1999-06-03 Special Meeting
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF SPECIAL MEETING, JUNE 3, 1999PAGE 281
ENABLING LEGISLATION FOR THE MEDICAL CENTER
ASSEMBLY
The New Hanover County Board of Commissioners held a Special Meeting on Thursday, June
3, 1999 at 8:45 a.m. in the New Hanover County Administration Building, Room 501, 320 Chestnut
Street, Wilmington, North Carolina.
Members present were: Commissioner Buzz Birzenieks; Commissioner Charles R. Howell;
Vice-Chairman Charles R. Howell; Chairman William A. Caster; County Manager, Allen O’Neal;
County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell.
Commissioner Ted Davis, Jr. was absent.
Chairman Caster called the Special Meeting to order and welcomed everyone present. He
advised that the purpose of the meeting was to discuss a local bill that will enable New Hanover
Regional Medical Center to invest its reserve funds in a broader range of permissible items while
maintaining appropriate safeguards to protect the public interest.
Mr. David Benford, Chairman of the Finance Committee for the New Hanover Regional
Medical Center Board of Trustees, reported the purpose of seeking enabling legislation is to allow
the Medical Center to better invest its cash reserves. After meeting with the Local Government
Commission in Raleigh, North Carolina, to discuss current investments under the current statute, it
was found that all investment strategies are being utilized by the Medical Center. During the meeting,
discussion occurred on two similar entities seeking local legislation from the General Assembly to
invest cash reserves under NCGS 147-69.2 instead of NCGS 159-30. This statute provides for a
broader range of investments and would allow the Medical Center to receive a higher annual yield
on investments. The Local Government Commission seemed to be comfortable with New Hanover
Regional Medical Center seeking the enabling legislation because of its excellent financial history and
size.
After the meeting, the Finance Committee discussed this matter with New Hanover Regional
Medical Center Board of Trustees, who support pursuing the enabling legislation. Before the Medical
Center can proceed with contacting the local legislative delegation, approval must be received from
the New Hanover County Board of Commissioners.
Under NCGS 147-69.2(b), the Medical Center would be able to invest 50% of its cash
reserves in equities. This would permit investments in common and preferred stock if those
investments are authorized by the Local Government Commission and by the New Hanover County
Board of Commissioners. This statutes also contains a list of investments that the State Treasurer
is authorized to make with special funds held by the State Treasurer for certain state plans and
agencies. NCGS 147-69.2(b) specifically states that common stock or preferred stock must be
registered on a national securities exchange as provided in the Federal Securities Exchange Act or
quoted through the National Association of Securities Dealers’ Automated Quotations (NASDAQ)
system.
In closing, Mr. Benford said with current cash reserves of $67,000,000 and an investment of
$33,500,000 (50%) into equities, the estimated annual yield would increase by $1,100,000 over the
present earnings. He offered to answer any questions.
Commissioner Birzenieks asked if Pitt Memorial and Durham General have enabling
legislation.
Mr. Benford responded that both hospitals have enabling bills; however, these bills are for
special funds, not investments of cash reserves.
Commissioner Birzenieks reported that under NCGS 147-69.2(b) the Medical Center will be
able to invest 50% of its cash reserves in treasury bonds, federal agency securities, certificates of
deposit, N. C. Cash Management Fund bonds, notes of any North Carolina local government or
public authority, equities (common and preferred stock), and notes secured by the FHA or VA.
These investments will be made under the control of the Local Government Commission, State
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF SPECIAL MEETING, JUNE 3, 1999PAGE 282
ENABLING LEGISLATION FOR THE MEDICAL CENTER
Treasurer, and New Hanover County Board of Commissioners. He spoke in support of the enabling
legislation and suggested that the proposed bill written by Attorney Dumay Gorham, Jr. be forwarded
to the local legislative delegation.
Chairman Caster asked if the enabling legislation could be enacted during the current session
of the General Assembly.
Mr. Benford responded that local legislators feel the bill can be enacted during the current
session.
Deputy County Manager, Andrew J. Atkinson, asked how the Medical Center will handle the
day-to-day investments if the enabling legislation is enacted by the General Assembly. He asked if
investments would be handled in-house or through an investment firm.
Ms. Kathleen Gormley, Chief Finance Officer, responded that she felt sure the Finance
Committee would hire a manager to handle investments.
Motion:
Commissioner Birzenieks MOVED, SECONDED by Commissioner Howell to approve
authorizing the Medical Center Board of Trustees to file a local bill enabling the Medical Center to
invest cash reserves pursuant to NCGS 147-69.2 and authorize the Chairman to write a letter to the
local legislative delegation requesting each member to support the local bill.
Vice-Chairman Greer requested the County Finance Director, Bruce Shell to comment on the
proposed action.
Finance Director Shell advised that he had been on vacation and was not informed about this
action until reading the morning paper. After reading the article, he contacted the Local Government
Commission (LCG) and found that the LCG does not have a problem with the request; however, the
LCG did suggest the hiring of a professional investment group to manage the Medical Center
investments if the enabling legislation is enacted.
In concluding his remarks, Finance Director Shell informed the Board that he did not have
enough information available to fully endorse the action proposed by the Finance Committee and
Board of Trustees; however, all parties involved should be aware that a small portion of the
retirement funds will be involved in these investments. He said if the Board proceeds with this action,
it should be done with the following caveats: (1) this is not an open investment arrangement; and (2)
the Medical Center should be given investment flexibility within stated parameters to receive higher
returns on investments.
Mr. Benford responded that a majority of the parameters are provided by the State Law, and
he stated that no retirement funds would be involved in the investments.
Finance Director Shell said the Local Government Commission was referring to State
Retirement Funds with a small percentage being in equities.
Mr. Benford explained that pursuant to NCGS 147.69.2(b) the invested assets of the
Retirement System can be no more than 50% in common stocks. Only up to 50% of the Medical
Center cash reserves can be invested under NCGS 147.69.2(b).
MOTION CARRIED BY A 4 TO 0 VOTE.
Upon vote, the
Commissioner Birzenieks requested authorization to forward the draft letter to Mr. Robert
M. High, Deputy Treasurer of the State of North Carolina.
Consensus:
After discussion of the need to receive support from the State Treasurer, it was the
consensus of the Board for Commissioner Birzenieks to forward the draft letter as presented to Mr.
Robert M. High.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27
MINUTES OF SPECIAL MEETING, JUNE 3, 1999PAGE 283
ENABLING LEGISLATION FOR THE MEDICAL CENTER
Chairman Caster, on behalf of the Board, expressed appreciation to Mr. Benford and Ms.
Gormley for the presentation.
ADJOURNMENT
Motion:
Commissioner Birzenieks MOVED, SECONDED by Commissioner Howell to adjourn the
meeting. Upon vote, the MOTION CARRIED by a 4 to 0 vote.
Chairman Caster adjourned the meeting at 9:15 a.m.
Respectfully submitted,
Lucie F. Harrell
Clerk to the Board