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Citing questions about process, Johnson City defers vote on $12.5M funding agreement

David Floyd • Updated Mar 12, 2020 at 7:45 PM

With city staff questioning the process by which Washington County approved the deal, Johnson City commissioners on Thursday deferred a vote on a controversial $12.5 million school funding agreement.

“Rather than risk someone challenging this later as to the legality of the process, we — being the city and the county — need to be sure that we’ve done this legally and properly so that we can do what’s in the best interest of the citizens we work for,” City Manager Pete Peterson said after a special called commission meeting on Thursday.

The $12.5 million interlocal agreement would allocate $500,000 annually to the city over 25 years and would stipulate that the city could not sue Washington County over the mechanism it’s using to fund the construction of a $32.75 million K-8 school and recreational facility in Jonesborough.

The funding mechanism, which does not guarantee funding to the city that it would normally share if the county issued bonds, would involve the town of Jonesborough paying for the school and recouping that money through a rent-to-own agreement with the county.

Critics have noted that the $12.5 million deal offers less than half of the approximately $30 million the city would receive if the county issued bonds. Peterson has said that the $12.5 million would at least allow the city to receive some money from the county to meet its school capital needs.

As he negotiated the deal with Washington County, Peterson said there were multiple versions of the agreement.

Peterson said the version that appeared in front of the Washington County Health Education Welfare Committee was not the deal that was agreed to. Subsequently, he said the version sent to the Budget Committee was different from the document reviewed by the Health Education Welfare Committee.

Ultimately, Peterson said the copy of the agreement published as part of the required public notice for the Washington County Commission meeting was not the agreed-to version, and he said a copy was also absent from the county commission’s agenda packet online.

To avoid acting on the agreement during spring break, Peterson hopes to place the item on the city’s agenda in early April.

Asked by commissioners to clarify the differences between the documents, Staff Attorney Sunny Sandos pointed to the waiver section of the agreement publicly noticed by the county.

“There is, I believe it’s either one or two sentences, that addresses an assignment of the rights of the city as they relate to the town of Jonesborough; it assigns all of those rights to the county,”  Sandos said. “That is not something that the city is going to agree to. It is not something the city can agree to.”

Sandos said those changes appeared in both the public notice and the interlocal agreement approved by the Health Education Welfare Committee.

“There is reference that that is the document that was considered by the ... county commissioners,” Sandos said. “As such, we deem that to be a material change — that assignment. Given that, we need additional assurance that what the county ... has approved is the same document that would be approved by the city.”

Sandos said there’s a question about whether the agreement will need to go back to the county for another vote.

Peterson said after the meeting that staff made the decision to recommend deferral on Thursday morning.

“We’ve been in constant communications (with the county) trying to get some points of clarification, and it’s been an ongoing conversation,” Peterson said. “We just need to get to the point where we get clear documentation that everything was done properly so that we can both approve the same document without question.”

Commissioner John Hunter agreed with the assessment presented by staff.

“I think it’s just imperative that we both literally and figuratively be on the same page as the county before we make a vote on the agreement based on what the city manager has said,” he said.

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