Hospital

What caused the City of Amery to part ways with the Condo Association agreement they had with the hospital? In documents obtained by the Amery Free Press through Wisconsin’s Open Records Law, a history is given of the West Campus Condo Association (WCCA) agreement and the financial responsibility of the city and hospital. It also reveals the challenges of maintaining an older building.

According to the association agreement, the city and hospital were updated annually concerning maintenance and replacement costs. The city cites the aging heating, ventilation and air conditioning (HVAC) as a major factor in their decision to leave the agreement. 

The WCCA was formed in 2008 after the city purchased two units from the hospital and the association manages the condos. The association board determines building assessments on an annual basis. The parking lot and surrounding land is under the ownership of Amery Hospital and Clinic (AHC) and the value of the land and parking lots need to be considered if options for a change in ownership would be considered. According to a condo summary, AHC has 64.9% interest in the WCCA, the City of Amery has 35.03% interest. The WCCA Board consists of two members appointed by AHC and one director from the city — the city administrator. 

What follows is a timeline of minutes of the WCCA over the past 17 months.

August 2018-Who will pay for the HVAC?

Present at the meeting were members Debra Rudquist, AHC President/CEO, Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member, Paul Isakson, Mayor of Amery and Jason Luhrs, Chief Financial Officer (CFO).

A discussion took place about the split of the cost for the HVAC project and whether there would be a willingness to split the cost differently with AHC taking on a larger portion of the costs.

It was acknowledged that the bylaws for the WCCA would need to be revised in order to make this change since the HVAC system is considered to be a common element.

Both parties expressed concerns about an investment of this size into the building. Luhrs said he would have an assessment done of the roof and other infrastructure upgrades that might need to be done in the future.

October 2018-Should money be invested into aged building?

Present at the meeting were members Debra Rudquist, AHC President/CEO; Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member and Guests Jason Luhrs, AHC CFO AND VP and Amery’s Mayor, Paul Isakson.

According to WCCA minutes, there were two different totals for the city’s portion of a HVAC replacement; one being $1.25 million and the other was $900,000. Luhrs reported the AHC finance committee and Health Partners finance leadership have discussed the HVAC and whether it makes sense to spend millions of dollars to upgrade versus looking at other options. 

AHC leadership is now working with an architectural firm to develop a “fit plan” and cost estimate for a new building on the AHC campus. Mayor Isakson noted the City of Amery goals are to the grow city/tax basis and would prefer not to spend dollars on an aged building.

December 2018-Would demolishing the building be an option?

Present at the meeting were members Debra Rudquist, AHC President/CEO; Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member and Guests Jason Luhrs, AHC CFO and VP and Amery’s Mayor, Paul Isakson.

According to WCCA minutes, Luhrs reviewed with the association members the cost for replacing the HVAC at the West Campus. Based off the facility carve outs (the amount occupied by both groups) the city’s portion would amount to $970,000; AHC’s cost total would be $2.78 million. Demolition costs were also pursued with the cost to the city being $735,000 and AHC’s $1.1 million.

A comparison chart from minutes showed a Roof Top Unit (RTU) HVAC price of $3,750,700 versus a demolition price of $1,835,000.

Luhrs and Rudquist mentioned senior leaders at AHC are working with an architectural firm to update the Master Facility Plan and there is a discussion regarding the feasibility of moving the current West Campus services to the main campus. 

Following this discussion, Isakson and Moore noted that the City Council would need to have a closed session to discuss the various options and funding. This should take place at their January 2019 meeting. Both the city and AHC representatives agree that it does not seem wise to invest a large amount of money into an aged building. In the meantime, they will continue to temporarily fix issues as they arise. The members also agreed that both parties would need to make a joint decision about the West Campus (WC) building.

Mayor Isakson believed the city council would have a lot of ideas for the campus at their closed session.

March 2019-City of Amery interested in purchasing West Campus

Present at the meeting were members Debra Rudquist, AHC President/CEO; Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member and Guests Jason Luhrs, AHC CFO, Amery’s Mayor, Paul Isakson, Paul Mahler, Counsel for the City of Amery and Nancy Berry, Senior Counsel, Health Partners/AHC.

According to WCCA minutes, Isakson reported the Amery City Council met in closed session in February 2019 to discuss the West Campus HVAC situation and possible alternatives. He said council members were unanimously favorable to purchasing the WC property for a nominal amount versus investing one million dollars in HVAC upgrade. Rudquist clarified that AHC was continuing to keep the information about a possible new building confidential and appreciated the city’s willingness to do the same.

June 4, 2019-Repairs would total $6.35 million over four years

Present at the meeting were members Debra Rudquist, AHC President/CEO; Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member and Guests Jason Luhrs, AHC CFO and Amery’s Mayor, Paul Isakson.

According to WCCA minutes, a facility overview was presented that divided needed projects into four phases. The estimated budget was $6.35 million, with AHC’s portion totaling $4.19 million and the City of Amery total being $2.16 million.

