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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. pve NW 27 ca ti 9� a yF ::IPJ 1 st Ave NE 3 3 �n y ■ 4 E N .b z a ... vu shington Ave E I.IFrary Squaw• park a st Ave SW �s[ �a SW N ■N d Ave SW 2nd Ave SE v - ■N m 3rd Avv SW 3rd A. CheckAn 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 SECOND 20 \\ 1 J ESTATES \ 14 1 �G�QT DDIT101\11 >wr w.Fp =M � �..wnar M Kwi,a1 .a�R wM r 4 ewrwl w aw. a aaealr w I I I I la rl Mt'- "- M1nr wrµ. eyowN POND GABBERS ADDITION TO FAIRWAY ESTATES PRELIMINARY PLAT DESCRIPTiOY tats 16 cnd 17. Slack 1, FAIRWAY ESTATES SECOND ADOMON. according to the recorded plot 0h.rFp1, HolAad Canty. Yfnne.otu. AREA + 25565 Squcn Feet OWNI 8 Jowl, d1 Div TracyDE ELOPM work & Lynne Gams ,412 Heritage Awn.. N.,20225 J.6S.e Mt. NeRohln.on. L nM ao SS350 silw Lala. Arreleeoto 55ul PRESM ZONING — R-1 Lw RE LIfulo HES DIA01MONAL RE12UMENM IlYamam lot Ano - 104" SRaen F.H F—t - .1tt fwt Mninern lu 'AidV, - " f"tMee - b fee! 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Prawq anrm]rxen n w any n r�nin.a.. vf.r�r.aen. -< ° m..ly a»�.w, en nn —ere er 20L— ;Mk. mi. ovn .aa avwaw rr N. cld ca�.ar of rerteNmve, uleear,w I �., „T e.,. ai zr� aed lrr.br crnN.n [enWcnca rho oil newrmanta oa aa[ fwtn M Wnnymn 9[amlra. Sr[he 'AI.O]. Sated. x- Nmd. Mhal: flb •drnwlHrcGw- NP dnk°nM emn dw aw lrmarir mlend mlr _ aq ar 7�— taantr Ir.eevar, rkWed rewnn ulnn..nv. r Narny urwr uwt wa veYrvr y. _ nrrr awn prW mr woe err[rN.d drtrierd as ml. owE paha tnl. — Dor a m ,warx/rnvnnrr. Nn.ee ca°aq, � Cry v! xa_, yr _ rarocr �r w oPcuewrx ud,.ad cwah. r+wn.ww raa evNrre Nr armr tv a wrvryW and wow v. °IABElt4 imniroN TO rAftmAr Esi m wa de amnq le.varav, �l.ad uwntr. ulee.am. == =� rv,w.r MI, wit frr oro+wv. oea 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. -10- 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. -ll- 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. -12- 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. - 13 - 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. -14- 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. - 15 - 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. -16- 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. -17- 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. - is- 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. -19- 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. -20- 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. -22- 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 -23- 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. -25- 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. -26- 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. -29- 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. -30- 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. -32- 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 -33 - 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. -34- 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. -35 - 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. -36- 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 -ii- 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 -1v- 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 -v- 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 -vi- 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 -vii- 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 -1- 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 -2- 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. -3- 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. 4- 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, -5- 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 -6- 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. -7- 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. -8- 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. -9- 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 -10- 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 -11- US.116746500.11 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 -12- US.116746500.11 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 -13- US.116746500.11 (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. -14- US.116746500.11 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. -15- US.116746500.11 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. -16- US.116746500.11 (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. -17- US.116746500.11 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. -18- US.116746500.11 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, -19- US.116746500.11 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: -20- US.116746500.11 (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 -21- US.116746500.11 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: -22- US.116746500.11 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. -23- US.116746500.11 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 -24- 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. -25- US.116746500.11 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] -26- US.116746500.11 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 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.] 16746500.11- 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 US.] 16746500.11- 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 US.116746500.11 AMENDED AND RESTATED LEASE AND AGREEMENT between CITY OF HUTCHINSON and HUTCHINSON HEALTH CARE April 1.2018 Dated. Deeeffimbef 31, 2007 US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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 US. 116746500.03 US. 116746500.07 US. 116746500.09 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 -ii- US. 116746500.03 US. 116746500.07 US. 116746500.09 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 -iii- US. 116746500.03 US. 116746500.07 US. 116746500.09 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 -iv- US. 116746500.03 US. 116746500.07 US. 116746500.09 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 -v- US. 116746500.03 US. 116746500.07 US. 116746500.09 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 -vi- US.116746500.03 US. 116746500.07 US. 116746500.09 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 -vii- US. 116746500.03 US. 116746500.07 US. 116746500.09 AMENDED AND RESTATEDE*hibit B &ieltided Assets -1- US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -1- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 �r.�ersterr��sersn .__•_. @11111 -2- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -3- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. 