Stage set for city health foundation 

Colorado Springs City Council has finally cleared the way for a nonprofit group to begin distributing money for health needs.

By settling its lawsuit over pensions of former Memorial Health System workers, Colorado Springs City Council has finally cleared the way for a nonprofit group to begin distributing money for health needs.

It could be up to a year before grants are funded, however. The Colorado Springs Health Foundation first has to hire an executive director and investment adviser, says foundation president Jon Medved.

Last week, Council approved paying $190 million to the Public Employees' Retirement Association, concluding a lawsuit begun two years ago, after the city leased Memorial to University of Colorado Health for 40 years.

UCH gave the city $185 million — part of a total upfront payment of $259 million for the lease — to fund Memorial employees' retirement benefits after they left PERA and became UCH employees. But the city argued it didn't owe anything for those workers' pensions.

The presiding judge later issued two decisions that jeopardized the city's chances at trial, which was slated for next month. So the city settled.

As of Aug. 22, city legal costs in the case totaled more than $2 million. Most, $1.97 million, went to Hogan Lovells law firm.

PERA said in a statement that the settlement amount is sufficient to ensure that other members of PERA won't have to subsidize the obligation to ex-Memorial employees.

The settlement also clears the way for the nonprofit Springs Health Foundation.

The foundation is overseen by Council, which confirms mayoral appointments of nine trustees. It now has $16 million from annual payments of $5.6 million that the city is receiving from UCH for 30 years.

City Councilor Jan Martin, who chaired the Memorial lease task force, says about $20 million of the original $259 million, all held in escrow, will be transferred to the foundation right away, and $25 million next year. Another $25 million will be retained in escrow until 2017 to cover any liabilities that might arise, such as worker's compensation, from the time the city operated Memorial.

The foundation's bylaws say the money is to be spent "for the purpose of addressing health issues in the City and Memorial Health System service area."

The fund, which will hold roughly $86 million by 2017, is expected to grow, in part because the bylaws prohibit spending the principal, except under special circumstances.

— Pam Zubeck

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