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Swain County has lost more than $17,000 a month from their coffers, and that financial gouge may become a lot bigger following a suit filed by Graham County last month.

Graham and Swain county are at odds over property taxes collected from the Tennessee Valley Authority for the Fontana Dam and its hydropower equipment and generators. For 67 years — since the dam was built — the two counties split the revenue equally.

But Graham argued it deserves more, since more of the dam and generators are on its side of the county line. Graham succeeded in convincing the N.C. Attorney General’s Office of their position last fall, resulting in a new formula for divvying the TVA proceeds. The result: Swain gets $17,700 less a month, which is now going to Graham instead.

The October ruling stated that, according to the original channel of the Little Tennessee River, which has long been the boundary between the two counties, more of the dam and its taxable equipment belongs in Graham. And the Attorney General agreed that, if this was the case, they should get more of the money, as well.

Upon hearing this, Graham County commissioners decided not to rest on their laurels content with their newfound cash flow. They marched right up to the Graham County Superior Court and filed suit against their neighbor for 67 years of back tax revenue that Swain County gained on the erroneous measuring formula.

The suit doesn’t put a number on how much they want back, but Graham officials have pegged it at $15 million, according to an article published in the Graham Star last month. Graham named the Department of Revenue as a co-defendant to ensure they provided a formula and a number for how much Graham would be owed.

Raleigh mayor and tax attorney Charles Meeker is leading the charge as Graham County’s attorney, and he said that discussions about a possible filing started to be bandied about following the Attorney General’s October ruling.

He said the county is simply trying to recoup what was always rightfully theirs, but has long been distributed inequitably.

“Because of incorrect information from the TVA, the Department of Revenue had not distributed those payments correctly for years,” said Meeker. “We don’t know the exact amount, but the lawsuit requests the Department of Revenue to make that calculation.”

Swain County has yet to respond to the suit, but has requested a 30-day extension to file their response.

Swain County Manager Kevin King told the Graham Star last month that his county would be looking into a countersuit, seeking damages for the 51,000 acres of land lost to the Fontana Dam’s impounding in 1943. King maintained that they were never fairly compensated, especially stacked up against the mere 4,000 acres lost by Graham County. He said the county is planning a robust battle against the suit. They are due to respond in mid-February.

Technically, the TVA payments to the two counties are called Payments in Lieu of Taxes, or PILT, since government entities are not required to pay property taxes. But like property taxes, the payments by TVA are based on the value of the hydropower operation determined by the N.C. Department of Revenue and the tax rate set by the county.

Battles in Congress are nothing new. Practically every day that the legislature is in session, there is a fight, argument or debate about something, some more trivial than others. But there’s one issue that residents of Swain County are watching intently, because the outcome of this fight may cost them $40 million.

The issue is earmarks. The new congressional leadership says it doesn’t like them, and some members are looking to axe them altogether. If that happens, county’s massive $52 million North Shore Road settlement is in danger of being classified as an earmark, which means the lion’s share of the money may never arrive.

Leonard Winchester, chairman of citizen group Citizens for the Economic Future of Swain County and active participant in the settlement process, said he thinks that’s unlikely. But it’s still a possibility.

“I think it’s more a matter of when, not if, “ said Winchester, of whether the money will arrive.

He thinks that the money will come through, but in the worst case, the county may have to go back to the bargaining table with Congress. Again.

The real issue, said Winchester, is education. The problem is just convincing Congress members that the settlement isn’t an earmark, it’s a debt owed to Swain County.

When the North Shore Road between Bryson City and Tennessee was flooded in 1943 as part of the war effort, there was little complaint in such dire times. Especially because the county came away with a promise from the federal government that a new road would be built. That was a pretty crucial promise, considering the county still owed $695,000 on the road when it was flooded.

The war came and went, as did two subsequent decades, and the county continued paying the loans for 30 years at the expense of the taxpayer for a road that seemed as though it would never come.

Cut to 2010, and fight still raged, both between Congress and the county and within the county itself. Today, many said, the road isn’t needed and cash would be a better deal. Others were adamant that the road was owed and should be built.

But when Congressman, former football star and native son Heath Shuler stepped in, he proved – along with his tireless efforts to persuade his fellow congressmen to his side – to be the missing piece.

A settlement was finally agreed to: $52 million over 10 years, with the county able to use the annual at its own discretion.

The county already has $12.8 million, and the next chunk has been added to President Obama’s 2011 budget. But the subsequent funds will come only if Congress doesn’t slice them out with other earmarks that may go under the blade in tough economic times.

Winchester said he thinks the county has the right amount of power on its side. Not only is Rep. Shuler plugging hard for the money, the Secretary of the Interior and the parks service are behind the measure.

“The Secretary of the Interior does not consider it an ear mark,” said Winchester. “But politics is an ever-moving target. I don’t think that it will be classified as an earmark. Certainly it’s not in Rep. Shuler’s mind or in Sen. Hagan’s mind. But there’s also other things that contribute significantly towards it not being considered an earmark,” and he’s hoping the clout from the interior department will prove enough to pull the settlement out of that category.

Even the money in the President’s budget is somewhat in jeopardy, since no budget has been passed and Congress has kept the country running by passing a series of continuing resolutions. They funnel money to necessary departments but don’t fund non-necessities of the budget — like the settlement.

For his part, Rep. Shuler said he’s committed to bringing this money back home, crusading against its classification as an earmark.

“No matter what happens with the appropriations process, there is a clear path for us to make sure Swain County gets this settlement funding,” said Rep. Shuler in a statement. “With strong support from President Obama and the Department of Interior, we will make sure that Swain County gets the funding it is due.”

Winchester said he’s actively trying to educate key Congress members, but isn’t too worried about losing the funding altogether, a possibility that he sees as highly unlikely. The economy, he maintains, will not be broken forever, and when the financial ship rights itself, Swain County will be on board.

“Once the economic conditions improve, it’s entirely plausible that the rest of the payments will be paid off in one payment,” Winchester said. “But we have to be at a point where the economic conditions are not so severe that everything that goes before Congress has to be compared with how important it is to the defense of the country.”

Opponents of the cash settlement say they are unsurprised by this unexpected turn. County Commissioner David Monteith, who was outspoken against the settlement throughout the process, said he opposed it for that very reason: because it takes control completely out of county hands.

