The National Park Service is refusing to let go of a $4 million payment Swain County is due as part of the cash settlement over the North Shore Road.

The federal government is supposed to pay Swain County $4 million a year over the next decade — a deal intended to finally compensate the county for a road that was flooded when Fontana Lake was built in the 1940s.

Swain has had little luck getting the government to make good on the pledge, however.

Swain didn’t get the money in 2011 after Congress clamped down on earmarks. This year, the money was supposedly included in the National Park Service’s construction budget by both the President and Congress, but the park service isn’t releasing the money.

“It is currently sitting in the National Park Service’s account,” said Whitney Mitchell, spokesperson for Congressman Heath Shuler, D-Waynesville. “It is unclear why the National Park Service has delayed transferring the $4 million payment out of their budget into the Swain County trust fund.”

The National Park Service claims it doesn’t have proper authorization to make the payment.

Simply including the money in its budget isn’t enough. The park service claims it needs specific authorization — spelling out that $4 million should be handed over to Swain County — included as part of the budget bill that was passed by Congress last December.

SEE ALSO: Swain uses money from first North Shore Road payment on special projects

“While the funding was included in the final bill, the necessary language was specifically excluded,” said Jeffrey Olson, a spokesperson for the National Park Service in Washington, D.C.

Without that language, it won’t turn over the money, Olson said.

“Everybody agrees the $4 million for Swain County was passed,” said Leonard Winchester, a Swain County resident who has been working on behalf of the cash settlement for years. “Why this money can’t be turned loose because someone at Department of Interior said they didn’t have the proper authorization, I don’t know.”

Shuler’s office, meanwhile, claims the money included in the budget carries clear instructions to be handed over to Swain County.

Olson was unable to address the apparent stalemate, simply reiterating that the park service lacked authorization to release the money.

“That is the end of the question for us,” Olson said. “If a member of Congress says ‘Yes it is,’ and we say, ‘We don’t have it,’ that’s as far as I can take it. It either shows up in the language of the appropriation bill or it is not there.”

Specifically, the money for the cash settlement was included as part of the National Park Service’s construction budget, a total of some $159 million. That’s something even Olson agrees with.

But where he differs is whether the $4 million for the cash settlement needs its own authorization before it can be released.

Olson said everything else in the construction budget carried the necessary authorization. That authorization usually comes in the form of an itemized list of approved construction projects.

“When we have a construction budget, it often includes a list of projects. It is my understanding that list of projects is our authorization,” Olson said.

However, that itemized list doesn’t show up in the appropriation bill passed by Congress in December. The list was left out of the final bill.

“Where it went astray was they didn’t keep the list. It just devolved to a single number,” Winchester said. “Whatever wording the National Park Service thought ought to be there went away, and they ended up with a lump sum number for their construction budget.”

That begs the question: Can the National Park Service not spend any of the $159 million in its construction budget this fiscal year because it too lacks authorization due to the absence of the list? Or is Swain’s cash settlement is being held to a double standard?

Olson said the National Park Service doesn’t need specific authorization for the rest of its construction budget. When it comes to the rest of the $154 million construction budget, the passage of the appropriations bill itself counts as authorization even though the list was left out of the final budget bill, Olson said.

“There is no requirement that this list of construction projects be attached to the appropriations bill Congress passes and the President signs before we proceed with the projects,” Olson said.

But as for the $4 million cash settlement contained in that same construction budget? The park service wants Congress to pass specific language saying its OK to pay it out.

Apparently, even though the money was included in the park service construction budget, the park service isn’t willing to consider the cash settlement as “construction.”

Leonard points out that the cash settlement is a substitute for constructing the road itself, and so in a way, it is kind of construction — since it is “in lieu of” construction.

At one point, there was indeed an itemized park service construction list circulated in budget talks. The cash settlement was allegedly on the list. The list was even referenced in budget committee documents as the “go-to” list for what the National Park Service should spend its construction budget on.

“The amount provided will fully fund the NPS construction projects as prioritized by the Service pursuant to the Administration’s revised request list provided to the Committees on June 24, 2011,” according to a draft version of the National Park Service appropriation bill.

