County lawsuit on the path to settlement

Published 9:00 am Thursday, April 28, 2016


The lawsuit filed by Carter County against Carter County Tomorrow (CCT) may soon be coming to a close, as the County Commission approved an agreement to do so Monday. The CCT Board members will have to approve the agreement, and it is on their agenda for an executive session Thursday, April 28.

If approved by CCT, the agreement would settle the litigation filed by Carter County against CCT on August, 18, 2015 with certain stipulations. Commission approved the agreement by a voting margin of 16-8-1.

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The lawsuit questioned the validity of a lease agreement between CCT and the First Tennessee Private Industry Council (PIC) in which PIC allegedly subleased the Workforce Development Complex (WDC) to CCT. The complaint by the county asserts that CCT had no authority to assume the management of the complex as PIC records show no meetings at the time and no approval of a transfer of assets. No records have been recovered by the Elizabethton Star showing the PIC board met after the year 2000.

The former Executive Director and Chairman of the PIC board signed the sublease agreement to CCT in 2007, but the complaint questions whether PIC board members were aware and approved these signatures and the transfer. CCT began acting as the PIC board at this time, according to a statement made by former CCT President Tom Anderson. He said CCT kept the name and non-profit status of PIC and that CCT’s board also served as the board for the PIC.

The settlement passed by County Commission and signed by county attorney Josh Hardin outlines certain stipulations and recommendations for CCT regarding assets, including the WDC:

• Parties agree not to oppose passage of a new interlocal agreement.

• CCT agrees to install an elevator and continue maintenance, including roof repair.

• CCT uses best efforts to maintain relationships with current sub-lessees.

• Term of the lease reduced by half to end July 31, 2022, a total of six more years.

• CCT agrees to consider transfer of assets, including remaining lease term, to new joint economic and community development board (JECDB) if determined appropriate.

• CCT waives funding owed by county and will not request further funding.

• Parties will not unreasonably hinder economic development efforts.

• County recognizes existence of CCT and dismisses litigation upon terms of agreement.

• Parties split cost of litigation, except attorney’s fees.

Carter County Mayor Leon Humphrey said the document has too many “ambiguities,” such as not outlining a dissolution date for CCT and considering a transfer of assets to the new JECDB. He said the standard procedure for dissolving an organization and transferring assets is to file the appropriate paperwork with the state and to allow those officials to decide how to distribute assets.

The litigation did not call CCT to dissolve, but has brought into light some compliance issues with Public Chapter 1101, like lack of an annual audit and lack of representation on the CCT board of all municipalities in Carter County.

“I spoke out against this agreement, because if CCT is serious about properly dissolving, then they would register with the Secretary of State and Attorney General to properly dissolve the entity,” Humphrey said. “It would be up to those individuals to determine where those assets go. It should not be up to CCT Board members to determine where assets go. If they felt it was compliant, they would never have agreed to the creation of second board.”

He said one of his major issues with transferring CCT assets is that it will make the new JECDB, which awaits signatures of Carter County Commission and Johnson City Commission, responsible for audits.

“Why would we take a new board with zero dollars and contaminate it with all the woes that currently exist with CCT?” Humphrey asked. “We don’t need to act quickly and get a settlement when we haven’t outlined treatment for all the people that will follow after.”

Without funding or assets, he said the new board would meet state requirements, thereby qualifying the county to receive grants.

“It will have active membership and will discuss economic development — it just doesn’t have to have the funds,” Humphrey said. “It will make suggestions and recommendations and call people in for their opinions to give to the EDO or economic development people, so it’s not going to be a shell board that does absolutely nothing, but  it’s not going to have the funding.”

He said the most important part is not funding, but to have new ideas to deliver to the economic development organization (EDO) or to the persons responsible for the economic development of Carter County.

A regional EDO has been discussed between Carter, Washington and Unicoi Counties, as well as discussion about an individual managing economic development, similarly to Johnson County.

Humphrey said if the new JECDB becomes responsible for CCT assets, including the WDC, those could cause complications for a regional board and could require a secondary asset transfer in the future.

“If those assets were transferred, you’ve created a lesser version of CCT with fewer members, with all the same problems,” Humphrey said, commenting on the potential transfer of assets and the addition of six members to the county’s original plan for the JECDB.

CCT Attorney Charleton DeVault said the county attorney along with CCT executives drafted the agreement. Though it is not the agreement Humphrey had in mind, it was approved by the County Commission and stands a chance at ending the pending litigation.

Humphrey said thus far, the cost of litigation to the county has been insignificant and that they have not utilized the $20,000 set aside for attorney fees.