Jackson County has extended the application deadline for a new economic development director after the first round failed to attract a large pool of applicants from Western North Carolina.

Before a crowded room of town officials this week, Jackson County Commissioner Jack Debnam announced, in so many words, what many already knew: the county’s economic development committee in its previous form was dead and never coming back.

Although Jackson County’s Economic Development Commission has not met in several years, all its board members’ terms have expired and its director has long-since resigned, it technically still exists.

The $289,000 loan from Jackson County to the new owner of Sylva radio station WRGC has finally gotten the green light, meaning the popular local station could be back on the air early next week.

“I think everything is in place to move forward with this,” County Manager Chuck Wooten told commissioners earlier this week.

WRGC went dead last August, a victim of dwindling advertising dollars in a souring economy. Sylva resident Roy Burnette hoped to buy the station and get it back on the air, but lacked the money or financing to do so.

540 Broadcasting Co., the business formed by Burnette, sought an economic development loan of $289,000 from the county. The deal has been in the works for months. Although commissioners OK’d the economic development loan in theory, it got hung up on issues of collateral. It was unclear what assets Burnette would put on the table to guarantee the loan.

Proper collateral, allowing the county to recoup its money should Burnette fail to make payments, is a touchy issue. The county’s track record for economic development loans has not been great in the past — finding itself in possession of the questionable collateral from underground fiber optic lines to 500 sewing machines — and it is trying to be a tad more judicious these days, explaining the hold up on the loan.

The issue of collateralization has now been resolved, County Attorney Jay Coward assured commissioners. Burnette will put up personal real estate “worth in excess of $175,000.” Additionally, an inventory of the radio station’s equipment shows that it, too, is worth in excess of $175,000, Coward said.

Of the total $289,000 loan, Burnette needed $250,000 to purchase the actual radio license from Georgia-Carolina Radiocasting Co. Some $39,000 was designated for acquiring the equipment needed to install the 5,000-watt station. Burnette is providing $100,000 in his own dollars for working capital.

Burnette plans to expand the radio station’s reach, previously limited to Sylva, from Canton in Haywood County to Topton in Swain County, which in theory also would expand advertising-revenue possibilities and make the station financially feasible.

The fallout from Metrostat Communication’s going belly up keeps getting more complicated, with Jackson County commissioners learning this week that an Asheville company owns some of the defunct company’s fiber optic line.

Metrostat, a high-speed Internet and phone service company in Sylva, went under late last year still owing about $500,000 in outstanding economic development loans to Jackson County and town of Sylva. The county and town took possession of the fiber optic lines and other Metrostat assets, including a tower, which had been put down as collateral. But not, as leaders thought, all of the fiber optic line.

“Things continue to just pop up,” County Manager Chuck Wooten said.

It turns out ERC Broadband, a nonprofit, owns 12 of the 48 strands making up some of Metrostat’s fiber optic lines in Sylva along U.S. 23 and N.C. 107. ERC bought some of Metrostat’s fiber lines in 2006 for $147,000. ERC Broadband was a grant-funded initiative dating to the late 1990s to run a high-speed Internet backbone through rural mountain counties. ERC acted as Metrostat’s provider to link its own fiber lines to the greater Internet world, Wooten explained.

Jackson County and Sylva initially wanted to simply sell the entire system, fiber optic cable, the tower and other Metrostat equipment, to a single buyer at the highest price possible. Problem is, no buyers emerged — Frontier Communications Co. said it wasn’t interested, and then BalsamWest FiberNET made an offer then withdrew the proposal.

The only possibility left was Cashiers Chalet Inn owner George Ware, who wanted only the tower on Kings Mountain, which once beamed out high-speed wireless Internet service, so that he could provide Internet to his guests. But, the county doesn’t want to sell Metrostat’s system piecemeal.

So the county and town have been left searching for Plan B. Use Metrostat’s assets as the base to provide all of Jackson County with wireless Internet service. The dream includes linking the various emergency towers across the county to provide this blanket coverage.

The county manager said that means there could be an advantage to ERC Broadband’s sudden appearance in the what-to-do-with-Mestrostat game: the focus of the nonprofit is to further economic development in Western North Carolina, which could fit like a hand in Jackson County’s wireless Internet glove.

