DOBSON — A long-running legal dispute between the Surry County government and a well-known restaurant operation in the Dobson area, stemming from an economic-development grant, is now off the table.
“We have finally come to a settlement with Fred Snow and Cody Creek Inc.,” County Attorney Ed Woltz announced during a special meeting of the Surry Board of Commissioners Thursday afternoon in Dobson. Cody Creek, which is owned by Snow, includes a restaurant and banquet hall.
As part of that settlement, $203,754 in grant funding will be returned to the county, Woltz added, which it had repaid to the N.C. Department of Commerce because of problems with an incentive agreement.
The issue stems from a state economic-development grant of that sum the county received in 2010 through a program of the North Carolina Rural Center, which is now administered by the Department of Commerce.
The money was used to help provide water and sewer services to the Cody Creek site, under a promise that the business would create 21 full-time jobs at or above minimum wage in response.
After taking over the North Carolina Rural Center, the Department of Commerce performed an audit that determined Cody Creek allegedly did not create the jobs, which was vehemently disputed by Snow.
The dispute led to litigation last year in which the county government sued to recover the money it repaid to the state department from Cody Creek.
Snow then filed a countersuit this past winter against the county, claiming he had been treated unfairly by it and seeking $25,000 in damages, plus attorney fees. His suit also claimed the county had no legal right to return the grant money to the state and that it had “failed to exercise reasonable diligence and ordinary care to minimize its alleged damages.”
“The long and short,” Woltz said when announcing the settlement Thursday afternoon, is the money Surry had to pay for Cody Creek allegedly not creating the required jobs is being returned. He said this resulted from the county working closely with attorneys for Cody Creek and the Department of Commerce.
Woltz said the settlement included Snow relieving the county of all claims that could arise from the matter and the voluntary dismissal of his suit.
For his part, Snow had contended that part of the problem resulted from the Department of Commerce’s definition of a job and part from a former Cody Creek bookkeeper later charged with embezzlement whose actions also involved reporting inaccurate job numbers.
The commissioners were pleased by the outcome.
“I’d say we are fortunate to get our money back from Commerce,” Commissioner Van Tucker said. “I’m glad we can close this chapter and live to see another day.”
Woltz said the county should receive the money within two weeks. “It ought to be a pretty quick turnaround,” the attorney added. The sum cited will be minus the cost of litigation occurring to this point.
Commissioner Larry Johnson, while happy with the return of the money, lamented the fact that the $203,754 being recouped will be more than offset by the $281,646 the board had agreed to pay earlier during Thursday afternoon’s meeting.
The latter sum is owed to a state agency that manages the Medicaid program, stemming from an its over-payment to Surry in the 2011 fiscal year for transporting patients covered by Medicaid based on inaccurate figures generated locally.
Lesson for future
While the issue involving Cody Creek has ended favorably, Surry officials think it represents a good learning experience for similar economic-development projects in the future.
“I think you need to go into these job-incentive (agreements) with eyes wide open,” Woltz advised the commissioners and county manager, including being confident about the number of employees to be hired.
That might be easier said than done, according to discussion at the meeting, which indicated that part of the problem was grant programs of the North Carolina Rural Center not including enforcement provisions.
“It puts the county in the position of being a policeman to see that these jobs are created, and we can’t do it,” Tucker observed.
The North Carolina Rural Center was accused Thursday of having entered into some “bad” grant contracts.
A state audit of the center in 2013 found grant-reporting requirements weren’t carried out, and job-creation measures for grant recipients failed to be verified.
Tom Joyce may be reached at 336-415-4693 or on Twitter @Me_Reporter.