Cash-poor hospital accepts county's favor to buy its real estate | Eastern North Carolina Now

    The hospital and the county shook hands today on a deal that will provide the hospital with the means to pay its debt service to the county and have operating capital—at least for the upcoming fiscal year.

    Beaufort County, which currently owns 80 percent of hospital land and buildings, offered to purchase the remaining 20 percent for $4.8 million. The county’s offer was communicated to the hospital board by Beaufort County Manager Paul Spruill at its July 13 meeting. At today’s hospital board meeting, the Beaufort Regional Health Systems Authority Board commissioners unanimously voted to accept said offer.

    As per the Installment Purchase Contract Proposal offered by First Citizens Bank, which will finance the county, the deal must close on or before August 11, 2010. The county will take out a 15-year loan for $4.8 million at 4.65 percent interest.

    If the deal goes through, the county will own 19 more parcels of hospital land, which include: a parking area off Brown St., land and buildings in use by Aurora Medical Center, land and a building on the corner of E. 15th and Brown streets, the land and reservoir on the opposite corner, Inner Banks Urgent Care, an empty lot on Cowell Farm Road, a building and a lot on Cowell Farm Road, and others.

    The tax value of this real estate is $6.27 million--$1.47 million more than what the county offered. Spruill said the purchase price was primarily based on the hospital’s immediate need for cash, as it attempts to avoid bankruptcy while it searches for a partner with which to affiliate and tries to cut costs and increase revenues. Just for the 2010-2011 fiscal year, the hospital owes the county a $1.57 million re-payment of money it borrowed for a construction project.

    “The offer to purchase of $4.8 (million) really has less relationship to the value of the parcels, and the relationship is really more towards what the hospital and the county have been trying to accomplish since about March in the way of a refinancing that would accomplish a release of liquidity on the part of the hospital so that the hospital could have some operating capital and repay the county debt service for this fiscal year,” he said.

    Brenda Peacock, the new Vice Chairman of the BRHS Authority Board, elected today, asked Spruill if the buildings owned by the county would be leased to the hospital.

    Spruill reassured her that they would, as are those that are already owned by the county.

    “The idea of the offer to purchase is that the county would simply become the owner of real estate and a landlord in the identical sense that the county is already a landlord for the remainder of what is the hospital’s business,” said Spruill. “So, we want to become nothing other than what we already are for 80 percent of hospital real estate.”