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Paduch takes Unicoi to task for projected losses on kitchen

Sue Guinn Legg • Apr 16, 2018 at 4:28 PM

At the last meeting of the Unicoi Board of Mayor and Aldermen, former Johnson City Mayor Pete Paduch spoke for several minutes on his concerns about the town’s new Mountain Harvest Kitchen and the use of tax dollars for the kitchen and other capital projects in Unicoi he said would be better spent on roads and public safety.

His comments were delivered during the “citizens comments” period of the meeting and ended in a less-than-amicable exchange of words with Unicoi Mayor Johnny Lynch.

When Lynch told Paduch his comment time was up and asked Paduch where he lived, Paduch, who owns property in Unicoi, told Lynch it was “none of your business.”

When Lynch, who earlier in the meeting had denied Paduch’s request to speak during a board discussion of a business item on the agenda, told Paduch he thought he lived in Johnson City, Paduch repeated it was none of Lynch’s business where he lives.

In the weeks since the March 19 meeting, Paduch has shared his concerns about the kitchen with several local news outlets and government offices from Erwin to Nashville and Washington.

He’s contacted the Deputy Commissioner of Tennessee’s Department of Economic and Community Development and the Appalachian Regional Commission that together with the federal Economic Development Administration provided more than $900,000 in grant funding for the approximate $1.2 million cost of the kitchen, and another $400,000 ARC grant for additional kitchen equipment and programming.

Paduch has contacted state Sen. Rusty Crowe and the local First Tennessee Development District about the kitchen. And since March 27, he has sent almost daily emails to the Johnson City Press to expound on his concerns.

Based on a financial summary of the kitchen’s first four months of operation provided to the board and to the Johnson City Press in January, Paduch is projecting the kitchen will finish its first year in September with an operational loss of $164,000.

Based on other figures shared with him by Unicoi Alderman Roger Cooper, Paduch alternately projects the kitchen’s one-year operational loss will be $130,000, which he estimates is 10 percent of the town’s total $1.3 million budget and $70,0000 more than a $60,000 town subsidy included the business plan on which the kitchen was launched.

To TDECD Deputy Commissioner Brooxie Carlton, Paduch wrote the town is refusing to share the kitchen’s financial records with the public and discouraged her department from awarding any more grants to Unicoi until it does.

“Please no more grants until kitchen financials are provided to the public. You, ARC, ETSU, FTDD all need to get involved to get this mess straightened out,” Paduch wrote to Carlton.

Upon receiving a copy of Paduch’s email to Carlton on March 27, the Johnson City Press immediately requested the kitchen’s most recent financial statements, and received those records on March 29, two days after submitting the written document request the town requires. On Thursday the Press again requested the kitchen’s most recent financial records and received those records on Friday.

Recorded in the town’s general fund ledgers through the end of February, the year-to-date kitchen expenditures were approximately $108,000 and appear to include more than $12,000 in one-time start up expenses. Year-to-date revenues were $5,964. The records also included more than $231,000 in grant and grant reimbursement credits for the kitchen from the EDA and ARC and a $20,000 EDA grant debit.

Year-to-date kitchen figures on the kitchen provided to the Press and to the board members in their agenda packet for Monday night’s meeting show the kitchen’s revenues increased to $6,600 during the month of March.

Cooper, Lynch and Town Recorder Michael Border all told the Press they do not have an exact projection for kitchen’s one-year operational loss.

Cooper says figure may be close to Paduch’s $130,000 projection, and he is concerned that number is more than twice the $60,000 first year subsidy included in the kitchen plan. Cooper is also concerned that so far the number of local residents using the kitchen for non-commercial food processing is very low.

Borders said whatever the year-end operational loss turns out to be, the town will pay it “just like any other department.” Borders also noted the kitchen has not yet been through its first local growing season, when more community members are expected to use the kitchen.

Lynch said he is still hopeful the the kitchen’s first local growing season, its continued use by local food business startups and the popularity of the educational classes it offers will result in a small end-of-year gain.

On Friday, Mountain Harvest Kitchen Director Lee Manning said five new food businesses assisted by the kitchen, including a small downtown Johnson City restaurant, are now up and running. Five business startups are currently using the kitchen to produce their products. And only a few spaces remain open for a upcoming class on cooking with wild herbs that grow in the local region.

Manning said the kitchen is a unique resource and expressed hope its critics will give it a chance to be successful.

Two new food business owners told the Erwin Record last week the help they received at the kitchen, which works in partnership with East Tennessee State University’s small business Innovation Lab, was invaluable, including their ability to use the kitchen after hours.

Lynch emphasized the kitchen was never intended to be a money-making venture but an economic driver for the local community and for the region, a food-related educational facility and a community kitchen for those who can and process locally grown foods. He said planning for the kitchen has spanned more than a decade and three different configurations of the Board of Mayor and Aldermen, who all understood its purpose was not to make money but to stimulate the region’s economy.

Borders noted that aside from any revenues the kitchen produces, the businesses the kitchen helps start will create jobs and generate local and state sales taxes.

Cooper, who has also expressed concerns about the difficulty of obtaining the kitchen’s financial statements, said the problem is that what is currently being provided is “raw data” that is hard to understand. But he credited Borders for his work to separate the records into a separate kitchen fund for which monthly reports are expected to be available by the end of June. “That should help a lot,” Cooper said.

Cooper, who recently took issue with a proposed exemption to the Tennessee Open Records Act that would have closed all the kitchen’s records before a state Senate Committee amended the bill to include only proprietary business information shared with the kitchen, said the important thing is transparency. “If the kitchen has a problem, just say so and we’ll fix it,” he said.

Email Sue Guinn Legg at slegg@johnsoncitypress.com. Follow her on Twitter @sueleggjcpress. Like her on Facebook at facebook.com/sueleggjcpress.

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