Olson didn’t want to talk about what type of authorization the National Park Service needs at this point to fix the situation.

“Those are conversations that happen between a congressman and the National Park Service,” Olson said. “We are not going to use your newspaper as a way to communicate with Swain County.”

However, that’s exactly the question that has stymied everyone working to secure the cash settlement.

“Somebody, somewhere, has to know if there is something missing, what it is,” Winchester said.

Winchester has followed the labyrinthian appropriations process through Congress. He even flew to D.C. in 2010 along with a delegation from Swain County to meet with Ken Salazar, the Secretary of the Department of the Interior, to remind him of the cash settlement promise.

Winchester said it is disappointing to fight so hard, to see the money included in the budget, but to come up empty-handed.

Insult to injury?

The cash settlement was intended to resolve a festering decades-old dispute between Swain County and the federal government over a road flooded during the construction of Fontana Lake back in the 1940s. At the time, the government promised to rebuild the road one day, but never did.

Nearly seven decades later, the government instead promised to make good on its broken promise by paying Swain the cash value of the road that was destroyed — a value pegged at $52 million.

The money was supposed to be appropriated by Congress to the tune of $4 million a year until the obligation was settled. But after an initial down payment of $12.8 million in 2010, Swain hasn’t seen a penny since.

The cash settlement was supposed to make right on the long-standing obligation to Swain County citizens. The federal government signed a memorandum of understanding amid great pomp and circumstance in 2010, a ceremony attended by some 200 people at Swain County High School, pledging to reimburse Swain County for the road.

If it’s authorization the park service wants in order to release the $4 million included in this year’s budget, how about that memorandum of understanding, signed by the Secretary of the Department of Interior Ken Salazar, promising to pay it? Winchester said that ought to be good enough.

“Each individual subsequent appropriation does not require a new additional authorization,” Winchester said. “These joint acts by the federal government and by Congress constitute the authorization, recognition, expectation and plan for future payments, if and when they are appropriated.”

Congressman Shuler has been a champion of the cash settlement. He grew up in Swain County and rode his football stardom there and at nearby Tennessee to his congressional seat in Washington.

Shuler had to lobby for the appropriation on two fronts. He worked closely with the Obama Administration to get the $4 million payment included in the National Park Service budget this year, Mitchell said.

He also had to shepherd the line item through Congress to make sure it remained intact during the budget process.

“Rep. Shuler worked closely with House leadership to ensure the $4 million annual payment the President promised and requested as part of the North Shore Road settlement was fully funded in the 2012 Appropriations bill,” Mitchell said.

Shuler is remaining optimistic.

“Rep. Shuler fully expects the National Park Service to fulfill the President’s request and uphold the federal government’s legally-binding obligation to Swain County by making the payment before the end of this year,” Mitchell said.

Mitchell pointed out that the government signed a “legally-binding” memorandum with Swain County.

Even with an ally in Shuler fighting for the cause, the cash settlement seems to have stalled out almost as soon as it was promised. Shuler is now serving his last year in office, however, having announced this winter he would not seek re-election.

Whether Shuler’s successor will fight with the same vigor for the settlement leaves the future of the payments in even greater limbo.

Shuler’s office says he will impress on whoever comes along after him to carry the torch.

“Our office will fully brief the incoming 11th District representative to ensure they have the information and resources they need to follow in Rep. Shuler’s footsteps and continue his leadership and hard-fought efforts on this front,” Mitchell said.

For now, Swain County leaders haven’t gotten actively involved in hunting down the $4 million that allegedly has their name on it somewhere in the National Park Service budget. Instead, they were counting on Shuler to fight that battle for them.

“The money is in the account ready to go but nobody is willing to sign the check,” Swain County Manager Kevin King said, proffering his version of the cash settlement’s status.

But Swain County commissioners might need to start rattling some cages.

“We might have to at some point in the future,” King said.

What is the North Shore Road?

