The Veterans Administration, with a 20-year lease etched into stone, will shell out more than $68 million over 20 years for a Wilmington, North Carolina facility it will not own, renting it instead.
According to WECT, which investigated the issue, commercial real estate brokers claim that the $300,000 monthly rent is roughly twice the normal rate for a month for prime medical office space in the area. WECT started its investigation after discovering that the clinic lay fallow for three months because plumbing was making the clinic’s water unusable.
In March, the Cape Fear Public Utility Authority issued a “Do Not Use Water” sign at the facility. After attorneys for the clinic sent a cease and desist order to CFPUA, the New Hanover County Health Department stepped in and said it would supervise the situation.
WECT reported that, despite the lease’s stipulation that the rent covered operating expenses, the lease says, “The Annual Rent does NOT include interior utilities and interior janitorial services, however it does include the Operating Expenses paid Summit Smith Healthcare Facilities $928,000 for operating expenses.”
The VA also pays $217,000 a year to lease the land under the building from the airport authority, land that once was owned by the federal government as a military facility but was given to New Hanover County after World War II with the understanding that the land be utilized for aviation. The 50-year lease for the land would cost the VA roughly $11 million dollars; after that time, the airport would reclaim the land.
Congressman David Rouzer, who sent a letter in June to Veterans Affairs Secretary Robert McDonald regarding the issue, released a statement regarding the revelation of the enormous cost assumed by the VA. He said:
The VA’s high rent payments for the Wilmington Clinic are just another example of the lack of common sense demonstrated as well as the taxpayer dollars wasted by the federal government. It is unacceptable that taxpayers are forced to pay double the fair market price to lease this facility, and it’s particularly shameful that a number of our veterans are not even able to use this facility right now — forcing them to find care at non-VA facilities or drive the long distance to the Fayetteville VA Hospital. Our veterans, their families and all of us as taxpayers deserve better.
Summit Smith has informed WECT that the lease for the facility no longer lists Summit Smith as the lessor, but rather lies with Wilmington NC VA 2011, LLC.