City Council defers Interlocal Agreement

Published 10:42 am Friday, March 11, 2016

Star Photo/Rebekah Price  Carter County Mayor Leon Humphrey (right) spoke at length about the need for the county and its municipalities to sign the new interlocal agreement in order to be compliant with the state so that any entity within may be eligible to receive pending and future grant monies.

Star Photo/Rebekah Price
Carter County Mayor Leon Humphrey (right) spoke at length about the need for the county and its municipalities to sign the new interlocal agreement in order to be compliant with the state so that any entity within may be eligible to receive pending and future grant monies.

After lengthy discussion with County Mayor Leon Humphrey, City Councilmen voted to defer action on a proposed Interlocal Agreement to establish a joint economic and community development board (JECDB) in Carter County. Counties and municipalities are required to enter into this type of agreement according to Section 5-1-113, Tennessee Code Annotated.

“I got the feeling that Council wasn’t unified in their approving the agreement tonight,” said Elizabethton Mayor Curt Alexander. “I still agree that the Interlocal Agreement is the way to go, and hopefully by next month, Council will have all their questions answered and we can move forward.”

Having a compliant JECDB board is required by Tennessee Public Chapter 1101 in order to receive grant monies, and Humphrey detailed various compliance issues which his office has found with the current JECDB, Carter County Tomorrow (CCT).

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“I don’t see deferring this matter, Mayor,” Humphrey Said to Elizabethton Mayor Curt Alexander and Councilmen. “You and I discussed this at length with City Manager Kitchens, and we’ve discussed it at length with Council present. This is a very serious matter. It has nothing to do with a power play on anyone’s part. I know that’s what we’ve heard quite a bit, but it has everything to do with compliance. I can assure you that we have looked at this extremely thoroughly. It’s not a finite decision; it is based on nearly a year’s research. We’ve got a serious compliance problem. CCT, the joint economic community development board is noncompliant. It has never been compliant, and I’m not proud to say that because it took me two-plus years to realize that myself.”

Humphrey said he began inquiring about the lack of an annual audit in 2012, which led to a Best Practices Overview by Blackburn, Childers and Steagall in 2013. He said this review of more than 60 transactions yielded a number of concerns and prompted the CCT board to vote in favor of getting audited.

However, the board never took action to contract with an auditor. Humphrey told Council, and CCT minutes reflect, that board members were concerned with the cost of an audit.

“It was the mind-set of the members at the time — and Mr. Tester, you were the one that pushed the issue especially — that we couldn’t afford an audit,” said Humphrey. “My statement then was if you can’t afford the price of an audit, if you can’t show that you’re a responsible agency when you’re dealing with public monies, if you can’t prove that you’re holding true to your fiduciary duties, then you don’t need to be in that organization.”

Humphrey said that at the time, CCT had plenty of money to afford an audit.

Based on a compliance audit report conducted by Humphrey and his assistant Susan Robinson in 2015, CCT had numerous compliance issues. Humphrey stated the absence of Johnson City on the CCT was one of them.

He cited examples such as the administrative dissolve of the Elizabethton/Carter County Economic Development Commission by the CCT, which was supposed to continue existence under the umbrella of the CCT, according to CCT Charter. Some other issues stated in the report regarding co-mingling of funds between entities, and the validity of the existence of the First Tennessee Private Industry Council (PIC), under which the Workforce Development Complex was leased after the act creating the PIC was repealed.

Most recently, the Tennessee Comptroller of the Treasury has contacted the board stating that it must file an audit report annually, according to Section 9-3-212, TCA. The CCT board voted Thursday to have an audit completed.

Because of these issues, Humphrey said he cannot sign to certify compliance with state law and therefore, the county cannot receive block grant and other grant monies.

Humphrey said the Interlocal Agreement would meet the minimum criteria of the state, would cost no tax dollars except the minimal price of posting public notice, and would require a minimum of quarterly meetings.

