Virginia City Council tables Essentia Health lease extension, schedules special meeting

The Virginia City Council on March 11 voted to table consideration of a proposed change to the clinic lease with Essentia Health and directed staff to convene a special meeting to review lease documents and bond paperwork before the lease notice deadline.

Councilors postponed action after a lengthy discussion over which lease and amendments govern the city's rights and whether Essentia's request affects only the renewal notice period. Councilor Johnson moved to table the packet item; the motion carried 4–3 after a roll-call vote.

The item in the meeting packet asked to change only the notice period for renewing the lease. Essentia representatives told the council they were seeking more time to complete negotiations: Sam Stone, administrator for the Virginia Hospital and vice president of operations for the region, said Essentia had asked staff for a three-month extension through June to continue talks, and that Essentia had delivered a proposal in mid-January. "We've been working with city leaders for approximately a year trying to get transparency on numbers so we could get a proposal in front of you," Stone said.

Joshua Moreau, assistant general counsel for Essentia Health, told the council the earliest lease for the building dates to 2005 and that a planned 2018 sublease and second amendment connected to bond refinancing were not fully executed. "There was a refinancing where there was going to be some cost savings along with settlement proceeds and the insurance proceeds to fix the defect in the building," Moreau said. He said one amendment was not signed at the time and that the packet item on the table relates to the April 2005 sublease and its notice terms.

Councilors raised several concerns. Councilor Johnson said she was not comfortable voting without a full review and noted a long record of the issue appearing on meeting agendas. Johnson also asked to have bond compliance and related documents produced. Several councilors pressed for clarity about a roughly $10,000 annual shortfall the city has identified, which staff and Essentia confirmed relates to an unsigned amendment in the 2018 refinancing sequence.

Councilor Buck Schneider, who identified himself in the meeting as an Essentia Health employee, acknowledged the potential for perceived conflict but said he had consulted the city attorney and intended to vote. He explained his position and said he would remain transparent about it.

After the tabling vote passed, the council endorsed setting a special meeting to continue the discussion before the lease notice deadline. Councilors instructed staff to assemble the relevant emails, executed and unsigned lease documents, bond transcripts, and compliance paperwork for review. City Attorney Brian Lindsey told staff he would be available for a meeting earlier in the month but had trial commitments that limit some dates; the council and Essentia representatives agreed to attempt to meet Monday, March 17, at 5:00 p.m., subject to counsel availability.

Council members emphasized the goal of preserving local health services while ensuring the city has a clear record of executed agreements and bond compliance. No lease terms were amended or adopted at the March 11 meeting; formal action was limited to tabling the packet item and scheduling a follow-up meeting.

The council instructed staff to circulate all related documentation to council members and to the city's counsel ahead of the special meeting so that legal and fiscal questions — including the annual $10,000 discrepancy and the status of the 2018 sublease/amendment — can be addressed in detail.