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Wednesday, 04 January 2006 00:00

Incubator episode may have long-term consequences

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A business incubator building in Waynesville has become the epicenter for a political firestorm among Haywood County officials looking to grow small businesses in the region.

Convinced the incubator was being squandered by the Smoky Mountain Development Corporation — a not-for-profit economic development group — and its long-time director Tommy Fouts, a coalition of critics instigated a movement to wrest the incubator from the corporation’s control. The critics — including some Smoky Mountain Development Corporation board members — believed Haywood County’s Economic Development Commission was better equipped to own and run the incubator.

That’s nearly what happened.

The board voted 6 to 1 in November to dissolve the organization and transfer ownership of the incubator to Haywood County. The decision to dissolve a corporation is weighty enough that it called for a formal vote by all the corporation members — 39 to be exact. The vote was held in December, attracting a sparse turnout. So sparse, in fact, that a handful of members who didn’t want the incubator to go to Haywood County prevented the move.

Among those members were Haywood County Manager Jack Horton, Haywood County Commissioner Larry Ammons and Fouts’ brother and son. Fouts resigned in September but has continued fighting to keep the corporation solvent.

Horton’s vote against disolving the corporation angered the majority of the county commissioners. They accused him of not following their instructions and not voting in the best interest of Haywood County, which stood to gain control of the incubator. Horton was asked to resign this week in a 3-to-2 vote by commissioners who claimed Horton put a personal allegiance with Fouts over his responsibility to the public. (see related article.)

The tug of war over the incubator has rekindled political divisions and could set the stage for the Haywood County commissioners race this fall, potentially motivating challengers who support Horton to come forward and run in retaliation. Regardless of how the election turns out, however, the unexpected change in leadership in the county manager’s office will shape the direction of the county for years to come.

 

Who should get it?

When Fouts resigned from Smoky Mountain Development Corporation in September, he didn’t leave the picture. Fouts has since fought to steer the course of events, from drumming up support for “no” votes that kept the corporation from dissolving to lobbying for new leadership on the board of directors.

Fouts is against giving the incubator to Haywood County. Smoky Mountain Development Corporation serves a 10-county area. It would be unfair to the others to give a building valued at more than $650,000 to Haywood County, he said.

“If they want the building they should do what everybody else does and make a written proposal,” said Fouts, who lives in Franklin. “Let’s put some money on the table and let’s talk about it.”

Fouts has come under fire for doing a poor job with the incubator. Instead of supporting start-up companies for a short time until they get on their feet, he has allowed a handful of businesses to park themselves in the incubator for years taking advantage of the cheap rent.

“The incubator has been a failure and been mismanaged. I don’t think anyone looking at it objectively can come to any other conclusion,” said Mark Swanger, chairman of the Haywood County commissioners and co-chair of the Haywood County Economic Development Commission.

Swanger said someone else needs to run it, and Haywood County is next in line. Haywood is the only county that pitched in to help build the incubator in the mid-1980s, donating $100,000 and the land.

“Who would be more justified?” Swanger asked. “Why would any other entity have a more righteous claim than Haywood County has?”

Fouts said any unspoken obligation to Haywood County has been fulfilled by providing free office space in the incubator for the county Economic Development Commission for nearly 20 years.

However, several Smoky Mountain Development Corporation board members, including some from other counties, agree Haywood County should get it. They simply aren’t interested in running an incubator that will likely never bring jobs to their own towns or counties, according to Jerry Plemmons, a board member and a retired businessman from Madison County.

“We have not graduated tenants out into other areas of Western North Carolina,” Plemmons said. “There had been maybe one or two at most that went somewhere else. But by and large, it became pretty apparent that the incubator was serving Haywood County. The Economic Development Commission would be much more conscientious in making it in fact a true incubator.”

 

A new leaf

The incubator matches the new philosophy behind economic development in Haywood County, one that elevates the importance of small businesses.

“The incubator is a great concept and can play into the focus on growing your own jobs through small business,” said Mark Clasby, economic development director in Haywood County. “That’s where the future growth is.”

For the last several decades, economic development leaders in Haywood County and around the country chased big new factories to replace the factories shutting down. But with factory jobs leaking overseas like a sieve, the attempts largely failed. After a couple of large industries who promised to bring jobs to Haywood County reneged on their promises — one after getting financial and tax incentives — many became dissatisfied with the direction of economic development efforts.

In 2003, an overhaul of the county’s economic development strategy was led by the newly-elected Swanger. A blue-ribbon task force packed with important players in the county was assigned to dissect economic development efforts.

