Elmbrook board reviews proposed relocation, 10-year lease for employee wellness clinic

Elmbrook School District administrators presented plans to relocate the district’s employee wellness clinic to a larger ground-floor suite on West North Avenue to expand exam capacity and private services, and outlined a draft 10-year, 7-month lease that would begin with seven months of free base rent and recurring 3% annual rent increases.

District leaders said the proposed space would add about 1,000 square feet compared with the clinic’s current site, allow a third provider exam room, dedicated private areas for the wellness coach and a licensed clinical social worker, a larger lab for two medical assistants and a right-of-first-refusal on an adjacent 1,700-square-foot suite to permit future expansion. “There is currently no additional space in the current location for future expansion,” administration said, adding that more than half of employees now consider a clinic provider to be their primary care physician.

Why it matters: Administrators and the board framed the relocation as a response to sharply higher utilization — the district reported a nearly 95% increase in physicals after replacing biometric screenings with complete physical examinations — and as a cost-management tool for the district’s self-funded health plan. The board pressed for financial clarity and legal protections while weighing trade-offs between a favorable lease package and a long firm term.

Key lease and cost terms presented - Lease term: 10 years, 7 months; seven months of free base rent with occupancy projected in mid‑2025 and rent beginning 1/1/2026. - Estimated full monthly base rent and operating share when fully in effect: $6,219 per month. - Current monthly cost at the existing clinic: roughly $3,886.75 per month (administration provided a comparison). - Annual base-rent escalator: 3% per year. - Tenant-improvement (TI) allowance from landlord: approximately $182,000 (reported as part of the lease economics). - Estimated construction/build-out: initial estimates ranged; administration cited an estimated build-out cost near $340,000 with the landlord’s allowance reducing the district’s cash obligation to roughly $208,000 (district staff described that figure as an estimate and said competitive bids are being solicited). - Funding source for district’s share of build-out: Fund 49 (other capital projects), money from a prior property sale; administrators said these funds are not legally restricted and could be used for the build-out.

Board questions and concerns Board members asked whether existing district-owned space had been considered. Administration said building out clinic space inside district facilities would be substantially more expensive (estimates cited were $700,000–$1.3 million more) and raised staff privacy concerns. Several trustees pressed for a termination or shorter-term option in the lease. Administration and the district’s brokers said a termination right would be difficult to negotiate at this stage and, if obtained, would likely carry a substantial penalty equal to unamortized TI costs plus other rent obligations; brokers said landlords typically expect a long firm term for major medical build-outs.

Other negotiated protections discussed - Right of first refusal on adjacent suite: the draft lease would include a right of first refusal to match a bona fide offer on the neighboring 1,700-square-foot vacancy; administration said the landlord typically limits the district to 15 business days to decide but said they will push for 30 days to reflect government decision timelines. - Sublease rights: the lease would permit subleasing; administration said the district could seek a subtenant if the district needed to vacate. - Maintenance and common-area responsibilities: landlord would handle snow removal, exterior upkeep and most building systems; the district would pay in-suite utilities and janitorial services.

Provider, operations and liability Administrators confirmed the clinic is operated by a contracted medical provider (named in a prior contract as Marathon Health) and clinic staff are not district employees. According to administration, professional medical liability rests with the contracted provider; the district pays for clinic operations through the provider contract and the clinic is a component of the district’s self-insured health program.

Funding and accounting questions Board members asked whether the one-time build-out cost should be capitalized across the lease term or treated as a one-time charge out of Fund 49. Administration said Fund 49 (other capital projects) can be used and that the district will discuss with finance and the Finance & Operations committee how to reflect the cost in budget reports; several trustees asked that total health‑care costs presented to the board reflect the build‑out because it directly relates to the district’s health program costs.

Next steps Administration said construction drawings are complete, contractors are being asked to bid and the lease remains under negotiation; staff expect to return the negotiated lease for board action at a subsequent meeting. Trustees asked staff to continue negotiating: to seek a longer right-of-first-refusal window, clarify termination remedies and penalties, and provide a clearer amortization plan showing how the district will treat the one-time build‑out payment in financial statements.

Ending Administration recommended proceeding with the North Avenue option because of lower estimated lifecycle costs, construction efficiencies tied to existing plumbing in the suite and greater employee privacy than in a school building. The board paused further action pending a final lease and an updated financial analysis for formal approval at a future meeting.