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Unicoi officials deny collusion in land deal

June 2nd, 2014 11:10 pm by Brad Hicks

Unicoi officials deny collusion in land deal

Unicoi County Mayoral hopeful Johnny Day accused Mayor Greg Lynch and others of trying to personally profit from the option of a 21-acre parcel of land in the county.

ERWIN — A candidate for the office of Unicoi County mayor has accused the county’s current mayor and a Unicoi County judge of colluding to see to it that they, and possibly others, profit from a possible land transaction. 

However, county officials say there was no such collusion or wrongdoing on their part, as the county acted on the property in an effort to enhance local industrial recruitment.

Last week, Johnny Day sent an email to several Unicoi County commissioners. In the message, Day expressed what he referred to as “deep concerns” regarding the county’s possible purchase of property recently optioned by the Unicoi County Economic Development Board. In this letter to commissioners, Day urged commissioners to vote against the county purchasing the property.

“This land deal reeks of ineptness or ‘good ole boy’ collusion or a combination of both,” Day wrote. “I suggest you think long and hard and do your own research into it before you give it serious consideration.”

Day was defeated by incumbent Unicoi County Mayor Greg Lynch in May’s Republican primary. Day recently said he intends to seek the office as a write-in candidate in the August general election.

In April, the Unicoi County Economic Development Board voted to place an option on nearly 21 acres of land along Zane Whitson Drive in the county’s Dry Creek area. Per the board’s vote, a 3-year option would be placed on the parcel at $3,000 per year, with two years right of first refusal. Monies paid toward the option would be applied to the property’s $397,000 purchase price.

“I can guarantee there’s no collusion on anybody’s part,” Lynch said Friday. “This is just someone who could afford a piece of land, and a county is interested in purchasing this land. We can’t really afford to purchase it outright right now, so we got an option on it.”

Lynch said the county’s economic development board has been interested in acquiring this particular property for several years. He said the property’s proximity to a rail line and the interstate makes it an ideal location for a prospective industry or a local company looking to expand.

“This could be a 40- to 50-acre industrial park someday,” Lynch said.

In his letter, Day accuses Lynch of violating the Sunshine Law by contacting at least two county commissioners before the property was purchased by its current owner in 2013 to ask the commissioners if they would vote for the county to by the property at a “small” profit to the owner. Lynch said he did contact some members of the county commission after the property was purchased at a public auction in May 2013.

“This is a good step for Unicoi County,” Lynch said of the option. “Of course, in his letter he accuses me of trying to broker a deal, and I wasn’t brokering a deal. But when I saw that it was up for auction, I was calling around to some commissioners, and I’m not sure how many, to find out would they go along with something like that. Most were hesitant because you haven’t seen a whole lot of industrial recruitment, where you could do something and bring the industry in.”

The property in question was purchased by Unicoi County Sessions Judge David Shults in May 2013. Shults paid $240,000 for the property, which had no lien against it.

“That means he paid cash for it,” Day wrote in his email. “Did he pay it all or does he have silent partners? If so, is one of them Mayor Lynch and/or other members of the Unicoi County Economic Development Board who stand to make a profit if the county buys it?”

Lynch said he did not know Shults was the purchaser of the land until after the auction at which the property was sold. He said he did contact Shults after the auction to see if there was a possibility of the county optioning the property.

“So when we found out Mr. Shults had bought it, I think I was probably one of the first people to call him and talk to him about it and ask him ‘Do you think there’s anyway you could price this property and work out some sort of option where we could tie it up,’” Lynch said.

Shults said he was unaware the county’s economic development board was even interested in the property until after he purchased it. Between his May 2013 purchase of the land and the June 2013 closing on the purchase, Shults said he was contacted by Lynch, who inquired about the possibility of placing an option on the property.

“I swear, under oath, that no one talked to me about that property until after I had purchased it,” Shults said. “I went out there the day of the auction, bought the property by myself. I paid for that property out of money that I’ve saved my whole life. There is nobody — not my brother, not Greg Lynch, not anybody on the economic development board — nobody has an interest in that property except me.”

Day’s email states that the agreed upon purchase price of $397,000 is $157,000 more than Shults paid for it, which is a “65.4 percent” profit.

“Is that what Mayor Lynch considers a ‘small’ profit that he ask(sic) the County Commissioners to pay during those phone calls in 2013?” Day wrote.

Day also wrote that although Shults paid $240,000 for the land, the Unicoi County Property Assessor has sent an “appraised value” of the property at $114,500. But Day said the market value has been reduced even further to $37,400, as the property is now on the Greenbelt and that Shults pays $251 per year in property taxes on the property.

“So how is a property with a market value of only $37,400 for tax purposes worth $397,000 to the county?” Day wrote.

Shults said he purchased the land as an investment, with the hopes of eventually making money on it, adding that he did have the property placed on the Greenbelt. He also said he denies all of Day’s accusations, particularly that there was collusion between him and county officials.

“I didn’t know anything about it being a possible industry site until after the auction,” Shults said.

Day wrote in his email that the county has a “field of dreams” approach to land for industrial recruitment, one he called “reckless” and a “huge gamble with taxpayers’ money.” He also referenced the town of Erwin’s move to purchase the former Morgan Insulation building for industrial recruitment, writing that the town is “waiting for someone to rush in and snatch it up, all the while losing all property tax revenues” on this property.

“Based on my over 35 years of business experience, it is my opinion that the county government does not need to be in the business of buying and selling property for obvious reasons, including the fact that any property owned by any government entity equates to losses in property tax revenues,” Day wrote. “There are much better ways for the EDB to facilitate economic development than to convert the town and county governments into real estate brokers.”

Lynch said he has been excited about the possibility of the county acquiring the Zane Whitson Drive property since the day he heard it was going to be up for sale. He also said he is excited about the potential the land holds, and he hopes it is “just the beginning” of bringing more jobs to the county. Lynch said Day’s efforts to create controversy with regards to the property were “sad,” as the economic development board is making strides to bring in industry but Day “wants to put the fire out.”

“What kind of upsets me with this is I’m being attacked for actually trying to do something to bring economic development to Unicoi County, and not just me, but the economic development board,” Lynch said Friday. “Right now is a good time for us to start trying to acquire property, and we’re not jumping in and buying property. We’re buying an option on the property. If things were to start to develop and a factory needed a building, then we’ve got the property.

“It’s really upsetting to me that someone would want to go on the attack for trying to bring in industry to Unicoi County and bring in jobs.”

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