“I was opposed to the settlement to start with,” said Monteith. “It was a bad deal because things like this can happen. It was real idiotic.”

The fight, however, is not quite over. The 112th Congress has yet to come in session, and the proposal to slash earmarks doesn’t have universal support among even one party. But Winchester and Shuler said they both recognize that it’s a battle of education, and to win, they have to get the sentiment of those outside the region on their side.

Having the interior department in their corner is the first step, said Winchester, but it doesn’t stop there. It is a complex issue that, at first blush, seems like a money-funnel straight from Washington for a road that will never even be built. It’s easy to see how Congress sees earmark all over it, and Shuler and his compatriots will have their work cut out for them in the new year.

“That political battle is not something we can say is behind us,” said Winchester. “Once we get that behind us, I think we’ll be OK.”

Public input is being sought for a memorial dedicated to the North Shore families in Swain County who had their land taken in the 1940s during the creation of Lake Fontana.

A design meeting will take place from 9 a.m. to 4 p.m. on Tuesday, Sept. 14, at United Community Bank in Bryson City.

The push for a memorial comes from two Swain County residents, Richard and Carolyn Allison, who say it’s time to honor the 600 families and gain some closure to the decades-long North Shore Road debate.

The Allisons moved to Whittier about four years ago, but they quickly saw how the heated debate over the North Shore Road had divided the county. They decided to spearhead efforts to create a memorial after recently completing a grantwriting course at Southwestern Community College.

The Allisons are seeking information from the community to come up with the 600 family names to put on a memorial wall, which they are calling a War Memorial. The name is sure to be an attention grabber.

“It gives something to mull over,” said Richard Allison.

Even though the North Shore families didn’t exactly fight in World War II, Lake Fontana was built to generate electricity for an aluminum plant that made airplane parts for the war.

After seeing their land taken away, North Shore residents seem to be suffering from Post-traumatic Stress Disorder, according to Allison.

“They lost not only their home, they lost loved ones who had to go into the service,” said Allison. “It’s important to get rid of this Post-traumatic Stress Disorder that has developed over all these years. They’re not just being ornery because they wanted something that was promised to them, it’s just because they have been stressed out.”

Lawrence Hyatt and Carolyn Allison will speak on Post-traumatic Stress Disorder at the meeting. While Richard Allison said a memorial might not fully relieve that stress, seeing North Shore families honored might be helpful.

Creation of the lake flooded a road that once led from Bryson City to Tennessee, passing through numerous rural communities along the way. In addition to losing their land, those who once lived in the area felt cheated by the government’s broken promise to rebuild the road.

Participants will divide into three groups to discuss what kind of mission statement should be etched onto the memorial wall and where it should be located. So far, the design calls for a granite and marble memorial with one large column flanked by two shorter columns of equal size over a base.

The cost would be about $4,900 and $1.25 more for each letter. It could be housed at the Swain County Administration building or in the North Shore area of the national park.

At a special session of the Swain County board last week, Commissioner David Monteith stood up and stunned the crowd with a controversial proposal for spending the North Shore Road cash settlement money.

Monteith called for a one-year suspension of property taxes for Swain County residents and a 3 percent raise for all county employees. Businesses and county commissioners would be exempt from the tax holiday, however.

Monteith estimates his proposal would scoop about $4.5 million out of the $12.8 million the county has gotten so far.

But doing so would dip into the principal of the road settlement money, a step that requires approval by two-thirds of registered voters in Swain County. Without such a referendum, commissioners are only allowed to spend the interest from the settlement, which is held in a special trust fund by the N.C. Treasurer.

Monteith said the tax break would be extremely helpful during these rough economic times.

“I know people are struggling...what better way to give citizens a break,” said Monteith.

It would also guarantee that the cash settlement benefits every taxpayer of Swain County.

Fellow commissioners were left flabbergasted by the proposal, which was brought up during a special meeting on an unrelated topic.

“We wasn’t there to discuss that,” said Commissioner Glenn Jones of the meeting. “Why he brought this up, I have no earthly idea.”

Jones and Commissioner Genevieve Lindsay vehemently opposed Monteith’s pitch, while Commissioner Steve Moon said he would only be in favor of spending the interest money to give county employees a raise.

It’s been more than two years since employees have gotten a raise, and they’ve also had to take furloughs without pay. “For a lot of people, that hurts,” said Moon.

However, giving everyone a holiday from property taxes for an entire year is a different matter.

“I could not agree with that and could not go along with that,” said Moon, adding only drastic circumstances would cause two-thirds of registered voters to support spending the principal. “To me, that would seem to be almost an impossibility.”

With at least three of the five commissioners opposed to it, Monteith’s proposal seems likely to die since the referendum requires approval by the board.

Jones stated outright that he would never support a vote by the people to dip into the principal, though he would like to see a committee of citizens help decide how to spend the interest money.

“If you ever did once get into that principal, then it’s gone,” said Jones. “You can never bring that back.”

Leonard Winchester, chair of the Citizens for the Economic Future of Swain County, a group that fought for the cash settlement, says he suspects ulterior motives behind Monteith’s proposition.

“All this is a vote-buying scheme,” said Winchester, citing upcoming elections. “In effect, it says, ‘Vote for me, I’ll give you money.’”

Monteith, who is up for re-election this fall, strongly opposed the cash settlement and was the lone commissioner to vote against it. One of his chief arguments was that commissioners would squander the settlement.

“Now look at who the first commissioner is to make a suggestion that the principal be reached into and passed out,” said Winchester. “It is scary just how far some people will go to try to make the settlement end as a failure.”

Winchester is skeptical that two-thirds of all registered voters will show up to the polls to support Monteith’s idea, and he guesses that Monteith might feel similarly.

“He’s a smart politician,” said Winchester. “He knows this is not going to pass, but he can still get a lot of political mileage.”

Where did the cash settlement come from?

Swain ended a decades-long uphill battle with the federal government this year, and could soon be flush with cash as a result. The federal government flooded a main road through the county for the creation of Lake Fontana in 1943, needed at the time to generate hydropower for the war effort. The federal government promised to rebuild the road, but never did. Instead, it has agreed to compensate Swain County with $52 million through installments in coming years — known as the “cash settlement.”

