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Tennessee Gov. Bill Lee, right, with then-Commissioner Hodgen Mainda of the Tennessee Department of Commerce and Insurance, surveying storm damage in Nashville, Tenn., on Tuesday, March 3, 2020. (AP Photo/Travis Loller)

NASHVILLE — Before resigning his $161,000-a-year job following an investigation into alleged sexual harassment, then-Tennessee Commerce and Insurance Commissioner Hodgen Mainda was supplementing his state pay with consulting fees of as much as $8,300 a month under contract with his former employer, the city of Chattanooga's Electric Power Board, records show.

Mainda, moreover, was also living rent free at public expense in a house on the grounds of the old Tennessee State Prison in Nashville.

Two government watchdogs said that while not illegal, they consider the EPB payments inappropriate, given Mainda's state employment. And they also question how Mainda could do consulting for EPB, Southeast Tennessee's electric power and internet provider, while simultaneously running a large department with important regulatory duties.

EPB records show that when Mainda, EPB's then-vice president of community development, formally became part of Gov. Bill Lee's administration on Oct. 1, 2019, he signed a consulting agreement with EPB in which he would be paid $8,300 a month or $99,600 a year. Three months later on Jan. 1, 2020, EPB signed him to a new contract reducing the monthly payment to $5,000 a month.

"I'm not accusing him of anything, but it would be very very difficult for him to run an entire department and be a consultant for EPB that is worth the money he is making," said Mark Cunningham, a vice president at the Beacon Center, a free-market think tank and advocacy group which keeps an eye on government. "I think common sense tells us that it's unlikely he could do both those jobs successfully."

Cunningham, whose group has been critical of EPB in the past, said, "I think we all agree as taxpayers there's a huge difference between what's legal and what's appropriate. And I think that this doesn't pass the smell test to taxpayers in Nashville, Memphis and Chattanooga. It just doesn't pass the smell test. It stinks."

Common Cause Tennessee head Dick Williams said, "It's better full-time public employees should be devoting their full-time attention and focus on that job, especially in a well-compensated job like that."

Mainda submitted his letter of resignation to the governor on Oct. 27, saying he had "an opportunity to transition to the private sector and at the same time, spend more time with my young family." Days later, a state Department of Human Resources report emerged showing he had been the subject of a sexual harassment investigation in September involving alleged "unwelcomed sexual advances and touching" with a female employee at an out-of-state conference in February.

Mainda said he didn't recall the events and denied "any inappropriate conduct on his part during the conference," states a summary of the investigation in which the investigator found "insufficient evidence to substantiate" the allegations, which had been raised by a third party. The report was forwarded to Lee's office on Sept. 23 for further action.

Asked by the Times Free Press at a Tuesday news conference this week whether he had been aware that Mainda had the consulting contract with EPB and whether he envisions making any changes to bar outside employment in his cabinet and other top positions, Lee responded, "As you know Mr. Mainda no longer works for our administration."

Lee said Tennessee law "actually allows state employees so long as they do not have a conflict of interest to have alternative streams of income. So it's allowed. You'll have to ask him about further questions."

Lee added, "I believe it was disclosed in his disclosures."

In Mainda's Oct. 24, 2019, required disclosure of economic interests, he listed income received from EPB. He did not mark the category "professional services."

This year, he again listed income from EPB. Under the professional services category, Mainda listed "Other, CONSULTANT- INTERNAL ADVISING."

Asked about Mainda's free housing — it had been offered to him on what was supposed to be a temporary basis by state Correction Commissioner Tony Parker but stretched into Mainda's entire tenure until he abruptly resigned — the governor said "it's certainly, as the other, it's allowable under our statute that you can make accommodations for employees in different settings. That's what happened in that case."

Attorney Ben Rose of Nashville, who represents Mainda, said Wednesday that "the administration was notified about the arrangement and approved the arrangement or he wouldn't have done it."

Rose said, "There was no conflict between what he was doing with EPB and his state position. He wouldn't have done it if there was a conflict. My understanding is that the nature of his work with EPB was all internal" and never involved his department.

The Department of Commerce and Insurance does not regulate EPB.

Tennessee Department of Correction spokeswoman Dorinda Carter said that after Lee's appointment of Mainda as commissioner in 2019, TDOC Commissioner Parker reached out to Mainda in November to offer his congratulations. After Mainda mentioned he'd be moving to town and looking for housing, Parker said one of the homes on the former prison's property, normally used for wardens, assistant commissioners and staff from other parts of the state while in Nashville, was temporarily vacant.

Mainda accepted. He only left the property last month.

"It was intended to be temporary," Carter said.

Rose said Mainda had originally planned to sell his Chattanooga home and relocate with his family to Nashville. But the late fall 2019 real estate market was soft and in March and April 2020 Mainda was dealing with tornadoes that struck Chattanooga and Nashville. And then the COVID-19 pandemic erupted.

In response to a series of questions posed by the Times Free Press, EPB officials defended hiring Mainda as a consultant as he departed for a top job in Nashville.

"Because Mainda left EPB before a new person was hired to assume his duties, he agreed to make himself available as a resource," reads a written response from EPB Public Relations Coordinator Scottie Summerlin. "Initially, this included sharing the job posting across his network to help identify well-qualified job candidates."

She said Mainda also made himself available to respond to "questions about projects in progress. Once a person was hired to fill the government relations duties, Mainda provided initial job orientation and continued to make himself available to provide background and to share his experience and expertise as the new person got up to speed over the first year of employment."

Asked if EPB could identify any specific projects that Mainda worked on or helped with in the past year, Summerlin said "he did not work on particular projects but rather served as a resource to share his experience and expertise with those who were responsible for his former duties. He did not represent EPB in any capacity during his tenure as consultant."

After Mainda left, she said, EPB conducted an "exhaustive search" before hiring Evann Freeman as its director of government relations. Mainda's other responsibilities were parceled out.

Chattanooga Mayor Andy Berke had no comment.

Former Chattanooga Mayor Jon Kinsey, who sits on the five-member Electric Power Board, called Marinda's consulting arrangement typical for executives that leave an organization, especially when there is no immediate successor.

When he left "we didn't have anyone immediately in place to do what he was doing, and when we did get someone new he can still be a resource," Kinsey said. "The amount [being paid to Mainda] went down after three months and we expected less of him because we then did have someone new on board. But it's always helpful for that new person to be able to ask and get some help with what was done in the past and why."

Prior to leaving EPB, Mainda's annual salary was $206,350.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow him on Twitter @AndySher1. Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.

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