtd. Incl only positions with
mkt value & calcs on report date.
For perpetual securities avg calcs, Final Maturity assume 40 yrs, Yield to Maturity uses strip yield.
PORTFOLIO RATING SUMMARY
R
Includes only positions with market value & calculations on report date. Market Value -weighted.
POSITIONS BY SECURITY TYPE
❑ AAA
19.7%
❑ AA
11.4%
❑ A
14.8%
❑ BAA
0.0%
❑ Below BAA
0.00/0
❑ NR
54.1%
Total:
100.00/0
Includes only positions with market value & calculations on report date. Market Value -weighted.
POSITIONS BY SECURITY TYPE
Agency SCD
■ Agency
14.2%
■ Asset Backed
0.0%
■ CD
54.1%
■ CEF
0.0%
■ CMO
0.0%
Corp
0.0%
■ Muni
31.7%
Pass Thru
0.0%
■ Preferred
0.0%
■ Treas
0.0%
Total:
100.0%
Muni
Includes only positions with market price & calculations on report date. Market Value -weighted.
- 911jV„r���������, �
100
90
80
70
60
x 50
0 40
30
20
10
0
20 b
Includes only positions with market price & calculations on report date. Market Value -weighted.
Please see the last page of this report for detail.
Page 6 of 42
7
)EPENHEIMEP PORTFOLIO SUMMARY - MARKET VALUE WEIGHTED - ALL SECURITY TYPES
MATURITY EXPOSURE
28
24
20
Y 16
12
0
8
4
0
'>0 '>0 nL" rk, rk, f 15 vl fv, rk,'V' L1 M0 V' 30 3+y3ti33 3N 3h 3(0 3130 30 a0 a'y,yx Jai
ip,p pO P;yO,yO,yO,yO,yO,yO,yO,yO,yO,yO,yO,yO,yO,yO,pO p,pO p,y0,10�0 Q�w
Q
2�
Includes only positions with market price & calculations on report date. Market Value -weighted.
DURATION EXPOSURE
32
28
24
20
Y
16
° 12
8
4
0
�ti3 ah X01 00i -011, 11, ah X01 00i o -P 15 ah (01 O �i x
O,Oy,Ov, 3' O�,O',0o,01,00, Off, 0, �' r'r 4r, �h''�O'4r o' �' �' IV IV IV IV IV "k30
O O O O O O O O O O 'Y 'Y 'Y 'Y 'Y 'Y 'Y 'Y 'Y 'Y '1• 'L 'L 'L 'L 'L 'L 'L 'L
Includes only positions with market price & calculations on report date. Market Value -weighted.
Multiple Portfolios
report as of 3/1/18
Please see the last page of this report for detail.
Page 7 of 42
PORTFOLIO EXPOSURE
Maturity
Effective Maturity
Duration to Worst
Average:
2.92yrs
Average: 2.66yrs
Average:
2.52
Year $ Mkt %Mkt
$ Mkt % Mkt
Year $ Mkt % Mkt
2018
$1,466,939 8.5%
$1,712,586
9.9% 00-01
$3,965,632
22.9%
2019
$4,165,893 24.0%
$4,906,777
28.3% 01-02
$3,138,505
18.1%
2020
$3,236,147 18.7%
$3,476,900
20.1% 02-03
$3,237,852
18.7%
2021
$2,432,209 14.0%
$1,933,428
11.2% 03-04
$5,064,405
29.2%
2022
$4,588,501 26.5%
$4,100,752
23.7% 04-05
$724,049
4.2%
2023
$241,238 1.4%
$241,238
1.4% 05-06
$1,207,862
7.0%
2024
$966,624 5.6%
$966,624
5.6% 06-07
-
2025
$240,753 1.4%
-
- 07-08
2026
- -
08-09
2027
09-10
2028
10-11
2029
11-12
2030
12-13
2031
13-14
2032
14-15
2033
15-16
2034
16-17
2035
17-18
2036
18-19
2037
19-20
2038
20-21
2039
21-22
2040
22-23
2041
23-24
2042+
24-25
Perpet
25-26
26-27
27-28
-
28-29
30+
-
Avg life used in
Effective Maturity for principal
pay -downs.
Includes only
positions with market price
& calculations on report date.
Market Value -weighted.
For Avg Maturity calculations, perpetual securities assume 40 yrs.
Please see the last page of this report for detail.