A time for healing

The signing of a cash settlement deal for Swain County last week was a heartbreaking end to a lifelong struggle for many.

For decades, road supporters held on to hope — hope that the government would honor the promise it made in the midst of a wide-scale evacuation to make way for the creation of Lake Fontana in the 1940s. The lake flooded the only road that led to their former communities, but they believed one day it would be rebuilt, allowing them to visit their former home sites and family cemeteries inside the Smokies.

To some descendents of those who lived along what is now called the North Shore, the road symbolized a connection to their past, a sense of place and a link to their heritage. The loss of the road is profound.

Charlene Blankenship, a road supporter, said family members have promised each other on their deathbeds they would never stop fighting for a road to their old cemeteries.

Linda Hogue, a leader behind the fight, said she will have more time on her hands now. She’ll spend it in her garden, with family and being more active in church, she said. But she also plans to turn her energy toward this year’s county commissioner elections, working to unseat those who voted for the cash settlement.

On the eve of a vote by county commissioners to accept the cash settlement and give up the county’s claim to a road, descendents of the North Shore community held a teary prayer meeting. A few dozen turned out to witness the vote the next day as well as the ceremony on Saturday, but most stayed home because they could not bear to watch, said Blankenship.

A few smuggled protest signs written in black marker on hot pink poster board into the ceremony, folded up inside their jackets or purses, and unveiled them during the myriad speeches. Luke Hyde, a leader of the cash settlement movement who presided over the ceremony, asked the protestors to put their signs away.

“There will be a time and place for protests, but it is not now,” Hyde said to the crowd.

But they continued to display them. One member stood up with her back to the stage, facing the large auditorium, in a silent protest. Many wore black armbands.

Until the bitter end

When commissioners convened the day before the ceremony to vote on whether to accept the cash settlement, David Monteith, the lone commissioner opposed to the vote, stood to deliver lengthy remarks. He challenged and begged the rest of the board not to go forward with the vote.

Monteith repeated his long-standing request that the county conduct a vote to gauge public opinion. He asked if he could be put on the agenda for three minutes during the ceremony to represent the other side of the issue. He also asked to open the meeting to public comment before the commissioners voted.

He put numerous such requests in the form of motions, but none got a second from another commissioner.

Monteith said the county has a legal and binding contract from the government promising to rebuild the road, and it should stand strong rather than be sold out for a cash settlement.

“We’ve had a legal binding contract for 66 years and where has that gotten us?” Commissioner Steve Moon asked. “Do you believe they would ever build the road, David?”

“As God is my witness, yes sir, I think the road would be built if we would stand our ground,” Monteith said. “We’ve been 66 years without a road. I would rather spend another 66 fighting.”

“How long would you be willing to wait?” Moon asked.

“If they brought $52 million in with a wheelbarrow right now, I would still be opposed to it,” Monteith answered.

But Commission Chairman Glenn Jones said accepting the cash settlement was the right decision for the future.

“We need to move on. We don’t need to look at the past. We need to vote on the future for this county,” Jones said.

Carter Petty, the director of Mountain Discovery Charter School, took his class on a fieldtrip to the county commissioners meeting Friday to witness the historic event.

“I want these guys to experience it,” Petty said, as they waited for the meeting to start. “It is a tremendously emotional issue.”

A win for all

Claude Douthit, a leader among the cash settlement supporters, spent 35 years trying to convince people to set their emotions aside and look at the issue rationally. The road would never be built, so the county should try to get something instead of nothing, said Douthit, who in the mid-1970s became one of the early crafters behind the idea of a cash settlement.

“There has been a division in Swain County here for years over this and it needs to be brought to an end so the people of Swain County can get back on track trying their best to cooperate with each other instead of fight with each other,” Douthit said.

Douthit’s son, Jonathan, hopes the next generation will grow up without the division that has burdened the county in the past.

“This is right up there with the Civil War with dividing families,” Jonathan said.

Jonathan said he doesn’t see his side as the winner and the other side as the losers.

“They didn’t lose. We all won,” Jonathan said.

The cash settlement, once it reaches $52 million, could reap more than $3 million a year in interest — nearly a quarter of Swain’s entire budget right now.

“I see the availability for a better quality of life for a lot of people,” Jonathan said. “I think it will be a boon to Swain County and some might not realize it now, but they will see how much vision has been shown by doing this for the future.”

As for Douthit, there were times he thought his dream would never come to fruition, or that he wouldn’t live long enough to see it. An organization formed to advanced the cash settlement, known as the Citizens for the Economic Future of Swain County, has met monthly for 10 years, right up until last week.

“Why did I keep on? That’s the only thing I know, I reckon,” said Douthit.

Suddenly finding a lot more time on his hands is perhaps the one thing he has in common with road supporters.

Swain County officially signed a cash settlement with the federal government in a moving and historic ceremony Saturday, ending a bitter decades-long dispute over the North Shore Road.

Swain will received $52 million from the government, and in exchange will drop its claims to a 30-mile road the government flooded 66 years ago and never rebuilt.

“It has taken Swain County 67 years to reach this point today,” said County Commissioner Chairman Glenn Jones. “The journey has not been easy folks.”

Congressman Heath Shuler, a Swain County native and football star, received three separate standing ovations during the ceremony for his critical work to bring the settlement to fruition.

“When you were up here playing football for the Maroon Devils, who would have ever thought you would be the missing piece of this puzzle?” Jones said.

Shuler fought tirelessly to win political support in Washington, including within the White House, for a settlement and to secure the first round of appropriations.

“It is not just about the money. It is letting go of something in the past that has divided us,” said Shuler, who choked up during one part of his speech. “I think maybe that’s why God has put me here, to bring a divided community back together.”

Under the cash settlement, Swain will get $12.8 million now and the rest in increments over the next 10 years. The amount of the settlement is based on the value of the road at the time it was flooded, plus interest.

“What we have tried to do in this whole issue is get an injustice for Swain County done and over with,” said Claude Douthit, a father of the cash settlement movement, following the ceremony. “I have tried and tried and tired for all of these years to bring people on board and educate them. It has taken me a long time to ever get the stars right so to speak. It finally came about.”

Luke Hyde, an attorney and leader of the cash settlement movement, led an invocation at the beginning of the ceremony, which was held at Swain County High School.

