The Colorado Public Employees’ Retirement Association wants a court to take control of $259 million in proceeds the city of Colorado Springs is poised to receive from the voter-approved lease of Memorial Health System.

PERA filed a lawsuit Friday against the city and other parties involved in the Memorial lease transaction.

The lawsuit, filed in Adams County, is in response to a lawsuit filed last month by the city against PERA. The city contends it doesn’t owe the pension plan anything since Memorial’s employees are no longer part of the system.

But PERA argues that the city is on the hook.

If an employer leaves PERA without providing enough money to cover the retirements already earned by its employees, those costs shift to other employers in the plan, including the city and Colorado Springs Utilities, Gregory W. Smith, PERA’s interim executive director, said in a statement Tuesday.

PERA argued in its lawsuit that the city’s move would be “equivalent to ‘firing’ all 4,000 of Memorial’s employees…imperiling the very existence of PERA.”

The situation, the suit claimed, has been precipitated by “the City’s desire to realize the largest, short-term profit without concern for…Memorial, its employees, or other PERA employers.”

The lease of city-owned Memorial to University of Colorado Health gives the city $185 million to cover potential pension liabilities for Memorial’s estimated 4,000 employees. The 30-year lease, which voters overwhelmingly approved last week, also gives the city a $74 million upfront payment and $5.6 million annually for a foundation dedicated to health care, among other terms.

Dan Weaver, a spokesman for University of Colorado Health, said the dispute was solely between the city and PERA.

“We hope the involved parties resolve this quickly. If they don’t, it will delay the October 1 transfer of responsibility for Memorial Health System from the city to University of Colorado Health,” he said in an email.

City Attorney Chris Melcher said the city was “unfortunately not surprised by PERA’s lawsuit” since PERA had threatened to sue several weeks ago.

“Our negotiation team has gone to PERA’s offices several times this summer in an effort to seek a reasonable resolution in this matter, and we continue to reach out to PERA to involve them in productive discussions,” he said in an email.

“The new Memorial-University of Colorado Health partnership offers a wonderfully bright future for better healthcare for over 600,000 people. The UCH partnership is also terrific multifaceted opportunity for our entire city, improving the lives of both patients and Memorial employees, creating a new branch medical campus at UCCS, and creating jobs and new economic stimulus,” he said. “With 83 percent of our city enthusiastically supporting this effort, we will again encourage PERA to look beyond their narrow interests and work together with us towards a positive outcome.”

Wayne Heilman contributed to this report

Memorial Hospital North. (The Gazette file)