1992-02-17 Work Session
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992"
PAGE 818
ASSEMBLY
The New Hanover County Board of Commissioners held a Work
Session on Monday, February 17, 1992, at 1:09 P.M. in Room 501 of
the New Hanover County Administration Building, 320 Chestnut
Street, Wilmington, North Carolina.
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Members present were: Commissioners Jonathan Barfield, Sr.;
Fred Retchin; William H. Sutton; Vice-Chairman Robert G. Greer;
Chairman E. L. Mathews, Jr.; County Manager, Allen O'Neal; County
Attorney, Robert W. Pope; and Clerk to the Board, Lucie F. Harrell.
Chairman Mathews called the meeting to order and stated the
purpose of the Work Session is for discussion of the proposed
hospital authority.
DISCUSSION OF PROPOSED HOSPITAL AUTHORITY
County Attorney Pope presented the following facts:
PROPOSED HOSPITAL AUTHORITY
1. Creation of Authority: Created by adoption of a
resolution by the Board of County Commissioners.
2. Governing Body of Authority: The governing body is the
Commissioners of the Authority with no less than six (6) members
and no more than thirty (30) members.
-Initial Appointment: One-third appointed for one year; one-
third for two years; one-third for three years; and all
subsequent appointments for three-year terms.
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-The Chairman of the Board of County Commissioners shall name
the first Chairman of the Authority, and thereafter the
Commissioners of the Authority shall elect each subsequent
Chairman.
-When a vacancy occurs the remaining Authority Commissioners
shall submit to the Chairman of the Board of County
Commissioners a list of nominees, and the Chairman shall
appoint and fill such vacancies only from the nominees.
-The Chairman files a certificate of appointment with the
County Clerk.
-Authority Commissioners shall receive no pay for services,
and are entitled only to reimbursement for necessary expenses.
3. Incorporation of Hospital Authority: After appointment,
Authority Commissioners shall present to the Secretary of State an
application for incorporation as a hospital authority, and the
Secretary of State files and records the application.
4. Boundaries of Authority: Territorial boundaries of the
hospital authority will include New Hanover County and an area
within ten (10) miles from the boundary of the County, except it
will not include the area of any previously existing hospital
authority.
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5. Removal of Commissioners: The Board of County
Commissioners may remove a commissioner of the Authority for
inefficiency, neglect of duty, or misconduct in office, only after
the Commissioner under consideration is given a copy of the charges
and afforded a hearing.
6. Powers of the Authority: Powers are broad statutory
authority similar to normal corporate powers but differ from the
usual public corporate powers in that a hospital authority is
exempt from public bidding laws and may invest any hospital funds
pursuant to the "Prudent Male Rule".
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992
PAGE 819
7. Power of Eminent Domain: The Hospital Authority can
acquire any real property for the public purpose of the hospital by
condemnation.
8. Bonds and Notes: (Borrowing) The Hospital Authority may
issue revenue bonds under the Local Government Revenue Bond Act and
may borrow upon notes or other evidence of indebtedness with
approval of the Local Government Commission.
CURRENT NON-PROFIT CORPORATION
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1. Creation of Non-Profit Corporation: Created in accordance
with Chapter 55A of the North Carolina General statutes and
Articles of Incorporation filed with and approved by the state of
North Carolina.
2. Governinq Body: Twel ve ( 12 ) members of the Board of
Trustees plus three (3) ex-officio members. Vacancies created on
the Board are filled by appointments made by the Board of County
Commissioners.
-The ex-officio members are: One County Commissioner, the
Chief of Staff, and the immediate past Chief of Staff.
-Terms of Appointment:
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(a) Trustees: Serve a five (5) year term and shall not be
eligible to succeed themselves. A trustee who has served a
five-year term shall not be eligible for re-appointment to the
Board until one year after the expiration of his/her last
five-year term. A Trustee whose initial service is by
appointment to fill an unexpired term shall be eligible to
succeed him/herself in office for a regular five year term.
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-Ex-Officio Trustees: County Commissioner - such period of
time as designated by the Board of County commissioners; Chief
of Staff - during one year tenure as Chief of Staff, and after
the termination of one year tenure as Chief of Staff, as
immediate Past Chief of Staff for a period of one year.
3. Incorporation of Existinq Hospital: By virtue of filing
with and receiving approval by the Secretary of State.