“Bless what the public officials will do here today and go with us into the future so we can do a better job for our children and our children’s children,” Hyde said.

The money from the settlement will be placed in a protected trust fund. The county will get the annual interest, which will amount to more than $3 million a year once the full settlement is received.

Jones referenced the motto on a sign outside the high school where the ceremony was held, declaring “Our best and then some.”

“We want to put this note in our kids’ pockets and say ‘We have given you our best and then some,’” Jones said. “Some way or another every citizen in Swain County will benefit from this cash settlement. I can see great things to come.”


The signing

The Secretary of the Department of Interior Ken Salazar was scheduled to appear and sign the settlement in person. But as a major snowstorm barreled down on Washington, D.C., late last week, Shuler and his staffers rapidly concocted a contingency plan.

The document required four signatures, one from each of the original signers to a 1943 agreement promising to rebuild the road. Shuler dispatched his aide Ryan Fitzpatrick on Thursday to collect the signatures ahead of time and deliver them to Swain County in time for the ceremony. After getting Salazar’s signature in D.C., Fitzpatrick promptly flew out to Raleigh and met with Gov. Beverly Perdue. He was scheduled to fly out from there to Knoxville on Friday to collect a signature from the Tennessee Valley Authority, but impending winter weather in the mountains led him to change his plans and fly on to Knoxville that night, and finally on to Swain County by car on Friday.

At each stop, he took a celebratory photo of the document with his cell phone and sent the picture back to Shuler. The documents never left his side during the two-day journey.

“I had them either on my lap or in the passenger seat right beside me,” Fitzpatrick said.

The final two signatures — that of Swain County Commissioner Glenn Jones and Congressman Shuler as a witness — were saved for Saturday’s ceremony.

Salazar sent written remarks, delivered by Smokies Superintendent Dale Ditmanson.

“It is not often one can end a 70-year old controversy with the stroke of a pen,” Salazar wrote.

The settlement was good news to environmentalists, who have spent decades fighting the road through a large, remote territory of the Great Smoky Mountains National Park.

“I was afraid I would die before I got it done,” said Ted Snyder, a Sierra Club activist who has been part of the fight since the 1960s. “It is an enormous win.”

A defining moment in the decades-long debate over the North Shore Road will play out in Swain County this week.

Commissioners are slated to vote in favor of a cash settlement from the federal government in lieu of building the controversial road — ending Swain’s bitter 66-year battle once and for all.

“It will be a historic vote for the county,” said Swain County Chairman Glenn Jones.

The vote will be held at 11:30 a.m. Friday, Feb. 5, at the county administration building. On Saturday afternoon, a signing ceremony is planned to ink a new agreement with the federal government.

Under the cash settlement, Swain would get $12.8 million now and a total of up to $52 million by the year 2020 — the full amount that Swain has been seeking as compensation.

“The completion of this agreement will be the most significant event in the history of Swain County and certainly the most positive,” said Leonard Winchester, an advocate of the cash settlement and chair of the Citizens for the Economic Future of Swain County.

Since the 1940s, the people of Swain County have been waiting for the federal government to rebuild a rural highway that was flooded by the creation of Lake Fontana. Failure to make good on the promise relegated Swain to relative isolation with few roads in and out, a dead-end destination hemmed in against a national park and large mountain lake.

Under the new agreement, Swain County will forgo its long-standing claim for the road under an old agreement with the federal government dating back to 1943.

“The 1943 Agreement is hereby extinguished and superseded and shall be of no further effect,” the new agreement states.

The lone vote against accepting the cash settlement will come from Commissioner David Monteith, an ardent supporter of building the road.

“My heritage is not for sale,” Monteith said.

Many families who once lived in the North Shore area before it was made part of the Great Smoky Mountains National Park are deeply resentful of any attempt to let the government off the hook.

Monteith is skeptical that Swain will get a penny more than the $12.8 million currently on the table. In the 1943 agreement, the federal government pledged to rebuild the flooded road “as soon as” Congress appropriated money to do so — not exactly a hard and fast promise.

The new agreement is likewise vague, stating that Swain will get “additional sums” as appropriated by Congress not to exceed the grand total of $52 million.

“It is a sellout to say ‘if and when’ funds are made available,” Monteith said. “It is the same as before. It is not worth the paper it is written on.”

But Jones said the agreement to be voted on Friday gives Swain far more leverage to collect than the old 1943 agreement ever did.

Through a clever bit of lawyering in the 1943 agreement, the federal government inserted a hold-harmless clause stating: “failure on the part of Congress for any reason to make such appropriations shall not constitute a breach or violation of this agreement.”

The new agreement contains no such hold-harmless clause. In fact, it says the opposite.

“This Agreement is binding on the parties, through their officials, agents, employees and successors,” the new agreement states.

It was important language that the county fought hard to get inserted this time around. Also in the new agreement, the government admits that the cash settlement is being offered as a substitute for the road it never rebuilt.

“At least the federal government has made a commitment and they are saying ‘We do owe Swain County’,” Jones said. “If it is not all paid, I think you would have a leg to stand on.”

To make good on the promise of a full $52 million by 2020, Congress would have to appropriate an additional $39.2 million over and above the $12.8 million that’s been secured already. It amounts to about $4 million a year.

Winchester said he is hopeful that will come to fruition. Instead of being left up to Congress, Winchester said the $4 million appropriation for 2011 appears in the President’s budget.

Jones said he was “very confident” that additional annual payments will be made to Swain County.

Money received from the cash settlement will be placed in a trust fund with the N.C. State Treasury. The state will remit interest off the account to Swain County, but the principal cannot be touched unless supported by two-thirds of registered voters in Swain County. The interest off $12.8 million would be close to $800,000 a year.

Whether Congress ever makes good on the agreement could depend on a congressman from Western North Carolina effectively lobbying for it. To date, Rep. Heath Shuler, D-Waynesville, a Swain County native, has done just that.

“He’s the one we have to give the credit to,” Jones said.

The $12.8 million already on the table for Swain was secured by Shuler. Shuler also worked hard to negotiate the agreement being voted on Friday.

During initial talks, the park service was reluctant to sign on to a new agreement that included the dollar figure of $52 million, but Shuler lobbied for the past year to bring them around.

“We appreciate the exceptionally hard work of Rep. Heath Shuler and his staff to bring this matter to closure in a way that will benefit all the citizens of Swain County forever,” Winchester said.


