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RESOLUTION R-1819-117: A RESOLUTION APPROVING AMENDMENT NO. TWO TO THE LEASE AGREEMENT BETWEEN THE CITY OF NORMAN, OKLAHOMA, AND NORMAN REGIONAL HOSPITAL AUTHORITY EXTENDING THE LEASE TERM FOR THE NORMAN REGIONAL HOSPITAL PROPERTY UNTIL MARCH 31, 2070.
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BACKGROUND: The first hospital in Norman, the American Legion Memorial Hospital, opened after World War I. In 1943 the hospital closed due to shortages of trained personnel due to the ongoing World War II. After news reports of people losing loved ones who were injured or sick in Norman because of the travel time to Oklahoma City hospitals, the City added charter provisions related to the creation of a Municipal Hospital in 1945. The Municipal Hospital continued to be operated by the City until 1969 on 11.55 acres at 901 N. Porter. In 1969, a public trust was formed to provide for the operation of the hospital by the Norman Municipal Hospital Authority (the “Authority”). Providing for the operation of the hospital via public trust allowed the hospital to take advantage of municipal bond rates for debt without risking City funds.
The Authority has grown its offerings over the years, including purchasing 18 acres adjacent to the Municipal Hospital (now the “Norman Regional Hospital”), acquiring hospital facilities in Moore, and construction of the Healthplex campus. The acute-care facility at the Porter campus is licensed for 219 beds and offers a full range of services. The HealthPlex campus is licensed for 168 beds, features Cardiovascular Services, Spine and Orthopedic Surgery, and Women’s and Children’s Services. Norman Regional was the first in the Oklahoma City - metro area to receive the Chest Pain Accreditation with PCI (Percutaneous Coronary Intervention) from the Society of Cardiovascular Patient Care (SCPC). Norman Regional Health System (“NRHS”) also provides outpatient diagnostic centers, medical transport services, physician services, centers of excellence, durable medical equipment supplies, a primary care network, community wellness service and employer health services. NRHS employs more than 3,000 people and have over 350 physicians credentialed on its Medical Staff.
The Authority, as a public trust, operates separately and independently from the affairs of the City, except that the City, as beneficiary, must approve the issuance of debt, and the Mayor, with the approval of Council, appoints the Board members. Shortly after the Authority was created, the City entered into a lease agreement for the 11.55 acres at 901 N. Porter. The lease agreement was initially for a period of 50 years (March 31, 2020) or to the date all indebtedness incurred by the Authority had been paid. In 1991, the lease agreement was extended in association with the issuance of new bonds. Additional debt was issued in 2016 and 2017.
DISCUSSION: The Authority has requested an extension of the lease of the 11.55 acres at 901 N. Porter for an additional 50 year term or until such later date as all indebtedness of the Authority that is secured by the Hospital or its revenues approved by the City is paid or provision for payment has been made. The previous lease agreement contained similar language related to debt.
Resolution R-1819-117 would approve the amendment to the lease agreement and extend the term of the lease to March 31, 2070, or later depending on debt status. The lease extension was unanimously approved by the Authority’s Board on May 23, 2019.
RECOMMENDATION: Staff recommends approval of Resolution R-1819-117.