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Commissioners to keep EDC records until audit is complete
By Lynn Hotaling
County leaders agreed Tuesday (Jan. 25) to return seized Economic Development Commission documents, but not until after auditors present them with a final report.
Then, they said, they will sit down with EDC board members for the joint session that group requested last week.
A meeting of the two groups had been tentatively scheduled for Tuesday, Feb. 1, but county officials voted unanimously for a delay.
"It's not a question of if we'll give them back, but when," said Commissioner Brian McMahan of the files. "I see no need to meet at all until we have the audit report."
McMahan then moved to continue to hold the records so that auditors Dixon Hughes can complete their work, and then schedule a joint meeting afterwards.
McMahan's motion, which passed unanimously, was amended by Commissioner Joe Cowan to allow any EDC business deemed necessary by the commissioners to be carried out while Jackson County leaders have the EDC's books.
Prior to the vote, Chairman Stacy Buchanan outlined the steps that had led up to commissioners' Jan. 12 action (See related story, page 1A).
"In no way was this a personal attack or witch hunt against (EDC Chairman) Tom McClure," Buchanan said.
According to Buchanan, the action that removed McClure from county appointments and launched an investigation and audit into the EDC and the county's economic development office was triggered by Tamera Crisp, the county's economic development coordinator. (Both Buchanan and County Manager Ken Westmoreland were careful to avoid using Crisp's name, referring to her always as the "economic development coordinator" or "our employee.")
Crisp, who officials two weeks ago confirmed was the only employee in the county's economic development office, was placed on paid administrative leave during commissioners' Jan. 12 closed session but was reinstated last week after preliminary audit findings showed "no evidence of wrongdoing by any county employee."
Crisp indicated "grave concerns" to him about the EDC particularly with regard to the monitoring of loans, Westmoreland said.
"Because of the agreement with the EDC and the close working relationship between our employee and Tom McClure, it was impossible to discuss our employee without discussing Tom McClure," Buchanan said, by way of justifying closed session discussion on Jan. 12.
McClure said Wednesday morning that he was not surprised that Crisp was the one who began the events that culminated in commissioners' Jan. 12 actions.
"Tamera doesn't understand some of these issues, and she doesn't understand the new credit line we set up for QC Apparel," McClure said.
The idea behind the new credit for QC was to reduce owner Clemmey Queen's interest and create a cash flow so he could pay his bills and pay the county, McClure said.
As elected officials, Buchanan said he and fellow commissioners "felt they had to act and act quick."
Buchanan described McClure as a volunteer who "was basically walking around with three checkbooks," saying that the monies he controlled were "public funds at one time."
"Those funds originally came from the taxpayers of Jackson County," Buchanan said. "That's asking a lot of a volunteer."
When contacted, McClure agreed that he was a volunteer, but said he doesn't control any checkbooks. All the boards on which he serves – the EDC, airport authority and Jackson Development Corp. – require two signatures on every check.
Southwestern Community College representative Gene Couch, EDC treasurer, signs all EDC checks; airport authority secretary Jim Rowell provides the second endorsement for authority checks; and Crisp herself is the second signatory to Jackson Development checks, he said.
Darrell Pruitt, owner of Smoky Mountain Gas Log and Propane, told how he had invested money in repairs to an 18,000-gallon propane tank located by QC Apparel, which is housed in the former Tuckaseigee Mills factory on Scotts Creek Road.
According to Pruitt, he and McClure had worked out an arrangement whereby he would do the work and use the area for five years with an option to buy the tank and property it sat on at the end of that time.
When Pruitt saw a foreclosure notice on the property, he panicked, he said, saying that losing that location would "devastate" his business.
After Pruitt spoke, Buchanan told board members that county attorney Paul Holt had received a call from another lawyer alerting him to the fact a partnership named Triple S was going to foreclose on the QC property near the Community Service Center.
Triple S holds the first mortgage for about $250,000, and the EDC holds the second, Holt said.
"Business is being conducted by volunteers by an organization (EDC) that never had a routine audit or performance audit," Buchanan said.
McClure confirmed that Triple S held the first mortgage, but he said that it had been paid down to $175,000, and that it was always Triple S' intention to sell the mortgage at that point. A private investor has already been located to purchase the Triple S mortgage, McClure said, describing the individual as a "patient investor" who will wait two years for payments to begin. Jackson Development holds title to the property, he said, and the EDC loaned the development corporation the necessary money to purchase the portion not funded by Triple S.
"The county shouldn't be involved in that at all," McClure said Wednesday.
While on the subject of QC Apparel, Commissioner Eddie Madden asked if QC had put up sufficient collateral to cover its $300,000 loan, which with interest is now more than $330,000.
Westmoreland replied that the collateral was owner Clemmey Queen's home, valued recently at $120,000, and the plant's equipment, which would only bring salvage value.
"So there's no way if we foreclose that we would recoup our investment," Madden said.
"It's pretty clear it's a no-win situation," McMahan said. "We'd lose our money and people would lose jobs. I'd like to at least look at it."
Buchanan said that he had talked with Queen and promised to meet with him as soon as the county determines procedures concerning revolving loans.
Commissioners' Jan. 12 action directed the county attorney to check the status of QC's loan and begin foreclosure if it was delinquent.
Turning their attention to the airport authority, Buchanan said he received a letter from the N.C. Treasury Department pointing out a statutory budget violation by the authority, also chaired by McClure.
"Again, Mr. McClure with a checkbook and public funds," Buchanan said. "These things are going through my mind."
Buchanan reminded his fellow commissioners that the authority is close to entering a project with an estimated cost of more than $1 million.
"We have a very active airport authority – the best since I've been a commissioner," he said. "But if the authority goes under, who pays the bill? The taxpayers of Jackson County. In my opinion, maybe it's high time we got involved."
Commissioner Cowan agreed.
"I'm satisfied a significant problem exists. If nothing else comes out of this it's time to reign in this three-headed monster," he said. "I don't feel bad, and I don't feel defensive. Our responsibility is to protect the taxpayers."
McClure said the airport authority's books are in order, that budgets are filed with the Local Government Commission in a timely manner and that the authority is audited each year by Dixon Hughes.
He said it's not surprising that Buchanan could have received a letter stating budget irregularities in December 2003, because the authority's books were not in order when he took them over.
"It took a year or two to get things cleaned up," he said.
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