Wednesday, June 29, 2022

Will outgoing New Hanover commissioners take seats on $1.25 billion foundation board?

The sale of New Hanover Regional Medical Center will generate nearly $2 billion in proceeds, and a new foundation to manage much of that money. (Port City Daily photo / File)

WILMINGTON — As the county prepares to finalize details of the $2 billion sale of New Hanover Regional Medical Center to Novant, questions remain about the community foundation that will manage the lion’s share of the proceeds — including who will sit on the foundation’s board.

The community foundation will manage $1.25 billion in assets, overseeing around $40 million in annual funding for a wide range of projects and managing the investment of the rest.

County commissioners have already said that elected officials will not be allowed to sit on the board, but other details — including whether outgoing officials will face a ‘cooling off’ period before they can serve, or term limits once they’re on the board — haven’t been settled yet. Other details, including how the board will be formed and perpetuated, are coming together as the county eyes an October end to the sale process.

How will the board be formed?

The initial blueprint for the foundation was included in a Letter of Intent (LOI) approved last month by county commissioners over objections from Commissioner Rob Zapple, who decried the last-minute addition of the LOI to a vote he felt was initially intended to be solely about which healthcare system the county would choose for advanced negotiations (more on that, here).

The foundation will have eventually have eleven members, with five members appointed by New Hanover County Board of Commissioners and six members appointed by a new local board set up by Novant once it takes over NHRMC.

According to New Hanover County, the rationale for giving Novant the majority of seats was twofold: first, county commissioners did not want elected officials directing the foundation’s funding — which they could do indirectly by making a majority of appointments; second, if the county does not have a majority, the foundation will not be limited by state law which restricts government investment to low-yield funds. In other words, with a minority of appointments from the county, the foundation board will be able to pursue higher-risk, higher-yield investments.

While Novant’s new hospital board will likely be ‘self-perpetuating’ (i.e. the board will appoint replacements to its own vacant seats) the community foundation board will not, meaning new members will be continuously appointed by Novant and the county.

However, because Novant is not slated to immediately stand up its own local board, the foundation will likely be created with an initial board of five — all appointed by the county commissioners. According to County Manager Chris Coudriet, this board satisfies the legal requirements for creating the foundation and its bylaws, but it would not necessarily feature long-lasting appointments.

By law, these initial members have to be named at the time the foundation is created (or very shortly after), according to Coudriet. For this reason, the initial members will probably be identified either in the definitive documents finalizing the sale of NHRMC to Novant, or in parallel filings approved at roughly the same time. Coudriet said this is still expected to happen no later than the Board of Commissioners mid-October meeting.

Other bylaws, including conflict of interest policies to prevent board members from directing funds to ‘pet projects’ or self-serving interests, are also being drafted, Coudriet said.

There is also no current plan to provide compensation for board members, according to Courdiet.

Elected officials and the board

There has been much public speculation about whether current New Hanover County commissioners Woody White and Patricia Kusek will be appointed to the board, fueled in part by announcements from both White and Kusek that they would not seek reelection. Both announced in October of last year, after the partnership exploration process for NHRMC began in earnest.

White said he didn’t know who would populate the foundation board, but noted that “those conversations are important and will begin taking on clearer focus over the next month or so.”

“I personally believe that having some continuity and institutional knowledge of the history and process, dating back many years, is very important to getting the foundation off on the right path. If that results in Pat [Kusek] and I being selected to be on it, I welcome that opportunity. Our record of serving this community is transparent and well-known and I hope would give the community some sense of ease that Pat and I would always put New Hanover County interests first if we were picked,” White said.

According to Coudriet, current commissioners could not be appointed to the initial foundation board, which is expected to be created prior to the end of the commissioners’ current term. However, once the full eleven-member board was filled out, Coudriet said former commissioners would be eligible, including White, Kusek, and — if not reelected — Jonathan Barfield, Jr.

It’s not clear, yet, how long commissioners would have to wait. Coudriet said county staff is looking at ‘best practices’ for creating this type of foundation board, including whether a ‘cooling-off’ period should be required. No decision has been made on that yet, according to Coudriet.

Coudriet did say he expected that, as with the county’s other appointed boards, there will likely be term limits. Most of the county boards limit members to two or three terms before they have to ‘rotate off,’ Coudriet said.


Send comments and tips to Benjamin Schachtman at ben@localdailymedia.com, @pcdben on Twitter, and (910) 538-2001.

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