Some background

When the federal government flooded a road leading from Bryson City to Tennessee with the construction of Lake Fontana in the 1940s, it signed an agreement promising to rebuild it one day, but only completed a small segment.

Historically, the flooded road connected many small communities, but the territory was evacuated and made part of the Great Smoky Mountains National Park. Building a new road today would mean traversing some 30 miles of Smokies backcountry. It would carry a price tag of more than $600 million.

The $52 million cash settlement sought by Swain is based on the value of the road at the time it was flooded plus interest and inflation.

The National Park Service and Swain County appear locked in a stalemate over how much the federal government should pay up for breaking its long-standing contract to replace a road flooded by the creation of Lake Fontana in the 1940s.

Swain County has asked for $52 million as fair compensation for the government’s refusal to honor the long-standing written promise to rebuild the road it flooded. But a meeting between Swain County and the National Park Service last week ended once again without a resolution. It is the fourth meeting held between the parties over the past 18 months.

“It is the same thing they have been doing for the past 65 years — they tell you one thing then they go back on their word,” said Swain County Commissioner David Monteith, who would rather see the road rebuilt rather than cash anyway. “I told the commissioners it was time they put their britches on. We have yet to get what we were promised.”

Swain County Manager Kevin King said the county expects $52 million and nothing less. The number was first proposed by the county in 2002. The park service later used that figure in its own literature and documents that were disseminated to the public during a comprehensive analysis of whether to rebuild the flooded road — which would traverse 30 miles through the Smokies — or compensate the county financially for the broken contract.

Smokies Superintendent Dale Ditmanson has failed to get behind the number, however.

“Their whole mission is to get as low a number as possible,” King said. “That’s why it is called a negotiation. They are just doing their job.”

Bob Miller, spokesperson for the Great Smoky Mountains National Park, would not say whether the park service endorses $52 million, or whether it opposes the amount.

“Discussion are still ongoing, aimed at coming up with an agreeable settlement amount,” Miller said.

Heading into the meeting, those following the process thought the park service might put a formal offer on the table. However, that didn’t happen. Instead, Congressman Heath Shuler, D-Waynesville, will continue lobbying for the full $52 million.

“He is trying to get it worked out behind the scenes,” King said. “I think that is why the park service did not present an offer because they know the wheels of government are turning.”

The negotiations had reached an impasse last year, with the park service unwilling to get behind $52 million. Shuler intervened in hopes of getting the money appropriated anyway.

King and County Attorney Kim Lay are the only people representing Swain County who participated in the meeting, which included a dozen people representing five different parties.

Since its creation, the Great Smoky Mountains National Park has loomed over Swain County. Its massive peaks flank life itself: as an engine for tourism, a stomping ground for locals, and a refuge for wild things.

The park’s most lasting legacy, however, seems to be the deep and unforgivable wedge it has driven through the mountain people living there. Like every community bordering the Smokies, Swain County suffered a heartbreaking evacuation of farms and home places to make way for the park in the 1930s. Hardly a decade later, the construction of Lake Fontana forced a second relocation, not only for those who lay in the direct path of the rising water but also those who lived in a vast area rendered inaccessible when the only road into their communities was flooded.

Hemmed in by the lake on one side and the park on the other — and with no road in or out — the area was no longer habitable, and the people were forced to move out. The isolated territory was ceded to the national park, but with a written promise from the government that it would rebuild the flooded road on higher ground. While the land would remain part of the park, the hope of a road provided a measure of solace. At the least, descendents believed they could visit their beloved home sites and pay homage to their cemeteries.

It has now been 68 years, and the road is still not built.

The broken promise to rebuild the road has fostered deep-seated distrust of the government and the park in Swain County. The feeling was so universal in years gone by that it was commonly taken up from the pulpit on Sundays, with preachers packing powerful sermons about the injustice perpetrated by the government’s betrayal. The hardships suffered by those visiting graves of loved ones trapped deep inside the park fanned the flames of bitter resentment.

“There was a good period of time in Swain County when the overwhelming view of the county was united that we needed to build this road,” said Leonard Winchester, 59, of Swain County. “Primarily based on the idea that the families from the North Shore had been given a raw deal and the road would give them a way to visit cemeteries.”

In the 1960s, a few miles of the road were actually built. But the rising environmental movement of the era rallied opposition from across the nation. Those forced out to make way for the park countered the false notions of a pristine wilderness. What about the houses and barns, mines and mills, stores and churches, that once riddled the area? But Swain proved no match for the numbers or clout of environmentalists, who not only made a good case against denigrating a well-loved national park but had the backing of environmental laws and the money to go to the mat if needed.

As Swain County fought for the road decade after decade to no avail, it seemed the government saw the mountains as a political backwater that needn’t be heeded. Over the years, however, some began to form a different conclusion. Perhaps the problem lay with the idea itself: a 30-mile road slicing through the largest backcountry territory in the East could never be pulled off.

As this realization sank in, a circle of leaders in the county began postulating: if given another out, would the government make good on its promise? If Swain County dropped its unwavering claim to build the road, then perhaps there was hope for another type of settlement.

The solution was a payoff, more or less: “Give us cash and we’ll settle this once and for all.” At first blush, it sounded like nothing more than a sell-out. Mountain people aren’t known for relinquishing their position once they’ve dug in. The challenge to change minds would be daunting.

The idea for Lake Fontana arose during the grips of World War II, when a large and steady source of electric power was needed for a plant in Tennessee hard at work churning out sheets of aluminum for wartime airplanes. A dam was proposed on the Little Tennessee River to provide hydropower for the Alcoa aluminum plant.

Not only would the lake drive out hundreds of people in the direct path of rising water, but it would flood the only road leading to several communities above the high water mark. Roughly 44,000 acres would be rendered inaccessible, leaving 216 families hemmed in by the lake on one side and the recently created Great Smoky Mountains National Park on the other.

The government could not spare the money to build a new road, so it decided those families would have to move out as well. A deal was crafted to evacuate the people and turn the land over to the national park.

The federal government signed a pact with Swain County to rebuild the flooded road after the war, “as soon as Congress appropriated the money” to do so. Known as the 1943 Agreement, it was signed by Tennessee Valley Authority, the State of North Carolina, Swain County and the Department of Interior on behalf of the national park.