The members would include the mayors of Carter County, Elizabethton, Watauga and Johnson City plus one qualifying, nominated land owner, one member of the Elizabethton/Carter County Chamber of Commerce, the director or designee of Tennessee College of Applied Technology in Elizabethton, and two private sector nominees.

The agreement states that nothing in it shall prohibit or restrict its parties from entering into other interlocal agreements as provided by law.

“Carter County has passed it; Watauga has passed it,” said Humphrey. “The Mayor (Alexander), city manager and I have discussed this and made what we feel are reasonable amendments that fall within Public Chapter 1101; and to defer it makes no sense to me at all. Believe me, I would not be in front of you tonight if it weren’t of a serious nature — a compliance nature.”

He asked why there would be any doubt in the minds of Councilmen, with the knowledge that the action to get an audit Thursday was taken because the comptroller demanded it, and that CCT “can never take care of its ills.”
“They can’t be cured, it’s impossible,” said Humphrey.

Humphrey referenced the previous metaphor used by Councilmen in December stating the CCT was like an automobile with a flat tire that needed repair and said that it is not true. He said if it were an auto, it would need a new drive train, suspension and outer body. “It’s not repairable,” he said.

The Interlocal Agreement would be established for one purpose, he said: to certify compliance in order to receive grants. He said it does not need to be mixed in with economic development organizations.

As far as an economic development organization, Humphrey said Carter County could join with nearby counties in their efforts to take a regional approach, or they could approach economic development differently, as various counties in the First Tennessee Development District have done.

The Interlocal Agreement has been approved by a 13-10 vote in the Carter County Commission and by a 3-1 vote in the Watauga City Council. Elizabethton Councilman Bill Carter was absent, and Councilman Wes Frazier voted against deferral of the motion.

Though various Councilmen including Sam Shipley, Mayor Alexander and (Carter County Tomorrow Chair) Richard Tester said they like the Interlocal Agreement, they voted to defer it.

Councilman Jeff Treadway asked what would be different and said he did not like being pressured to vote on the agreement without more information. Other councilmen questioned the validity of Humphrey’s allegations regarding compliance issues with CCT and whether these were issued which could be fixed.

Humphrey’s assistant Susan Robinson presented 18 compliance issues to the County Commission in January 2016 based on research into CCT meeting minutes, news reports, annual reports, state laws, IRS documents, interviews with state and federal authorities and attorneys, and bylaws of CCT and its entities. This report cited information from those sources and provided links to Internet-accessible documents, laws and videos where possible.

When Alexander was asked by the Elizabethton Star Thursday whether he, an original member of the CCT, or any member to his knowledge had researched any of these compliance issues he said, “No,” and that he would not know where to look.

He said attorneys Sam LaPorte and Charleton DeVault have been researching it.

Alexander said the compliance issues may be true, but that they do not know 100 percent. When asked again by the STAR if he had looked into it, he said, “No, we will check that out.”

He and Tester argued that they don’t get paid to serve on the board and do not have time to research these issues because they work full-time and serve in multiple elected positions.

“First of all, it’s not my job to do research; I’m a part-time Mayor with a full-time job,” said Alexander. “We have a staff that does that, and I rely on Jerome Kitchens to do that. …I’ve never seen a paper or anything other than from the County Mayor that says we’re not in compliance.”

When asked by the STAR if any CCT members fact-checked the citations in the County Commission presentation by Robinson in January which provide links and TCA code numbers for reference, Tester responded, “Those TCA codes are really vague. The problem that Carter County Tomorrow has — I’ll be straight up with you — is we don’t have that interlocal agreement and that’s why we’re trying to basically work through some of these things and to make everyone feel comfortable with creating another interlocal agreement, and we’ll do that.”

If the matter is not resolved and a compliant Interlocal Agreement established, Humphrey said an approximately $450,000 grant to expand the Carter County Health Department may be lost. If this agreement were to have passed, Humphrey said Johnson City representatives agreed they would have put it on their agenda for March 17 and had said they would likely pass it.

The issue will be revisited at the April 14 City Council meeting.