NEWPORT—Meeting for two hours on Monday evening, members of the Cocke County Legislative Body’s finance committee discussed industrial land acquisition, as well as managing the county’s debt.
The bulk of Monday’s session, which was the regular monthly meeting of the committee, was driven on industrial land acquisition.
As discussed last week, the Eternal Beverage project — which would be the first tenant on a proposed 100 acre industrial park site — has hit a snag in the land acquisition from the Shults family in Cocke County. Newport attorney Bill Shults was at Monday evening’s meeting, where he told the committee could not sign the contract with the firm, which would lock his family into an eternity of liability.
“There was language in the contract proposed, in my opinion and my attorney’s opinion, that laid me and my family open to attorney fees from now (in perpetuity),” Shults said. “I couldn’t and wouldn’t sign it.”
Shults said his property was last appraised at $980,000 and he thinks the $1 million price tag on the 100-acre tract is a fair price. He cited another recent development at the intersection of US Highway 25/70 and 411, which brought in $1.2 million for a 15-acre tract.
“The liability on the remainder of land was a sticking point,” Shults said. “If a problem ever came up that we potentially could be responsible for the payment of attorney fees. I can sit here and dream up scenarios all day long.
“It was too open ended, we can’t do it,” Shults said.
Finance Committee chairman Forest Clevenger has proposed that the county would purchase the land from the Shults family and then sell sites to potential firms, including Eternal Beverages — which is currently operating in Cocke County.
Shults has agreed to sell the 100-acre tract for $1 million on a 10-year note.
5th District Commissioner Dan ‘Pete’ Bright asked if the county would be liable of such issues that Shults is trying to avoid.
Both Shults and Scott Gibson, with Cumberland Securities, said that governments have much more protection than individuals when it comes to lawsuits.
“Exposure to any damage claims is limited (for local governments),” Shults said, noting when he was a budget that attorney fees couldn’t be recovered in cases against government entities. “Compared to individuals, governments have shields against conceivable attorney fees that (individuals) do not.”
Shults said the issues have nothing to do with the Eternal Beverages firm.
“They have a great product and they want to locate here,” Shults said. “They have a huge contract with CVS and Publix. They’re excited about getting here, we just couldn’t sign the contract. I have to protect our family.”
Clevenger said if an agreement could be reached with the Shults family, the monthly payments would run $11,000 per month, which over 10 years would represent 2.4 cents of the property tax rate. The chairman also argued for the need to support buying the entire tract to aide in site development grants for the project.
Cocke County Partnership President Lucas Graham said that the county lost out on $1 million in state and federal funding on the project, because the county did not own the land of the site.
Shults said that made perfect sense.
“As long as the county doesn’t own the whole site, why would the state make a grant to essentially build me a road so I could make off like a bandit with the other 83 acres,” Shults said.
“No other county does it the way we are trying to do it,” Clevenger said. “We’re trying to go about it (backwards). You can’t put an industrial park on someone else property. We have to get skin in the game and buy property.”
Bright expressed dismay that representatives from the firm have not been in front of the county commission.
“They’re not coming unless they have a contract,” Clevenger responded. “We’ve been notified of their presence here on two occasions. I took the initiative to go see them and so did several (other commissioners).
“If you didn’t meet them, you had your chance.”
Gibson told the commissioners that it would need to broker such a deal through the Industrial Development Board, instead of purchasing it through the county government.
7th District Commissioner Gary Carver made a motion to ask the Economic Development Commission to draft a contract to potentially put in place through the Industrial Development Board to acquire the 100 acre tract. The vote passed unanimously.
“I don’t see how we can lose. I’ve spoken to the people from Eternal Beverages. They want to be here. They love our county,” Clevenger said. “They don’t want to go to Jefferson County or Sevierville.”
Clevenger continued to reiterate his point of developing land with pad ready sites to attract future development and bring Cocke County up to par with other locations in East Tennessee.
“I just want (development). If you get the development, others will follow,” Clevenger said.
TALKING DEBT: Gibson spent the remainder of Monday’s meeting, talking debt with the commissioners present.
He showed numerous graphs and charts of how the county can balance its current debt load with its likely need to accumulate more debt for upcoming capital projects.
Gibson noted if the county were to pursue projects like a jail and a school building program it will need to find ways to increase revenue.
“You’re going to need more revenue to do these projects, whether that’s a property tax increase or a wheel tax,” Gibson said.
He noted few counties in the state have property tax rates over $3.00 per $100 assessed value. Cocke County’s rate in the 2018-19 budget stands at $2.83.
Gibson also noted that many rural counties in the state had wheel taxes.
He also said a portion of Cocke County’s problem is that half of the land in the county is federally owned with the Cherokee National Forest and Great Smoky Mountains National Park.
Clevenger used Gibson’s presentation to argue for a wheel tax.
“I don’t want to raise property taxes. We can bring in over $1 million on a $25 wheel tax or $1.4 million on a $30 wheel tax,” Clevenger said. “With that schools get built, the jail gets built, there’s money in capital projects, Lucas gets 2.3 pennies (of the tax rate) to build an industrial park. All is right with the world.”
Gibson also argued that to help the burden on the taxpayers, that the Cocke County Board of Education could help offset funding with helping pay on the debt.
Cocke County Board of Education Chairman Dr. Ken Johnson responded by noting that the educational savings account, or school vouchers plan, recently passed by the state legislature and signed by Gov. Bill Lee would take around $500,000 annually from school coffers that it could use to help pay on the debt.
“People are tired of me belaboring the vouchers and what they’ve done to us and the perceived lack of impact it has on Cocke County,” Johnson said. “I talked with the legal counsel of the Tennessee School Board Association and the impact is going to be $100 million year. Break that down into 141 districts and we could be bringing in over $500,000 to help you guys out.
“We need to get on top of the legislators and the governor and repeal vouchers,” Johnson said. “Not naming. Names, but one of them voted for vouchers and is. claiming it won’t. Impact the county. It’s $100 million a year of public money going to private schools.”
BUDGET TRANSFERS: In its regular monthly item of business, the committee discussed budget transfers, in what finance director Heather McGaha called house keeping items in the final weeks of the fiscal year.
The transfers were approved unanimously.
Clevenger, who has ruffled feathers with several department heads in the past, applauded the efforts of some of those same managers for their efforts to save money.
“With three weeks left in the fiscal year, the sheriff is coming in with almost $368,000 left in his budget and the jail also has a substantial balance of $182,000 they did not use,” Clevenger said. “There’s a lot of (misinformed) talk about how county offices can’t budget or control spending, but according to the ledger balance on June 7, there’s $2.1 million in unused funds in all of county budgets.
“There’s a substantial amount of money going to be returned to the general fund. I want to compliment the Sheriff and other offices who did not run through their money. We can definitely find a use for it to move the county forward.”