Page 7 of 42
PPENHEIMF_
PORTFOLIO POSITION DETAIL
Multiple Portfolios
report as of 3/1/18
Page 1 of 3
A Type
St
Qty
Cpn
Maturity
Mdy S&P
% Mkt
Duration
Acq Cost
Acq Yid
$ Acq Cost
Mkt Price
Accrued Int
Security Description
C CUSIP
Insurer
Convexity
Acq Date
Mkt Yid
$ Adj Cost
Mkt $ Value
Unreal Gn/Ls
MERRICK BK SOUTH JORDAN UTAH
B CD
245
0.900
05/10/18
NR
NR
1.42%
0.18
$100.00
0.900
$245,000
99.94
$139
Conditional Puts - Death of holder - Restrict
59013JNV7
0.00
05/09/17
1.254
$245,000
$244,843
($157)
KEY BK NATL ASSN OHIO
B CD
245
1.000
05/11/18
NR
NR
1.42%
0.18
$100.00
1.000
$245,000
99.93
$765
Conditional Puts - Death of holder - Restrict
49306SWN2
0.00
05/09/17
1.362
$245,000
$244,836
($164)
CONNECTONE BANK
B CD
245
1.000
05/14/18
NR
NR
1.42%
0.19
$100.00
1.000
$245,000
99.93
$134
Conditional Puts - Death of holder
20786ABM6
0.00
05/09/17
1.371
$245,000
$244,826
($174)
BANK LEUMI USA NEW YORK N Y
B CD
245
1.250
06/22/18
NR
NR
1.42%
0.30
$100.00
1.249
$245,000
99.90
$613
Conditional Puts - Death of holder
063248GE2
0.00
05/09/17
1.579
$245,003
$244,757
($245)
BANK INDIA NEW YORK BRH
B CD
245
1.500
09/12/18
NR
NR
1.42%
0.52
$100.00
1.500
$245,000
99.91
$1,732
Conditional Puts - Death of holder - Restrict
06279H2Q5
0.01
09/14/17
1.671
$245,000
$244,767
($233)
ENERBANK USA SALT LAKE CITY UTAH
B CD
240
1.350
10/04/18
NR
NR
1.39%
0.58
$100.00
1.350
$240,000
99.80
$9
Conditional Puts - Death of holder - Restrict
29266NVE4
0.00
05/09/17
1.696
$240,000
$239,518
($482)
CONNECTICUT ST TAXABLE GO BDS
B Muni -Taxable
CT
2,000
2.300
01/15/19
Al
A+
11.58%
0.85
$100.05
2.250
$2,001,040
99.94
$9,456
TAXABLE - Material Events
20772KAA7
0.01
12/21/17
2.364
$2,000,820
$1,998,880
($1,940)
MAIN STR BK CORP WHEELING WV
B CD
245
1.450
02/14/19
NR
NR
1.41%
0.93
$100.00
1.450
$245,000
99.56
$779
Conditional Puts - Death of holder
56034WAP6
0.01
05/09/17
1.915
$245,000
$243,932
($1,068)
WORLDS FOREMOST BK SYDNEY NEB
A CD
200
1.300
05/28/19
NR
NR
1.15%
1.22
$100.00
1.300
$200,000
98.94
$50
Conditional Puts - Death of holder
981571CM2
0.02
05/26/16
2.177
$200,000
$197,874
($2,126)
RIVERSIDE CALIF CMNTY COLLEGEDIST
B Muni -Taxable
CA
500
2.345
08/01/19
Aa2
AA
2.89%
1.37
$101.50
1.657
$507,485
99.88
$1,107
TAXABLE - Material Events
76886PFA6
0.03
05/09/17
2.431
$504,755
$499,405
($5,350)
AMERICAN EXPRESS FSB
B CD
247
2.150
11/13/19
NR
NR
1.43%
1.64
$100.00
2.150
$247,000
99.65
$1,630
Conditional Puts - Death of holder - Restrict
02587CCR9
0.04
05/09/17
2.360
$247,000
$246,136
($865)
CIT BK SALT LAKE CITY UTAH
B CD
240
2.100
11/13/19
NR
NR
1.39%
1.64
$100.00
2.100
$240,000
99.74
$1,547
Conditional Puts - Death of holder - Restrict
17284C3N2
0.04
05/09/17
2.254
$240,000
$239,383
($617)
BMW BANK OF NORTH AMERICA - UT
B CD
245
1.550
12/16/19
NR
NR
1.40%
1.74
$100.00
1.550
$245,000
98.69
$843
Conditional Puts - Death of holder - Restrict
05580AFT6
0.04
05/09/17
