A representative from the law firm hired by the Upper Cumberland Development District has informed UCDD directors that they may be in a sticky situation with the Living the Dream facility in Putnam County.
Attorney Bob Walker related his findings concerning an internal investigation ordered by the UCDD board of directors at a board meeting Thursday.
Walker told the board, consisting of county and city mayors and executives of the Upper Cumberland region, that the agency is facing the possibility of losing a great deal of money on the Living the Dream facility if it is not completed and populated with paying residents soon.
Walker, of the Nashville-based law firm Walker, Tipps and Malone in presenting his findings to the board, told them that Askins and her deputy moved $900,000 into the Living the Dream project, much of it without board approval.
In addition, a $750,000 bank loan was procured.
Walker’s presentation included charts detailing how funds were moved around so that the UCDD board did not really know or have any control over what was going on.
Walker pointed out many specific procedures which were not followed on the LTD project, including the lack of a feasibility study and the absence of financial controls, a construction budget and an operations budget.
Walker told members that if the project is not completed the property would be relinquished to the bank, leaving the agency at a loss for entire cost of the project.
"If you just went to a fire sale with it in the morning, you might lose all of this," Walker said.
Board members were obviously unhappy with the situation.
"I wonder how much were we told truth and how much were we not told truth," Smith County Mayor Michael Nesbitt remarked. "It's kind of alarming to me, as a board member, all the things that went on behind the scenes that we did not know about."
DeKalb County Mayor Mike Foster also expressed his frustration, saying that trust had been lost and would be hard to recover.
"We trusted people in this organization to do the right thing and to tell us the truth and follow procedures," Foster said. "I'm not going to say they didn't, but my trust is gone. It's going to take some time to earn it back. Those of us who work for our counties feel like we have been shot down and misrepresented.”
To stifle financial losses related to the project, Walker recommended that the Living the Dream home be rapidly completed as a boarding home for needy seniors.
To avoid similar situations in the future, Walker also suggested that UCDD name an audit committee and a finance director who reports directly to the board.
"The audit committee would have to be confirmed by the executive board," Walker instructed. "The chairman and the committees cannot do anything without coming back to the executive committee for approval or confirmation."
The audit committee would be a permanent entity charged with advising the executive committee on the appointment of an internal auditor.
The committee would be also charged with overseeing UCDD financial matters and bookkeeping, as well as  compliance with the comptroller’s auditing and financial reporting requirements.
In addition, the committee would monitor auditors and make recommendations to the executive committee regarding the hiring and retention of outside auditors,  cooperation with the comptroller, and a many other financial concerns.
The attorney further urged the board to to revamp controls over travel and reimbursements, and to take a close look at its rules against nepotism.
Walker then took the UCDD board itself to task, saying that members had less than  a 50-percent attendance record in 2011 when most of the problems occurred.
Walker stressed that it is the duty of members to attend meetings of the board.
Meanwhile, the search for a new director has been set in motion with the formation of a search committee.
Since the board met a month ago to place executive director Wendy Askins and deputy director Larry Webb on administrative leave, both Webb and Askins have tendered resignations.
Askins’ resignation came a few days before the meeting, and the board was informed Thursday that Webb had also resigned his position.
"We've got to put closure on this,"  Foster said of the search for a new director. "Let's move on this quickly."
Earl Carwile will continue to fill the position of acting executive director until a decision is made, and Ashley Pealer will remain as acting deputy director.