4. Territorial Boundaries of Non-Profit Corporation: None.
5. Removal of Trustees: General Statute 55A-20 provides that
a Trustee may be removed from office by any procedure set forth in
a charter provision. The current Articles of Incorporation
contains no provision which allows for removal of a Trustee.
6. Powers of Existinq Corporation: As set out in the
Articles of Incorporation and as allowed by Statute, which requires
the hospital to follow public bidding laws.
7. Power of Eminent Domain: None.
8. Power to Invest: Controlled by the Local Government
Budget and Fiscal Control Act. The hospital may borrow funds in
accordance with the act, but cannot issue bonds.
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Motion: After discussion of the proposal not being acceptable,
commissioner Sutton MOVED, SECONDED by commissioner Retchin not to
consider approval of a hospital authority as it is written in
accordance with N. C. G. S. Chapter 131E. 'The Commissioners shall
only consider a hospital authority through a local enabling act
such as the Craven County legislation. The floor was opened for
discussion.
Vice-Chairman Greer stated the MOTION is not necessary since
the Commissioners agree that the proposal is not acceptable.
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992'
PAGE 820
commissioner Sutton emphasized the importance of informing the
public that the proposed hospital authority is not acceptable as
written under North Carolina law.
Chairman Mathews recommended amending the motion to read that
a hospital authority is not acceptable as written in the General
Statutes instead of structuring a local bill based upon the Craven
County legislation.
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Amended Motion: After further discussion, commissioner Sutton
amended the MOTION to state the Board will not accept a proposal
for establishing a hospital authority as outlined in the North
Carolina General Statutes. Chairman Mathews called for a vote on
the AMENDED MOTION WHICH CARRIED UNANIMOUSLY.
Chairman Retchin stated a major reason for the Board of
Trustees requesting a hospital authority is the ability of an
authority to invest through usage of the Prudent Man Rule to
receive higher earnings. He requested a definition of this rule.
County Attorney Pope stated the Prudent Man Rule is
established by N.C.G.S. 36A-2, entitled, Investment, and reads as
follows:
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"In acquiring, investing, reinvesting, exchanging, retaining,
selling, and managing property for the benefit of another, a
fiduciary shall observe the standard of judgement and care
under the circumstances then prevailing, which an ordinarily
prudent man of discretion and intelligence, who is a fiduciary
of the property of others would observe as such a fiduciary.18
County Attorney Pope stated this means investments can be made
with no restrictions.
Chairman Retchin inquired as to whether it would be possible
for an authority to have more flexibility with investments, but
still require review by the Local Government Commission.
County Attorney Pope stated through local legislation or
through an agreement between the authority and Board of County
Commissioners this type of arrangement could be established.
Director of Finance, Andrew J. Atkinson, stated N.C.G.S. 159
specifically defines what type of investments can be made; however,
the County could broaden this definition allowing more flexibility
and at the same time avoid risk investments. Discussion was held
on the possibility of amending this statute. Dire~tor Atkinson
stated it would be most beneficial for the County to be able to
invest in mutual funds and stated it might be possible to encourage
the Local Government Commission to broaden the statute.
County Attorney Pope stated the hospital authority could
establish certain limitations on investments that would satisfy the
Board of County Commissioners.
. commissioner Sutton commented on the proposed authority and
listed the following reasons for considering this action:
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-The territorial boundaries of the Brunswick County Hospital
Authority can condemn property and establish a medical care
facility anywhere in New Hanover County within ten (10) miles
of the County's boundary line. New Hanover Regional Medical
Center is within this territory, and if an hospital authority
is established, State law will not allow two authorities to
overlap. This question would be resolved.
-Exemption from the Public Bidding Law would produce a savings
of approximately 10% - 15% on construction projects.
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992
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-Flexibility in investing will increase earnings approximately
1% - 3%.
-New Hanover County Regional Medical Center will assume the
County's general obligation bond indebtedness in the amount of
$3,750,000 saving the County $700,000 per year.
-New Hanover County Regional Medical Center's capital needs
will not clutter up the County's ability to borrow money.
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-The possibility of losing the IRS 501-C exempt status;
whereas, an authority would automatically be eligible to
receive this status.
Commissioner Sutton commented on the Craven County by-laws and
recommended that we obtain enabling legislation to create a similar
authority as follows:
-New Hanover Regional Medical Center Corporation would be
changed to New Hanover County Medical Center Authority with
the same board composure.
-The by-laws would allow the Board of County Commissioners to
appoint the authority members to serve at the pleasure of the
Board with removal of a member without cause by the Board of
County Commissioners.