Facility Overview- Phase 1

Estimated Budget: $1.3 million

• Amery Hospital & Clinic: $858K

• City of Amery: $442K

Timeframe:

• Fall 2019 or Spring 2020

Work:

• Roof replacement: $10K

• Humidity controls: $240K

• RTUs; 1, 2, 3, 4: $1.05 million

 

Facility Overview- Phase 2

Estimated Budget:  $1.2 million

• Amery Hospital & Clinic: $792K

• City of Amery: $408K

Timeframe:

• Fall 2020 or Spring 2021

Work:

• Legionella modification to abandoned plumbing: $65K

• Doors, Windows, & Fire Proofing: $195K

• Replace heating and cooling pneumatic controls: $270K

• RTUs; 4, 5, 6, 7, 8, 9: $670K

 

Facility Overview- Phase 3

Estimated Budget:  $1.8 million

• Amery Hospital & Clinic: $1.188 million

• City of Amery: $612K

Timeframe: 

• Fall 2021or Spring 2022

Work:

• RTUs; 8, 9: $135K

• Replace heating and cooling pneumatic controls: $270K

• Replace perimeter fan coil units: $285K

• Steam to hot water conversion: $1.05 million

 

Facility Overview- Phase 4

Estimated Budget:  $2.05 million

  Amery Hospital & Clinic: $1.353 million

• City of Amery: $697K

Timeframe:

• Fall 2022 or Spring 2023

Work:

  Misc. Building Work: $155K

  Replace hot water circulator: $25OK

  Replace emergency generator: $425K

• Sprinkler piping & heads: $520K

• Replace fire alarm system: $700K

Isakson stated that from his perspective, the City Council would have a number of questions about the WC. He discussed other projects the city is committed to which may make it difficult to fund the WC infrastructure projects. He said it would be discussed at a June 5 meeting. He asked whether it would be possible to separate the utilities and HVAC for the city owned units. He discussed options the city might have to fund the WC infrastructure projects if the decision was made to proceed.

Rudquist and Luhrs encouraged the city to bring in experts for their own assessment of the building. They also expressed their interest in working collaboratively with the city.

June 25, 2019-Could the hospital buy out city and lease units back?

Present at the meeting were members Debra Rudquist, AHC President/CEO; Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member and Guests Jason Luhrs, AHC CFO and Amery’s Mayor, Paul Isakson.

According to WCCA minutes, Discussion regarding the need for the association to continue as long as the city and AHC own units in the building. Rudquist said if the city decided to sell its units, the hospital would have first right of refusal and the hospital would need to determine if they want to buy the units back and possibly lease them back to the city for a determined amount of time (as it will take time for the city to vacate the units). The hospital would need to know the city’s exit strategy if planning to sell its units.

Isakson indicated the city might have the option of purchasing the Bremer building to consolidate all city services. He asked if the hospital would consider moving the Fitness Center from downtown to the WC. Rudquist said at this time they have no plans of doing so.

There was discussion about how lease rates or purchase price would be determined noting the city currently owns 30,000 square feet in the building. Luhrs suggested the city should get a valuation for the property it owns and the hospital should do the same to establish fair market value of the space in the event of a purchase or lease.

Luhrs listed alternatives for the city to consider in financing their share of the needed improvements, such as spreading it out over four years as a special assessment versus yearly capital calls. He suggested the city may want to estimate the cost of a new building; the cost of a remodel and the cost of a sale and lease back and review those against the estimated cost of improvements of the WC.

For example, the city is currently paying $35K/year now for the WC general assessment and if the special assessment payments for the WC improvements were spread over four years at approx. $45,000/year, the total of the city’s general and special assessments each year during that time would be approx. $80,000. A new building may run the city easily $2.5 million.

Isakson said there would be a Finance Committee meeting that night. Luhrs said they needed to move fairly soon on the project at the WC and asked if the city could get an answer back to them by late August. The hospital would ideally like to start the work in the spring of 2020. Isakson said he would work with the Finance Committee and Council and have an answer by the end of August. 

September 2019-City offers to vacate

building by Jan. 1, 2020

Present at the meeting were members Debra Rudquist, AHC President/CEO; Kim Moore, City of Amery Administrator, Jim Leadholm, AHC and WCCA Board Member and Guests Jason Luhrs, AHC CFO AND VP, Amery’s Mayor, Paul Isakson, Doug Johnson, chief financial officer and Tim Strohbusch, Amery City Council President.

According to WCCA minutes, Luhrs reported work is proceeding with the general contractor and plan to enter Phase 1 of the HVAC replacement in April or May 2020. Phase 1 cost is approximately $1.5 million.

Discussion proceeded regarding the City of Amery decision-making of their condo ownership and assessments. It was noted by Isakson the city appraisal for their WC condo units is completed. Luhrs said the AHC appraisal was underway but not completed. 

Strohbusch reported the city has the opportunity to purchase a building downtown, where they would house all of their operations under one roof. He also noted the city would vacate the WC condo units by as soon as Jan. 1, 2020 if AHC preferred this. He noted there is no desire by the city to lease the units back for any length of time.

Rudquist noted the units would likely be vacant for at least a couple of years. She noted that there is a possible long-term use for the PT/Rehab/Fitness center, which is out of space but there have been leadership and board concerns about vacating a downtown building. She also stated that AHC’s first choice would be for the city to continue to own their units.

In January 2020, the Amery City Council announced it plans to purchase the Bremer Bank building and consolidate all city services under one roof. AHC made a statement that they have no immediate plans for the units they are gaining from the city. “We’re always exploring our service location options and how we can most efficiently use our spaces to best meet our patients’ needs and give them a great experience when receiving care. At this time, we have no plans to build additional space.

Our discussions with the City of Amery about improvements, including to the HVAC system, needed at the West Campus have been ongoing," said Rudquist. 

Bremer Bank plans to build a new facility in downtown Amery. 

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