Item Description:
title
Loan to Hennepin Healthcare Systems, Inc. for capital medical equipment purchases
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Resolution:
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BE IT RESOLVED, pursuant to Minnesota Statutes, Section 383B.916, the County Administrator is authorized to negotiate and finalize a loan agreement with Hennepin Healthcare System, Inc. (HHS) for the purchase of capital equipment in the initial amount of up to $15,000,000 and with a five-year term for repayment including interest; and
BE IT FURTHER RESOLVED, that the County Administrator is delegated the authority to increase the loan from the initial amount of up to $15,000,000 up to a new total amount of $20,000,000, after considering loan repayment performance and the overall financial condition of HHS; and
BE IT FURTHER RESOLVED, that the County Administrator is delegated the authority to extend the duration of the term of the loan from the initial five-year term to an additional five-year term, after considering loan repayment performance and the overall financial condition of HHS; and
BE IT FURTHER RESOLVED, that following review and approval by the County Attorney's Office, the County Administrator is authorized to sign the agreement on behalf of the county, that the Controller is authorized to disburse funds as directed and that the approval of this loan agreement by the Hennepin County Board of Commissioners does not imply any continued lending agreements, disbursements, extensions or modifications of loans for this or any other purpose;
BE IT FURTHER RESOLVED, that the County Board does not provide its approval, as required under Section 3.4 of the HHS Bylaws, for HHS to incur additional debt from any other source.
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Background:
Minn. Stat. § 383B.916 permits the county to finance capital improvements or equipment for Hennepin Healthcare System (HHS), which is a subsidiary of the County. On April 16, 2025, the interim CEO and CFO for HHS together made a formal request to the county for a loan to purchase capital medical equipment for HHS.
If approved by the County Board, the County Administrator will negotiate a formal loan agreement with HHS for an initial term of 5 years to lend cash up to $15,000,000 from the general fund at an interest rate of about 4.0%. That interest rate represents an approximation of what the County would otherwise earn in investment income on those funds. Pursuant to that agreement, HHS may access up to $15M in funds. Principal and interest on the outstanding balance will be paid semi-annually pursuant to the terms of the loan agreement. This board action includes additional delegations that would authorize the County Administrator to increase the amount available, from the initial amount up to $15M to a new total up to $20M, and to extend the repayment term, from the initial five-year term to an additional five-year term, after considering HHS’s repayment performance and overall financial condition.
The fifth resolving clause of this resolution relates to other debts that HHS may seek to incur. The HHS Bylaws require the approval of the County Board for any debt incurrence, excluding “de minimus” (sic) debt. See also Minn. Stat. 383B.906(2) (requiring County Board approval of any HHS bylaws change relating to the County Board’s reserved powers as specified in the bylaws). Because the existing debts of HHS, including obligations related to the HHS Clinic and Specialty Center, already exceed the “de minimus” threshold, any additional debt incurrence by HHS from any outside source, including a private lender, requires approval of the County Board. This Resolution declines to provide such approval, and so HHS would need a separate action of the County Board granting approval before it could incur any such additional debt.
recommendation
Recommendation from County Administrator: Recommend Approval