ERC Broadband could bring the technical expertise to the table Jackson County needs to try and use Metrostat’s infrastructure to provide countywide wireless Internet, Wooten said. A meeting between county officials and company representatives is scheduled for Friday.

“I’m not sure we’ll ever get our money back, but we may end up with something that is an asset to this community,” Wooten said.

Selling off a high-speed internet system of fiber optic lines in Sylva that belonged to the now-defunct Metrostat Communications is coming up short.

The 10-year-old company provided Sylva high-speed Internet and phone service until going under late last year. Metrostat had about $250,000 in outstanding economic development loans with Jackson County and town of Sylva.

Metrostat had put up its fiber optic lines as collateral. The county and town are in process of selling off those fiber lines — but it appears even if they manage to sell them they won’t recoup the full balance owed on the loan. Metrostat’s former system also includes towers that provide high-speed internet service via wireless signals to customers many miles away.

Frontier Communications Co. recently notified Sylva town leaders that the company isn’t interested in making an offer on Metrostat’s network after all. That would appear to leave BalsamWest FiberNET, a joint venture funded by the Eastern Band of Cherokee Indians and Macon County businessman Phil Drake, as the most likely buyer of the defunct company’s assets.

BalsamWest has a 300-mile network of fiber optic lines in the far west designed to bring high-speed access not otherwise available in rural, remote counties. While BalsamWest provides a backbone, the cost of building the “last mile” to businesses wanting to hook on to the high-speed lines has proven a hurdle, and as a result the network hasn’t been tapped as well as it could.

Metrostat’s network of fiber through Sylva’s central business district and wireless towers reaching outlying areas could bring solve some of those “last mile” issues and bring new customers to BalsamWest’s table.

Ironically, Metrostat owners Robin and John Kevlin cited BalsamWest’s combination of grant-funded, public-private partnership that enabled the company to run high-speed fiber lines through rural mountain counties as a major reason for Metrostat’s demise. The large-scale nature of the telecom business made it difficult for small start-ups serving only hyper-local areas.

The county was hoping to unload the entire network, which also includes towers to deliver high-speed internet signals wirelessly to customers several miles away, but might reconsider.

“I’ve recommended we sell this entire enterprise rather than break it into components,” County Manager Chuck Wooten told Jackson County commissioners this week. “But, maybe it would be best to break out some parts.”

Cashiers Chalet Inn owner George Ware has asked commissioners to let him lease a tower on Kings Mountain that once beamed out high-speed wireless internet service so he could provide internet to his guests.

Jackson County, two failed attempts to the contrary, looks poised to once again hold hands with the county’s four towns when it comes to crafting a new economic development strategy.

How this will actually look and play out isn’t yet known. Six months were allotted to hammer out the best method of attracting and keeping jobs in this hard-knock economy.

County Commission Chairman Jack Debnam expressed impatience with efforts to date on the issue. He told leaders from Jackson County, Sylva, Dillsboro, Webster and Forest Hills who gathered Monday night at his behest that time they might have used to undergird the local economy has been frittered away.

“We have everything in place and we need to decide where we want to go for a change instead of where we are going to be led,” Debnam said. “I feel like I’ve wasted my first year in office. I want to look back and say: ‘We got something accomplished.’”

Debnam, who ran and won in 2010 as an unaffiliated candidate, campaigned in part on promised future leadership for job retention and creation.

In name only Jackson County still has an Economic Development Commission. But County Manager Chuck Wooten indicated that it might be time even to change that.

“I try to avoid using E-D-C, it has a bad connotation or bad vibration to many people in this community,” he said. “But we are at a point that we need to decide what our next steps are. Do we wish to activate it, do we wish to activate it in some other form, or do we wish to dissolve it.”

The strategy

Jackson County is paying Ridgetop Associates, which is the husband-wife team of David and Betty Huskins, $3,500 a month for six months to help them develop a strategy. The Huskins are primarily known for work in the tourism industry through the regional entity Smoky Mountain Host, but they have extensive experience in local government and economic development issues, too. Betty Huskins is currently at work on N.C. Tomorrow, a state economic development effort by regions that she said would dovetail nicely with Jackson County’s current push into that arena.

