Hamilton County Commission reverses nonprofit oversight money rules

Hamilton County Commissioner Tim Boyd

It only took the Hamilton County Commission a month to back down from new financial oversight rules it put in place for certain nonprofit organizations.

In late June, the commission voted 6-3 in favor of regulations requiring any nonprofit organization to adopt county purchasing and travel policies if it received county money exceeding 25 percent of its operating budget. The new rules also called for an affected nonprofit to give a board seat to a county commissioner and to provide all expense records to the county.

Commissioner Tim Boyd introduced the financial oversight measures after months of publicly scrutinizing the Chattanooga Convention and Visitors Bureau, which has received all of the county's lodging tax revenues since 2007. In fiscal 2017, the bureau received $7.8 million in lodging revenues; in 2018, the agency is expected to receive $8.2 million. County dollars make up more than 80 percent of the bureau's income.

On Wednesday, commissioners voted 7-2 to rescind the new nonprofit rules, with only Commissioner Randy Fairbanks standing with Boyd in trying to save them.

"The taxpaying citizens are the ones who lose," Boyd said after the meeting. "Come election time, I'd hate to have to explain why I reversed my vote on transparency and accountability. I don't have to worry about that."

When the meeting opened, Commission Vice Chairman Greg Beck made a motion to reconsider the original financial oversight resolution, simply identifying it by its official designation: Resolution 617-35 - the 35th resolution the commission considered in June 2017.

The issue was not on the meeting agenda, nor did Beck summarize or describe the resolution's contents. However, all the commissioners seemed to know exactly what resolution he was talking about.

All nine commissioners agreed to bring the resolution back to the floor for reconsideration, then Beck put forth a motion to deny the original resolution.

Boyd tried to keep the resolution alive by setting a $100,000 trigger requiring nonprofits to comply, but his effort died for lack of a second motion.

If the commission had accepted Boyd's amendment, the new rules would have remained in place for the Convention and Visitors Bureau and the Humane Educational Society, which is set to receive $620,970 from the county in fiscal 2018. It would let many of the two dozen or so nonprofits - about half them volunteer fire departments - that receive county contributions off the hook, assuming they even met the 25 percent threshold in the first place.

Both the CVB and the Humane Educational Society pushed back against the resolution. While unaffected by the new rules, the Dallas Bay Volunteer Fire Department also responded to the new oversight measures, citing the need to clarify its commitment to transparency.

Neither CVB President Bob Doak nor Jerrold Farinash, vice president of the humane society board, could be reached for comment.

Boyd previously said he believed it should not be a problem for agencies to comply with the resolution.

None of the commissioners knew for certain which nonprofit organizations would be affected when they voted on the measure last month, Commissioner Sabrena Smedley said. Instead, the commission should have delayed its vote until it had more information.

At the time of the vote, Mayor Jim Coppinger and his finance team cautioned commissioners they did not know who the rules would impact. While the county requests financial information from recipient agencies, the county had not researched how much county money those agencies receive in comparison to their total revenue.

Smedley said she had heard from a number of nonprofit agencies that said they were on board with accountability, but could not adhere to county purchasing policies.

"You live and learn," Smedley said. "I'm all for being accountable and transparent, but if there are certain [nonprofit organizations] that cannot adhere to certain aspects of this resolution, in my opinion, we have no option but to deny it."

Commission Chairman Chester Bankston, Commissioner Warren Mackey, Smedley and Beck all reversed their support for the resolution, joining the three commissioners who opposed it in the first place: Jim Fields, Joe Graham and Greg Martin.

When Martin voted against the resolution the first time, he said he didn't believe the commission fully understood its implications.

"I don't have a problem with transparency, but I believe we have added another layer of government to these nonprofits with this resolution," Martin has said.

Boyd hasn't forgotten the Convention and Visitors Bureau, though.

He said he will introduce a measure to cut a percentage of the agency's lodging revenue in the near future. Boyd floated the idea of cutting bureau dollars back in the spring, mentioning the possibility of letting the county spend the money on a sports complex near Howard High School instead. He has not yet pinpointed the percentage to slash, he said.

"I've got to build a case to determine whether the CVB needs all the money they are getting," Boyd said.

Contact staff writer Paul Leach at 423-757-6481 or pleach@timesfreepress.com. Follow him on Twitter @pleach_tfp.