One aspect of NHRMC’s potential sale that surprisingly hasn’t been discussed much is what we would do with $2 billion.
My recommendation – let’s buy an NBA team. (Forbes says the Charlotte Hornets are worth $1.5 billion
But seriously, the possibilities for a community our size are staggering.
Say we invest the $2 billion and only spend our investment gains. Assuming a 5 percent annual return, that’s $100 million a year to spend on community improvements.
To put this in perspective, New Hanover County’s entire annual budget is $400 million.
Until this week, the official line from participants in the exploration process has been that the money was the least considered factor.
If NHRMC’s potential sale is moving forward, that needs to change now.
New Hanover County’s five commissioners are scheduled to vote Monday on whether to sign a letter of intent to sell NHRMC to Novant Health. This follows similar votes of approval by the Partnership Advisory Group that studied the options and NHRMC’s Board of Trustees. (A final vote to sell would be in the next couple months.)
To the credit of New Hanover County’s commissioners and administration, the main feature of the emerging plan is a community foundation that isn’t run by the county and at the whim of every election.
“To me, it was a deal breaker,” said Commissioner Pat Kusek, who cast one of three votes to launch the process exploring the hospital sale.
Commissioner Jonathan Barfield, who voted against the exploration process, agreed.
“I would not want those dollars to be in the hands of elected officials,” said Barfield, noting the biggest political battle every budget season is deciding which non-profits get the approximately $1 million currently allocated by the county.
NHRMC’s Board of Trustees this week took the first swing at what to do with the money:
• $1.25 billion for a community foundation focusing on four areas – health and social equity, education, community development and community safety
• $300 million for NHRMC employees toward pension benefits and a “resiliency and retention” fund
• $300 million for a rainy day fund for New Hanover County
• $50 million for a health fund focused on mental and behavioral health
The commissioners I spoke with (Barfield, Kusek, Woody White and Rob Zapple) said the trustees’ proposal is in line with their thinking.
“It’s still a fluid document and undergoing continued discussion among the commissioners and will take shape over the next few weeks,” White said. “What they put down is consistent with the path we’re going down.”
However, White’s list of how the funds should be used includes a “fiscal stability” plan to pay off some or all of the county’s approximately $400 million in debt. White said the savings on debt service, which is $64 million this year, could be used for additional county services as well as keeping taxes static or lowering them.
It’s not easy finding a model for a such a massive injection of cash into a small community.
States received more than $200 billion in a settlement with tobacco companies in 1998. Indiana and Chicago brought in billions by privatizing their toll roads. Some states and communities have created ongoing revenue streams by selling mineral and oil rights.
Yet these funds largely went to states or larger regions with much bigger budgets. And many saw the money go out the door quickly.
There will be a temptation – and pressure – to spend money quickly on immediate needs, which risks getting bigger returns for our community by investing for the long run.
A recent and more comparable example is the Dogwood Health Trust
, a $1.5 billion community foundation that was formed with proceeds from the sale last year of Mission Health System in Asheville to HCA Healthcare.
Yet even this example covers an 18-county region, likely much bigger than the reach of New Hanover County’s foundation.
Regardless, lots of critical decisions will need to be made, including the foundation’s focus, how much of the proceeds go into it and who’s on the board. These decisions deserve considerable thought and public input.
“It feels like a whole lot of decisions are being made in a short amount of time,” Zapple said. On the trustees’ plan, he added, “maybe it’s a good first draft, but I’m not sold on it yet.”
The county invested a significant amount of time and resources exploring the potential sale of NHRMC. Assuming the sale happens, the same should be done to make sure we create the right, long-term structure for how to invest these funds.
If not, though, my vote is still with grabbing an NBA team.
Rob Kaiser is the publisher of Greater Wilmington Business Journal. He can be reached at [email protected] or (910) 343-8600 x204.