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With little oversight, it's deja vu all over again

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Sunday, July 8, 2018

Just what is it about the Albemarle Commission that invites financial scandal?

That may seem like a provocative question, but long-time readers of The Daily Advance familiar with the commission’s history — two directors were fired back to back in the 1990s for either malfeasance or misappropriation of funds — were asking after Staff Writer Jon Hawley’s report last week about the latest allegations of questionable spending at the Hertford-based council of government.

According to Hawley’s report, the Albemarle Commission, at Executive Director Cathy Davison’s request, awarded a construction management contract worth $22,000 last year to NENC Project Solutions, an Elizabeth City-based firm, to pursue a new building for the commission. Davison had claimed the commission’s current 10,400-square-foot facility, which is owned by Perquimans County, is no longer large enough for the agency’s operations. 

Minutes from the April 20, 2017, meeting of the commission’s Board of Delegates — the 13-member body that’s ultimately responsible for what the commission does — show Davison recommended hiring NENC to oversee the design, construction and final inspections of the new 16,600-square-foot building she had proposed. The board didn’t vote to hire NENC but agreed by consensus to Davison’s recommendation after she advised it was the “only firm that is located within the region that provides this type of service.”

What Davison didn’t tell the board was the full extent of her husband’s involvement in NENC Project Solutions. The minutes show Davison disclosed that Jim Davison “has conducted asbestos inspections, as well as facility assessments” for the company. But she didn’t clearly spell out what Hawley discovered with several record checks: that Jim Davison is NENC’s owner.

That presents a problem because, as Hawley’s report noted, state law strictly prohibits public officers and employees from receiving a “direct benefit” from a contract with a public agency, which the commission is. The law specifically defines a direct benefit as a contract with the public officer’s spouse, provided the spouse receives direct payments from the contract and owns more than 10 percent of the company.

Davison has defended her award of the contract to NENC, saying she disclosed her husband’s role and that the commission’s auditor expressed no concerns about the matter. But several commission board members told The Daily Advance they weren’t told Jim Davison owns NENC, and that they never would have OK’d the contract had they known that.

The commission ended up paying Jim Davison’s firm only half of its $22,000 contract — $11,000 — apparently because the construction project never went forward. The project stalled after Pasquotank County, the largest county by population of the 10 served by the commission, declined to support it. 

The question that obviously comes to mind in the wake of this disclosure is the same one raised after allegations of misspending surfaced during the tenure of the two later-fired Albemarle Commission directors in the 1990s: Namely, how did the board of delegates let it happen?

The range of factors that led to Davison’s apparent conflict of interest — board members’ inattention to detail, disinterest, lack of skepticism — are as easy to pinpoint as they are pervasive and long-lasting. They are in fact the same factors that led to the questionable spending at the Albemarle Commission in the 1990s; at the now defunct Northeast Economic Development Commission in the 2000s; and at the now defunct Albemarle Mental Health Center, also in the 2000s.

So the question remains, why does this happen?

The appointed boards tapped to oversee these large, multi-county agencies include people who, for the most part, are diligent, engaged and hard-working. The trouble is, these folks have only so much time and effort to give, particularly if they are an elected official. County commissioners appointed to the Albemarle Commission Board of Delegates, for example, likely feel they have enough to worry about back home when it comes to financial oversight. The last thing they want is the burden of overseeing the finances of another agency, particularly one where they themselves are not directly accountable for what happens. And by directly accountable, we mean to voters. So they end up trusting the professional manager of the agency to do the right thing.

That’s why it was heartening to see the board of delegates step into its oversight role recently and take the rare step of initially rejecting the commission’s proposed budget for 2018-19. The $6.8 million spending plan Davison presented the board included a $149,000 annual lease payment for a new facility for the commission in Elizabeth City — triple the cost of agency’s current rent — and another $38,000 for an economic developer position — a job some board members noted is supposed to be among Davison’s responsibilities. Several board members have also noted the budget planned to spend another $900,000 from the agency’s fund balance refurbishing the leased building. The board approved a revised $6.4 million budget last week that omits both the new lease and new position.

The commission board finally seems adequately attentive. The question is, for how long? The board needs to show it’s up to the job of providing oversight by first demanding Davison give straight answers about her husband’s role in NENC when members meet later this month. Then it needs to demand NENC refund the $11,000 the commission wrongly spent on the contract.

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