-No compensation should be provided for authority members.
-The by-laws should require public bidding and allow the
authority to award contracts.
-The by-laws should require approval of all revenue bonds by
the Board of County Commissioners.
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-Joint ventures with private physicians should be carefully
considered as it is not good to mix private funds with public
funds.
commissioner Sutton stated in summary, it does not make sense
to consider asking citizens to float bonds to pay for such things
as a Rehabilitation Center since 40% of the users are from out-of-
county. Through good, sound management, the Medical Center is in
the position to pay the capital cost out of earnings, new
investments, and savings. Patient costs must remain at competitive
rates or below. The Rehabilitation Center is badly needed and it
is not right to ask the County taxpayers to absorb this debt when
the project can be paid from savings created by establishment of an
authority.
commissioner Barfield commented on concerns of the general
public and stated the major issue of concern is protecting the
pUblic's interest if the hospital becomes an authority.
A lengthy discussion was held on the importance of developing
by-laws that will specifically address and protect the interest of
the general public. Vice-Chairman Greer stated in order to
approach this issue, the Commissioners must be informed of the
financial status of the hospital, and he requested that a list of
investments be furnished to the m~mbers of the Board.
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Chairman Mathews stated the general public is interested in
receiving the best medical care for the least possible cost. Many
citizens have expressed concern for TV advertisements and high
salaries of the President and Administrative Staff.
A lengthy discussion was held on investments. commissioner
Sutton stated the Craven County Attorney informed him that the
Local Government Commission has control over investments of an
authority. Finance Director Atkinson stated investments of the
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992
PAGE 822
hospital are currently under the Local Government Commission;
however, if the hospital becomes an authority, and utilizes the
Prudent Man investment statute, investments will not be under
control of the Local Government Commission.
commissioner Barfield recommended identifying the Board's
concerns with the proposed investment flexibility.
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Consensus: After further discussion, it was the consensus of the
Board to request Finance Director to prepare a list of financial
items, including investments, that would be beneficial for
assessment of the hospital's financial condition with copies of
these items being forwarded to the Commissioners.
DISCUSSION OF N.C.G.S. 131-23, POWERS OF A HOSPITAL AUTHORITY
The following powers of a hospital authority as outlined in
the North Carolina General statutes were discussed:
1. To investigate hospital, medical, and health conditions
and the means of improving those conditions. Action:
Approved as written.
2 . To determine where
facilities exist. Action:
inadequate hospital and
Approved as written.
medical
3. To accept donations or money, personal property,
estate for the benefit of the authority and to take
the same from any person, firm, corporation or
Action: Approveq as written.
or real
title to
society.
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4. To acquire by purchase, gift, devise, lease condemnation,
or otherwise any existing hospital facilities. Add:
Contingent upon approval by the Board of County Commissioners.
5. To purchase, lease, obtain options upon, or otherwise
acquire any real or personal property or any interest therein
from any person, firm, corporations, city, county, or
government. Action: Approved as written.
6. To sell, exchange, transfer, assign or pledge any real or
personal property to any interest therein to any person, firm,
corporation, city, county or government. Action: Delete the
, word, personal, and add contingent upon approval by the Board
of County Commissioners.
7. To own, hold, clear and improve property. The question to
be resolved is whether the property is owned by the hospital
or the County. By right the property reverts to the County
should the authority be dissolved. Action: Insert a clause
that will state if the hospital authority ceases to exist, the
property will revert back to the County.
Commissioner Barfield commented on items 3-9 and recommended
that the County Attorney prepare a recommendation that will clearly
state that hospital property should revert back to the County.
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8. To borrow money upon its bonds, notes, debentures, or
evidences of indebtedness, as provided in G.S. 131E-26 and
G.S. 131E-27. Action: Add a phrase to tie this provision
into the fund balance.
9. To purchase real or personal property pursuant to G.S.
131E-32. Action: Add a clause to state that property should
revert back to the County and these purchases must be approved
by the Board of County Commissioners.
10. To appoint an administrator of a hospital facility and
necessary assistants, and any and all other employees
necessary or advisable, to fix their compensation, to adopt
necessary rules governing their employment, and to remove
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992
PAGE 823
employees. Action: Approved as written.
Consensus: After discussion of the pUblic's concern for salaries
being paid to the hospital administrative staff , it was the
consensus of the Board that a list of salaries should be furnished
to the Commissioners and in the future this information should be
reported to the Commissioners on a regular basis.
