Friends don't let friends gouge Mooresville taxpayers

Just like the rest of us, town officials have friends. It's just that some friends come at a higher cost than others.

And at least twice in the past four years, Mooresville taxpayers have foot the hefty bill for certain town officials throwing business to their friends.

Most recently, Jimmy McKnight – owner of Realco Investment Properties, Inc. and a lifelong friend of Interim Town Manager Erskine Smith’s – pocketed a $237,151.50 commission check, courtesy of Mooresville taxpayers, for doing practically nothing.

Last year, Mooresville commissioners directed town management – former Town Manager Jamie Justice and Smith, who was assistant town manager at the time – to hire a realtor to find potential recreation land for the town, particularly on the west side of Interstate 77.

“When the town goes looking for land, the price tends to go up awful fast,” Ward 3 Commissioner Mac Herring told the Report this week. “We decided to hire a third party to pursue negotiations.”

Jimmy McKnight, said Ward 4 Commissioner Chris Carney, was the person chosen by "management staff.”

Around the time McKnight was hired, Carney said he was approached by Statesville attorney David Parker, a friend of Judge Preston Cornelius’s who owned 70 acres on Cornelius Road. “He said he thought Judge Cornelius was open to selling the land to the town for park land and that he (Parker) would help to facilitate that if we wanted him to,” Carney said.

However, “David Parker is involved with the Langtree project (the $800 million Mt. Mourne development), which was undergoing town zoning and other issues at the time,” Carney said.

“Parker knew we had a need for land and thought (the Cornelius Road property) would be something we could use,” Carney said, “but at that time, we could not see him other than as a representative of the Langtree project, and that made it difficult for us to pursue that deal. Because of statutes, we had to be careful of not violating the public’s trust by looking like we were making side deals. That was our fault, not his. He had the best of intentions, and I appreciate it."

But when the town started talking in earnest about purchasing additional park land, Carney mentioned the Cornelius Road property to other town commissioners.

Recalled Herring: “Chris suggested that we take another look at it.”

Meanwhile, however, McKnight was scouting out properties and later took his recommendations to the town board. McKnight presented several pieces of potential park land on Mooresville’s west side, Carney recalled. But the Cornelius Road property wasn’t one of them.

Instead, McKnight proposed parcels of land on Brawley School Road and near the Target shopping center on N.C. 150.

“It’s currently impossible to build on Brawley, and there was one piece on 150 that was decent, but we were nervous about the location with that much traffic in the area,” Carney said, adding that the largest tract of land that McKnight proposed was the Mallard Head Golf Course property on Brawley School Road.

“I asked if there was currently a cemetery there,” Carney said with a chuckle, “because if we bought that land, they’d have to bury me there.

“That just wasn’t feasible,” he said. “We don’t need another golf course; that’s not even something we were entertaining.”

Especially knowing that 70 acres had already been made available to the town by Cornelius, Carney said, “I thought the most appropriate area was Bluefield and Cornelius (roads). There were several large tracts of land still available, and my question to (McKnight), when he brought his recommendations to the board, was whether or not he had looked into those areas.

“(McKnight) said that when he looked at Bluefield, he couldn’t find anybody who was willing to sell,” Carney continued. “My question to him was: ‘How about Cornelius Road? It’s already been offered to us.’

“The conversation ended there,” Carney said. “And the next thing we knew, a contract appeared before us days later on that property … (McKnight) brought us a contract back for Judge Cornelius’s property."

And as a result of that – and because of the wording of the contract that town management had secured with McKnight – the realtor walked away with $237,151.50 in commission. His “earnings” were in addition to the nearly $6 million that the town paid for the property.

And come to find out, said Carney, McKnight went against the direction of the town board by disclosing to potential sellers that he was negotiating the land purchases as a representative of the Town of Mooresville.

Fortunately, despite McKnight’s involvement and disclosure that he represented the Town of Mooresville, Cornelius sold his property to the town for the same price as he had originally offered it.