The so-called “Road to Nowhere” is a source of bitter resentment for the people of Swain County. Before it was flooded, the road traveled for more than 30 miles from Bryson City to Tennessee. The route was dotted with homes, farms, schools, churches, cemeteries and general stores of numerous Appalachian settlements going back generations.

When Fontana dam was built in the 1940s, what wasn’t consumed by the rising water of Fontana Lake was folded into the Great Smoky Mountains National Park. Hundreds of people were forced to leave their homes forever.

The federal government promised in writing at the time to rebuild the road, but after pecking away at a dozen or so miles in the 1950s and 1960s, it was abandon due to the exorbitant costs and environmental hurdles of building the remaining 20 or so miles.

It became a symbol of Washington’s failure to keep promises to rural Appalachia. Swain County, after all, had paid to build the road in the first place — and had to keep paying off the construction debt for years after the road didn’t exist anymore.

A deep-seated distrust and disillusionment set in over the intervening decades.

After a decades-long battle to get it, the first interest payments on Swain County’s North Shore Road settlement are finally starting to trickle in.

Now to figure out what to do with it.

Of the $52 million payout, given to the county by the federal government as a consolation prize for a road that was promised in the 1940s but never built, $12.8 million is already in the bank. There’s another $4 million that’s promised this year — it’s in President Obama’s budget, anyway — although it could be a while until it finally makes its way into the county’s hands.

But after the long and arduous negotiations that led to the settlement, and speculation from all sides over what should be done with the money, there is, as yet, no plan for the interest that’s accruing on the settlement cash that’s already in the bank.

When an agreement was reached last summer, the idea of a steering committee peopled by community members was bandied about, with the intent of directing the county on the best use of the money.  County Manager Kevin King said it’s a concept that has been mentioned in the intervening year by a few commissioners and community members, but no one’s formally proposed it in the commissioners’ twice-monthly meetings, so the cash is still sitting there. No committee has been formed, either.

But, said King, there’s not much money to spend yet, anyway. He estimates the fund will make around $200,000 in interest this fiscal year, which will be paid out at the end of June.

“Of course right now, with the economy, it's not drawing a lot of money,” said King. “It'll take a while to increase to the point at where they could do something with it.”

The funds are held in trust for the county by the North Carolina Department of the Treasurer, with only the interest remitted to the county each year. This year the interest has averaged less than 2 percent.

“If it was making more interest, it would probably be further on the front burner,” said Leonard Winchester.

Winchester is the chair of a group called Citizens for the Economic Future of Swain County, and he’s been instrumental in getting the money secured for the county and wants to see citizen input on how it is spent.

“I am in favor of a committee doing it. It's just that there's not that much interest there to be dealt with and so it's not been a hot topic,” Winchester said.

Commissioner Robert White concurs. He’s one of the commissioners in favor of a citizens group.

“We haven't accrued enough yet, but I assure you what I would love to see would be a citizen committee to look at this particular situation,” said White.

His vision is that the money would be used for special projects in the county, things that could never be done otherwise.

“My vision for that North Shore money is once we get enough accumulated, I want to see things that are going to improve Swain County in whatever manner that it may take. You also really have to look and see about things that could really step the county up another level,” said White.

A small portion of the interest money has already been spent, going to erect five commemorative granite pedestals in front of the county’s administration building, one detailing the North Shore Road saga. The project cost around $20,000, with $7,500 covered by a National Heritage Area grant and the rest of the bill footed by the interest money.

Nothing bigger, however, has been proffered as a potential project.  King said he’s in no hurry to rush a decision on the funds, especially in this economy.

“At this point, we're just trying to let this grow,” said King. “And with the economy like it is, it's almost impossible to bank on any investments right now.”

The former CEO of Haywood Regional Medical Center will get $150,000 from the hospital after settling a lawsuit claiming he was wrongfully fired.

David Rice was at the helm during a near meltdown of the hospital in 2008. At the time, Rice publicly said he resigned, but in a lawsuit filed two years later he claims he was forced out.

Settling the suit was a business decision, according to the current CEO Mike Poore.

