Archived News

EDC audit out of reach due to spotty records

Jackson County commissioners closed the book on a painful chapter in the county’s history on Monday, announcing they would give up their quest for an audit of the economic development commission.

The commissioners had hoped to present an audit of the EDC’s finances to eliminate suspicion that taxpayer money had been misused during a five year period between 2001 and 2005 during which the EDC operated independently. In the absence of an audit, though, they had to settle for calling time on the fractious debate.

“I consider this the past now, and I’m looking to the future,” said County Chairman Brian McMahan.

In July, the county enlisted the Asheville accounting firm of Gabler, Molis & Co. to piece together an audit of the EDC’s finances for the five-year period in question, but the firm resigned from the task in a letter dated Dec. 21, citing the lack of sufficient records to conduct a proper audit.

Controversy over the EDC erupted in 2005 amid allegations of financial mismanagement by those at the helm. The EDC was a separate entity, but relied on funding from the county. Concerned by the lack of oversight of public funds at the disposal of an all-volunteer body, the county to withdraw from the EDC and seized the organization’s records. But part of the records either weren’t there to begin with or went missing in the process.

Auditors tried to get statements from United Community Bank, which handled the EDC’s finances, but the bank did not have financial records going back that far, McMahan said.

Related Items

Hopes of clearing the air with an audit have now been dashed.

“What has happened to our records, I don’t know,” McMahan said. “But the fact is we don’t have the financial records at hand to conduct an audit.”

Commissioner Tom Massie expressed his displeasure that the accounting firm gave the county so little notice that they could not carry out their assignment, but he said the board had done all it could to get to the bottom of the issue.

“I think it would be difficult for a reasonable person to say we haven’t done everything in our power to find out what happened,” Massie said.

Meanwhile, four of the nine members on the Jackson County Economic Development Commission resigned last month, signaling growing frustration among the board over lack of direction from the county commissioners. The EDC board complained this summer that they had no real authority and had been relegated to a mere advisory role.

The last director of the EDC resigned over the summer, and issued a parting recommendation to dissolve an EDC she called dysfunctional and create a new entity. Commissioners have held off on hiring a new EDC director.

Criticism of the EDC’s past financial dealings has centered on a revolving loan fund under the auspice of a nonprofit arm of the EDC called the Jackson Development Corporation. Grant money flowed from the county, to the EDC, then to the JDC and finally into the hands of private businesses, several of whom fell behind on their loan payments.

The origin and status of those loans has been reconstructed by the county’s Finance Director Darlene Fox.

In lieu of an audit at this week’s commissioners meeting, Fox provided a summary of the financial dealings between the county and the EDC over the past 15 years. The summary showed that the county contributed $2,423,426 in cash and assets to economic development between 1993 and 2007. The EDC returned $335,000 to the county when it was dissolved in 2008 and the county got another $2,126,000 back in property value on the Tuckaseegee Mills and Clearwood properties that reverted to county control after defaulting on their loans.

Fox’s report indicated that the county came out ahead $38,270 in its 15 year history in economic development.

For McMahan, the knowledge that the county’s tax money had not been drained by the EDC was enough to close the issue.

“Not a single penny of taxpayer money has been lost,” McMahan said.

Leave a comment

Smokey Mountain News Logo
Go to top
Payment Information


At our inception 20 years ago, we chose to be different. Unlike other news organizations, we made the decision to provide in-depth, regional reporting free to anyone who wanted access to it. We don’t plan to change that model. Support from our readers will help us maintain and strengthen the editorial independence that is crucial to our mission to help make Western North Carolina a better place to call home. If you are able, please support The Smoky Mountain News.

The Smoky Mountain News is a wholly private corporation. Reader contributions support the journalistic mission of SMN to remain independent. Your support of SMN does not constitute a charitable donation. If you have a question about contributing to SMN, please contact us.