City Project board: Proposed nonprofit would stay out of politics

The board of directors of the City Project says in a letter to High Point Mayor Bernita Sims and members of City Council that there was never any intention of using a proposed economic development nonprofit serving the Core City for political campaigning purposes.

In the letter delivered to the mayor and council members yesterday that was obtained by Triad City Beat, the board members express disappointment that a previous document, a proposed memorandum of compromise, was leaked to the High Point Enterprise. The letter was also provided to Triad City Beat by a source who requested anonymity. Any documents received by members of city council, with specific exceptions spelled out by state law, are considered public records.

“We have experienced a high level of disappointment that the High Point Enterprise was leaked a copy of the Memorandum the same day you received it,” the City Project board stated in yesterday’s letter. “It was not our intention to share this publicly while you were contemplating the proposals.

“Again, very much to our dismay, the HPE ran a story on June 14 that had misleading and detrimental statements with innuendos confusing to the intent of our proposal,” the letter continues. “Words like ‘… changing its tax status to one that would allow it to get involved in political activity…..’ As outlined in the Memorandum of Compromise, the idea of forming a 501(c)(4) entity was suggested by modeling the [High Point Economic Development Corp.] and solely for economic development purposes… not to get involved in political activity. Shame on the HPE writer for emphasizing and suggesting the political activity angle allowed by law rather than the economic development purposes intended.”

Aaron Clinard, a past president and member of the City Project board, said that under other circumstances he would agree that it’s healthy for dealings between elected officials and community groups to be conducted in a transparent manner.

“Our apparent desire to not share it with the general public was to give council some quiet time to review and consider because there had been so much public display of emotions about this situation,” said Clinard, a lawyer. “If one had paid any attention to what’s been displayed in the public arena — in hearings and media articles — it’s an easy conclusion to make that we’re at loggerheads. In my legal world, negotiations are private. You try to give each side the opportunity to review and deliberate on the pros and cons of any compromise that’s presented.”

The City Project board has proposed two compromises after city council voted in May to reassign the position held by the nonprofit’s executive director — whose salary is paid by the city — to a role with responsibility for the entire 11-square mile Core City Area as opposed to Uptowne, the current focus of the City Project.

Under the first proposal for compromise issued by the City Project board, the city would freeze the past arrangement in place through Dec. 31 while a “citizens review committee” studied and recommended a plan for revitalization to city council.

Councilman Jim Davis, who represents Ward 5 and made the initial motion to reassign the City Project’s executive director, said that idea is a non-starter.

“I took that as they want to wait until the election so they can get a new council that will reverse the actions that we’ve taken,” Davis said.

Under the second proposal, a nonprofit similar to the High Point Economic Development Corp. would be established to pursue economic development in the Core City Area. The board of the proposed public-private partnership would include developers, bankers and members of the High Point Regional Board of Realtors. The board recommends that Wendy Fuscoe, who recently served as executive director of City Project, be employed as president of the proposed Core City High Point Inc.

“We’ve made our decision of how we want to move forward,” Davis said. “The vote was 7 to 2 to be good stewards of taxpayer money. I think we need to make those decisions and not have a nonprofit driving the bus.”

Clinard said the High Point Economic Development Corp., led by Loren Hill, is renowned across the state for recruiting business to north High Point. While the EDC recruits industrial and commercial businesses, Clinard said Core City High Point Inc. would focus more on retailers.

“I would be remiss if I didn’t challenge his idea that he doesn’t want an outside organization to run economic development,” Clinard said. “I surely hope that he can see the logic in what we’re proposing in creating an organization that is nearly identical in structure and purpose to an organization that his hugely successful.”

Davis said after researching Internal Revenue Service rules on the internet, he made a motion at a city finance committee meeting on Monday to freeze the City Project’s funding in this year’s budget because he was concerned that a change in its non-profit status might not meet specifications for receiving city funding. He said his concerns were somewhat allayed when Richard Wood, the current chair of the City Project board of directors, said the proposed organization would retain its 501(c)(3) status while adding an organization with 501(c)(4) status for economic-development purposes.

Filing opens for High Point City Council candidates on July 7. In May, after council voted to reassign the City Project’s executive director, Clinard stood before an audience at the High Point Theatre and called for a “revolt.” Councilman Jay Wagner, a City Project supporter who was on the losing side of the vote, said at the time that citizens would have to elect a new council if they wanted revitalization plans to go forward.

In an interview today, Clinard acknowledged that members of the City Project’s board of directors might individually recruit candidates to run for council and contribute to political campaigns, but scoffed at the idea that such activity would be undertaken organizationally.

“Why in the world would city council fund an entity that was trying to defeat them?” he asked.

In the recent letter to the city council, City Project board members suggest that a contractual agreement could specifically restrict political activity, and contend that new rules under development by the Internal Revenue Service will likely clamp down on political activities by 501(c)(4) organizations.

“In seeking professional legal counsel on this matter, it was made abundantly clear to us that if the city determines that the formation of this new 501(c)(4) entity Core City High Point Inc is appropriate that city funding for it (just like the HPEDC) could have contingencies and restrictions placed upon it by contractual agreement, i.e. the funds provided could not be used by the board of directors and/or officers in campaigning activities for political candidates, but could be used for promoting bond referendums,” the letter reads. “As a side note, the attorney that provided this legal opinion also mentioned that because of the IRS scandal involving Lois Lerner and others, the IRS in November submitted proposed new regulations for this type entity that restricted political campaigning almost entirely, and particularly within 60 days of an election.”