“At the end of the day,” said Carney, “we would have paid the same price (without McKnight’s involvement), just without the $237,000 commission.”

Recalled Herring: “The impression that I had is that we sort of handed (the land deal) to (McKnight) on a silver platter. It was an easy contract to fulfill, in my opinion. Did he have to do a lot of talking, convincing, etc.? Probably not.”

Did McKnight earn the $237,151.50? “Absolutely not,” said Carney emphatically. “He legally earned it because of the contract between him and staff, but he violated the principle of it which was to bring us land that we weren’t able to find.”

Added Herring: “‘Earned’ is sort of a relative term. The way the contract was worded, it said we would pay him that amount, and we had to play by the rules.” But for the amount of work, Herring said, the commission amount “was sort of excessive.”

Carney said he expected McKnight to charge the town something “for doing the legwork on a contract for land that had already been offered to us.” However, he said, “I was disappointed and certainly angered” that McKnight accepted the entire $237,151.50.

“And I expressed that repeatedly to Mr. Justice in a tone much louder than a normal speaking voice,” Carney added.

Carney said that he questioned whether the town had to pay McKnight. “But (Town Attorney Steve) Gambill did some homework on the contract and felt like we had no wiggle room,” Carney said. “So I then asked for the town to terminate any future contracts with (McKnight). We’ve asked that we do no more business with him.”

At-Large Commissioner Miles Atkins was not yet elected when the town purchased the Cornelius Road property in October 2007.

Responding to Report questions this week about McKnight’s commission on the land transaction, Atkins said: “This is the first I have heard of this, and as you can imagine it is very disturbing news. You can expect that I will seek to learn more about this so there is accountability to the citizens why such waste could or would occur.”

Several sources have confirmed for the Report in recent weeks that McKnight and Erskine Smith are lifelong friends. When they were younger, their fathers owned downtown businesses close to one another, and both families were apparently active members of the ARP church. Additionally, the Report has been told, Jimmy McKnight and Erskine Smith are approximately the same age and attended the same schools.

Smith did not respond to e-mailed Report questions asking about his relationship with McKnight and how much influence he, as the assistant town manager at the time, had on the town management’s decision to hire McKnight. A “read receipt” indicated that Smith opened the e-mail at 8:53 a.m. this morning. He was asked to respond by 2 p.m.

Commissioners Frank Rader, Mitch Abraham and Thurman Houston also did not respond to Report e-mails this week about McKnight’s commission from the purchase of the Cornelius Road property.

When asked if he is aware of Smith and McKnight’s friendship, Carney said, “I just understand that they both grew up together.

“I don’t know why he was hired over other realtors, and I’ve certainly had other realtors ask why they weren’t given the opportunity to pursue such an arrangement with the town,” Carney said. “And honestly, in the beginning when we talked about different realtors, Jimmy McKnight wasn’t a name that the board threw out. None of the commissioners weighed in (on who town management should ultimately hire), but we named five or six realtors that we knew dealt with large tracts of land development."

Justice had been town manager for less than three years when McKnight was hired, meaning he was much less familiar with realtors than Smith, a lifelong Mooresville resident who has been assistant town manager for nearly a decade.

So, why was McKnight hired?

“That’s a town management question; we didn’t hire that guy,” Carney said. “The checks-and-balances system of the board is that we give direction to the town manager, and it’s up to the manager to implement those directions.

“They (Justice and Smith) chose that individual, certainly not us.”

Unfortunately, this isn't the first time town officials have allowed friendships to stand in the way of sound decision-making. In 2004, Commissioner Mitch Abraham and former Commissioner Alice Lee spearheaded the town’s hiring of engineering firm CH2M Hill, despite staunch objections from the town’s engineering and utilities professionals. It was later discovered that Abraham, Lee and a CH2M Hill official (who, as of earlier this year, is no longer employed by the company) are close friends and attend the same church. (For more information, see “Rats Abandoning a Sinking Ship?” March 4.)