Among other duties, the couple has been hired to conduct a county economy assessment, listing what exactly — positive and negative — the county has in terms of economic development potential.

Mayor Jim Wallace of the Village of Forest Hills said he believes that’s critical: “We need a good catalogue of what we’ve got before we can move ahead.”

County Commissioner Doug Cody said that in meetings with BalsamWest FiberNET he’d learned that Jackson County is on par “with the level of Silicon Valley, Atlanta, any major urban network” in terms of connectivity speed.

But, Cody warned, that competitive advantage would last just three to five years before other rural areas in the nation catch up or surpass Jackson County. Bill Gibson of the Southwestern Development Commission went even further, asserting that Jackson County has “the best rural (fiber) backbone in the world,” but noted that the use is limited. “Because what we don’t have is off-ramps to businesses,” Gibson said.

In other words, the network exists for amazing connectivity, but BalsamWest isn’t or can’t make the technology available to everyday business Joes because of the “last mile” challenge — the short but often costly run of fiber from the trunk line to an industry’s front door.

Still, Cody said, the capability is there, and it being there enables Jackson County to look beyond such polluting development dinosaurs as “smokestack industries.”

Time is critical, Commissioner Charles Elders said.

“It’s kind of like a drag race. We’ve got a short time to get there and we’ve got to move through the gears,” he said.

The plan

Debnam, typically freewheeling in his comments, urged the county’s two towns — Webster and Forest Hills — that limit commercial development in their zoning laws to get on board the now moving train of economic development.

“We’ve built our little silos when times were good. But times aren’t so good now,” Debnam said, adding that everyone “needs to get off their butts” and start working together on job creation and retention.

“You’ve got to take a good look at what you’re doing to help Jackson County move along,” Debnam said.

Mayor Larry Phillips of Webster verbally supported the economic development efforts, though he did not speak directly to whether his town might consider removing some of its commercial restrictions.

“I think it’s great what we have heard and I’m very excited,” Phillips said. “Let’s get going on this … I just see all kinds of potential for Jackson County.”

Debnam indicated he would meet with the mayors from each of the four towns in coming days. The plan is to develop a five-year strategy to tackle economic development. Wooten indicated the county would likely move toward hiring someone in-house to oversee economic development.

Same tune, different verse?

Technically Jackson County has an Economic Development Commission. It exists in name only, however.

About four years ago a joint EDC formed by Jackson County and the four towns imploded amidst bureaucratic turf wars. The director resigned; the board quit meeting; members resigned one by one and replacements by the county and towns weren’t forthcoming.

It actually marked the second EDC meltdown in Jackson. The prior EDC fell apart in 2005 amid controversy and allegations of financial mismanagement.

There’s still money in the pot, though, a total of $425,000, which includes a transfer of $335,000 from the 2005 failed EDC plus money from each entity involved. Jackson County and the four towns were contributing $1 for each resident.

Here’s what each Jackson entity, percentage-wise, has “bought” in terms of equity for their contributions to the EDC pocketbook:

• Jackson County: $382,064.84, or 89.79 percent.

• Dillsboro: $2,850.91, or .67 percent.

• Forest Hills: $4,042.34, or .95 percent.

• Sylva: $29,743.10, or 6.99 percent.

• Webster: $6,808.15 or 1.60 percent.

Jackson County has been down this road before, but that isn’t stopping leaders from taking another look at forming a local economic development commission.

Or, to be more precise, reconstituting the county’s current Economic Development Commission.

“Because technically, there is an EDC in Jackson County,” County Manager Chuck Wooten said.

The county’s current EDC exists in name only, however. It has an office but no director. By-laws but no members. A mission statement but no budget.

The former EDC, which functioned as an independent entity outside county oversight, went defunct in 2005 amid controversy and allegations of financial mismanagement. Three years later, county commissioners formed a new EDC, this time under county control although representatives of each town had seats at the table.

The new attempt fell apart after less than a year, however. The director resigned. The board quit meeting. Members resigned one by one, and neither the county nor towns appointed replacements to fill their seats.