Their recommendation: disband the old economic development commission and create a new one. A primary difference would be that the economic development commission could hire and fire its director. The EDC director at the time, Jay Hinson, answered to County Manager Jack Horton, not the EDC board. The structure gave EDC the ability to advise Hinson but rendered it powerless to dictate the economic development strategy being carried out by him, according to Swanger at the time.

Shortly after the overhaul, a new economic development director, Mark Clasby, came on board. An entrepreneur himself, Clasby and the new EDC made recruiting and retaining small businesses just as important as recruiting new factories.

The overhaul was not without controversy, however. Battle lines were drawn according to political and personal allegiances, pitting some of the county’s long-time business and civic leaders against each other. At times it seemed the political power struggle overshadowed the mission of improving the economy.

 

Butting heads

Fouts had a ringside view of the overhaul and didn’t like what he saw. Fouts and Hinson, EDC director at the time, had worked in neighboring offices in the incubator for years and become friends. He did not want to see Hinson go.

Meanwhile, Haywood County Manager Horton also did not like the EDC overhaul, according to observers. Horton, too, was friends with Hinson. But more so, a county department had been taken away from his control and essentially placed under Swanger, the co-chairman of the new EDC.

Swanger had long held that Horton had too much control as county manager and too little oversight from the commissioners, and during his campaign for office had spoken often on the issue. Power should lie with the elected officials who in turn are held accountable by the public, Swanger believed.

The EDC overhaul was the first public display of what would become an ongoing power struggle. Fouts and Horton found themselves aligned on the same side of the fence — and the opposite side as Swanger.

Fouts soon decided the EDC should start paying rent for their office space in the incubator. The EDC contributed $200 a month toward utilities but was not charged rent as a courtesy because Haywood County had pitched in to build the incubator.

But Fouts theorized that the EDC was no longer a county department since it was no longer under Horton’s management and should therefore have to pay rent. Fouts also concluded the county should make a financial contribution to his organization.

“Haywood County was pretty lucky to have a business incubator operating in their backyard and not have to contribute a penny,” Fouts said.

Fouts and Clasby, the new EDC director, butted heads over the rent proposal. Swanger stepped in to help shoot it down.

“The building was paid for by Haywood County. The land was donated by Haywood County. Certainly you wouldn’t be expected to pay rent in the building you paid for,” Swanger said.

Fouts’ board soon told him to back off the rent idea. Fouts claims his board of directors supported the move to start charging rent, but some board members said they did not learn of it until after the fact.

Fouts also believed he should have been given a role in the new EDC and that his organization deserved a seat on the EDC board. He said previous EDC directors invited him to meetings to share news about business activity in the incubator, but Clasby wouldn’t.

“They’ve excluded me from every type of activity they could possibly exclude me from,” Fouts said. “Why do they not want me on their team?”

Fouts became increasingly dissatisfied with Clasby as an office mate. He came to believe Clasby was gunning for his job. When Fouts stepped down from his position in September of this year, he wrote an email to Horton blaming Clasby for trying to wreck his organization and steal his job.

“His continued involvement was malicious and with intent to become executive director of SMDC,” Fouts wrote. “At this time I request that the Haywood EDC director be immediately placed under the supervision of the county manager, that he not be granted permission to serve as executive director of SMDC.”

 

Conspiracy theory

Fouts says Swanger was actually behind the move to disband Smoky Mountain Development Corporation. Fouts said Swanger has a history of taking out people in power and elevating new people who will be loyal to him.

Fouts pointed to the overhaul of the Haywood County school system administration under Swanger. When Swanger became chairman of the school board, he shepherded a controversial change in leadership that resulted in the resignation of the school superintendent Karen Campbell. Staff that were loyal to the old superintendent were shuffled around. Fouts said an acquaintance of his, Larry Leatherwood, was caught up in Swanger’s overhaul and demoted from assistant superintendent of the school system to an elementary school principal.

Fouts said Swanger did the same thing to Hinson with the EDC overhaul and has now done the same thing to County Manager Horton. Fouts said he, too, was a victim of Swanger. He claims Swanger infiltrated the Smoky Mountain Development Corporation, planted seeds of dissatisfaction and lobbied its board members to disband the corporation.

“They have ruined my career and put me out of job,” Fouts said of Swanger. “What business is it of the county to tell me, a private enterprise, what to do? The county is getting into a business they don’t have any business getting into. There comes a point where we have to say ‘Look, this is our business’.”

Fouts said it is dangerous for Swanger to have unchecked power to meddle in the affairs of a privately-run business like Smoky Mountain Development Corporation.

Swanger disputed Fouts allegations.

“He may have this conspiracy theory, but it is unfounded,” Swanger said. “The only time I got involved is when he tried to gouge Haywood County taxpayers by trying to charge exorbitant rent.”

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