ORTONVILLE CITY COUNCIL
MEETING MINUTES
COUNTY OF BIG STONE,
STATE OF MINNESOTA
SPECIAL MEETING
Ortonville Area
Health Services Building Project
DIALYSIS BUILDING
435 Eastvold Avenue, Ortonville, MN
Tuesday, May 20, 2008
5:00 P.M.
CALL TO ORDER AND ROLL CALL:
Mayor Blair Johnson called
the Special Meeting of the Ortonville City Council to order at 5:00 P.M.
Roll Call was taken with the following Present: Mayor Blair Johnson, Craig
Randleman, Steve Berkner, Mike Dorry, Nick Anderson, John Cunningham.
Absent: Bob Meyer. Staff Present: City Administrator David Lang. Others
Present: OAHS Administrator Rick Ash, Brent Hasslen of Hasslen
Construction, Carolyn Drude of Ehlers & Associates, Inc., OAHS Board
Members: Mary Ann Ulrich, Ronald Thomas, and Marilyn Lindahl.
PROJECT PLAN/DESIGN OVERVIEW:
OAHS
Administrator Rick Ash reviewed a Power Point presentation of the proposed
project. He noted the expectations of patients are changing and the
rebuild will help provide the tools and resources for the staff to meet
those changing expectations. The rebuild will also benefit recruitment and
retention, as well as enhancing safety and quality of care. The current
facility is designed as an inpatient model rather than today’s outpatient
model. The rebuild will also provide for future growth. 25 beds will be
maintained, including 17 private rooms. Clinic admissions and hospital
admissions will be integrated into one area.
LAND/PARKING CONSIDERATIONS:
It is hoped the Methodist Church will be willing to enter
into a long-term lease to provide employee parking. OAHS would improve and
maintain the parking lot, and would hold the church harmless from any
liability. There will also be 57 patient parking spaces adjacent to the
new building. It is intended to provide geothermal heating and cooling
which would have a very favorable payback period estimated at 7 to 8
years.
FINANCING CONSIDERATIONS:
The
OAHS Foundation has committed to raising 10% of the project, or $2.2M.
Current pledges total $1.2M over a period of several years. New debt would
be $18.4M. The total project cost is estimated to be $22.9M.
Carolyn Drude reported the Resolution adopted in May 2001 was unique to
Ortonville. The City Charter includes OAHS in the Utility Department of
the City. All of these enterprise funds are “in this together.” The
Charter requires for each of the last 2 fiscal years net revenues to be at
least 125% of the maximum principal and interest.
Option Two was distributed and discussed. Debt Service
Reserve was explained as having money available to pay principal and
interest should there ever be a shortage.
Ortonville City Council Special Meeting Minutes May 20,
2008 Page 2 of 2
FINANCING CONSIDERATIONS: (cont.)
Option Two coordinates the existing hospital debt with the
new debt so as to minimize the impact upon the other enterprise funds. The
coverage field in the spreadsheet indicates the amount available to cover
debt service. Two times coverage is a good solid number. It is anticipated
the bonds will be paid completely from hospital revenues.
Jim Foster will be obtaining an actual forecast from the
OAHS audit firm Larson Allen for use for the underwriters. Carolyn Drude
proceeded to review the Preliminary Timetable for issuance of the Public
Utility Revenue Warrants of 2008. She recommended the underwriter be
identified about the same time as the construction contract is awarded.
The interest rate advantage of bank qualified bonds is 30
to 40 to 50 basis points, or one-half of one percent interest rate. It is
anticipated the single issue would be split into two separate closings;
one in late 2008, and the second closing in January 2009. Lease Purchase
of office equipment would also count against the bank-qualified limit of
$10M annually. With the IRS $10M bank qualified annual limit, an OAHS bond
issue of $7.953M in 2009 would leave the City with about $2M left for
bonded projects in 2009.
5.a. Resolution Establishing Procedures Relating To
Compliance With Reimbursement Bond Regulations Under The Internal Revenue
Code.
Resolution 08-040, Resolution Establishing Procedures
Relating To Compliance With Reimbursement Bond Regulations Under The
Internal Revenue Code.
Motion by Anderson, second by Berkner
to adopt Resolution 08-040, Resolution Establishing
Procedures Relating To Compliance With Reimbursement Bond Regulations
Under The Internal Revenue Code. Discussion and
questions followed. It was noted it is the City’s intent to have OAHS use
its cash reserve for the project up front, and then retain the right to be
reimbursed once the bond proceeds are received.
Upon roll call vote, the following voted Aye: Berkner,
Cunningham, Randleman, Johnson, Dorry, Anderson. Nay: None.
All in favor. 6-0. MCU. (Motion Carried Unanimously).
It was noted the projected revenue available for new debt
is a coverage of 1.86 times the debt load. When the required coverage of
1.25 times is subtracted, this equals 0.6 or about $1.8M of remaining
bonding capacity for all the enterprise funds combined.
ADJOURNMENT:
Meeting
adjourned by consensus at 6:22 P. M.
All in
favor.
APPROVED:
ATTEST:
_____________________
______________________
Blair
Johnson David
A. Lang
Mayor
Clerk-Administrator