While the EDC technically exists on paper and could be restarted at any time by simply making fresh appointments to the board, Wooten believes that the county’s phantom EDC should probably be dissolved because of what he termed “bad connotations for people.” But, something needs to take its place to spur economic development in Jackson, the county manager said.

A joint meeting of county and town leaders is set for March 5 to discuss the topic. Sylva town board member Harold Hensley, for one, is happy that the county is initiating work again on the economic front.

“I know there’s been a lot of controversy about the EDC,” Hensley said. “But, I think that it could be a good thing if it is run right.”

Hensley emphasized that he’s uncertain in his own mind whether the same EDC structure used previously in Jackson County should be tried again, however.

Dillsboro Mayor Mike Fitzgerald also said he’s pleased county leaders are moving toward formal economic development efforts. But, like Hensley, he was unsure about the form he’d want to see such an effort take.

“But, it needs to be investigated,” Fitzgerald said.

Rough history for EDC

When it comes to EDC boards, Jackson County’s version is extremely unusual among counties in Western North Carolina. While most EDC’s are county-led entities, Jackson County has included town leaders in economic efforts with their own seats on the board. Wooten said he still believes that “you do need to have the municipalities at the table.”

When the EDC was thrust into turmoil in 2005 amid allegations of financial mismanagement and a lack of oversight, town representatives remained at the table even though the county pulled out. It limped along until the county opted to become re-involved.

When the board was reconstituted with a new set of bylaws, a power struggle played out between the county and the towns over who would hold the most authority. Even though the amounts of money being contributed by the county and town to the “joint” effort were disproportionate.

Jackson County kicked in $105,000 for economic development efforts. Each town put in just $1 for each resident, amounting to a few hundred for Dillsboro, Webster and Forest Hills, and $2,500 for Sylva.

The county’s new EDC director, Dorothea Megow-Dowling, resigned after less than a year, calling the entity dysfunctional. She said the county missed an opportunity by agreeing to reconstitute the board under the same structure rather than dissolving the EDC and creating a new one from scratch.

In response, the then-mayors of Sylva and Dillsboro accused the county of stripping the EDC board of its power and relegating it to a mere advisory role. Additionally, EDC ghosts from the not-so-distant past continued to haunt this newest reconstitution.

A watchdog group called Jackson County Citizens Action Group dogged the county and the members of the EDC, accusing them of financial cover-ups and a lack of diligence in safeguarding public funds.

It remains to be seen what exactly Jackson County and the four towns will do this time around.

Supporters of Jackson County’s revolving loan program describe the financial give-outs as a tool in the county’s economic toolbelt, a boost to deserving businesses that can’t receive critical, even lifesaving, financial help through banks.

But five defaults since 1993 when the loans started, out of a total of nine loans, raises serious questions about the program.

It’s been awfully easy — too easy, county leaders admit — for businesses in Jackson County to get loans without providing adequate collateral should the company go under.

Jackson has flat-out lost $525,000 since starting the program because of businesses folding. Another $420,000 is on the line, with the exact losses depending how much the county can recoup from selling off collateral.

“It is not just a gift or a grant,” said Jackson County Chairman Jack Debnam, who has strongly advocated for stiffer loan restrictions. “If it is a grant, call it a grant. If it’s a loan, certain criteria should be met.”

The revolving loan fund is nowhere close to being tapped out. Despite having $820,000 in outstanding loans, there is another $756,000 in the kitty.

Revolving loans are generally considered high risk, used to help start-ups or struggling businesses with an injection of capital when banks won’t. But those needing that help most are generally the least able to afford payback. That has certainly been Jackson County’s experience.

How loose has Jackson County’s definition of collateral been? The worst-case example involves QC Apparel. When the company recently went belly up after years of protracted sinking, Jackson County found itself the proud possessor of $5,000 worth of sewing machines.

Board minutes from August 2006 show the board of commissioners at the time agreed to let the textile manufacturer, which made such goods as pillowcases and bed-in-a-bag materials, off the hook. In a restructuring of the company’s loan, commissioners voted to release the house of QC’s owner Clemmy Queen as collateral in favor of the company’s equipment.

Now the county is about to sell these used machines at what will inevitably prove less — a lot less — than the money owed, according to Jackson County Manager Chuck Wooten.