2.300
$245,000
$241,800
($3,200)
TBK BK SSB DALLAS TEX
B CD
245
1.600
12/16/19
NR
NR
1.40%
1.74
$100.00
1.596
$245,000
98.78
$870
Callable 06/18@100 -Conditional Puts - Dea
87219RBC7
0.04
05/09/17
2.298
$245,016
$242,021
($2,995)
BARCLAYS BANK DELAWARE
B CD
240
2.050
12/17/19
NR
NR
1.39%
1.74
$100.00
2.049
$240,000
99.64
$1,051
Conditional Puts - Death of holder
06740KJC2
0.04
05/09/17
2.256
$240,008
$239,131
($877)
SALLIE MAE BK SALT LAKE CITY UT
B CD
245
1.750
03/09/20
NR
NR
1.40%
1.94
$100.00
1.749
$245,000
98.75
$2,091
Conditional Puts - Death of holder - Restrict
795450ZT5
0.05
05/09/17
2.391
$245,022
$241,930
($3,092)
CONNECTICUT ST FOR PREVIOUSISSUES
B Muni -Taxable
CT
560
2.534
04/15/20
Al
A+
3.21%
2.02
$100.92
2.140
$565,124
99.05
$5,518
TAXABLE - Material Events
20772JEK4
0.05
11/21/17
3.003
$564,519
$554,658
($9,862)
MASSACHUSETTS ST GO BDS
B Muni -Taxable
MA
500
2.090
05/01/20
Aal
AA
2.87%
2.08
$100.00
2.090
$499,995
98.98
$3,599
TAXABLE - Material Events
57582P2T6
0.05
05/09/17
2.580
$499,995
$494,890
($5,105)
MB FINL BK N A CHICAGO ILL
B CD
245
1.300
05/11/20
NR
NR
1.39%
2.15
$100.00
1.300
$245,000
98.19
$192
Conditional Puts - Death of holder - Restrict
55266CRK4
0.05
05/09/17
2.148
$245,000
$240,568
($4,432)
CENTENNIAL BK CONWAY ARK
B CD
245
1.300
05/20/20
NR
NR
1.39%
2.17
$100.00
1.300
$245,000
98.06
$113
Conditional Puts - Death of holder
15135KBA8
0.05
05/09/17
2.201
$245,000
$240,242
($4,758)
THIRD FED SVGS & LN ASSN OF CLEVEL
B CD
245
1.900
09/15/20
NR
NR
1.40%
2.43
$100.00
1.900
$245,000
98.69
$2,181
Conditional Puts - Death of holder - Restrict
88413QBQO
0.07
09/15/17
2.438
$245,000
$241,778
($3,222)
CAPITAL ONE, NATIONAL ASSOCIATION
B CD
245
1.400
09/21/20
NR
NR
1.38%
2.46
$100.00
1.400
$245,000
97.10
$1,551
Conditional Puts - Death of holder
14042RCA7
0.07
05/09/17
2.581
$245,000
$237,897
($71103)
Please see the last page of this report for detail.
Page 37 of 42
Multiple Portfolios POSITION DETAIL as of 03/01/2018 Page 2 of 3
Security Description
A Type St
C CUSIP
Qty
Cpn
Maturity
Mdy S&P
Insurer
% Mkt
Duration
Convexity
Acq Cost
Acq Date
Acq Yid
Mkt Yid
$ Acq Cost
$ Adj Cost
Mkt Price
Mkt $ Value
Accrued Int
Unreal Gn/Ls
WEBBANK
B CD
245
2.000
09/28/20
NR
NR
1.40%
2.49
$100.00
2.000
$245,000
98.90
$67
Callable 03/18@100 -Conditional Puts - Dea
947547JR7
0.07
09/28/17
2.443
$245,000
$242,298
($2,702)
WEX BK MIDVALE UTAH
B CD
245
2.000
10/19/20
NR
NR
1.40%
2.52
$100.00
2.000
$245,000
98.87
$1,853
Conditional Puts - Death of holder - Restrict
92937CGB8
0.08
10/18/17
2.447
$245,000
$242,227
($2,773)
FIRST BUSINESS BK MADISON WIS
B CD
245
1.400
11/13/20
NR
NR
1.38%
2.60
$100.00
1.400
$245,000
97.26
$1,052
Conditional Puts - Death of holder
31938QR89
0.08
05/09/17
2.454
$245,000
$238,294
($6,706)
CAPITAL ONE BK USA NATL ASSN GLEN
B CD
245
2.050
12/29/20
NR
NR
1.40%
2.71
$100.00
2.049
$245,000
98.87
$908
