© 2024
Virginia's Public Radio
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

After botched real estate deal, state watchdog recommends changes to VCU Health’s board

VCU President Michael Rao speaks before elected officials at the June 2024 meeting of the Virginia’s Joint Legislative Audit and Review Commission.
Brad Kutner
Radio IQ
VCU President Michael Rao speaks before elected officials at the June 2024 meeting of Virginia’s Joint Legislative Audit and Review Commission.

Virginia’s Joint Legislative Audit and Review Commission, or JLARC, recommended changes to Virginia Commonwealth University’s hospital system leadership Wednesday. The review came after a botched real estate deal between the city of Richmond and the hospital’s board.

The more than $600 million plan seemed like a good idea back in early 2021. It would’ve brought a large office park, retail space and parking to downtown Richmond. But after the pandemic hit, the idea was scrapped – leaving VCU Health owing about $80 million dollars to the city and another $2.5 million annually as a “payment in lieu of taxes”

After questions about the deal arose, JLARC – the state’s legislative watchdog – was authorized to study the issue last fall. Wednesday’s recommendations included changes to the makeup of the health system’s board, shifting responsibilities away from VCU President Michael Rao, and requiring the entity to do more long-term strategic planning.

Rao spoke before legislators and the commission and noted both VCU and VCU Health worked with JLARC to complete the report. But he also took responsibility for the debacle.

“We all regret the result wasn’t what anyone wanted, but I will say that the buck stops with me," he said.

Rao said the project was a goal of the hospital system for some time, but high-level departures, a confluence of economic issues and a threat to its bond rating all required the deal to be scrapped. He also said he already made some internal changes in line with JLARC’s recommendations, but welcomed undertaking more.

“I very much support updating the rolls of VCU president and VCU board chair,” he said.

But Senator Jeremy McPike is still concerned about the health system — a semi-state entity — entering into a deal that collects funds in lieu of taxes.

“Clearly they wanted to bend over backward to do whatever they had to do to get that property but in doing so, they’re obviously paying a dear price for it,” McPike told Radio IQ after the meeting.

McPike hopes to see the annual payments to Richmond city nixed and promised to work on a bill next year to address additional concerns.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.

Brad Kutner is Radio IQ's reporter in Richmond.