Mr. Klemm: We have some questions about some "little points" of the EDC Annual Reports | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

   The Beaufort County and City of Washington taxpayers were treated to another prime example last week of why we have such a mess with the Economic Development Commission (EDC) in Beaufort County. We had one of the two primary people responsible for providing oversight of the EDC to say that the recently submitted Annual Report of the EDC Directors was "acceptable." Commissioner Al Klemm was quoted in a local newspaper as saying: "It meets the criteria of the by-laws. You could argue about it with this little point and that little point, but let's be sane about it." Apparently the other "oversight commissioner" Jay McRoy was attempting to distance himself from the report. He was unavailable for comment. But that will be the most interesting aspect of the report...when CPA Mcroy weighs in on the financial part of the report, in light of the most recent outside audit of the adjunct Committee of 100. That audit contained several red flags and none of them are spoken to in the Annual Report.

    Click here to read the Annual Report for 2011.

    Click here to read the May 2012 Year to Date budget report of the EDC.

    Now, Mr. Klemm, if this report is acceptable to you allow us to ask you to explain the following to the People of Beaufort County:

    1. Which grants that are currently outstanding are performing as required by state and Golden LEAF requirements?

    2. What is the existing and future potential liability of clawbacks of any of the grant contracts the County and/or the Committee of 100 are legally obligated for?

    3. What is the value of the assets the County and Committee of 100 possess in conjunction with the economic development program in the county? How have those assets changed in value during the year the Annual Report covers?

    4. What are the liabilities the County and Committee of 100 have in relation to the operation of the economic development program in the county? How much do we owe. Let us repeat that question. How much has the EDC put the taxpayers on the hook for in the deals that have been made?

    5. Where in the Annual Report does it show compliance with N.C.G.S § 158 7.1. and specifically Section (c) and (d). Can you furnish us with minutes of the Board of Commissioners which show compliance with Section (c)? Likewise, would you be so kind Mr. Klemm as to show us the documentation exhibiting compliance with Section (d) relative to the recent "conveyance" of property within the Washington Industrial Park to whomever it was that the county made a deal with what the Annual Report apparently refers to in the section labeled "P&G Manufacturing." Does in fact this part of the report comply with N.C.G.S § 158 7.1.(d) Mr. Klemm?

    6. Perhaps the cavalier references in the Annual Report to the number of jobs "created" is one of those "little points" you refer to, but please show us the actual data, particularly how the Annual Report computes that "the employment in that plant will double." Could we see the historical ESC data, or perhaps the payroll data from P&G Manufacturing and Weir Valves and the others that the report takes "jobs" credit for? Little points to you, but we know that major errors of job computation have taken place in the past. Could we have an Appendix that shows the actual data? Just a little point, we acknowledge but we would suggest that an undocumented assertion is not a "little point." Would any bank or lending institution accept such pro forma projections without some documentation?
Beaufort County Commissioner at Beaufort County's government's retreat: Above.     photo by Stan Deatherage
    We could go on, Mr. Klemm. Indeed we could go on and on and on. But we will settle at this point for a balance sheet that shows the assets and liabilities of the EDC and Committee of 100 and the Interim Performance Reports of the outstanding grant contracts. Perhaps you consider it a "little point" but we think the People of Washington and Beaufort County deserve to know whether we are facing clawback possibilities for any of these grants.

    And we will concede this is a "little point," but for the record the Financial Report is for the wrong year. It should be for 2011 if the EDC uses the calendar year, which it apparently does because the report is due in April, which would of course come three months before the end of the fiscal year if the year ends June 30. "Little point" Mr. Klemm? Will if so, please tell us how to reconcile the number to the audit report which is based on a fiscal year ending June 30. Perhaps you can get Mr. McRoy to explain how we reconcile those numbers. We speak specifically to the year over year changes in the balance sheet and income statements.

    And perhaps this is another of your "little points" but where are the debt services payments in this financial report, Mr. Klemm? Where are the expenditures that were made repairing the not so Quick Start II building? Little points indeed.

    Perhaps all of these points are too "little" for you to concern yourself with, so we'll just make this point which we have to believe you will agree is not such a "little point." Did the EDC/Cof 100 make money or lose money last year, compared to previous years? Did the People's investment in the EDC and its affiliate increase in net asset value or did it decrease? And how did that change compared to prior years? Are our contingent liabilities and long-term payables increasing or decreasing? Do we have adequate reserves to cover those liabilities? Are the taxpayers on the hook to have to bailout the EDC/C of 100 if we're hit with defaults? To be sure you don't think those to be "little points"? If so, let us just leave you with this thought: "Hospital."

    Perhaps you are correct on one thing. Perhaps this report "meets the criteria of the by-laws..." but if so we trust you will offer significant revisions in the by-laws to address some of these "little points" we've asked about above.

    We note also that Warren Smith has reviewed this Annual Report and he has some more "little points" which seem to us to be very sane. Click here to read Mr. Smith's letter to Mr. Klemm regarding this report.

    Now then, Mr. Klemm another other "little point." Would you be so kind as to inquire of Mr. McRoy, CPA whether if Mr. Thompson worked for him in his CPA business if he (Mr. McRoy) would accept the financial report that was submitted by Mr. Thompson as an "adequate" annual report of the financial status of the EDC/Committee of 100 that he would put his company name on and submit to one of his clients?

    But there is one other "little point" ... do you really feel it is appropriate for an employee to be out of work without their immediate superior (the County Manager) knowing they are going to be out? And if they take jury duty leave, do you not feel they should have served on jury duty or reported to work. Little points no doubt.