Cliff Buchan
News Editor

A lawsuit filed in Washington County District Court on Dec. 28 calls to question the lease of the former District Memorial Hospital property by Fairview Health Services and names the city of Forest Lake and Memorial Hospital District as defendants.

The legal action, filed by the Forest Lake Community Association, a non-profit citizen group, will attempt to prevent the Memorial Hospital District from conveying the old hospital property to Fairview.

That transfer is scheduled to take place early this year under the 10-year lease signed by Fairview with the local hospital board in 1995. Fairview last year notified the hospital board of its intent to exercise its lease option to acquire the property in Forest Lake for the nominal fee of $1.

The suit contains a notice of lis pendens that specifies that the object of the action is to prevent conveyance of the property by the hospital district.

FLCA contends that Fairviewís decisions to enter purchase agreements with Duffy Development Corporation, Inc. of Minnetonka and a group representing Lakes International Language Academy, a public charter school, is a default of the purchase agreement.

The citizen group will also argue that the city of Forest Lake did not enforce its ordinances for subdivision and conditional use permit requests and the hospital board is at fault for not enforcing terms of the lease with Fairview and protecting deed covenants that require the property be used for medical or healthcare functions.

The hospital board this fall rejected citizen requests to call a special meeting to review the lease and based on its legal counsel, has disagreed with citizens that the Fairview purchase agreements have resulted in lease default.

Multiple lawsuits

The citizen lawsuit filed last week is the second to land at Forest Lake City Hall.

The city was sued by Duffy and its partner Washington County Human Services, Inc., after the city denied its requests for permits to build a 48-unit affordable housing complex on the grounds of the former hospital campus.

Citizens organized as a result of the Duffy and HSI, Inc. plan but have since expanded their concerns to the school proposal. The Spanish immersion school is in its second year of leasing space in the old hospital and has plans to utilize the entire building for a school housing some 500 students over time.

Richard Pecar, a spokesman for FLCA, said last week the suit will request a judge temporarily block the sale to Fairview and void the two purchase agreements, thus freeing the city from its legal obligations in the Duffy-HSI suit.

At deadline on Tuesday, it was not certain when the suit would go before a judge. The city and hospital district will have 20 days to respond from the date of service. A preliminary hearing court date is yet to be determined.

Forest Lake City Council met in closed session on Wednesday of this week to discuss the Duffy-HSI action but it was not clear if the FLCA suit was to be discussed. The city is represented by the League of Minnesota Cities in the Duffy-HSI suit.

The hospital board is slated to meet at 7:30 p.m., Monday, Jan. 9 at American Legion Post 225, 355. W. Broadway Ave. for a regular meeting. The litigation matter is expected to be considered during a closed session next Monday.

FLCA argues that under Section 1.2(d), the lease forbids Fairview to ìsell, lease, sublease, pledge, assign, mortgage, encumber, give, or otherwise transfer or convey any interest in its leasehold or other rights under this Agreement, or agree to do so, except as permitted herein or as agreed to in writing in advance by the District.î

Based on the deed covenants, FLCA also argues that since the hospital district has no power to use its property for purposes other than providing health care, the city rezoning of the hospital campus as multi-family residential constituted a taking under the U.S. and state constitutions.

The action will seek a declaratory judgment that Fairview is in default of its lease and that the lease itself is null and void.

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Forest Lake Times
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880 SW 15 St.
Forest Lake, MN 55025
651-464-4601
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