The 1943 Agreement pledging to rebuild the road has lived in infamy ever since. While die-hard road supporters won’t speak to cash advocates even casually in public, there is one point they agree on.

“We felt like they owed Swain County something. We still do,” said Claude Douthit, the leading historian on all things pertaining to the North Shore Road.

The only question is what: a road or a cash settlement?

If there is one man responsible for turning the tide toward a cash settlement, it’s Douthit. Now 81, Douthit knows every court case on the matter, which courtroom it was heard in and the name of the presiding judge. He can quote chapter and verse from the 1943 Agreement.

A room in his house is littered with evidence of his fight for Swain County’s settlement. Files that no longer fit in cabinet drawers form precarious piles on his desk, dog-eared post-it notes protrude from the pages of Congressional transcripts. Maps detailing every tract of land acquired for the park have taken up permanent residence on his dining room table.

“I could tell you every piece of property that was down there and whose it was and how much it was,” Douthit said.

Douthit has all the necessary traits to drive the settlement home: he’s stubborn, cantankerous and a stickler for the facts. The tougher the fight got, the harder he hoed. When others wanted to give up, convinced it was a hopeless cause and their efforts were fruitless, he soldiered on, prodding others to stick with him.

Like many Swain natives, Douthit claims family ties to the area now under the park’s domain. His father worked for one of the big lumber companies as a blade sharpener for the giant saws that ate their way across the landscape in the 1920s.

Douthit spent his own career closely tied to the park. He was the head of the Bryson City office of the Tennessee Valley Authority, which had built Fontana Lake. As a lake overseer, Douthit spent many a day patrolling the water.

“I worked up and down this lake, worn out more damn boats than most people have ever seen,” Douthit said.

That’s how his quest for the real history behind the North Shore started.

When Douthit first started with TVA in 1951, the lake was relatively new. He was frequently paid visits by those whose land was claimed in the creation of the lake or the park and became a dumping ground for their gripes. Some claimed they were still owed for their land, others decried the hardship to visit family cemeteries unreachable except by boat.

“I had to learn and understand exactly what happened,” Douthit said.

Douthit wasn’t always a supporter of the cash settlement. Like most, he felt the government should keep its promises to build back the road it flooded.

While slow to start, it seemed the road would eventually come to pass. In 1960, $8 million was appropriated for the road and construction got underway. But in 1968, with just seven miles built, work ceased. For starters, money had run out. But far more ominous, environmentalists had mounted a campaign against the road. And park service engineers issued a report advising against further construction.

While the road progressed in fits and starts those eight years, a second debate was playing out over whether the park should be designated as wilderness. A heated round of public hearings ensued. Environmentalists and park lovers wanted the entire park to be designated as wilderness, forever scuttling the North Shore Road. The people of Swain County fought back, but were outnumbered by the rising environmental movement of the era. While wilderness designation never came to pass, the writing on the wall did not bode well for the fulfillment of a road.

Douthit and others fighting for a settlement of the 1943 Agreement began toying with the idea of a lawsuit against the federal government. In 1974, an entourage from Swain County drove to Asheville and boarded two small planes bound for Raleigh. Their mission was to meet with the N.C. Attorney General Robert Morgan and implore the state for help.

“Whether it was build the road or give money, just to do something,” Douthit said.

They felt the only solution was to sue the federal government.

But they soon uncovered a major flaw in the 1943 Agreement. The agreement contained a hold-harmless clause should the road never come to fruition, stating: “failure on the part of Congress for any reason to make such appropriations shall not constitute a breach or violation of this agreement.”

“Our county lawyers at the time got out- lawyered, so to speak,” Douthit said.

Dejected, Douthit realized there was no ground for a lawsuit.

“If they filed a suit, it would be lost and Swain County would never receive anything. It would be over with. We would get no road, no money, nothing,” Douthit said. “Knowing we couldn’t sue on the 1943 contract, what would we do?”

To Douthit, the fight for a road hit a dead-end.

“Why did I choose to fight for money?” Douthit asked. “We knew we couldn’t get the road. We knew we could never get it.”

And so Douthit began the long, uphill battle to bring the same revelation to the rest of Swain County.

One of the people on Douthit’s list to bring over to the side of a cash settlement was Luke Hyde. Born and raised in Swain County, Hyde went away to law school and entered the world of state politics in Raleigh. He traveled back and forth regularly, and Douthit figured Hyde would be useful to have on their side.

Like Douthit, Hyde, 69, had always supported the road. In the late 1960s, Hyde joined an underground movement of strategists to get the road built. They researched federal laws, studied the politics and plotted the prospects of bringing a lawsuit against the federal government get the road built.

But one day in the mid-1970s, when Hyde was giving a talk for the local Democratic Party in the old Swain County Courthouse, Douthit approached Hyde and shoved a thick stack of papers into his hand. Among the papers was a copy of the 1943 Agreement. Hyde came across the same pesky hold-harmless clause.

“I sat there reading it and my face flushed and I got angry and said ‘Son of a gun,’” Hyde recalled. “It was a marvelous job of lawyering.”

Like Douthit, Hyde realized then there would never be a road. There was only one outlet left. In lawyer’s terms, it’s called a “substitute performance,” but to laymen it would become known as the cash settlement.

It wasn’t an easy stance for Hyde. His own family grew up in the North Shore area and was forced off their land to make way for the lake and the park. Many in his own family remain road supporters to this day.

“We respect and love each other enough not to talk about certain issues,” Hyde said. “We are on good terms, but they think I am wrong for supporting the cash settlement.”

The drama over the North Shore Road heated up through the 1980s. Descendents of the North Shore area sued the government to get the road built, known as the Helen Vance lawsuit. The case was lost, appealed, lost again, appealed again, but denied by the Supreme Court for a hearing.

Meanwhile, Congressmen fought it out in the halls of Washington. Dueling bills were introduced: one that would provide a cash settlement of $9.5 million and one that would build the road.

In Swain County, public hearings on the dueling bills drew crowds in the hundreds, inspiring impassioned, angry and heartbreaking speeches. It was like a replay of the public hearings from 20 years earlier pitting wilderness designation against road construction. Little did people know at that time that the hearings were destined to repeat themselves yet again 20 years later.