Conditional Puts - Death of holder
14042OS43
0.09
05/09/17
2.465
$245,011
$242,239
($2,772)
MORGAN STANLEY BANK NA
B CD
245
2.500
02/01/21
NR
NR
1.42%
2.78
$100.00
2.500
$245,000
100.08
$537
Conditional Puts - Death of holder
61747MJ36
0.09
02/01/18
2.472
$245,000
$245,189
$189
COMENITY CAP BK SALT LAKE CITY UTA
B CD
245
1.600
06/07/21
NR
NR
1.38%
3.16
$100.00
1.600
$245,000
97.14
$290
Conditional Puts - Death of holder - Restrict
20033AQP4
0.10
05/09/17
2.514
$245,000
$237,995
($7,005)
COMMUNITY BK PASADENA CALIF
B CD
245
1.550
06/15/21
NR
NR
1.38%
3.19
$100.00
1.550
$245,000
97.11
$187
Conditional Puts - Death of holder - Restrict
203507BA5
0.11
05/09/17
2.467
$245,000
$237,924
($7,076)
EAST BOSTON SVGS BK BOSTON MA
B CD
245
1.500
06/23/21
NR
NR
1.37%
3.18
$100.00
1.500
$245,000
96.78
$725
Conditional Puts - Death of holder
27113PBEO
0.12
05/09/17
2.521
$245,000
$237,109
($7,891)
FEDERAL HOME LN MTG CORP CALL 2%
B Agency
500
2.000
07/26/21
Aaa
AA+
2.83%
3.25
$100.00
2.000
$500,000
97.60
$1,000
Callable 04/18@100
3134GBYJ5
0.12
07/26/17
2.743
$500,000
$488,010
($11,990)
FEDERAL HOME LOAN MORTGAGE CORP
B Agency
500
1.500
10/28/21
Aaa
AA+
2.87%
1.61
$100.00
1.000
$500,000
98.99
$2,583
Callable 04/18@100 - Multi -Step Coupon
3134GASK1
0.03
05/09/17
2.428
$500,000
$494,930
($5,070)
FOCUS BK CHARLESTON MO
B CD
245
2.100
11/24/21
NR
NR
1.40%
3.53
$100.00
2.100
$245,000
98.34
$1,424
Conditional Puts - Death of holder
34415LAN1
0.15
11/24/17
2.569
$245,000
$240,935
($4,065)
MIZRAHI TEFAHOT BANK, LTD
B CD
245
1.750
11/30/21
NR
NR
1.41%
1.46
$100.00
1.247
$245,000
99.31
$59
Callable 05/18@100 - Multi -Step Coupon -Co
606857Q78
0.03
05/09/17
2.298
$245,000
$243,312
($1,688)
STATE BK INDIA NEW YORK N Y
B CD
247
2.350
01/26/22
NR
NR
1.42%
3.68
$100.00
2.349
$247,000
99.12
$604
Conditional Puts - Death of holder - Restrict
8562845Z3
0.16
05/09/17
2.589
$247,030
$244,814
($2,216)
GOLDMAN SACHS BK USA NEW YORK
B CD
247
2.300
03/08/22
NR
NR
1.41%
3.76
$100.00
2.299
$247,000
98.85
$2,770
Conditional Puts - Death of holder
38148PGX9
0.17
05/09/17
2.605
$247,032
$244,152
($2,880)
COMENITY BK WILMINGTON DE
A CD
200
2.300
03/29/22
NR
NR
1.14%
3.87
$100.00
2.300
$200,000
98.79
$63
Conditional Puts - Death of holder
20036DXN2
0.16
03/29/17
2.614
$200,000
$197,580
($2,420)
SYNCHRONY BK RETAIL CTF DEP PROGR
B CD
245
2.400
04/07/22
NR
NR
1.41%
3.83
$100.00
2.400
$245,000
99.16
$2,400
Conditional Puts - Death of holder - Restrict
87164XPZ3
0.17
05/09/17
2.618
$245,000
$242,937
($2,063)
MARYSVILLE MICH PUB SCHS DIST GO U
B Muni -Taxable MI
500
2.317
05/01/22
Aa1
2.83%
3.90
$98.85
2.565
$494,230
97.67
$3,990
TAXABLE - Material Events
574446GV6
0.18
05/09/17
2.917
$494,230
$488,335
($5,895)
NEW YORK N Y CITY TRANSITIONAL FIN A
B Muni -Taxable NY
500
1.650
05/01/22
Aa1
AAA
2.75%
3.95
$99.43
1.771
$497,125
95.03
$2,842
Make Whole Call Only - Make Whole Call Exp
