The Chippewa County Board of Commissioners met in Special Session on Friday, April 22, 2011 at 9:00 a.m. in the Circuit Courtroom of the Chippewa County Courthouse.

Present: Commissioners Ted Postula, Don Cooper, Don McLean, George Kinsella, Jim Moore and Chairman Scott Shackleton

Absent: Commissioner Jesse Knoll Also Present: David Jahn, CEO War Memorial Hospital, Kevin Kelchek, CFO War Memorial Hospital, Debbie Sirk, Chuck Leonhardt, Steve Cannello, Scott Brand, Frenchie LaJoie, Deputy Administrator Kelly Church, Administrator Jim German and Diane Cork, County Clerk

Additions/Deletions to the Agenda

Moved by Commissioner McLean, supported by Commissioner Kinsella, to approve the agenda as presented. On a voice vote, the motion carried.

Public Comments

None

New Business

A. Proposed War Memorial Hospital lease

David Jahn, CEO of War Memorial Hospital, explained the proposed amended and restated hospital facilities lease agreement by saying 2 years ago the hospital had 40 million dollars worth of projects they wanted to do with USDA stimulus monies that were available. They went thru the whole process and got down to where they actually had a meeting between committees of the County Board and Hospital Board talking about the lease, the final touches on it, and then the USDA said they no money left. So the project ended.

Just recently, because of the budget crisis at the Federal level, the continuing resolution where they didn’t know whether they were going to have money to operate or not, somebody in the government said we need to give the USDA all the money before they shut down the government so they can get it out during the year. That is when the hospital received a call from the USDA saying that the 22 million dollar project got funded.

It was noted that there will be five projects covered under this 22 million project as follows:

1. $10,000,000 of debt that the hospital currently has will be refinanced thru the USDA.

2. The Emergency Department currently has 9 beds and will be increased to 18-25 beds at a cost of $5,000,000.

3. Three and a half million dollars will help complete the overhead walkway from the parking garage to the hospital.

4. One and a half million dollars for infrastructure changes: boilers, long term care changes, air conditions etc.

5. $800,000 will be used to connect the old hospital structure to the new portion of the hospital.

Kevin Kelchek, hospital CFO, spoke on the securing of the loan thru the USDA and why the lease needed to be updated. The current lease wording reflects the 1997 bond issue and must be current with the USDA requirements and format.

It was noted that this basically wipes out any debt that the hospital currently has. In regard to the financing of this project, there is $3,800,000 that is direct financing from the USDA with a 40 year amortization with a fixed rate of 4.625% or less which payments go back to the USDA.

The $18,000,000 that remains in the $21,000,000 is what is called a guaranteed loan with a partnered bank.

Steve Cannello spoke on the changes that were made in the new proposed lease. He noted that the lease must be specific for this loan and must be extended for the term of the loan application. The new loan will be for 40 years as long as the hospital does not default. The lease is the collateral for the loan. It was noted that nothing can change on the lease without the approval of the County Board.

Extended discussion was held on the appointment of Hospital Board members and changing the number of appointments by the County Commission to 5 and Hospital Board meetings not open to the public.

It was noted that any ancillary building facilities off hospital property belonged solely to the hospital and not the County.

Chuck Leonhardt pointed out that if the Hospital should default on the loan, the County would not be responsible for the loan but could possibly loose the real property as it is collateral for the loan. Mr. Cannello noted that this has been the case with all the Hospital/County lease agreements.

It was moved by Commissioner Postula, supported by Commissioner Moore, to approve the amended and Rested Hospital Facilities Lease Agreement as presented. On a voice vote the motion carried with Commissioner Cooper voting no.

Having completed the agenda items, it was moved by Commissioner Moore, supported by Commissioner Postula, to adjourn. On a voice vote, the motion carried. The Board adjourned at 10:06 a.m.

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Diane S. Cork, Clerk                       Scott Shackleton, Chairman