11. To delegate to its agents or employees any powers or
duties as it may deem appropriate. Action: Approved as
written.
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12. To employ its own counsel and legal staff.
Approved as written.
Action:
13. To adopt, amend and repeal by-laws for the conduct of its
business. Action: Add: Contingent upon approval by the
Board of County Commissioners.
14. To enter into contracts for necessary supplies,
equipment, or services for the operation of its business.
Action: Approved as written.
15. Power to appoint committees or subcommittees as it shall
deem advisable, to fix their duties and responsibilities, and
to do all things necessary in connection with the
construction, repair, reconstruction, management, supervision,
control and operation of the authority's business. Action:
Approved as written.
16. To establish procedures for health care providers to
secure the privilege of practicing within any hospital
operated by the authority pursuant to Part B of Article 5 of
this Chapter. Action: Approved as written.
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'17. Establish reasonable rules governing the conduct of
health care providers while on duty in any hospital operated
by the facility pursuant to Part B of Article 5 of this
Chapter. Action: Approved as written.
18. Power to provide for the construction, reconstruction,
improvement, alteration or repair of any hospital facility, or
any part of a facility. ,Action: Approved as written.
19. Power to enter into any contracts or other arrangements
with any municipality, other public agency of this or any
other state of the united states, or with any individual,
private organization, or nonprofit association for the
provision of hospital, clinical, or similar services. Action:
Legal Department is to review and resolve concerns with
reference to joint ventures.
20. Subject to subsection (c), to lease any hospital
facilities to or from any municipality, other public agency of
this or any other state or of the united States, or to any
individual, corporation, or association upon any terms and
subject to any conditions as may carry out the purposes of
this Part. Subject to subsection (c), the Authority may
provide for the lessee to use, operate, manage and control the
hospital facilities, and to exercise designated powers, in the
same manner as the authority itself might do. Action:
Approved as written.
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21. To act as an agent for the federal, state or local
government in connection with the acquisition, construction.
operation or management of a hospital facility, or any part
thereof. Action: Approved as written.
22. To arrange with the state, its subdivisions and agencies,
and any county or city, to the extent it is within the scope
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PAGE 824
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of their respective functions: (a) To cause the services
customarily provided by each to be rendered for the benefit of
the hospital authority; (b) to furnish, plan, replan, install,
open or close streets, roads, alleys, sidewalks or similar
facilities and to acquire property, options of property rights,
for the furnishing of property or services for a hospital
facility. Action: Approved as written.
23. To insure the property or the operations of the authority
against risks as the authority may deem advisable. Action:
Approved as written with incorporation of the clause, "as
applicable by the Wilmington/New Hanover Insurance Advisory
Committee.
24. To invest any funds held in reserves or sinking funds, or
any funds not required for immediate disbursement, in property
or securities in which trustees, guardians, executors,
administrators, and others acting in a fiduciary capacity may
legally invest funds under their control. Action: The Legal
Department is to review usage of the Prudent Man Rule.
25. To sue or be sued. Action: Approved as written.
26. To have a seal and alter it at its pleasure. Action:
Approved as written.
27. To have perpetual succession.
written.
Action:
Approved as
28. To make and execute contracts and other instruments
necessary or convenient to exercise the powers of the
authority. Action: Delete this item.
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29. To remove vehicles parked on land owned or leased by the
hospital authority in areas clearly designated as no parking
or restricted parking zones. An owner ofa removed vehicle as
condition of regaining possession of the vehicle, shall
reimburse the hospital authority for all reasonable costs, not
to exceed fifty dollars ($50), incidental to the removal and
storage of the vehicle provided that the designation of the
area as a no parking or restricted parking zone clearly
indicates the owner may be subject to these costs. Action:
Delete this item.
The County Attorney was requested to review these items and be
sure that all areas are covered with deletion of Items 28 and 29 as
well as duplication of any other items when preparing the draft
document. County Attorney Pope stated a catch-all clause can be
listed at the end of the document which states, "not withstanding
anything heretofore in the delegation of powers". The by-laws can
address issues of concern, which can be discussed and resolved when
meeting with the Hospital Board of Trustees.
commissioner Barfield objected to addressing concerns through
the by-laws due to a constant change in the membership of both the
Hospital Authority Board and Board of County Commissioners.
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commissioner Retchin recommended writing a local bill that
will establish the type of authority as desired by the Board of
County Commissioners.
