Aggressive Moves of Carolina Healthcare System
DCDA, CHS work to straighten out 'misperceptions'
Concerns over CHS’s acquisition of Dilworth properties highlights need for communication Following UNC’s endorsement in March of plans to expand its School of Medicine in Charlotte, Carolinas HealthCare System has drawn increasing scrutiny as it acquires properties near its medical center in Dilworth. Rumor and conjecture gained steam this summer when CHS, through its real estate representative Lincoln Harris, added properties along East Boulevard and Fountain View Street to its already significant holdings.
Dilworth residents began to wonder what would become of that section of Dilworth. The more suspicious among them envisioned retail and residential teardowns to accommodate institutional structures and parking decks that could spoil quaint, walkable, shoppable Dilworth. Apprehension grew. It was time to talk.John Knox, an Executive Vice President with CHS, attended an August meeting of the Dilworth Community Development Association, “at which point it became very clear that we need to have a better communication process both ways,” he said. To that end, representatives of DCDA and CHS met Sept. 22 to address questions that have arisen in the neighborhood since the June purchase of the East Boulevard property leased to Caribou Coffee and Bruegger’s, explained DCDA President Geoff Owen.
CHS fielded questions about its goal in purchasing land currently leased to Caribou/Bruegger’s and East Boulevard Bar & Grill; about its relationship with the Centurion Healthcare Fund, Lincoln Harris and Charlotte Radiology; about any intent to purchase or redevelop other properties within the “four blocks” area adjacent to Carolinas Medical Center (an area stretching along East Boulevard, from Scott Avenue past Fountain View Street and Garden Terrace to Lombardy Circle). And about possible plans for a medical school in that space.
“People have read about the potential for the UNC School of Medicine coming to Charlotte,” said Knox. “They understand we have a number of properties and they’re concerned that we have imminent plans to demolish properties with the intention of building a school of medicine. That’s incorrect.”
“We understand that Carolinas Healthcare System has to maintain an element of privacy in what they do from a strategic standpoint,” acknowledged DCDA’s Owen. “Also they have a certain situation that they need to be cautious of, which is the attainment of the medical school. They’re trying to piece a lot of puzzle pieces together that are not necessarily happening in the ideal chronological order, which can cause CHS to probably be a little more cryptic than we think they should be.” Still, Owen said he thought the recent meetings helped bring residents’ concerns to light, and Knox talked earnestly about alleviating worries that CHS properties might be left vacant and poorly maintained for long stretches.
CHS has steadily become a significant landholder within the four blocks. According to the Street Name Lookup function on CharMeck.org, 10 of 25 parcels on Fountain View and 22 of 29 parcels on Garden Terrace belong to CHS, its parent company or a related LLC. One of DCDA’s goals is to advocate for neighboring homeowners who fear their property values will slide if CHS does not adequately maintain its properties or lets them remain vacant.
Knox says the vast majority of the CHS-owned homes in the area are occupied, primarily by students and medical residents whose leases may last a few weeks to a few years. As for upkeep, Knox said CHS maintains its properties in a state that’s “as good as or better than they were when we bought them. We’ve put over $700,000 into these residential properties since we purchased them.”
Knox noted that one or two properties may be unrentable. “We haven’t decided yet what to do with those,” he said.
As an advocate for the four blocks, DCDA aims to improve communication with CHS. The association has asked CHS to provide vacancy reports and early notice of any planned demolition, and CHS has agreed to meet twice a year – more often, if needs arise – with a representative group of homeowners in the four blocks. DCDA is also pushing for transparency in pricing – the transfer of property from one CHS entity to another can obscure the sale price, which compromises comparable sales figures.
Despite a common misperception, the DCDA cannot prevent acquisition of properties from owners who want to sell – and some clearly do. CHS has been purchasing properties around the CMC campus for 20-some years, “essentially to prevent us from being landlocked,” said Knox. “In general, we purchase properties when they become available.” But in the past year, the purchasing seemed more purposeful. “If we looked at a map of CHS-owned properties in the four blocks area, you’ll see there are a few properties we don’t own that over some period of time it probably would be helpful to own. And so we used Lincoln Harris to contact those property owners and ask them if they would be interested in selling,” Knox explained. Regarding CHS’s current relationship with Lincoln Harris, Knox said “they are not assisting us at this point in time.”
Will Dilworth HostA School of Medicine?
If approved by the N.C. General Assembly, the UNC School of Medicine’s expansion would increase first-year enrollment at the Chapel Hill facility by 70 students in 2009. As those students enter their third year of study in 2011, the proposed plan would bring 50 to a UNC School of Medicine in Charlotte and 20 to an Asheville facility. In Charlotte the following year, the 50 rising fourth-year students would be joined by 50 students from a third-year class.
Knox says CMC already trains 50 medical students but would need additional facilities to accommodate the expansion plan, if approved.
In May, the Charlotte Business Journal reported that the medical school would require about 110,000 square feet of space. In the same article, Dr. James McDeavitt, CMC’s senior vice president for education and research, told the Journal that some locations being explored would involve replacing existing buildings.
CHS will not acknowledge or disclose site plans unless UNC gets financial approval for the expansion, which meanwhile leaves CHS open to conjecture that Knox says can create misperception.
“If you look at our history working with DCDA and Dilworth, we have done as much as, if not more than, anyone else to make sure that we help maintain the vibrancy and the quality of this community,” Knox said, adding it’s in CHS’s best interest to ensure that Dilworth and surrounding areas are of the highest quality to aid in recruiting health care professionals and to provide employees with desirable dining and retail options.
“We feel like we’ve really tried to do the right thing, and we’ll continue to … be respectful of the neighborhood and do what we need to do to maintain our mission, and at the same time do it in such a way that people feel good about it,” said Knox.
To that end, Owen said that when change comes he’d like to see CHS and DCDA work to create a plan that benefits CHS and Dilworth. He points to Cleveland, Pittsburgh and Philadelphia as models of how higher-density, mixed-use development can integrate into a neighborhood well and produce exciting projects.
Owen emphasized that if a medical school is projected for an area zoned mostly for residential use (like the area between CMC and East Boulevard), CHS can assemble all the properties but still must go through a rezoning process. “We worked really hard with City Planning to build an award-winning small-area plan for Dilworth, and it should be what rules the day,” Owen said.