The Governor of Southwest Virginia


In the span of a few hours, Terry McAuliffe received both support from healthcare executives for his Medicaid stance and a big legislative win for his Bristol retail legislation

By Scott Robertson and Tammy Childress

On March 4, which saw his first visit to Southwest Virginia since becoming governor, Terry McAuliffe had a very good day. It began with a roundtable discussion with Wise County Chamber of Commerce members and representatives of Frontier Health, Mountain States Health Alliance and Wellmont Health System regarding Medicaid expansion. The meeting, held at the University of Virginia-Wise’s Convocation Center, brought the governor into a roomful of sympathetic figures.

McAuliffe has asked the Virginia General Assembly to deliver by July 1 a budget that addresses what is generally referred to as “the coverage gap.” The gap is the result of the U.S. Supreme Court decision allowing states to decline Medicaid expansion funds. In states that do not accept those funds, some individuals find that they do not make enough money to qualify for health law subsidies, but make too much to fall into the existing Medicaid ranks.

While the State Senate has put forward a bipartisan plan to address the gap, the House of Delegates is pushing to end the current session without addressing the issue, then to convene a separate session later for that purpose. McAuliffe decried the proposed delay as, “Washington-style politics brought to Richmond.”

McAuliffe told the gathered executives he believes it to be counterproductive both from a healthcare standpoint and from an economic standpoint to refuse the $2 billion he believes Virginia would gain from accepting Medicaid expansion.

“I want everybody to understand that as of today, since January 1, we have given up $270 million,” said McAuliffe. “We lose $5.2 million a day of money that you are paying that is going to another state.”

McAuliffe asked Wellmont CEO Denny DeNarvaez what Wellmont’s future would be without Medicaid expansion. DeNarvaez told him that in addition to closing Lee Regional Medical Center, she has already had tough talks with members of rural communities served by smaller hospitals. “We tell them, ‘We’ll be here just as long as we can do it, but it is not easy.’”
Asked later if she could guarantee all her hospitals would stay open for a year if the House of Delegates gets the delay it’s seeking, DeNarvaez said, “No. We cannot guarantee anything in healthcare right now.”

DeNarvaez and Ann Fleming, senior vice president, Virginia operations for Mountain States both told McAuliffe that no hospitals in Northeast Tennessee or Southwest Virginia currently function solely on operations revenue. “You can’t go that long on fumes,” said Fleming, who also told the governor that if Medicaid expansion funds were accepted it would mean an additional $1.2 million per year for Norton Community Hospital alone, but that, “as a system we now employ about 750 fewer team members than we did this time last year.”

“I will get this done,” promised McAuliffe later. “I will get this done if it’s the last thing I do.”

The Falls
Later in the day, as the governor continued touring medical facilities in Wise County, the Virginia Senate Finance Committee and the full Senate back in Richmond were passing his first bill. That bill gives Bristol the ability to collect sales tax back from the state in order to float revenue bonds upon the opening of any business in The Falls retail development. Those revenue bonds will be necessary to continue work on the project because Bristol has already used 96 percent of its capacity to issue general obligation bonds.

Similar legislation had failed to make it out of the Senate Finance Committee in late February, but the governor’s version sailed through both the committee and the full Senate March 4.

“Southside, Southwest Virginia are in desperate need of jobs,” said McAuliffe. “Unfortunately the legislation didn’t make it out of the House or Senate, so I drafted – my first one – I drafted my own bill that I sent over that will alleviate the problem because we can create thousands of jobs in Bristol. It was the right thing to do.”

McAuliffe said he wanted to remove any doubt that Richmond will stand behind Bristol in its effort to create the super retail center off Exit 5 of Interstate 81. “I picked up the phone and called the chairman of Cabela’s that will be the anchor tenant. I said, ‘Listen, it didn’t get done in the General Assembly. I’m going to do this as governor. We’ll get it done in a bipartisan way. Please, please, please come to Bristol.’ And he said, ‘If you get it done, I’ll be there.’”

McAuliffe’s move to support The Falls breathed new life into the project, said Bristol Mayor Guy Odum. “We appreciate Governor McAuliffe so much because this area of Southwest Virginia did not go his way in the election, but he put politics aside and decided that the number of jobs created in this development would be more important than politics.

“The governor’s bill did exactly what we needed it to do with The Falls,” Odum continued. “We can collect the sales tax as each building is built and apply it to the revenue bond purchases. That will allow us to move to the bond market a lot quicker.”

Odum said the city’s bond counsel is now making ready to issue those bonds. “They have been doing their due diligence already. They’re looking at all the numbers we’re giving them and the number of stores we have already signed. As we sign more stores, which we hope to do in the coming weeks, then they will look at those sales figures to determine how much money we can get in the bond market.”

Odum said he’s hopeful that the governor’s intervention will push Cabela’s to move forward with a fall 2014 opening instead of waiting until spring 2015. “We’re looking at two stores right now that we’re working on finalizing the contracts. There’s about 25 stores that have letters of intent. We believe that once Cabela’s has firmly started building and going vertical, that other stores will jump on board and want to be in that development.”

The original Senate legislation had been opposed by lobbying efforts paid for by the developers of The Pinnacle, a retail development straddling the Tennessee-Virginia line. McAuliffe portrayed that struggle as an interstate battle between Tennessee and Virginia. “The Tennessee developer has got every right to argue his position,” said McAuliffe. “But he’s in Tennessee. My job is to watch out for the Commonwealth of Virginia.”

Steve Johnson, the lead developer of the Pinnacle, bristled somewhat at being referred to as “the Tennessee developer.” Johnson’s office is in Bristol, Va. and the Pinnacle has more acreage in Virginia than in Tennessee.

“To be clear, we did not oppose the governor’s bill,” said Johnson. “Bristol’s team of lobbyists will tell you that. I will say that although I don’t believe the governor was properly informed of the public’s risk associated with The Falls, I am encouraged by his interest in Southwest Virginia. The governor has contacts all over the country and there are many ways he can help here.”

“In fact,” added Johnson, “we are ready to expand into our 230-acre site in Washington County, Va. The best-kept secret in this whole deal is that over half The Pinnacle project is in Virginia. We’re in receipt of our initial grading permit in Washington County and we look forward to working with the governor’s economic development staff and local officials to maximize the positive impact on Washington County and Virginia.”

McAuliffe did make it clear that while he backs the Falls project 100 percent, he was not pleased when he learned that Bristol’s choice to go so deeply in debt ($40 million in bonds for The Falls to date) was forcing the state to step in. “When I came into the governorship, I had to deal with a situation where millions of dollars had already been spent,” said McAuliffe. “We risked the threat of losing all of that money and the threat of losing thousands of new jobs.”

Read the entire story in the March 2014 edition of The Business Journal.

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