Thursday, October 31, 2013

Sumner County Regional Airport (M33), Gallatin, Tennessee: Board voids airport manager's contract - Sudbury to stay on with same pay, reduced duties

Steve Sudbury / FILE

The Sumner County Airport Authority board classified the airport’s only worker — its manager — as an independent contractor rather than an employee, and deemed a five-year contract for that worker passed by a former board in February invalid.

The 9-2 vote Monday was taken because the new board was “concerned about federal liability with the IRS and taxes and things that aren’t being paid,” said Treasurer Dianne Denson.

The contract of airport manager Steve Sudbury passed at the beginning of the year included a 50 percent pay raise, which the board did not reduce Monday out of concern that the move could result in legal action. Sudbury will continue to earn $3,750 per month, which was approved by a unanimous vote. The contract was approved by a slate of old board members who were replaced in June after a long-running legal battle with the county.

The board also unanimously approved a four-part recommendation of an ad hoc audit committee that took accounting and financial transaction duties away from Sudbury. The committee was created as one of the first orders of business of the new board.

As part of classifying the management position as an independent contractor, the board directed its attorney, Mark Smith, to negotiate with Sudbury’s son, Josh Sudbury, who has represented his father since September. The two will aim to work out a mutually acceptable independent contractor agreement, though over the past month they have failed to do so.

The board refused to look at or even consider Josh Sudbury’s proposed rewrite of the contract to define the position as an independent contractor that retained a term of five years.

Steve Sudbury had worked as an independent contractor since 2005 without a contract. At the old board’s last meeting in February, before they were replaced, the members unanimously approved an employment agreement that has since been in dispute because Sudbury took the stance that he was not an employee and paid his own taxes.

The new board, with 10 out of 11 members taking office since March, spent hours at its last three meetings expressing concern over tax problems that could arise from the employment agreement.

The authority’s audit committee submitted a four-part recommendation to the full board to change software, transfer accounting and financial duties from Sudbury to a bookkeeper or accountant, submit three years of back records to an audit firm in Nashville and ask for funding from the county for a forensic audit if needed. A forensic audit applies evidence in civil and criminal legal matters and may include courtroom testimony on accounting and auditing standards by expert witnesses.

The committee’s report said Denson had looked through the financial documents and found “nothing alarming.” Its chairman, Ben Williams, said Sudbury should not have been handling the airport’s finances and that doing so did not follow “best business practices.”

“That’s not a normal duty,” he said.

The possibility of litigation regarding Sudbury’s status and contract arose repeatedly.

“We may still have the specter of the feds coming in and saying, ‘Folks, he said he’s an employee. You’re not withholding. You’ve got to pay back until February or possibly even further,’ ” Smith said.

Josh Sudbury urged board members to “reform the language” of the contract but was rebuffed. After the contract was canceled, he tried to introduce a rewritten contract but was advised it was not on the agenda.

Dan Downs, the old board’s only remaining member, and newest board member Camden McConnell were the two recorded “no” votes.

Loan approved

As the new airport board moves forward, it made progress Wednesday in shoring up its finances when the state Comptroller’s Office of State and Local Finance approved the county government’s request to provide an internal loan to the cash-strapped Airport Authority.

“We were pleased that the state would give its blessing to put the airport back on a sound financial footing,” County Budget Chairman Jerry Stone said.

Stone, County Executive Anthony Holt, County Attorney Leah Dennen, County Finance Director David Lawing and Airport Authority Chairman Jim Egan met with four representatives of the comptroller’s office Wednesday. State Sen. Ferrell Haile and Rep. Courtney Rogers attended the meeting in support of the county’s request. Rep. William Lamberth was unable to attend but made calls on the county’s behalf in advance.

The plan approved by the County Commission last week is an interest-only loan of $800,000 at 3 percent to pay off about $430,000 of bank loans and wrap in an outstanding county loan of $197,500. The rest would cover matching grant money needed to fix runway grading in order to use all 6,300 feet.

The new monthly loan payments of $2,000 will be significantly less than the $3,700 a month the airport currently pays for bank loans and $2,500 a month owed to the county.

County officials consider it a win-win situation because the hospital capital fund that will be used currently earns only about a quarter of a percent in interest.

Paperwork must be filed with the state to make the loan legal. The term is for nine years in three 3-year periods with two renewals.

The loan must be approved by the Airport Authority board and by its attorney, Egan said.

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