Town of Mason dismisses lawsuit after reaching deal with Tennessee comptroller over financial takeover

The Town of Mason has dismissed its lawsuit against the Tennessee comptroller after entering into an agreement for more favorable terms as part of ongoing state financial oversight.

The agreement, released Wednesday, pares back an earlier plan by the comptroller to maintain close financial control of the majority Black town, whose predicament drew national scrutiny earlier this year.

In February, Tennessee Comptroller Jason Mumpower took the unusual step of mailing a letter to every home in Mason, urging residents to tell their elected officials to relinquish the town's charter - a move that would have subsumed the Black-led and majority Democrat community under the governance of predominantly white and Republican Tipton County.

The comptroller's outreach came just ahead of a $5.6 billion investment in the area by the Ford Motor Company. Mumpower said at the time that Mason's finances were in such disarray that its leaders would be ill-equipped to manage the challenges, and opportunities, heading their way.

But Mason's mayor and Board of Aldermen refused to yield the town's charter and cede control of a community that, until 2016, had been led by predominantly white administrations who had accrued high levels of debt.

The comptroller proceeded with a financial takeover with strict guidelines, including veto power over every expense of $100 or more and an onerous monthly debt repayment plan that elected leaders feared they could not make.

The new agreement instead gives the comptroller veto power over expenses of $1,000 or more, reduces the recurring debt repayment to $5,100 for the next 48 months (down from more than $9,500) and requires monthly check-ins - rather than weekly - between Mason officials and the comptroller's staff. The town has agreed to hire a certified public accountant to monitor its finances. Mason officials also agreed to cease borrowing funding from its utility districts to cover expenses - one source of its longstanding debt, which now stands at nearly $250,000.

In exchange for more palatable terms, Mason's elected leaders agreed to dismiss a lawsuit filed April 1 with legal assistance from the NAACP. The lawsuit alleged, in part, racial discrimination by the comptroller. It also challenged the authority of the comptroller to take day-to-day financial control.

Virginia Rivers, Mason's vice mayor, said Wednesday she was OK with the agreement because it presented far less onerous terms for the small community of under 1,500 people.

"It's a much better deal than what it was before," Rivers said. "It gives us a little more breathing room."

But, she said, her experience since February has made her wary of future actions should the town err in any way.

"The downside is we had to dismiss our lawsuit with prejudice," she said - an action that bars the community from filing a similar lawsuit again. "We couldn't get the deal otherwise. The other downside is they still have the right to come back and say we've defaulted and then they can take any legal action they want."

"Even with this negotiation, I can't let my guard down," she said. "I'm still feeling they're in the background, just waiting."

Comptroller Jason Mumpower said in a statement the agreement, which includes an updated corrective action plan, is a significant step in restoring the town's financial health.

"By agreeing to change its practices and work with our office, Mason will operate on a balanced budget, work toward correcting its audit findings, and eliminate improper borrowing," the statement said. "Most importantly, if Mason follows this plan, taxpayers can know their leaders are being good stewards of their money."

Van Turner Jr., an attorney representing Mason, who also serves as a Shelby County commissioner and the president of the Memphis NAACP chapter, said Wednesday he believed the deal represented a "positive outcome" for both Mason and the comptroller's office.

The comptroller otherwise could have faced a protracted legal battle that raised questions about whether Mason was being treated differently than majority-white communities in Tennessee, he said.

One of the claims included in Mason's lawsuits rested on the Equal Protection Clause of the state Constitution, he said. The next steps in the legal battle would have been "very intensive discovery."

"There were the things I think the comptroller's office wanted to avoid," he said.