Supporters of a cash settlement had won an important and promising ally in the late 1970s: Cecil Andrus, Secretary of the Department of the Interior. Andrus made a trip to Swain County to see for himself the issue at hand. It seemed everyone wanted a shot at lobbying Andrus, so a local entourage rented a bus and piled in for a chance to bend Andrus’ ear.

“We took him up to Calf Pen Gap and let him look across Fontana Lake to the Smokies,” Douthit said. “We wanted to convince him that Swain County was due some money, due something.”

The fieldtrip ended with a catered picnic at Deep Creek in the park. Andrus was apparently convinced and began working to help secure a cash settlement for Swain County. Andrus even appointed a committee to study the issue, which recommended a cash settlement of $9.5 million. A bill was introduced to that effect in Congress.

Although one foot was in the door, the prospect of a cash settlement hit a brick wall. Senator Jesse Helms, with his dueling bill to build the road, proved a formidable opponent. Helms was soon joined in Washington by Congressman Charles Taylor, who took a similar stance in the House of Representatives.

By the ‘90s, the issue had all but stalled. The families suing for the road lost their lawsuit in the federal courts. In Congress, Helms and Taylor were unable to advance the road but were unwilling to take up the cause of a cash settlement.

“We wound up with nothing,” Douthit said.

While hamstrung nationally, supporters of a cash settlement put their down time in the ‘90s to good use, swaying the hearts and minds of locals. In the process, Hyde struck on a commonly held belief.

“If you asked people as a moral question, should the government build the road, the answer would be ‘yes.’ But at the same time 9 out of 10 said there ain’t going to be a road,” Hyde said.

So Hyde stopped asking people whether they thought the road should be built.

“The question instead is ‘since they are not going to build the road, what should we do now? What is an intelligent plan B?’” Hyde said. “That’s been my posture.”

They took their message to what Hyde calls the county’s “influence molders,” one porch at a time and one living room at a time. One of those on their list was a man named Leonard Winchester.

Like many, Winchester was a road supporter. Hyde and Douthit not only swayed him, but convinced him to take a leadership role in their newly formed group to fight for the cause of a cash settlement: the Citizens for the Economic Future of Swain County. While all in the group support the cash settlement, reasons vary.

“Some say since there is not going to be a road, we should pursue a settlement,” said Winchester, 59. “My view is given the choice of a road or a settlement and you can have which ever one you pick, I would still pick the settlement. I think it is a better choice.

“Clearly there would be some level of tourism increase if the road was there, but who would benefit from it,” Winchester said. “The average taxpayers would not get much out of it.”

Winchester, now retired, was the IT director for the school system at the time. Winchester was a Republican, unlike Hyde and Douthit who were Democrats. Winchester would help present their group as bi-partisan.

The Citizens for the Economic Future of Swain County needed a cold, hard dollar amount to ask for to successfully advance the cause of a cash settlement. The group hired an accounting firm, Crisp, Hughes and Evans, to calculate a figure. They had an easy starting place: the monetary value of the old road flooded by the lake. The accounting firm started with that base figure, adjusted for inflation and added 60 years of interest. Their answer became the now-touted $52 million.

To realize a cash settlement, the group had to sway the original four signatories of the 1943 Agreement: Swain County, North Carolina, TVA and the park service. Each would take work to win over, but perhaps the toughest and most critical were the elected leaders of Swain County.

To that end, the Citizens for the Economic Future of Swain County pulled off quite a coup in the county commissioner election in 2002. For the first time, a majority of the candidates elected were in support of the cash settlement. They promptly passed a resolution by a vote of 4 to 1 calling for a $52 million payout in lieu of the road.

In the meantime, however, road supporters were having some luck of their own. Congressman Charles Taylor, a long-time road supporter, had risen in prominence and power in the halls of Washington. Using his seat on the powerful Appropriations Committee, he stealthily inserted a line item of $16 million in the federal budget for construction of the road.

It was far from a green light for the road, however, as the National Park Service would first have to undergo a massive study to meet the terms of the National Environmental Policy Act.

The park would spend more than five years coming up with possible solutions and weighing them from every possible angle — even building a giant bridge across Fontana Lake. Once again, controversy reached a fever pitch as Swain County became home to another round of heated public hearings, marking the third such showdown in the history of the road saga.

The park service spent five years and $10 million conducting the assessment, a 552-page report on the pros and cons of building or not building the road. Ultimately, the park came down on the side of a cash settlement.

Ironically, Taylor had single-handedly advanced the cause of a cash settlement more than anyone in history. If not for his $16 million line item to build the road, there would have been no environmental assessment that in turn forced the park service to formally weigh in — for or against — for the first time. Taylor’s little line item had also once more rallied environmental groups and pushed the issue onto a national stage.

“That put them in high gear,” Winchester said.

The environmental movement was the lynch-pin in the fight for a cash settlement, bringing to bear political pressure that the people of Swain County could never have mustered otherwise.

“The conservation community is a large community, and they were willing to help to keep a road from being built through the park,” Douthit said.

In 2007, several key elements fell into place to bring about the cash settlement in lieu of the long-promised road.

One was the election of Heath Shuler, a new congressman for Western North Carolina who was from Swain County and differed from his predecessor’s stance on the road. Shortly after Shuler took office, he got to work on a cash settlement. Just three months into his term, a coalition of 17 Senators and Congressmen from North Carolina and Tennessee joined forces in calling for a cash payoff and signed on to a letter of support.

“We finally had a large number of lawmakers focused on getting a monetary settlement for the folks in Swain County. It was the first time we’d been able to point to such strong support for that approach on Capitol Hill,” Greg Kidd, with the Asheville office of the National Parks Conservation Association, said at the time.

In May of that same year, Douthit got an important call — one that was a long time coming. Dale Ditmanson, the superintendent of the Great Smoky Mountains National Park, told Douthit the park service finally made a decision on the North Shore Road. It supported a cash settlement.

“I was very pleased,” Douthit said.

Shuler got to work again and appropriated $6 million as a down payment toward an eventual cash settlement in the government’s 2008 fiscal year budget. Another $6 million is left over from the pot of money secured by Taylor for road construction that never came to fruition.

Swain won’t receive any money until final negotiations with the park service over a dollar amount are concluded.