4 - US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -5- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -6- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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; -7- US.116746500.03 US. 116746500.07 US. 1 16746500.094� (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. -8- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -9- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -10- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -10- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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, -12- US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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_ -13- US. 116746500.03 US. 116746500.07 US. 1 16746500.094� -- -13- US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -14- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -15- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 • - MW A - .-E.M.-WO --- --- -16- US.116746500.03 US. 116746500.07 US. 1 16746500.094� (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 -17- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -18- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -18- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -19- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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: -20- US.116746500.03 US. 116746500.07 US. 1 16746500.094� (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 -21- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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, -22- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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, -22- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -23- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -24- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -25- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -26- US.116746500.03 US. 116746500.07 US. 1 16746500.094� -27- US.116746500.03 US. 116746500.07 US. 1 16746500.094� - -- - -- -- - - -- - - - - - ---- - -- - - - -111111 - - - - - - - - -- - - - - - - - - -- - - - - - --- - - - - -27- US.116746500.03 US. 116746500.07 US. 1 16746500.094� ---- - - - - -- - - - - - --- - - - - - -- - - -- - - - -- --- - - - wmnvm Oil -00'.• . - - - - - - - - - - - - - - - - - - - - - - I I I I -I I I I I I WX 11 M Ml 01111111W. IM1011 LM -27- US.116746500.03 US. 116746500.07 US. 1 16746500.094� FIT m IP.0 . !�r�:r_e!ea n:rrss 6111 llilllW ..WIN MUMMKI •.._ •. • FIT m IP.0 . !�r�:r_e!ea n:rrss 6111 llilllW •.._ •. • -28- US.116746500.03 US. 116746500.07 US. 1 16746500.094� -111011111 6111 llilllW -28- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -29- US.116746500.03 US. 116746500.07 US. 1 16746500.094� NOW MIN 11 �N .111 1111�11WIIW--- - - - - - - - - -- -- - - - - - -- - - 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 -29- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. ._ i� - -30- US.116746500.03 US. 116746500.07 US. 1 16746500.094� .•....... ...... 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 NZ NOW WNWA (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 -31- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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� • '- M;; • - .•• 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 -32- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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.. -33- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -34- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -35- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 -36- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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. -37- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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] -38- US.116746500.03 US. 116746500.07 US. 1 16746500.094� -39- US.116746500.03 US. 116746500.07 US. 1 16746500.094� 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 US. 116746500.03 US. 116746500.07 US. 1 16746500.094� 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 US. 116746500.03 US. 116746500.07 US. 116746500.09a� 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 US. 116746500.03 US. 116746500.07 US. 116746500.09a� EXHIBIT A Legal Description of the Land Hospital Land: Medical Office Building Land: Shopping Center Land: Dassel Medical Center Land: US. 116746500.01 US. 116746500.01 US. 116746500.01 US.116746500.0904 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 6 W,/ - gt't'� dms.us.49117792.08 CITY OF HUTCHINSON Its l ►_ . - . " Its And by A'-. Its _ CQ 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 -1v- US.116746500.11 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 -v- US.116746500.11 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 -v1- 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 -vii- 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 -1- 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, 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 -2- US.116746500.11 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. -3- 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. 1.19 Hazardous Material. Any substance, chemical, waste or material that is or becomes regulated under applicable law because of its toxicity, infectiousness, radioactivity, -4- US.116746500.11 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; -5- US.116746500.11 (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; -6- US.116746500.11 (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 -7- US.116746500.11 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. -8- 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. -9- 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 -10- 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 -11- US.116746500.11 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 -12- US.116746500.11 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 -13- US.116746500.11 (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. -14- US.116746500.11 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. -15- US.116746500.11 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. -16- US.116746500.11 (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 -17- US.116746500.11 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. -18- US.116746500.11 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, -19- US.116746500.11 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: -20- US.116746500.11 (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 -21- US.116746500.11 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: -22- US.116746500.11 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. -23- US.116746500.11 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 -24- 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. -25- US.116746500.11 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] -26- US.116746500.11 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.