Cliff Buchan
News Editor

Monday was a night for a procedural move by the Memorial Hospital District board to amend its lease with Fairview Health Services.

But the routine of the procedure evaporated as the governing board spent most of its meeting fielding questions from residents who are concerned with future use of the DMH campus and have fears Fairview will sell the property at below market rates.

With four members in attendance, the board voted unanimously to amend the 1995 Fairview lease. The amendment includes a more specific clause stipulating that any excess proceeds from a sale of the former hospital building and grounds is utilized by the Fairview Foundation with the area Fairview region which includes the Memorial Hospital District.

Fairview took over operation of District Memorial Hospital on Jan. 1, 1996 and ran the facility as a hospital until Fairview Lakes Regional Medical Center opened in early 1998. Under terms of the lease signed by the local hospital board, Fairview can take possession of the DMH site on Jan. 1, 2006.

Fairview has notified the hospital board it will do so and has preliminary plans in place to sell the campus land and building to two different groups.

Duffy Development of Minnetonka wants the land to build a 48-unit affordable housing complex while a second group is negotiating to buy the building and lease it to Lakes International Language Academy, a public charter school that is now renting space in the building.

Mondayís lease review meeting at American Legion Post 225 was meant as a housekeeping chore.

Board Chair Michael Perreault of Hugo said the hospital board was intent on making sure excess proceeds on any sale of former DMH assets stayed in the hospital region and used to enhance health care in the area.

The lease amendment sets a benchmark of $643,201 as the amount for determining excess proceeds. The amount includes $400,000 in DMH bond retirement and other expenses assumed by Fairview under terms of the 1995 lease.

The excess proceeds agreement will be effective for four years under terms of the hospital board action on Monday.

According to city of Forest Lake records, Duffy has provided details of the terms of the purchase agreement for the land parcel. It calls for a purchase price of $600,000.

No numbers have been released by the group proposing to buy the old hospital building or Fairview.

Questions raised

Mondayís meeting was a chance for city residents to ask questions about the site and Fairviewís future plans for the property.

The questions followed a detailed history review of the DMH-Fairview affiliation presented by John Miller, hospital board attorney.

While Miller focused on the Fairview involvement and an earlier failed attempt for DMH to partner with HealthSpan, some of the questions touched on the hospital history from the 1950s and 1960s.

Resident Brian Tilton said District Memorial Hospital was built with taxpayer dollars on land donated in part by its former owners who wanted the site used for medical purposes. Tilton said deed covenants on the land that call for the land to be used for medical purposes should be honored.

Miller said there is some legal thought that the deed restrictions from 1960 are no longer valid.

Tilton, however, argued that Fairview has utilized the property and has profited from the use.

There were also questions regarding the established market value of the property and Fairview steps to reach purchase agreements for building and land prior to having final ownership.

Clyde McCaskey, a city resident, said Washington County has set the assessed valuation of the building and land at $7 million.

The hospital board was also told that another city resident contends that Fairview is in default of its lease agreement by moving ahead with purchase agreements. The state attorney general has been contacted, the resident said.

Perreault acknowledged receipt of the complaint.

Miller did not dispute the Fairview steps but said it was not unusual for such preliminary purchase agreements in real estate deals that carry a contingency. In this case, the contingency would be Fairviewís final step to acquire the property on Jan. 1 for a nominal fee.

Dawn Nelson and Art Jensen, two southeast area residents, also questioned how the public could be assured that any excess proceeds would be utilized as stipulated by Fairview.

Value gained

Hospital board members and the district attorney stressed that Fairview has been a good partner for the community.

Miller said when the HealthSpan plans collapsed in June of 1993 after a legal challenge and a restraining order, talks with Fairview developed when it became clear Fairview and Chisago Lakes Health Service would become one. A new and larger hospital in the area would have crippled DMH, he said.

Perreault said Fairview has made a ìhuge financial commitmentî to the hospital district.

In addition to the bond debt that the district held in 1995, Perreault said the Fairview lease has saved hospital district property taxpayers some $3 million over the past nine years when no property taxes have been assessed.

Dan Anderson, Fairview president, spoke Monday and said Fairviewís initial commitment to the region was $40 million for the hospital in Wyoming.

For the future, Anderson said Fairview is planning a $22 million hospital expansion next year. A new medical clinic is being built in Hugo and a 10,000 square foot clinic expansion will take place in Lino Lakes.

He added that the Wyoming hospital now has 70 doctors on staff in Wyoming and has added 11 new physicians this year alone.

Anderson said Fairviewís performance has resulted in the facility winning two major national awards in 2005 for excellence in performance. Fairview was one of 37 hospitals in the nation to garner awards.

ìFor the things we do (in Wyoming), we do them very well,î Anderson said.

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Forest Lake Times
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880 SW 15 St.
Forest Lake, MN 55025
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