QC Apparel owes Jackson County a total of $426,000 in loan money and back rent for space at the now county-owned former Tuckasegee Mills building. Given the estimated $5,000 value of the sewing machines, the county is left with a large difference to write off.

The latest company to default on its revolving loan with the county is Metrostat, a small Internet service provider. The company announced it would close three months ago and could not pay back some $250,000 in outstanding loans it owed the county and town of Sylva.

Metrostat had put up fiber optic lines as collateral, and the county and town are in process of selling off those fiber lines— but they won’t recoup the full balance owed on the loan.

The county might also find itself in possession of equipment for making biodiesel due because of a default by Smoky Mountain Biofuels.

But the county hasn’t totally curbed its appetite for non-standard collateral. When making a $289,000 loan to an AM radio station last month, the county agreed in principle to accept the federal license of the radio frequency as the primary collateral backing the loan. Federal regulations prohibit frequencies from being put as collateral, however, so the county is working with the prospective station owner to find a substitute.

Another county, more revolving loans

Now another local government wants to get in the revolving loan business. Macon County is considering instituting a program of its own, ostensibly to boost the creation and staying power of local businesses. And, just as in Jackson County, leaders there are touting the system as a good method of igniting the engines of economic development. In this weedeater-like two-cylinder economy that once roared at a mighty 10 cylinders (think Ford F-250 pickup truck), any possible forward motion has moths-to-flame attraction for county leaders and business entrepreneurs alike.

“I’m thinking of a business person out there who might want to expand a business, and needs some money to get off the ground,” Macon County Commission Chairman Kevin Corbin told fellow board members during a recent meeting. “Banks aren’t interested in such small loans.”

Macon County Attorney Chester Jones, who was ultimately asked to review possible mechanisms for such a county loan program and report back to the board, cautioned prudence.

“You’ve got to structure the deal so that at the end of the day, the deal will be beneficial to the public,” Jones said.

And that’s exactly what’s in question next door in Jackson County: With that outstanding bill to its revolving loan program of just more than $800,000, supporters are hard pressed to easily defend and explain exactly what the public benefit might be.

Commissioner Joe Cowan, the longest serving commissioner on the board, said he believes the issues date to how and why the revolving loan program was conceived: job creation at any price.

“The whole purpose was to create jobs,” Cowan said. “Whether you made money, you didn’t, or even if you lost a little.”

Over time, Cowan said, people involved in the loan program had different views, and proper collateralization fell by the wayside as job production became ever more emphasized. Loans were extended to businesses that were “fixtures in the county and to good people,” the commissioner said, “but somehow we (the county) just let them get money without sufficient collateral. The county bent over backwards to protect job growth.”

Despite the defaults, county taxpayers aren’t directly losing dollars because of the loans. Money to get the revolving loan fund started from grants. Although the revolving loan fund hasn’t been a drain on the county’s tax coffers, the question remains, however, whether it has done the job as promised: to help build and boost economic development in Jackson County.

Debnam touted Sequoyah Fund’s solid track record and methods of extending loans, which requires prior in-depth scrutiny of an applicant’s financial status, as a possible model for Jackson County. This Eastern Band of Cherokee Indians’ regional loan program has used casino dollars to help provide training and technical assistance to more than 1,000 individuals and extended more than 135 loans totaling almost $4.6 million since 2001.

Controversial history

The revolving loan situation in Jackson County verged on the bizarre in 2005. Commissioners’ relationship with the now defunct Economic Development Commission fractured amid questions about who was in charge of the revolving loan program. There were questions about whether favoritism played roles in some of the loan participants receiving unusually generous loan terms.

Ultimately, deputies were ordered to seize EDC financial records, and an auditor was brought in to review the group’s finances. The auditor eventually concluded the records were too spotty to perform a conclusive audit.

“The whole thing was ill-conceived from the beginning,” said Commissioner Doug Cody of the revolving loan program. “It wasn’t handled in a business-type manner.”

Today, there is no EDC in Jackson County, though there have been signs of resurrection by current commissioners — though probably in an entirely different form and unarguably under commissioners’ oversight and control.