64971 WJ35
0.18
05/09/17
2.928
$497,125
$475,160
($21,965)
JP MORGAN CHASE BANK NA
B CD
245
1.250
05/31/22
NR
NR
1.40%
3.13
$100.00
1.243
$245,000
98.49
$797
Callable 05/18@100 - Multi -Step Coupon -Co
48125Y21_7
0.12
05/09/17
2.115
$245,000
$241,305
($3,695)
FEDERAL HOME LN MTG CORP CALL STE
B Agency
1,000
2.100
07/27/22
Aaa
AA+
5.68%
3.71
$100.00
2.100
$1,000,000
98.00
$2,042
Callable 04/18@100 - Multi -Step Coupon
3134GBYN6
0.16
07/27/17
2.731
$1,000,000
$979,950
($20,050)
AMERICAN EXPRESS CENTURIAN BK CTF
B CD
245
2.350
08/08/22
NR
NR
1.39%
4.16
$100.00
2.350
$245,000
98.08
$394
Conditional Puts - Death of holder - Restrict
02587DV47
0.20
08/08/17
2.814
$245,000
$240,289
($4,711)
FEDERAL HOME LOAN MORTGAGE CORP
B Agency
500
2.000
08/22/22
2.83%
3.78
$100.00
2.000
$500,000
97.76
$278
Callable 05/18@100 - Multi -Step Coupon
3134GBB27
0.17
08/22/17
2.782
$500,000
$488,785
($11,215)
ALLEGIANCE BK TEX HOUSTON ACQUIRE
B CD
245
2.200
11/03/22
NR
NR
1.39%
4.42
$100.00
2.200
$245,000
97.75
$30
Conditional Puts - Death of holder - Restrict
01748DAY2
0.21
11/03/17
2.713
$245,000
$239,490($5L510
Please see the last page of this report for detail.
Page 38 of 42
Multiple Portfolios
POSITION DETAIL as of 03/01/2018 Page 3 of 3
*See glossary for ACCT legend
Please see the last page of this report for detail.
Page 39 of 42
A Type St
Qty
Cpn
Maturity
Mdy S&P
% Mkt
Duration
Acq Cost
Acq Yid
$ Acq Cost
Mkt Price
Accrued Int
Security Description
C CUSIP
Insurer
Convexity
Acq Date
Mkt Yid
$ Adj Cost
Mkt $ Value
Unreal Gn/Ls
DISCOVER BK GREENWOOD DEL
B CD
245
2.450
11/18/22
NR NR
1.40%
4.38
$100.00
2.450
$245,000
98.81
$1,760
Conditional Puts - Death of holder
254672WU8
0.22
05/09/17
2.720
$245,000
$242,087
($2,913)
WELLS FARGO BANK NA 84 MO
B CD
245
1.650
11/23/22
NR NR
1.42%
0.71
$100.00
1.650
$245,000
99.80
$1,130
Callable 11/18@100 - Multi -Step Coupon -Co
94986TWE3
0.01
05/09/17
1.924
$245,000
$244,517
($483)
LIVE OAK BANKING COMPANY WILMINGT
B CD
245
2.500
12/13/23
NR NR
1.40%
5.36
$100.00
2.500
$245,000
98.44
$67
Conditional Puts - Death of holder
538036CZ5
0.31
12/13/17
2.793
$245,000
$241,171
($3,829)
COMMERCE CALIF CMNTY DEV COMMN S
B Muni -Taxable CA
500
3.000
08/01/24
AA
2.78%
5.74
$105.32
2.200
$526,595
95.84
$1,417
DID - TAXABLE - Material Events -AGMC, in
20056UAV6
AGMC
0.38
05/09/17
3.735
$523,770
$479,215
($44,555)
NEW YORK N Y CITY TRANSITIONAL FIN A
B Muni -Taxable NY
500
2.600
11/01/24
Aa1 AAA
2.79%
5.99
$97.35
2.998
$486,750
96.30
$4,478
Callable 11/22@100 -TAXABLE -Material Ev
64971QJ38
0.41
05/09/17
3.221
$486,750
$481,515
($5,235)
HSBC BANK USA, NATIONAL ASSOCIATIO
B CD
240
2.250
03/11/25
NR NR
1.38%
1.94
$100.00
2.249
$240,000
99.24
$2,589
Callable 03/20@100 - Multi -Step Coupon -Co
40434ASB6
0.05
05/09/17
2.641
$240,000
$238,164
($1,836)
*See glossary for ACCT legend
Please see the last page of this report for detail.
