Wednesday, June 29, 2022

County releases draft plans to manage $1.9 billion proceeds of hospital sale, most earmarked for ‘community foundation’

New Hanover Regional Medical Center. File photo.
The county has released a draft proposal of how it plans to spend nearly $2 billion in proceeds from a future sale of the New Hanover Regional Medical Center. (Port City Daily photo/Mark Darrough)

WILMINGTON — Hours before it is set to vote on a Letter of Intent with Novant Health Monday afternoon, New Hanover County has released a draft including how it plans to spend a valued $1.9 billion in proceeds from the sale of the New Hanover Regional Medical Center system.

The draft includes $1.25 billion to be invested in a non-profit community foundation “that furthers the county’s strategic priorities of health and social equity, education, community development, and community safety.”

The foundation would disperse up to 4% of the Foundation’s total endowment (which would start with $1.25 billion from the sale of NHRMC but could also include future donations). That would mean up to $50 million in funding annually.

The foundation would be governed by an 11-member board, with six members appointed by the hospital’s new board under Novant’s ownership, and five appointed by county commissioners. Elected officials would not be eligible to serve.

Roughly 15% of the total funds, $300 million, is earmarked for a ‘NHRMC Transition Stabilization Escrow,’ two-thirds of which would be used to bridge any gap for employee benefits, including pensions.

Another $300 million would be used for a reserve fund for the county to tap into for emergency response, debt relief, and tax and fee stabilization. Meanwhile, $50 million is planned for mental and behavioral health initiatives.

If the board votes to approve the letter of intent on Monday, the final agreement — including how the county would spend the net proceeds of the hospital sale — would be negotiated and shared publicly, likely in September or October, according to county spokesperson Jessica Loeper. A public hearing would then proceed a final vote of the NHRMC Board of Trustees and county commissioners.

“This is a significant amount of money that must be invested wisely and strategically,” County Manager Chris Coudriet said. “As such, the letter of intent outlines that the assets must be managed in a way that is ‘sacred and protected for the community in perpetuity.’”

Commissioners will discuss the drafted proceed allocations and the community foundation during Monday’s meeting, he said.

“[I]f Commissioners vote to move forward with a Letter of Intent with Novant Health, then this framework will become part of a definitive agreement that is negotiated and finalized in the coming months.”

View a section of the drafted letter of intent, Exhibit D – Use of Net Transaction Proceeds, below:

Editor’s Note: We will update this article with more information after Monday afternoon’s Board of Commissioners meeting.

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