“We felt that it was best not to spend any more money on attorneys and complete that chapter,” Poore said.

In his suit, Rice demanded 20 months of his salary, back pay for accrued vacation and sick time, bonuses he had been promised and lost benefits. While Rice’s salary was $199,000, benefits included a car and health insurance, extra bonuses and other perks.

Although Rice left in the spring of 2008, he claims the hospital board verbally promised him his salary and benefits through the end of 2009 when his contract expired. In exchange, they asked him to publicly announce that he resigned instead of labeling it a termination.

Rice claims he was tricked, however, and that the hospital board had no intention of keeping its verbal promise. Rice had been the CEO for 15 years.

Many in the community blamed Rice for the hospital crisis back in 2008. The hospital failed federal inspections causing it to lose its Medicare and Medicaid status, triggering an exodus of private insurers as well. The hospital essentially shut its doors for five months except for the most essential services.

Rice kept the brewing crisis a secret, attempting to quietly fix the underlying issues, but it eventually imploded. Observers believe that Rice’s failure to address the citations early on led inspectors to make an example out of Haywood, pointing to other hospitals with more egregious problems that didn’t get shut down.

Regardless, hospital board members and community leaders said they were blindsided and condemned Rice for failing to keep them in the loop.

The hospital leveled a countersuit against Rice. Even though the hospital maintained that Rice resigned, the countersuit claimed there was good cause to fire Rice had that not been the case.

The countersuit claims Rice failed to “communicate with the board, medical staff and administration in an effective and timely manner, or otherwise concealing and distorting material facts and circumstances concerning the operation and affairs of HRMC.”

In the countersuit, the hospital claimed Rice’s actions leading to decertification caused “significant loss of HRMCs patients and revenue placing the future operation of the hospital in jeopardy.”

The hospital shutdown had major economic consequences for the community. For starters, the hospital burned through more than $10 million in reserves it had built up over the years.

Doctors lost business when patients went elsewhere. Many of the nurses and staff were put on temporary unemployment. The county saw a substantial increase in ambulance costs for ferrying patients to hospitals in Asheville or Sylva. Patient numbers still have not fully returned to normal.

Last month, a group of emergency room doctors was awarded $1.6 million in a lawsuit against the hospital dating back to Rice’s reign. Haywood Emergency Physicians were wrongfully ousted by the hospital in 2006 and replaced with a corporate physician staffing company. Rice helped orchestrate HEP’s replacement because he saw them as a threat to his insular power structure, according to the doctors involved.

Settling the suit with Rice marks the final chapter in the saga, allowing the hospital to move forward with its mission, Poore said.

“We are moving forward and focusing on our hospital’s mission of providing compassionate, quality and cost-effective healthcare,” Poore said.

The two sides went to mediation in November. The only ones present were Poore, Rice and his wife, and their respective attorneys.

While out-of-court settlements are not publicly filed in the court record, Poore elected to share the information in the interest of transparency.

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.”

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.”

By Jennifer Garlesky & Julia Merchant • Staff Writers

Two Swain County employees will join representatives from the Department of Interior, the State of North Carolina and the Tennessee Valley Authority to negotiate a new contract that will replace the 1943 North Shore Road agreement.

By Rep. Heath Shuler

After more than 60 years of contentious debate that has divided our community, we are finally nearing a fair and conclusive solution to the issue of the North Shore Road. This solution will provide a fair monetary settlement to the people of Swain County that will be used to improve our schools and economy well into the years ahead.

By Julia Merchant • Staff Writer

With a potential end to the North Shore Road saga looming, supporters of constructing the 30-mile road through the Great Smoky Mountain National Park are confronting their fear of what a wilderness designation would mean for the park and Swain County.

By Julia Merchant • Staff Writer

After 64 years, it looks like the battle over the North Shore Road in Swain County may have finally reached a resolution.

Rep. Heath Shuler, D-Waynesville

“As a Swain County native, I have a deep, personal understanding of the issues and emotions surrounding the Road to Nowhere. The people of Swain County have