Page 39 of 42
Public Arts Commission
Meeting Minutes—January 11, 2018, 4:00-5:00
Attendance: Haley, Steve, Kay Guest: Alan Stage
1. Alan Stage — Ridgewater College
a. Additional Sculpture Plot
i. College would pay for plot.
ii. Spot outstide art building- visible from Century and 15
iii. Potential lecture series- connect Ridgewater to City and vice versa
iv. Open to looking at spot closer to sign.
v. PAC makes decision on which sculpture goes there.
vi. Ridgewater has insurance (would follow PAC's lead )
1. Steve talk to city about potential.
2. Call For Artists
a. Deadline for submission Jan. 31St
b. February 8t" review submissions
i. Everyone mark your calendars!
3. Poetry Plaza update
a. Steve
i. $ denied.
ii. Discussed possibility of SMAC Grant Match to council when appropriate. $1,000
4. New Members
a. Kay Contact:
i. Becky Whaling, Sandy Hess, Tinea Graham
b. Haley Contact:
i. Janet Meier, Melissa Ovadje
5. Corporate Sponsorships
a. draft letter
b. $500 per plot
6. Gateway Park Mural Signage
a. Steve has meeting with City and will update PAC.
Public Arts Commission
Meeting Minutes - February 8, 2018, 4:00-5:30
Attendance: Haley, Greg, Jon, Kay, Steve, Dolf (ex -officio)
Guest: Tinea Graham (interested board applicant)
1. Approved January 11th Minutes
2. Reviewed 2018 Sculpture Stroll submissions:
a. 17 submissions from 10 artists
b. 4 new artists submitted works
3. Discussion of adding a new pad at Ridgewater College:
a. Board in favor with 4-0 with 1 abstention
b. Steve said council should approve since this would be a change from the original intent
of the sculpture stroll to link the Luce Line to Downtown.
i. Steve will request that this is added to the Feb 13th council agenda
ii. Greg will attend the council meeting
4. Selected the following pieces for the 2018 Sculpture Stroll:
1. "Spirit" by Victor Yepez
2. "Seat of Sound Singularity' by Kelsey Wishik
3. "Crossroads" by Jon Kamrath
4. "Xuberant!" by Craig Snyder
5. "Treasure Tower" by Gail Katz -James
6. "Slices of Heaven" by Craig Gray
7. "Dawn" by Sam Spiczka
8. "Twisted Sister" by Craig Snyder is an optional piece in the event that the Ridgewater
pad is approved.
5. Selected sites for the sculptures:
a. "Spirit" — Historic Church
b. "Seat of Sound Singularity' — Luce Line/Masonic Park (RiverSong area)
c. "Crossroads" — Luce Line/Riverside Park
d. "Xuberant!" — ShopKo
e. "Treasure Tower" — Library Square
f. "Slices of Heaven" — Depot
g. "Dawn" — Luce Line/Pedestrian Bridge
h. "Twisted Sister" — Ridgewater, if approved
Next meeting: March 8th
.Mwo�
HRA
IiUTCHiN50N HOUSING AND
REDEVELOPMENT AUTHCRpTv
Regular Board Meeting Tuesday, February 24, 2018, 7:00 AM
Minutes
CALL TO ORDER: Chair Renee Lynn Johnson Kotlarz called the meeting to order.
Members Present: Gary Forcier, Eileen Henry and Steve Jensen. Staff Present: Jean Ward
and Judy Flemming.
2. CONSIDERATION OF MINUTES OF THE REGULAR BOARD MEETING ON
JANUARY 16, 2018
Gary Forcier moved to approve the Minutes of the regular board meeting as written. Steve
Jensen seconded and the motion carried unanimously.
