City Council Meeting Date: April 21, 2026
To: Mayor and Members of Council
From: Ben Martig, City Administrator
Title
Consider Resolution Approving a Purchase Agreement for the Acquisition of a Medical Clinic, a Taxable Subordinate Hospital Revenue Note, Series 2026C in Connection with Financing Such Acquisition, and Amended and Restated Indenture of Trust and Related Documents.
Body
Action Requested:
The Northfield City Council Approves Resolution Approving a Purchase Agreement for the Acquisition of a Medical Clinic, a Taxable Subordinate Hospital Revenue Note, Series 2026C in Connection with Financing Such Acquisition, and Amended and Restated Indenture of Trust and Related Documents.
Summary Report:
The Northfield Hospital & Clinics is recommending the City Council approve the Purchase of Property at 1400 Jefferson Road. The NH+C board of directors voted on the agreement at an April 13, 2026 special meeting and unanimously approved the resolution.
City Code Section 2-307 Subd. 4, as stated below, requires approval from the City Council related to purchase.
Sec. 2-307. - Authority reserved to city council.
The city council shall have the exclusive authority to:
(1) Construct any additional hospitals or additions to the present hospitals, convalescent homes, nursing homes and related medical facilities including medical clinics.
(2) Construct any appurtenant structures.
(3) Acquire any real property for any hospital or related use.
(4) Buy, sell, or lease any of the above mentioned facilities or property.
(5) Levy or impose taxes for the operation and maintenance of any part of the hospital system.
(6) Enter into operation, management, sale, purchase, privatization, lease and all other similar operations and/or management agreements by which a substantial portion of the hospital system's assets (including but not limited to equipment, supplies, and accounts), cumulatively or collectively, are leased, licensed, or otherwise transferred or conveyed, for any length of time, to another legal entity other than the hospital and the board to operate and/or manage the same.
On December 16, 2025, Northfield Hospital + Clinic made a public announcement with Allina Health that we had signed a Letter of Intent for NH+C to purchase the Northfield Allina clinic at 1400 Jefferson Road from Allina Health. Over the past four months extensive due diligence has been conducted under the direction of NH+C's board of directors. The due diligence has included external and internal assessments of impacts to patient care, access, and experience in addition to operations, finances, contracting, and technology.
The NH+C board of directors held a first review of the due diligence findings at the February 26th, 2026, board meeting. At this meeting NH+C administration presented recommendations, answered questions, and received input from board members on any outstanding issues to address.
A second review occurred at the NH+C board of directors meeting on March 12, 2026. Hospital administration presented additional information and provided updates on the negotiations of the final agreement terms.
At an April 13, 2026 special meeting, the NH+C board received a third and final due diligence presentation. At this meeting, the board of directors unanimously approved a motion to recommend to Northfield City Council that NH+C purchase the Allina Northfield Clinic building.
Key elements of the proposed purchase agreement of 1400 Jefferson Road:
• NH+C will purchase 1400 Jefferson Road including land, building, and equipment for $5.56 million. An initial payment of $2 million will be made at time of purchase, and the remaining $3.56 million will be paid to Allina over 5 years with 4% interest.
• This deal will benefit healthcare in Northfield by strengthening the financial position of NH+C and keeping more care local. Duplication of imaging services, lab services, and specialty outreach has created a disjointed healthcare environment in Northfield that has weakened both Allina and NH+C. When NH+C opens a new clinic at 1400 Jefferson Road, it will unite healthcare in our community and create a positive financial impact that returns NH+C to a positive operating margin.
• NH+C administration engaged the audit and professional services firm Clifton Larson Allen (CLA) to validate the financial projections associated with the purchase of 1400 Jefferson Road. The internal and external analysis concluded that this deal has a favorable 2.5-year payback period. The NH+C finance committee met on February 24, 2026 and unanimously endorsed moving forward with this purchase.
• As part of the transaction, Allina Health will receive a 12-year right of first refusal to purchase NH+C if the City of Northfield decides to change the ownership structure of the municipal hospital. It is important to note that there is a carve out for the situation in which the city decides to convert NH+C to a 501c3 non-profit hospital. In that situation, the right of first refusal would survive, but it would not be triggered, and NH+C would remain independent.
• In March of 2026, Allina announced an LOI to join Sutter Health, a non-profit health system based in California. The 12-year right of first refusal between Allina and NH+C would survive that purposed transaction. For purposes of clarity, the 12-year right of first refusal between Allina and NH+C only survives if Allina joins a non-profit organization and would terminate in all other cases.
From a tax revenue standpoint, there is no impact to city or school revenue. Healthcare clinics are taxed at the normal property rate and NH+C will be responsible for the payment ($223,900 in 2025) as the new owner.
In addition to facts in this memo, there are additional public FAQ on the NH+C website: FAQ with CEO Zander Abbott on Allina Clinic purchase | Northfield Hospital + Clinics (Attachment #5).
The NH+C operations team is actively planning and preparing for the September 2026 re-opening of the newly named NH+C clinic at 1400 Jefferson Road with familiar doctors and health care staff but new leadership and ties to our community hospital.
Northfield Hospital + Clinics President and Chief Executive Officer Zander Abbott presented on the proposed purchase at the March 3, 2026 City Council meeting. The link to that presentation is attached (attachment #4).
Mr. Abbott will be in attendance at the Council meeting to provide additional summary information related to the due diligence and request approval to purchase 1400 Jefferson Road including the land, building, and equipment, and to grant a 12-year right of first refusal to Allina Health.
City Plans & Policies Relevance:
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