Herald JournalHoward Lake-Waverly Herald, Aug. 26, 2002

HL council hesitates with clinic over lending its tax-free bond status

By Lynda Jensen

Months of citizen feedback and the chronic presence of false rumors appeared to wear down the Howard Lake City Council, as council members hesitantly OK'd lending its tax-free status to the Ridgeview Medical Clinic at the council meeting Tuesday.

Lending the tax-free bond status to non profit entities is a common practice for cities that are trying to develop, and was used by the City of Cokato in recent years to help the Cokato Charitable Trust expand its facilities.

The action does not involve taxpayer money directly or indirectly, and has no impact whatsoever on the city's credit rating, which was once again testified by attorney Stephanie Galey of the law firm Faegre and Benson.

The City of Howard Lake may lend its tax free status for projects up to $10 million, with the clinic project being valued at $6,135,600.

Of the sum, $1,135,00 will be used toward the Howard Lake clinic for equipment. The rest is tagged for expansion that was already planned by Ridgeview for its Chanhassen and Delano clinics, before the Howard Lake clinic got underway.

The $10 million figure resets itself each year, and the city currently has no projects in the works that could be dedicated for this purpose, City Administrator Kelly Bahn said.

Bob Stevens, president and CEO of Ridgeview Clinics, praised the council for "going to bat for us," ­ as the city council has done years ago when the clinic was first established, he said.

This did not prevent several council members from voicing strong doubts about the surety of the project, and nearly deciding to table the issue.

The council members requested Ridgeview officials to directly address the public access TV audience a number of times, to make sure that city residents viewing would clearly understand the situation.

Stevens personally assured council members that the project was moving forward, and that the clinic had every intention of expanding into Howard Lake ­ although he could not produce a signed document or other evidence of this, since the bank and clinic are still negotiating.

The negotiations will conclude in 30 to 60 days, he said.

"We are committed to this town," Stevens said. "Howard Lake is a good match."

Mayor Gerry Smith, and council members Don Danford, Tom Kutz, and Shelly Reddemann expressed strong misgivings.

Danford, Kutz, and Reddemann indicated at different times that they wanted something more concrete.

It was also noted that the money will be spent mainly at the clinics in Chanhassen and Delano.

Mayor Gerry Smith indicated that offering the tax-free bond status is freeing more money to be used at the Howard Lake clinic.

Ridgeview did not expect to expand in Howard Lake until two or three years down the road, and so the Howard Lake expansion took it by surprise, Stevens said.

Stevens alluded to the project being a matter of trust between the city and Ridgeview. "It's not signed, sealed, and delivered yet," he said of the agreement. The clinic wanted to do everything properly, he added.

"We didn't want to rush, but details must be worked out," Stevens said.

When it appeared the council would table the subject for two weeks, Ridgeview's financial advisor Tom Mayfield addressed the council with urgency.

Mayfield indicated that delays could derail the whole project ­ with the possibilities of lenders bailing out.

"It would make a serious crimp into our plans," Mayfield said. "The decision you make is an important one."

Mayfield pointed to Stevens, saying that he is well respected in his field, and a man of good faith, who has been honest with the council from the outset.

At the height of the discussion, City Attorney Chuck Paschke addressed the council.

Paschke asked what could be gained by waiting two weeks or possibly longer, which would scuttle a project that has taken years to accomplish, he said.

"We've had excellent assurances from these people," Paschke said, motioning toward Stevens.

"Delaying would put a fly in the ointment of very complex negotiations," Paschke said.

Paschke pointed out the city would lose nothing over lending its tax free bond status, the latter of which was also pointed out by council member John Swanson.

"We should be assisting an existing business anyway," Swanson said.

Full-time doctor to be at Howard Lake and Winsted starting Sept.

During the discussion of tax-free bond status, Stevens indicated that a full-time doctor ­ Dr. Roberta Midwinter ­ plans to expand into full time practice between the Howard Lake and Winsted clinics, starting Sept. 1.

Dr. Midwinter also delivers babies, Stevens said, which is something that is becoming more rare over the years because of malpractice insurance, he said.

Ridgeview is hoping she will also find it suitable to take up residence in the community with her family.

This is very good news, because recruiting a second doctor is easier after the first one is committed, Stevens said.

This will take place before construction of the new building, he said.

Two staffers will be transferred out to equalize the staff at the Chanhassen clinic, nurse Jane Anderson, and Mike Schulenberg, who were both here one day per week, he said.

Internal medicine people will also relocate.

Stevens expressed concern about Ridgeview patients, saying that staff changes are usually hard on them, and is sympathetic to anyone who would be unable to see medical staff they liked. However, he noted that Chanhassen patients would sorely miss Dr. Midwinter.

Stevens also mentioned some delays that caused the negotiations to take longer.

Bahn said that the two entities have actually only been negotiating for a couple of months.

Other than the fact that attorneys were involved, Stevens indicated that the goals of the clinic and bank were different.

"We started at polar opposites," Stevens said.

The bank/clinic complex will probably outgrow its use in 10 years, if the community continues to grow, which is why the clinic did not want to commit to a 20-year term, as the bank wished.

It was also a problem that the clinic would end up not the owner of the building at the end of the term, Stevens said.

The plans call for the bank to build the exterior, and the heating and air conditioning; with the clinic paying for its interior work, Stevens said.

The bank wants to build a thermal heating system, which is not something the clinic is familiar with, Stevens said. "We are still investigating this," he said. Clinics generally need to be warmer in clinic rooms than normal offices, and Ridgeview is uncertain what kind of effect that thermal heating would have yet, he said.

The bank has agreed to allow the clinic to set up its own heating and air conditioning system, probably a rooftop unit.

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