3. FINANCIAL REPORTS
a. Gary Forcier moved to approve City Center General Fund payments of $13,243.14 for
checks 8912 to 8917. Steve Jensen seconded and the motion carried unanimously.
b. Steve Jensen moved to approve City Center December 31, 2017 financial statements after
YE accounting adjustments. Gary Forcier seconded and the motion carried unanimously.
c. Steve Jensen moved to approve Resolution 92018-2 to void check 1562. Gary Forcier
seconded and the motion carried unanimously.
d. Steve Jensen moved to approve Park Towers operating account payments of $54,835.65
for checks 14196 to 14225 and approval of Park Towers Security Account payments of
$255.75 for check 15£5. Gary Forcier seconded and the motion carried unanimously.
e. FYI: 2017 Park Towers' financial reports unavailable and accountant request to HUD for
30 day extension of REAL submission due to accountant software conversion.
4. PARK TOWERS UPDATE
a. Occupancy Report — 100% occupied.
b. Park Towers' February Newsletter: FYI
c. LED installation complete and Utility Commission rebate submitted.
d. Retirement of Byron Pack, Park Towers maintenance on March 30, 2418. Jean Ward is
looking into different options to present to the Board next month.
5. CONSIDERATION FOR APPROVAL OF SUBORDINATION REQUEST FOR
PAEHLKE LOAN 9 8684-1
Steve Jensen moved to approve the subordination request for Paehlke loan #8684-1. Eileen
Henry seconded and the motion carried unanimously.
6. CONSIDERATION OF 2017 YEAR END REPORTS
Steve Jensen moved to approve the 2017 Year End Report. Gary Forcier seconded and the
motion carried unanimously.
7. COMMUNICATIONS
Jean Ward reviewed the Letter of Inquiry for 141 5"' Avenue NE with the Board.
February 20, 2418 Minutes Page 1 of 2
8. ADJOURNMENT
Steve Jensen moved to adjourn and Gary Forcier seconded. There being no rather business,
Chair Renee Lynn Johnson Kotlarz declared the meeting adjourned.
Recorded by Jean Ward, HRA Executive Director
Gary Forcier, Secretary/Treasurer
February 20, 2018 Minutes Page 2 of 2
MINUTES
HUTCHINSON PLANNING COMMISSION
Tuesday, January 16, 2018
5:30 p.m.
1. CALL TO ORDER 5:30 P.M.
The January 16, 2018 Planning Commission meeting was called to order by Chair Fahey
at 5:30 p.m. Members in bold were present Chair Fahey, Vice Chair Wick,
Commissioner Garberg, Commissioner Wirt, Commissioner Lofdahl, Commissioner
Hantge and Commissioner Forcier. Also present were Dan Jochum, City Planner, Kent
Exner, City Engineer, John Olson, City Public Works, John Paulson, City Environmental
Specialist, Marc Sebora, City Attorney and Andrea Schwartz, City of Hutchinson Permit
Technician
2. PLEDGE OF ALLEGIANCE
3. CONSENT AGENDA
A. CONSIDERATION OF MINUTES DATED October 17, 2017.
Motion by Commissioner Hantge, Second by Commissioner Wick. Motion
approved.
Motion to Approve — Motion to Reject
4. PUBLIC HEARINGS
A. CONSIDERATION OF A SITE PLAN FOR A MULTI -TENANT RETAIL
BUILDING AND VARIANCE TO REDUCE PARKING STALL SIZE IN A
C-4 ZONING DISTRICT, LOCATED AT 1094 HWY 15 S.
Dan Jochum, City Planner addressed the Commission.
Mr. Jochum reviewed the application as outlined in the Commission's packets.
This is the former Kentucky Fried Chicken space. Applicant is requesting site
plan approval for an 8,000 square foot brick efface building with flat roof in a
commercial zone. They are requesting a reduction of the parking stall size from
20 feet in length to 19 feet. The front of the building will face the Mall and the
rear of the building will be to the highway.
There are currently 8 additional parking stalls. Once the Planning Department is
notified of the actual use of the suites an accurate number of stalls needed will be
known. Mr. Jochum is confident that there will be enough.
Minutes
Hutchinson Planning Commission
January 16, 2018
Page 2
Parking/driving circulation will enter from a south entrance and an additional north
entrance will be for exiting the lot/drive through.
A pond will be constructed on site for storm water runoff. This is a low area and
this is proposed to help the issue. There will also be some excavating work along
the highway to help shed water back to the pond area.
The developer will be requesting a permit from MnDOT to remove the trees along
the highway for the site to be more visible. Extra trees will be planted on the site
to mitigate for this.
Chair Fahey questioned how difficult it will be to remove the trees along the
highway?
