Canton grant uncertain as Rural Center finances get sorted out

By Vicki Hyatt | Aug 07, 2013
Photo by: Vicki Hyatt The Appalachian Regional Commission, via the U.S. Department of Agriculture,  provided $300,000 of the $1.67 million in funding for the Champion Drive sewer project. It is the only agency that requires grant recipients to erect a sign proclaiming their involvement.

CANTON — When Canton officials embarked on a $1.67 million sewer project that would open the town to industry for decades to come, they did so with the understanding that about half the project would be paid for with a grant from the N.C. Rural Center.

The project is nearly complete, but the promised funding is forthcoming is up in the air.

That’s because the N.C. Budget Director Art Pope has frozen all N.C. Rural Center funds, and the legislature has appropriated no new funding for the center. The action followed a state audit showing the center failed to provide proper oversight for some of the grants, and other grants didn’t create the promised number of jobs.

About $200,000 of the promised $828,000 in Rural Center funding has been reimbursed, said Canton Town Manager Al Matthews, and over half of the receipts have been submitted for payment.

“That’s the way it works,” he said. “You pay it up front, then send in documentation once the work is done to get reimbursement.”

Matthews is hopeful the rest of the funds will be forthcoming as promised in the signed contract.

However, a contract might not be enforceable if funds aren’t available to honor it. For now, that appears to be the case.

Center’s fate is uncertain

CeCe Hipps, the executive director of the Haywood County Chamber of Commerce, is a member of the Rural Center’s governing board.

The grant to Canton isn’t the only local project that is up in the air. Funding for a second N.C. Step grant for $100,000 has been submitted, and even the Chamber has two projects approved, but not yet funded.

In a meeting last week, Hipps said the board approved the payment of $734,444 for pending grants and $5,539 for the center’s operating expenses. None of that funding went to Haywood projects, however. On Sunday, N.C. Gov. Pat McCrory approved the board’s decisions.

“Anything submitted is not going to happen right now,” Hipps said of payments for ongoing projects. “You would think contracts would be legally binding, but when the state budget director freezes your funding, there’s not much you can do.”

The Rural Center receives some private and other funding, but it is not enough to honor all the commitments made. A group of five board members is going through the budget to figure out how to operate and how to turn transfer responsibilities to the N.C. Department of Commerce, Hipps said. The board will reconvene at the end of the month to decide the center’s fate.

Hipps said Commerce Secretary Sharon Decker attended the meeting and promised the department would look into each of the grants and make a decision on whether they would be paid.

“It’s no longer the Rural Center’s decision,” Hipps said. “It’s a mess. We all know what this is about. … This is nothing but politics. The amount of error in not providing jobs is 5 percent. To me that’s not a big deal. They wanted to find something and they found it.”

Hipps said she spoke with a board member from Marion who told her a project in his community was in question. The audit concluded the project failed to provide the number of jobs promised, but in fact, the outcome was that more positions were created than expected. He said he tried to prove that to the auditor’s office, but was told it was too late.

The state audit was critical of that system, and noted the governing board was unaware of project details. Hipps countered that the Rural Center grants were reviewed by subcommittees and board action hinged on the committee findings — a system used by many organizations, including the chamber.

The findings of the state audit were also critical of the Rural Center because some of those on the board received grants within their communities, a finding four-year board member Hipps dismissed.

“The reason individuals were placed on the board is because they knew what was going on in their communities,” she said. “There was a basic misunderstanding of how the process worked.”

A new direction

Under a plan outlined by McCrory and approved by the General Assembly, state funding previously provided to regional nonprofit agencies to spur economic development will now be placed under the N.C. Department of Commerce.

So-called “prosperity zones” will be created, and the state wants to partner with private companies in hopes they hope will contribute funding as they do now for the regional efforts.

The fallout from the reorganizations is that budget funds for most of the regional agencies have been scaled back significantly, and in the case of the Rural Center, funds were frozen, and no additional state funds were appropriated.

Hipps is hopeful the prosperity zone plan will be beneficial to the western part of the state, even though only a single representative from west of Charlotte, the Biltmore Estate’s Jack Cecil, has been named to the board.

“There’s an opportunity for better collaboration if we are in these prosperity zones and we have an entity working on Western North Carolina issues,” she said.

She's also hopeful that once the plan is finalized, there will be opportunities for others to become involved.

Meanwhile, those who have completed, or even started projects based on promised Rural Center funding, will have to wait for answers.

“Right now, no one knows what’s going on. Everyone is in limbo,” she said. “People are calling from communities to see what is going on with their grants. I’m sure people are not getting the information they need. We’re in a system of dysfunction right now.”

As for the Canton Champion Drive project, Matthews said the project is about 95 percent complete and the town has the required documentation for the Rural Center reimbursement.

“We feel confident the funding will come through,” Matthews said. “The money could be tied up for a period of time, so if we have to, we will tap into our fund balance.”