Wednesday, July 24, 2024

AG Stein sends Novant, county reminder letter of diversity requirements on NHC Endowment board

Three months after a resident group requested Attorney General Josh Stein’s oversight of the New Hanover County Endowment, his office forwarded a reminder letter about diversity requirements to local officials. (Courtesy Port City Daily)

NORTH CAROLINA — Three months after a resident group requested Attorney General Josh Stein’s oversight of the New Hanover County Endowment, his office forwarded a reminder letter about diversity requirements to local officials. 

READ MORE: ‘We can’t build our way out of this’: NHC Endowment addresses affordable housing, other questions

ALSO: New nonprofit petitions AG Josh Stein to ensure NHC Endowment transparency, performance

The county’s $1.25 billion endowment was created from the sale of the county-owned hospital to Novant Health in 2021. It is focused on distributing grants to address systemic county issues, including health, education, safety and economic prosperity.

In a June 21 letter to New Hanover County legal counsel Jordan Smith and Novant Health chief legal counsel Frank Emory, Stein reminded the attorneys of agreed-upon diversity requirements in filling vacancies for the endowment’s board. Stein signed off on the endowment deal but not before requiring its board add two more positions than originally planned, in order to create more diversity.

The 13-member board currently has two African-American representatives.

Stein — who’s running for governor this year — wrote:

“During negotiations with my office, the County and Novant committed to increased public accountability measures for the Community Endowment. One such committment [sic] was ensuring that the Community Endowment’s Board of Directors reflects the rich and varied perspectives of New Hanover County’s ever-growing population. Specially, the Community Endowment’s Bylaws were amended to include a requirement that the Board, whose members are appointed by the county and Novant, reflect ‘[d]iversity that fairly and equitably ensure[s] gender, racial and ethnicity considerations, as well as lived experiences reflecting different rates of educational attainment, economic prosperity and social mobility.’”

The Novant Health Coastal Region Board selects six of the endowment’s 13 appointees. Five are appointed by county commissioners and two are picked by the endowment. 

Earlier this month, Novant selected Jack Barto, the former CEO and president of the county-owned New Hanover Regional Medical Center, to fill a vacancy left by former appointee Michele Holbrook. 

Holbrook was the third leader of the charitable trust to step down this year, following CEO William Buster’s exit in February, followed by board member Pat Kusek in March.

Kusek was appointed just last fall by county commissioners, along with Woody White, her fellow former commissioner, both of whom voted on the hospital sale and helped decide the rules of the endowment. They weren’t allowed to serve on the endowment board until they were two years removed from their commissioner position. 

Their appointments raised concerns in September 2023 when the board of commissioners chose them over founding board members Virginia Adams and Hannah Gage. Adams was the only appointed Black board member by the commissioners and endowment chair Bill Cameron sent a letter to county commissioners asking both be reappointed. 

However, a 3-2 vote — with Jonathan Barfield and Rob Zapple dissenting — ensured White and Kusek were moved to a seat instead.

Upon Kusek’s sudden exit, without reason given to the county, Mary Lyons Rouse — a development associate at Cape Fear Academy — filled the vacancy in April. 

The endowment is also currently seeking a new CEO, which it announced earlier this week at its listening session would be revealed by summer’s end. 

Buster is African-American, while Barto and Rouse are white, leading critics — such as local nonprofit Heal Our People’s Endowment — to raise concerns regarding insufficient representation of the county’s minority demographics on the endowment board. 

Stein’s letter was also sent to New Hanover County commissioners, according to internal emails from the county terminal. Commissioner Dane Scalise responded: 

“The New Hanover County Commission fully abides by its obligations under the law. Indeed, Mr. Stein does not accuse anyone of failing to do so in his letter. As such, it is hard to read this “reminder letter” as anything other than political gamesmanship, which is regrettable and should be avoided in the future.”

Port City Daily reached out to the commissioners but didn’t hear back by press.

Former mayor and senator Harper Peterson, who founded Heal our People’s Endowment (HOPE) in March, began a petition — with 1,196 signatures as of press — requesting Stein’s intervention to ensure the endowment meets its original charitable purpose. The nonprofit cited concerns including leadership changes, the excessive influence of Novant, inadequate transparency, and insufficient community participation.

“We welcome his attention to the importance of diversity on the board, but so many other issues germane to the endowment’s failures persist,” Peterson said to Port City Daily. “He needs to exercise his statutory authority to address these issues.”

PCD reached out to Stein’s office to ask if the letter was prompted by Heal Our People’s petition, if he’d reviewed the nonprofit’s concerns beyond diversity requirements, and what the next steps would be if the endowment board fails to heed the letter. Spokesperson Nazneen Ahmed said she did not have anything to add beyond the letter.

Heal Our People member Sonya Patrick told PCD she appreciated the attorney general’s action and viewed it as a positive step. She argued racially diverse representation on the endowment board is essential for understanding the needs and perspectives of disadvantaged communities. 

Patrick emphasized the importance of addressing Wilmington’s historical legacy, including the 1898 coup and the White Declaration of Independence.

“The city still has not healed from that, socially or economically,” she said. 

Health consultant Ann Kempski advised Save Our Hospital, an earlier nonprofit composed of several HOPE members, including Peterson, that opposed the NHRMC sale to Novant. She criticized Stein’s approval of the sale, which she argues has contributed to excessive market concentration in the area. 

“It’s disappointing that Josh Stein signed off on such a consequential privatization of public assets that gave Novant both enormous power over New Hanover residents’ health care, and gave Novant undue influence over the $1.3 million endowment,” she told PCD. “These conflicts could have been foreseen from the governance model the AG agreed to back in 2020.”

A Novant Health spokesperson said the letter had been shared with the Novant Health Coastal Region Board. 

“The New Hanover County Board of Commissioners and the Novant Coastal Board have the sole authority to appoint board members,” endowment spokesperson Kevin Maurer told PCD. “We are not part of this process.”

Stein’s letter in full:

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