There are a whole lot of zeroes in the agreement to lease city-owned Memorial Health System to University of Colorado Health that was made public Friday:

$74 million up front, $5.6 million annually for 30 years, an estimated $2.5 million a year in profit sharing, $185 million to cover pension liabilities, $28 million a year in capital investment, and $3 million annually for a medical school at the University of Colorado at Colorado Springs.

Voters will be asked in an Aug. 28 special election to approve or reject the deal, which was unanimously backed by City Council and a city task force charged with weighing offers for the hospital. If the measure passes, UCH will hand the city a check for $259 million Sept. 30 — the $74 million up front payment and the $185 million for PERA — and take over operating the hospital Oct. 1.

All told, said City Attorney Chris Melcher, who led the city’s negotiating team, leasing Memorial means about $2 billion in proceeds or investment coming to the community.

“This is not only a good partnership, it is a tremendous partnership,” Melcher said.

The dollars are good, said Councilman Merv Bennett, council’s liaison on the negotiations, but what University of Colorado Health — a new organization composed of University of Colorado Hospital and Fort Collins-based Poudre Valley Health System — brings to the table is just as important.

“This is something that will serve this community for decades,” Bennett said. “How many times do you get the opportunity to partner with the best academic hospital in the nation?”

In a statement, University of Colorado Health said, “We are ready to take this exciting role in the bright, bold future of Memorial Health System. We believe it’s important that we open the doors on this new chapter starting October first and are able to be a strong part of the Colorado Springs Community.”

Melcher will present the details of the lease to City Council Monday and council will hold a public hearing on the agreement at 3:30 p.m. Tuesday.

Even before the details of the lease were made public, though, how to spend the windfall was becoming a hot issue. Mayor Steve Bach on Friday called the lease deal a “grand-slam home run” for the city, but said he would oppose it unless there’s a concrete plan on what to do with the proceeds and who would be in charge of disbursing them.

Bach said he wanted to avoid a repeat of the fight over the $1.15 million severance agreement given to former Memorial CEO Dr. Larry McEvoy, in which Memorial’s board defied the wishes of City Council in approving the deal. Council then fired the board, but could not undo the severance agreement.

“These proceeds need joint oversight of the mayor and the council, so we can avoid another deal like we just had with the McEvoy million,” Bach said.

City Council members and the mayor appear to agree that the proceeds should be set aside in a foundation to be used for health care in El Paso County, although how “health care” is defined is still up in the air.

Bach said he wants to set up a board approved by both the mayor and City Council to recommend uses for the funds, but that major spending decisions would still require approval from both the mayor and council.

Bennett said he’s spoken to the mayor throughout the lease negotiations and believes everyone has the same goals in managing the proceeds.

“His concerns are accurate and ours are the same,” Bennett said. “Finding a reasonable solution to make sure this (the severance package) never happens again, we’re all in agreement on that.”

Council President Pro Tem Jan Martin said how the funds are used and overseen is the important thing.

“This is not about power struggles, this is about the best interests of the community,” she said. “We are really looking to find a solution that is a win-win for everyone.”

Martin said she supports a foundation that will spend the money wisely, but that the focus right now needs to be on educating voters on the benefits of the agreement and building support ahead of the Aug. 28 election.

“I think what’s important for people to understand is that the money will be put in a lock box until we are able to determine the outcome,” she said of how the foundation is structured.

Councilman Tim Leigh said he supports the mayor having the authority to appoint a board to oversee the funds, but said council or citizens would be the final check on the board’s actions.

“You have got to have really smart people on it who have really strong experience in these matters,” Leigh said. “Why wouldn’t you have Thayer Tutt on there? We have people in Colorado Springs that you could appoint or call on.”

In the meantime, there are plenty of details in the deal for voters to chew over:

— The University-run Memorial will be overseen by a local, 11-member board, with seven members who live in El Paso County. For the duration of the lease, board members will be named by a nominating committee that is itself composed of three members appointed by the city and three by UCH. The local board can, however, be overruled by UCH’s system board.

— University will give the city all of Memorial’s cash-on-hand, roughly $330 million. The city will use the money to pay off Memorial’s bonds, which could range from $324 million to $359 million, Melcher said. Getting the cash-on-hand should allow the city to pay off the hospital’s debt for less than $330 million, he said. The remainder would go into the foundation, he said.

— The city intends to negotiate with the state’s Public Employees Retirement Association to reduce the $185 million figure it gave Memorial last year to leave the system, Melcher said. The city contends that it owes PERA nothing for the future benefits of Memorial’s roughly 4,000 employees. If that argument is successful, the city would keep the entire $185 million in the foundation.

— All Memorial employees’ jobs will be guaranteed for six months after UCH takes over. UCH will also honor all of Memorial’s existing contracts with physicians and outside companies.

— The city will have a profit sharing agreement in which it gets 5 percent of all earnings above an 8 percent cash flow margin. Memorial currently runs at a 9-10 percent margin, Melcher noted, while University of Colorado Hospital averages 21 percent and Poudre Valley Health System averages 17 percent. UCH estimates the city will get an average of $2.5 million a year from the deal.

— The city will keep $50 million set aside for three years to pay off unforeseen liabilities at Memorial. After three years, that figure will drop to $25 for the fourth and fifth year, and then go away.

— City Council is expected to formally approve the agreement June 26. Then, Colorado Attorney General John Suthers’ office will review the deal under the state’s Hospital Transfer Act. That opinion and any conditions the attorney general places on the deal, is due Aug. 26. Melcher said he believes the attorney general will find nothing to fault in the agreement.

— University pledges to maintain Memorial’s current commitment to TriCare and indigent care.

— After nine years, the lease agreement will become an ongoing, rolling 30-year lease, unless either the city or UCH opts out. Melcher said UCH needs that length of time fixed so that it can issue bonds and make investments in Memorial.

— City Council will set the ballot language for the Aug. 28 election July 10. Melcher said he expects the language to be kept simple, but said the entire lease agreement is public and there should be no surprises.

“We’re trying to make this as simple as possible,” he said. “We know the community has had some disappointments in the past and we want to do everything possible to avoid that.”

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Memorial timeline

The city has been debating the future of city-owned Memorial Health System for the past three years, but things will come to a head in the next three months:

June 11 — City Attorney Chris Melcher presents lease agreement to City CouncilJune 12 — 3:30 p.m. public hearing on lease agreement at City Hall, 107 N. Nevada Ave.June 26 — Council scheduled to vote on formally approving lease agreementJune 27 — Colorado Attorney General John Suthers begins review of agreementJuly 10 — Council sets ballot language for special electionAug. 26 — Attorney General’s review of agreement dueAug. 28 — Special election to approve or reject lease agreementOct. 1 — If voters approve deal, University of Colorado Health takes over Memorial