The previous board of commissioners had likewise attempted to jumpstart the EDC, but had modeled the new entity, much like the old one, by sharing control with the towns. It wasn’t long before the newly hired EDC director resigned, claiming the entity was floundering because of a lack of clear structure and mission. The entire effort soon fell by the wayside.

Despite the loan program’s history of woes and current financial shortfalls, commissioners said that they support the concept of a county revolving loan program if the controls are tightened.

“I think it has its place,” said Cody, a fiscally conservative Republican.

Cody supported extending two recent loans made by the county, one to Jackson Paper for $250,000 (the Sequoyah Fund kicked in an additional $250,000) and $110,000 to local resident Roy Burnette who wants to get Sylva radio station WRGC back on the air. The station got an additional loan of $179,000 from the county’s separate economic development fund.

To qualify for the revolving loan fund, businesses must create a minimum of three jobs with a threshold of $10,000 for each job created. The economic development fund doesn’t have a specific job-creation threshold.

The loan to Jackson Paper was to rebuild the wood-fired boiler at the recycled paper manufacturing plant. The terms of the revolving loan was for 10 years at a 3.25 percent interest rate. The collateral is a second lien on 47 acres and buildings in downtown Sylva, which Wooten said last week should adequately cover the county’s financial exposure following any possible default.

The interest rate for Jackson Paper is the same rate as proposed by the Sequoyah Fund so that explains why it is higher, Wooten said.

“I suspect we would have loaned at a lower level if it had involved only Jackson County,” he said.

The county opted to give Burnette his loan at 2 percent interest, but the money isn’t being doled out until the county is satisfied with the collateral being offered. A move to put the county on the FCC license along with Burnette failed when the FCC flatly ruled out the idea. Wooten said he believes other collateral will prove satisfactory to the board, as did Cody.

Wooten knows his numbers: before becoming county manager, he worked for three decades as Western Carolina University’s finance officer. The revolving loan, he said, needs “to be a little more businesslike. This is not ‘angel’ funding.”

And when it comes to the collateral that underpins loans, the county really “does not want sewing machines,” Wooten said. “I do think we need to be conservative. But, it is something in our toolbox.”

Who got what and when? A history of  Jackson’s revolving loan recipients

• August 1993: Hensley-Dean, $28,090. Paid in full June 2001. Out of business.

• May 1995: Q.C. Apparel, $358,355; owes county $425,901. Loan terms renegotiated seven times. Out of business.

• December 1997: Clearwood LLC: $225,000; owes county $80,104. Out of business.

• June 1999: Southern Lumber: $218,000; paid in full July 2008. Out of business. County bought property and the owner used some of those proceeds to pay the loan off.

• May 2001: County Collections: $14,000; balance of $12,157 “written off” by commissioners. Out of business.

• August 2002: CMG, later Fraternal Composite Specialties: $325,000; owes county $82,452. They are current on payments though owing that money.

• November 2004: Metrostat Communications: $250,000; owes county $259,228. Out of business. Assets transferred to county and Town of Sylva to sell off, but likely won’t be enough to cover outstanding balance.

• August 2006: Smoky Mountain Biofuels: $148,000; owes county $160,357. Out of business. Assets and collateral still being determined.

• March 2011: Webster Enterprises: $70,000; owes county $71,158.26. Payments deferred until April 25, 2013.

• Current: A pending $110,000 loan to Roy Burnette in Sylva to get local WRGC back on the air. County still trying to determine appropriate collateral.

• Current: A pending $250,000 loan to Jackson Paper for repair work at the Sylva plant. That loan looks certain to move forward.

Where Jackson’s loan program started

Jackson County’s revolving loan has its genesis in a 1982 Community Development Block Grant for $750,000, a joint effort with the town of Bryson City. Tuckasegee Mills received $738,500 in a loan, and Jackson County received 50 percent of a payback — $553,973.

Another grant for Jackson County for $291,000 enabled a loan to a business for $285,500. Ultimately, the principal from the two grants totaled $654,750 — a nest egg for the revolving loan fund.

The three guiding principles for Jackson’s loan program

• Creation of new job opportunities and the retention of existing jobs … principally for people of low and moderate income.

• To further new business development or expansion within the county.

• To enable private business development that would not take place without loan assistance from the county.

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.

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.