Commissioner Lofdahl asked if the center row of parking could be placed
diagonal. Mr. Jochum mentioned that it was looked at but the straight parking was
decided best.
What would happen if a restaurant came into the building? Would there be enough
parking?
John Bell, Klodt Inc. answered about the tree removal and looks like things are
already in the works for the tree removal. There is no anticipation for a restaurant
type business. Possibly a sandwich shop type dining would be the most extreme
type of business for needing more parking.
Mr. Jochum explained the answers from the Planning Staff, of practical difficulties
for the request for the variance. The biggest issue is the practical difficulty of
uniqueness. The soil on this property has a very slow filtration so the developer is
planning to have a pond area to help with the filtration. This area will take up
space that was originally planned for more parking.
Planning staff would like the developer must request a right of entry (vs. easement)
from the Mall for the construction, in condition number 3 that the planning staff
has recommended.
Chair Fahey questioned the SAC and WAC charges and what they are for. Mr.
Jochum explained what the charge is for and that the developer will get a credit
for how many units were existing.
John Bell — mentioned all the parking stall will be 9 ft wide vs. 8.5 ft. which is the
City of Hutchinson requirement. The rain garden or storm water pond should
improve the existing conditions of drainage issues. Part of the MNDOT permit
will be to excavate and work on the east side of the lot along the highway, this re-
grading should bring storm water back to the pond.
Minutes
Hutchinson Planning Commission
January 16, 2018
Page 3
Pete Cormorik — McDonalds. Have the developers checked with the mall on
height on outlot buildings? McDonalds was not allowed to build over 18 feet in
height back in 2012. Mr. Cormorik would like the rest of the trees along the
highway removed.
Motion by Commissioner Wick, second by Commissioner Hantge to close hearing
at 6:05 p.m.
Staff recommendations:
1. The landscaped area on the west side of the building, directly adjacent to the building,
shall be reduced in size to 3 feet from 5 feet to make the sidewalk larger to meet ADA
standards.
2. The transformer shall be moved to the east side of the drive-through aisle unless
alternative arrangements can be made with Hutchinson Utilities Commission.
3. If any construction activity encroaches onto property owned by the Hutchinson Mall
an easement right -of -entry will be needed from the owners of the Hutchinson Mall.
4. The proposed building and site improvements shall comply with the standards of the
C-4 district and the Zoning Ordinance, as well as all other City regulations.
5. Any reconstruction of existing infrastructure within City of Hutchinson right-of-way
or easement areas shall be the developer's responsibility, including improvements and
associated costs. This work shall meet all of the City's engineering standards and be
approved by the City.
6. There must be emergency service access around the building that meets the fire code.
Fire hydrants must be located no farther than 400 feet from the building.
7. Exterior refuse collection area must be fully screened.
8. Moving or relocating any utility services will be at the property owner's expense.
9. SAC/WAC charges will be due at the time building permits are issued.
10. A parkland contribution fee will be collected with the building permit.
11. MnDOT must approve any work done in the Highway 15 right -of way.
12. The property owner proposes to use the property in a reasonable manner as a
commercial property with a drive-through.
13. The landowner's problem is unique to the property; in that storm, water management
is not easily accomplished due to the soil types and takes up a larger area than usual,
thus affecting the available space for the parking lot.
14. The request will not alter the essential character of the locality. There are many
commercial properties in this area with drive-through's and the scale of the proposed
building is similar to other buildings in the area. In addition, there are other properties
in the area that are not meeting the parking stall size requirements.
15. The variance is in harmony with the purpose and intent of the ordinance.
16. The variance is consistent with the Comprehensive Plan.
Motion by Commissioner Hantge to approve with 16 staff recommendations listed
above, making note of a change to number 3 to word "Right of Entry" vs.
"Easement". Second by Commissioner Forcier. Motion approved. Item will be
on City Council consent agenda on 01/23/2018.
Motion to close hearing — Motion to approve with staff recommendations — Motion to reject
Minutes
Hutchinson Planning Commission
January 16, 2018
Page 4
5. NEW BUSINESS
6. UNFINISHED BUSINESS
7. COMMUNICATION FROM STAFF
A. Update land development ordinances in 2018 with help of a consultant (this is
something Dan Jochum would like to see)
B. Upcoming Meetings
Dan Jochum noted that we have no applications for the February Planning
Commission meeting at this time.
8. ADJOURNMENT
Motion by Commissioner Wick, Second by Commissioner Wirt to adjourn at 6:12
p.m.