While it seems Swain County is closer than ever to getting something, a new obstacle has arisen. The same park leaders who once embraced Douthit, Hyde and Winchester as allies have suddenly stopped backing a settlement figure of $52 million and are pushing for a lower number, according to those familiar with the issue.

The about-face was not only a surprise but a personal affront to the people of Swain County.

“It is the greatest disappointment I have seen in the last 20 years,” Hyde said. “I don’t know why they are backpedaling, but it is not a nice thing to do. We believe in the mountains in keeping your word. We got into this mess partly because people didn’t keep their word.”

Park Superintendent Dale Ditmanson said he is merely trying to arrive at an equitable figure and determine how the $52 million was calculated.

Hyde said there is a moral and legal obligation for the park service to stay with its position on $52 million. Hyde suspects it may be a negotiating device suggested by the legal counsel for the park service. Whatever the case, “It’s not going to work,” Hyde said.

It seems the government is getting a bargain with $52 million — considering the cost of building the road was pegged at $728 million, he said.

Swain leaders say they won’t settle for anything less. For Douthit, Hyde and Winchester, it would be difficult to face their friends and neighbors if they did. They rallied the community to give up on the road and come together behind a cash settlement of $52 million, and to now produce something less simply isn’t an option for them.

“We are closer than we have ever been, and we are going to prevail. I am convinced we are going to make it work,” Hyde said. “While it has been 66 years, we are going to solve this and Swain County will get $52 million. We have the right combination in Raleigh and Washington.”

Negotiations over a cash settlement for Swain County have been stalled for more than a year as opposing sides argue over a fair dollar amount.

Swain County officials have met three times with the U.S. Department of the Interior to discuss a dollar figure for the cash settlement, but negotiations were called off last July. The leading reason is a change in Washington administration, from a new president to a new secretary for the Department of the Interior and various players down the line — all of whom must be briefed and educated on the long-standing controversy.

The negotiations also ground to a halt after the U.S. Park Service mentioned a dollar amount for the settlement that is drastically lower than what Swain County expected to hear.

For six years, Swain leaders have operated under the assumption they would get a $52 million cash settlement from the federal government if they gave up their claims to the long-promised North Shore Road. The federal government promised to rebuild the road after flooding the old one during the construction of Lake Fontana in the 1940s. Building a new one would traverse 30 miles of backcountry in the Great Smoky Mountains National Park, an expensive and environmentally unsound proposal — thus making the cash settlement a more viable alternative.

U.S. Congressman Heath Shuler, D-Waynesville, has been fighting for a cash settlement since taking office three years ago and stands by the number of $52 million.

“That number has been pretty consistent. That is the number that has been out there,” Shuler said.

Shuler said he does not know why the park service came up with such a low number in negotiations.

“It may have just been thrown out there to say ‘Let’s see if they’ll take this,’” Shuler surmised. “I think like with any negotiation, one group will start out low and one group will start out high.”

That said, Shuler doesn’t want to bend on $52 million, nor do the Swain County commissioners who will ultimately accept or reject any offer on behalf of the county.

According to those familiar with the negotiations, Great Smoky Mountains National Park Superintendent Dale Ditmanson has been actively pushing for a far lower number. In a response to written questions, Ditmanson countered that claim, however.

Ditmanson said that the park service has not yet made Swain an offer for a monetary settlement. When asked how he would characterize the figure he allegedly brought up during the negotiations, Ditmanson did not respond.

It is unclear how much sway Ditmanson will have over the final number the Department of the Interior puts on the table.

“As superintendent, my primary responsibility is to do due diligence in identifying a justifiable basis for a monetary settlement and briefing the leadership of the National Park Service and the Department of Interior,” Ditmanson said in his written response to questions.

Ditmanson said the purpose of the negotiations right now is to determine exactly how Swain County has calculated the figure of $52 million and whether it is accurate. The premise is that it starts with the value of the road at the time it was flooded and adjusts it for inflation and interest. But exactly what the starting number should be is a matter of debate.

“Determining a basis or calculation for a monetary settlement is a primary purpose of the meetings with the four parties,” Ditmanson said. The basis will be explained in the final agreement, he said.

The sum of $52 million was arrived at by the Citizens for the Economic Future of Swain County, a group that formed to advance the cause of a cash settlement. In 2002, the group hired the accounting and auditing firm of Crisp and Hughes to do the calculations.

Shuler said he has been educating the new guard in Washington about the North Shore Road issue, including a meeting with President Obama’s chief of staff and a breakfast with the Department of the Interior Secretary Ken Salazar.

“We have to reengage them back into the process,” Shuler said.

As for Ditmanson, he has briefed the assistant secretary of the Department of the Interior and the acting director of the National Park Service. There is no permanent director appointed yet.

The past three negotiation meetings have had a delegation from Swain County, the state, the National Park Service and the Tennessee Valley Authority, which built the dam and lake that flooded the road. Ditmanson expects another meeting between the parties to be held this fall.

Shuler said the decision of how much to appropriate for a settlement is ultimately up to Congress, and he will fight for what he calls a “complete settlement.”

Shuler managed to rally support among fellow congressmen and senators for a cash settlement two years ago. But that was when building the road was still on the table and the park service was in the final throes of a major analysis weighing the pros and cons of each option.

During the analysis, the park adopted the figure of $52 million and quoted it extensively as a leading alternative to building the road during a lengthy public input process. That led the public to believe that if the monetary settlement was supported, that’s the amount Swain would be getting.

But Ditmanson now says the figure was used only for “analysis purposes,” largely because it lacked anything more concrete. The $52 million figure had been proposed by Swain’s leaders, so the park ran with it during the analysis.

When the analysis concluded and the park came out with its official stand on a cash settlement instead of the road, the $52 million figure vanished and was replaced with the language “monetary settlement,” with “an equitable method” for arriving at a dollar figure to be determined through negotiations. Ditmanson was appointed as the Department of the Interior’s point man in those negotiations.

Ditmanson said his job is now in the “due diligence” stage.

Shuler said the full settlement of $52 million is needed “to heal some wounds and bring people back together in the community.”

When asked about the public relations crisis the park service would likely encounter by refusing to endorse a settlement of $52 million, Ditmanson said his responsibility is merely to determine an equitable amount.

“I cannot comment on how the public will respond,” Ditmanson said.

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