Title
RESOLUTION AUTHORIZING AN AMENDMENT TO AGREEMENTS FOR DESIGN AND CONSTRUCTION OF ROAD AND UTILITY WORK AS PART OF THE DULUTH REGIONAL EXCHANGE DISTRICT TO INCREASE THE TOTAL AMOUNT FROM $10,423,182.78 UP TO $11,179,576.78.
Body
CITY PROPOSAL:
WHEREAS, Resolution No. 19-0575 authorized the city to enter into a development
Agreement with St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East (“Essentia”) for certain road and utility work as part of Project 5 of the Regional Exchange District (“RED”) project pursuant to which the city will reimburse Essentia for costs thereof in an amount not to exceed $5,262,000.00 (the “Phase I Development Agreement”);
WHEREAS, Resolution No. 21-0306 authorized the city to enter into a development
Agreement with St. Mary’s Duluth Clinic Health System d/b/a Essentia Health (“Essentia”) for additional road and utility work as part of Project 5 of the Regional Exchange District project pursuant to which the city will reimburse Essentia for costs thereof in an amount not to exceed $5,161,182.78, as amended by a first amendment that was authorized under Resolution No. 23-0014 (collectively, the “Phase II Development Agreement”);
WHEREAS, the work performed by Essentia under the Phase I Development Agreement and Phase II Development Agreement (collectively, the “Project 5 Agreements”) was funded with State of Minnesota (the “State”) appropriation bond proceeds authorized under the Regional Exchange District legislation, Minnesota Laws 2019, 1st Special Session Chapter 6, Article 10, as amended by Section 1 of Laws of Minnesota 2021, 1st Special Session Chapter 9 (the “Legislation”);
WHEREAS, the actual costs of the road and utility work completed by Essentia under the Project 5 Agreements exceed the amount allocated in the Project 5 Agreements and the Legislation;
WHEREAS, the Legislation provides that, under certain terms and provisions, any unexpended amount for certain RED projects that have been substantially completed may be applied to Project 5;
WHEREAS, Project 3 is anticipated to be completed below the maximum amount allocated to Project 3 in the Legislation and, once completed, the City desires to request permission from the State to roll over unexpended funds from Project 3 into Project 5;
WHEREAS, the city and Essentia desire to amend the Project 5 Agreements to, under the occurrence of certain terms and completion of specific items, increase the total amount to be reimbursed to Essentia by $756,394.00.
NOW, THEREFORE, BE IT RESOLVED, that the proper city officials are hereby authorized to enter into an amendment to the Project 5 Agreements, substantially in the form attached as Exhibit 1, with St. Mary’s Duluth Clinic Health System, dba Essentia Health East, pursuant to which the total amount to be reimbursed to Essentia for certain road and utility work will increase from $10,423,182.78 up to $11,179,576.78 should funds become available; payable from Fund 455 Regional Exchange District.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this resolution is to approve an amendment to two development agreements with St. Mary’s Duluth Clinic Health System d/b/a Essentia Health East (“Essentia”) for certain road and utility work as part of the Regional Exchange District. This project is payable from appropriation bond proceeds authorized as Project 5 pursuant to the Legislation (defined above). Project 5 is described as roadway, utility, and site improvements and capacity upgrades to support medical entity west hospital construction. The City and Essentia entered into two development agreements for Project 5 (one development agreement per each phase of the project). The total amount of the work completed under the two development agreements exceed the maximum amount by $756,394.00, and this amendment provides a mechanism to reimburse Essentia up to $756,394.00 should funds become available.
The Legislation allows that, under certain terms and provisions, any unexpended amount for certain RED projects that have been substantially completed may be applied to Project 5. The City anticipates Project 3 to be substantially completed at a cost less than the maximum amount provided by the Legislation and, if so, will request the State of Minnesota (the “State”) to roll over unexpended funds from Project 3 into Project 5. If approved by the State, the City would-under the sequence of events, terms and conditions described in the attached amendment-reimburse itself for City-funded work associated with Project 5 and then reimburse Essentia for Essentia-funded work in connection with Project 5. The City will only reimburse Essentia after such funds have been provided by the State.