The lawsuit filed by Carter County against Carter County Tomorrow and First Tennessee Private Industry Council (PIC) in August is coming at a high price to both city and county taxpayers with its impact on economic development and with attorney fees, according to Elizabethton City and Chamber representatives.
Aside from attorney fees amounting to $60,000 that both the county and Carter County Tomorrow have allocated, the Carter County Commission approved a $75,000 bid to terminate the lease with CCT regarding the Workforce Development Complex at their meeting Monday night.
However, not all the lawsuit’s costs can be recorded in budgets. Jon Hartman, Elizabethton Director of Planning and Development, says one huge economic cost is the reputation of the city and county to prospective industries.
“There are some large economic impacts as well as bad PR,” Hartman said. “Before an industry comes in, they read the papers. They want to know what’s going on, and if they see that the county and its economic development agency are fighting, it doesn’t bode well.”
Not only that, but the Tennessee Department of Economic and Community Development has put a Select Tennessee site development program with Carter County on hold until the lawsuit is settled, Hartman said.
The program would involve a state consultant evaluating four industrial sites and making recommendations to get the sites shovel-ready. Then, through the Select Tennessee program, the state helps to prepare those sites and offers grants. Once the sites are prepared, the state then helps the local officials market those sites to potential industries.
“It’s just going to set us back,” said he added.
It can take five years to get a site ready with water, sewer, road improvements and other measures, Hartman said. So, if the lawsuit were to last two years, it could take seven years to have sites ready to offer prospective industries.
Hartman listed Fidelitone as an example of job creation and pointed out that those 65 new jobs bring people into the town, spending money that can help create more new jobs.
“Everything is connected and it’s kind of a trickle-down effect,” he said. “If we’re set back from getting a manufacturer here that could hire 50-100 people, that’s 50-100 families that are being set back. So they’re not spending as much locally either. Depending on how long this lawsuit goes, at this point, it is setting us back at least 6 months at a minimum.”
And though Carter County Mayor Leon Humphrey said it is not related to the lawsuit against CCT, the county has also withheld the hotel and motel tax from the Tourism Development Commission — $92,000 or 75 percent of its annual budget — since July 21. Humphrey would not comment on why it is being withheld.
Elizabethton City Councilman Richard Tester expressed his frustrations with the lawsuit, and with Humphrey.
“The Mayor is basically suing himself,” said Richard Tester, an Elizabethton City Councilman, who is one of three members acting as CCT President along with Dale Fair and Sam LaPorte.
“We had numerous meetings with Leon (Humphrey) to work together,” Tester said. “Between Leon, myself, Dale and Sam, we met at least three times. The last meeting that he attended was about a week before this lawsuit. We informed the Board on this and tried to move forward.”
“Leon doesn’t like the structure of CCT,” Tester said. “He doesn’t like the tourism being under the umbrella of the Economic Development Board. He wants the WDC under his control.”
Tester also said he believes Humphrey wants an economic development director to answer to him instead of a “whole board of directors,” and he believes that is why Humphrey has designated his Administrative Assistant, Susan Robinson, as his delegate to deal with economic development in the county.
“All the state programs have to work through the Economic Development Board,” said Tester. “They see it as vital for communities to work together, and that’s the whole point of CCT — the city and county mayors are on it, along with council and commission representatives and members from each city.”
Tester also said, according to Tennessee Public Chapter 1101, an organization must be in place or opportunities for “significant grant money” will be lost.
Humphrey refused to comment on the intended outcome of the lawsuit, but said “It’s simply asking the court to determine the validity of the lease period.”
“Parties are trying to expand this into something more than it is,” he added.
The Carter County Tomorrow economic development agency is comprised of both county and city representatives, and its board manages the assets (Workforce Development Complex) and bank accounts of PIC, an agreement which former PIC Executive Director J.B. Shepherd and former CCT Chairman Jack Buckles signed in August 2007.
The County complaint asserts this is not the proper process to dissolve a non-profit entity or to merge or transfer its assets to another entity.
The time period in question may be between the dissolve of the former five-county board of directors until the creation of CCT in 2007. The county complaint asserts that when the PIC ceased to exist legally as an entity, all of its assets became property of the County and that any subsequent lease is null and void. However the Secretary of State Business Records show the PIC listed as active with reports maintained annually from 2000 to 2014, with previous documentation dating back to its initial filing in 1985.
The County is the owner of the WDC, and CCT is the sublessee according to an agreement beginning August 2011 and ending in July 2028 signed by Mayor Leon Humphrey and former CCT President Tom Anderson. The lease appears to be notarized in both 2012 and 2014, and the county complaint states that it was never recorded with the Carter County Register of Deeds Office.
CCT’s response to the lawsuit, filed by Attorney Charleton DeVault, states that because the county participates in CCT and PIC business affairs with two county commission members and the county mayor being members of the CCT board, the county has waived any objections that it now raises. The county has “participated in, ratified, acquiesced in all the acts, operations, and events regarding FTPIC and CCT which it has alleged in its complaint,” it states.
“The lawsuit affects a large operation that benefits the city and the county,” said DeVault. “It’s a non-profit attempting to help both the city and the county with multiple operational budgets under its control including WDC under FTPIC. It is big business — it affects all operations; it doesn’t just affect this building. And, the county has been in all the meetings in which all of this has been decided — that’s one of our arguments — estoppel — you can’t go back on what you were a part of.”
Tester said the county has backed off on some of the claim’s accusations because new information has come to light. For example, it states that CCT, in the name of WDC or PIC, has incurred a debt against the county totaling $154,000. This debt was approved by the County Commission on May 19, 2014 as a forgiveness of four years of WDC rent of $41,000 annually to compensate for the new roof installed on Building Two which houses Northeast State, totaling $152,000. If this is the debt in doubt, it has been paid down to a debt of $111,000 according to WDC Director Kim Eggers.
Executive Director of the Elizabethton/Carter County Chamber of Commerce Tonya Stevens is very concerned about the economic impact the lack of funding will have on the area. The Chamber’s tourism efforts include marketing online, through state venues, attending events to promote the county and staffing the Visitor Center and providing it with maps and guides.
This is the busiest time of year, Stevens said, noting that when people visit, whether it is to go fishing, hiking, camping or site seeing, they stay in Carter County hotels, eat in local restaurants and purchase supplies in local stores.
Since January, the Chamber has welcomed more than 1,500 travelers into the visitor’s center, 1,000 of which were from out of state, Stevens said. The county has had 60 international visitors, and has received more than 2,500 requests for information from people looking for a place to retire, she added. Carter County has also received the Retire Tennessee Program designation, something that came about through participation in the Tennessee Department of Tourism.
As a direct result of the Chamber’s work, Stevens said, in 2013 and 2014, tax receipt revenue increased by five percent, totaling $2.17 million.
“It is important to keep up consistent communications with potential visitors,” Stevens said. But if funding is not distributed as intended to maintain these outreaches, she warns that Carter County can expect to see a decrease in these numbers.
“We can’t last too much longer without getting that funding,” Stevens added. “It’s very lean right now, and we need to make sure that our community knows that we are still working as hard as we can with what we have. It would be much easier to promote our county if we had the funding that has been coming to us and that has been set aside for tourism.”
“It’s very disheartening to realize that we can’t capitalize on some opportunities that might present themselves because our funding is being withheld,” she added.
If tourism doesn’t have the money to operate, Stevens said they will not be able to have a visitor center or promote the county.
“We have been able to finish things that we already had planned,” she said. “What this is now causing us to do is to be very frugal and not to take on any new projects and to cut way back on opportunities that present themselves from here forward.”