April 19, 2014

York County Council chairman promises to release lawsuit settlement offer

Details will eventually be made public on what York County offered as a settlement proposal last summer to avoid a lawsuit with the Culture and Heritage Foundation, County Council Chairman Britt Blackwell said last week. The county has refused to release its settlement proposal since The Herald filed a Freedom of Information Act request for the document in August 2013.

Details will eventually be made public about what York County Council offered last year to avoid a lawsuit against the Culture and Heritage Foundation, County Council Chairman Britt Blackwell told The Herald last week.

The June 2013 proposal will be released, Blackwell said, after a recently-approved settlement agreement is finalized and the lawsuit is dropped.

He declined to discuss details of the county’s 2013 proposal or other aspects of the lawsuit, citing his respect for the legal process and the advice of county attorney Michael Kendree.

The county denied a request for the proposal filed by The Herald in August under the state’s Freedom of Information Act.

Kendree denied the newspaper’s request because, he said, it relates to “proposed contractual arrangements,” which is an exemption allowed in the law. The request was denied even though the county gave the document to the foundation, the entity ultimately sued by County Council.

York County filed its lawsuit on June 30 after foundation leaders refused the County Council’s settlement proposal. The lawsuit came nearly one year after the foundation formally changed its mission statement to no longer give financial support solely to the county’s public museums.

The lawsuit also followed years of wrangling between York County Council, the county museum system, and the foundation. The council and museum system have raised questions about the foundation’s finances.

The County Council unanimously voted earlier this month to settle the suit before trial after a mediator brokered an agreement.

Attorneys from both sides spent nearly 10 hours in mediation in March to come up with settlement terms. The county and the foundation split the $3,525 expense in mediator fees.

Settlement awards county audit, money from land

The Herald first reported details of the mediation settlement agreement when foundation Chairman Bill Easley provided the newspaper with a copy of the document on April 3. That same night, county officials had refused to release the agreement.

A copy of the settlement was filed with the York County Clerk of Court four days later.

In the settlement, York County will receive “all net proceeds” from the sale of nearly 274 acres of donated land near Interstate 77 and Gold Hill Road and a “forensic audit” report of the foundation’s assets. While the settlement does not contain specific numbers, the donated land is expected to be sold for $10 million.

Money from the sale of the land, and the so-far-undisclosed remaining balance in all of the foundation’s accounts, will be managed by a third-party nonprofit group, with oversight from both foundation and county appointees. Foundation for the Carolinas has been chosen as the nonprofit group to manage the money.

The foundation has also agreed to turn over its financial records to a third-party accountant to perform a “forensic audit.” A forensic audit reviews an organization’s financial statements to determine if they are “accurate and lawful,” according to thelawdictionary.org.

York County has agreed to state in writing that the audit shows “no evidence of malfeasance,” if that statement is consistent with the auditor’s findings.

An audit or accounting of the foundation’s assets is a major part of York County’s lawsuit. While not a part of the foundation’s formal settlement proposal just before the suit was filed, foundation officials have said they offered to use a third-party accountant to perform an audit in 2011.

With a forensic audit now agreed upon, the county and the foundation plan to share the cost of accountant fees.

That audit will begin, according to the settlement agreement, within 30 days of execution of the agreement with the court. A report from the auditor will be given to York County within three months of an accountant being chosen.

The settlement agreement also calls for the foundation to give the county – within two days of execution of the settlement – “verified account statements” that show the amount of money and investments held by the foundation and its subsidiaries.

York County has asked for but not yet received those account statements. The foundation’s choice to not provide them until the settlement is formally executed does not breach the settlement agreement, said attorney Brian Autry, who was hired as special counsel for York County in the lawsuit.

The county could choose to ask York County Master-in-Equity Judge Jack Kimball to expedite the process. Nearly two weeks have passed since the settlement was filed with the Clerk of Court.

“The county and commission’s timeline is for this to be completed as soon as possible and we are working toward that end,” Autry said, adding that final settlement will include details on the scope of the forensic audit and the account management agreement with Foundation for the Carolinas.

A timeline for finalizing the settlement – which would start the clock for terms to be met – has not been set, officials told The Herald. But, Blackwell said full resolution could come within four weeks.

“The council is pleased that the foundation has finally agreed to a forensic audit without conditions,” he said, adding that “the bottom line is fiscal accountability.”

Also at the center of York County’s lawsuit is a fight over 274 acres of donated land along the Catawba River, near Sutton Road and Interstate 77 in Fort Mill. The land was given to the foundation for the benefit of York County’s museums in 1998 by Jane Spratt McColl.

Crescent Communities of Charlotte has said it wants to buy the donated land to build a residential and commercial community. The company already owns 282 acres adjacent to the foundation’s property.

McColl has signed an affidavit stating that the foundation’s plans for the land “are consistent with my family’s original intent.”

Foundation attorney Jim Sheedy told The Herald last week that “due diligence” on the land deal is in process and did not specify a date on which Crescent close on the property.

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