Drama swirls around Industrial Development Board following audit

Wednesday, February 11, 2009 at 1:00am

A key member of Metro’s Industrial Development Board has pushed back against Vice Mayor Diane Neighbors, who has proposed to disband the board on the heels of an eyebrow-raising audit.

The IDB was created in 1959 in order to help nonprofits, public entities and private businesses gain access to public funds.

According to a letter to the board from Metro Finance Director Richard Riebeling, the IDB’s oversight and administration of financial transactions has gotten progressively worse.

Problems with the IDB recently were uncovered in an audit conducted by Parker, Parker and Associates.

The audit showed a $150,000 discrepancy stemming from a $150,000 purchase option that was exercised potentially without board knowledge. According to the audit, a 38-year-old purchase agreement was exercised in August 2006 by PLC Properties, LLC. A waiver of notice on the purchase agreement was signed by then-board Chair Nettie Scalf and then notarized by the board’s attorney Bobby Davis.

Two days later, PLC sold the property for nearly $5 million, but funds from the $150,000 purchase option were never accounted for until more than two years later, according to the audit. The board discussed the lease purchase option at its meeting on Oct. 14, 2008, but the funds were not transferred to the IDB until Oct. 27, 2008 and the transfer came from Davis’s own escrow account, according to the audit.

The audit goes on to state that it is unknown whether the board knew about the exercising of the purchase option agreement, although the audit concludes that the board’s treasurer and legal counsel ought not to be consolidated under the same position.

To that end, Riebeling has recommended giving advising and oversight to the Mayor’s Office of Economic Development and allowing the Metro legal department advise on legal matters.

The resolution filed by Neighbors would disband the board and allow it to be re-formed by a vote of Metro Council members. Neighbors stated current board members should be eligible to be elected to the new IDB.

But longtime board member Nick Bailey took issue with Neighbors taking such “unprecedented” action without speaking first to the board.

“I am most distressed that you sent your resolution to all council members with a cover letter that did nothing to correct the record you sent to them, that we were invited to a meeting with auditors and that no member of the IDB attended,” Bailey’s letter stated. “You and Rich both now acknowledge that we were never told about the meeting by Bobby Davis.”

Neighbors followed by sending out a press release through the Council office stating there would be an IDB meeting at 2 p.m. Friday to discuss the issues facing the board.

Filed under: City News
By: TNReader on 12/31/69 at 6:00

I am not saying anything is wrong here, just want more details. Who is the owner of PLC Properties and why did they get a $150,000 option on property they bought & sold for $5 million two days later. The Cooper family (Jim, William, & John) has some real estate investments with PLC in the name of the entities. Don't know if this is one of their entities or not. But I would be curious to know more details of the transaction.

By: Anna3 on 12/31/69 at 6:00

It seems that Ms. Neighbors has acted too hastily. Ms. Neighbors has not been particularly business friendly over the years...and this proposal being made public before she discussed it with those most affected shows poor judgement. The ladies and gentlemen that have served on this board have been some of Nashville most upstanding citizens and to tar them up with innuendo and rash proposals for their removal seems to belie another motive on the part of Ms. Neighbors. I wonder what it is? PS - Her husband does quite a bit of business with the IDB...does it have any connection to her proposal?

By: localboy on 12/31/69 at 6:00

It might be prudent to find out how much actual oversight the Board exercised over the administration - or if they were even interested. Even upstanding citizens have been known to accept figurehead appointments that get included on resumes but have little true function. Dissolving the Board and reformation by the Council and injection of some new blood wouldn't appear to a bad alternative.You go, Ms. Neighbors!

By: jsnap on 12/31/69 at 6:00

I have never heard of a 38 year old purchase agreement. That is scary.