30. To plan and operate hospital facilities.
Approved as written.
Action:
31. To provide teaching and instruction programs and schools
for medical students, interns, physicians, nurses, technicians
and other health care professionals. Action: Approved as
written.
32. To provide and maintain continuous resident physician and
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MINUTES OF WORK SESSION,> FEBRUARY 17, 1992
PAGE 825
intern medical services. Action: Approved as written.
33. To adopt, amend and repeal rules and regulations
governing the admission of patients and the care, conduct, and
treatment of patients. Action: Approved as written.
34. To establish a fee schedule for services received from
hospital facilities and make the services available regardless
of ability to pay. Action: Approved as written.
35. To maintain and operate isolation wards for the care and
treatment of mental, contagious, or other similar diseases.
Action: Approved as written.
36. To sell a hospital facility pursuant to G.S. 131E-8.
Action: Add contingent upon approval by the Board of
Commissioners.
37. (a) To agree to limitations upon the exercise of any
powers conferred upon the hospital authority by this Part in
connection with any loan by a government. Action: Approved
as written. (0) A hospital authority may exercise any or all
of the powers conferred upon it by this part, either generally
or with respect to any specific hospital facility or
facilities, through or by designated agents, including any
corporation or corporations which are or shall be formed under
the laws of this state. Action: After discussion of the
words any or all, it was the consensus of the Board to request
the County Attorney to further study this item and prepare a
recommendation for the draft document. (c) A hospital
authority shall not sell nor convey any rights of ownership
the authority has in any hospital facility as defined in G.S.
131E-6(4), including the buildings, land and equipment
associated with the hospital, to any corporation or other
business entity operated for profit, except that nothing
herein shall prohibit the sale of surplus buildings, land or
equipment by a hospital authority to any corporation or other
business entity operated for profit. Action: Approved as
written with adding a clause that will state "except if the
hospital authority declares any real estate surplus, that
property could be sold to any corporation or other business
that is operated for profit with approval by the Board of
County Commissioners.
A hospital authority may lease any hospital facility or part
to any corporation, foreign or domestic, authorized to do
business in North Carolina, on terms and conditions consistent
with the purposes of this part. The hospital authority shall
determine the length of the lease; however, no lease under
this subsection shall be longer than 10 years, including
options to renew or extend the original term of the lease,
except that leases of surplus buildings, land or equipment may
be for any length of time determined by the hospital
authority. The lease shall provide that the hospital facility
will be operated as a community general hospital open to the
general public and that the lessee will accept Medicare and
Medicaid patients. No lease executed under this subsection
shall be deemed to convey a freehold interest. No bonds,
notes nor other evidences of indebtedness shall be issued by
a hospital authority to finance equipment for or the
acquisition, extension, construction, reconstruction,
improvement, enlargement, or betterment of any hospital
facility when the facility is leased to a corporation, foreign
or domestic, authorized to do business in North Carolina.
For the purposes of this subsection, "surplus" means any
building, land or equipment which is not required for use in
the delivery of necessary health care services by a hospital
facility at the time of the sale, conveyance of ownership
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MINUTES OF WORK SESSION, FEBRUARY 17, 1992
PAGE 826
rights, or lease.
This subsection shall not be construed to affect any pending
litigation nor to reflect any legislative intent as to any
prior authorized or executed agreements. This subsection
shall be effective from July 15, 1983 until June 30, 1984.
(d) No provisions with respect to the acquisition, operation
or disposition of property by other public bodies shall be
applicable to a hospital authority unless otherwise specified
by the General Assembly. Action: After discussion of the
provisions of (d), the County Attorney recommended using the
same verbiage as used in the Craven County by-laws.
Further discussion was held on eminent domain. Commissioner
Retchin recommended deleting this item with a provision whereby the
hospital authority can request the Board of County Commissioners to
condemn property when necessary.
Consensus: After further discussion, it was the consensus of the
Board to request the County Attorney to review the eminent domain
provision and make a recommendation. Also, the County Attorney was
directed to prepare a draft document incorporating the action of
the Board on the items discussed as well as any other action that
will protect the County's interest. Once the draft document is
completed, another Work Session will be scheduled to discuss the
proposal.
ADJOURNMENT
Motion: Commissioner Barfield MOVED, SECONDED by Commissioner
Retchin to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSLY.
Chairman Mathews adjourned the meeting at 4:10 P.M.
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~e F. Harrell
Clerk to the Board
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