Cleveland Clinic Health System Obligated Group - FMSbonds.com

The main campus also includes a combined patient parking garage with 1,346 spaces and office facilitycontaining 131,000 square feet of administrative office space (the “Leased Garage/Office Facility”) that wascompleted in October 2004; a 156,000 square foot Genetics and Adult Stem Cell Research Building (the “LeasedResearch Facility”) that was completed in December 2004, and a combined employee parking garage withapproximately 4,000 parking spaces and a 221,975 square foot underground service center and 10,631 square footground level office space (the “Leased Garage/Service Center Facility”) that is under construction and scheduled toopen in Fall 2008, each of which is located on property ground leased by the Cleveland Clinic to a third party andleased by the third party to the Cleveland Clinic under a long-term lease that is treated as an operating lease forfinancial accounting purposes. For additional detail regarding these facilities, see Appendix B – AuditedConsolidated Financial Statements and Other Financial Information. The Leased Office/Garage addresses the needfor parking that resulted from the demolition of the main entrance garage to provide the site for the Miller FamilyPavilion. The Leased Research Facility houses state-of-the-art genetic research laboratories, administrative officesand conference rooms used by Cleveland Clinic-employed scientists and physician-scientists to perform basicbiomedical research, with a focus on adult stem cell and related research. The Leased Garage/Service CenterFacility will provide on-campus parking for Cleveland Clinic personnel and centralized services for the maincampus, including laundry, sterilization, shipping and receiving, and materials management.The Cleveland Clinic also leases approximately 145,000 additional square feet of space in the W.O. WalkerCenter, a facility located immediately east of the main campus. The facility is owned by an Ohio nonprofitcorporation of which the Cleveland Clinic and University Hospitals Health System (“University Hospitals”) are thesole members and have equal representation as to governance. The Cleveland Clinic is obligated to make rentalpayments in an amount equal to debt service payable on Hospital Revenue Bonds, Series 1998 I (W.O. WalkerCenter, Inc.) issued by Cuyahoga County to finance and refinance costs of acquiring and improving the facilityallocable to the Cleveland Clinic’s interest in the facility. Those bonds are outstanding at present in the aggregateprincipal amount of approximately $19.5 million. The Cleveland Clinic and University Hospitals share the paymentof operating expenses generally on the basis of the square footage used by each.See the discussion under “PART IV – MANAGEMENT’S DISCUSSION AND ANALYSIS OFRESULTS OF HEALTH SYSTEM OPERATIONS AND FINANCIAL POSITION – H. ANTICIPATEDEXPENDITURES, FUTURE PLANS AND OUTLOOK FOR OPERATIONS” regarding the current considerationof specific projects and the consideration generally of potential new projects.Regional. The Cleveland Clinic operates 16 suburban Family Health Centers in northeast Ohio, each ofwhich is either owned and occupied exclusively by the Cleveland Clinic or operated by the Cleveland Clinic underlong-term lease arrangements. See “PART II – THE OBLIGATED GROUP – A. THE CLEVELAND CLINIC –The Clinic – Regional Medical Practice” for a description of the Cleveland Clinic’s 16 Family Health Centers andcertain other facilities located in northeast Ohio.The Cleveland Clinic owns an approximately 522,000 square foot building located six miles east of themain campus that was formerly the world headquarters of Parker Hannifin Corporation. That building housescertain Health System administrative support operations (the “Administrative Support Campus”). In addition, in2002, the former world headquarters facility for TRW Inc. was donated to the Cleveland Clinic and is currentlyowned by two affiliates of the Cleveland Clinic. The 435,000 square foot building is located on an approximately98-acre site seven miles east of the main campus in Lyndhurst, Ohio and is used for administrative functions (the“Lyndhurst Campus”). In 2007, the Cleveland Clinic purchased the underlying land and leased five buildings inBeachwood, Ohio that formerly served as the corporate headquarters of MBNA (the “Beachwood Campus”). TheCleveland Clinic leases approximately 707,000 square feet in two of the buildings for administrative supportoperations pursuant to the terms of an operating lease and subleases the other three buildings to Bank of America,which acquired MBNA in 2006. The Cleveland Clinic ground leases separate portions of the land to the owners ofthe buildings.Excluded Property. The following real property is not integral to the Obligated Group’s operationalactivities and its use, disposition and maintenance are not subject to covenants otherwise applicable to property ofthe Obligated Group under the Master Trust Indenture: property owned by Cleveland Clinic and used by theCleveland Museum of Natural History; Foundation House, a fully restored, early-twentieth-century mansion housethat is used for meetings and receptions; and various other properties located in the Cleveland area outside theA-15