Rockingham, Hamlet seek mediation with county over breach of contract

ROCKINGHAM — A law firm representing both Rockingham and Hamlet delivered a letter to the Richmond County government Wednesday seeking mediation over the county’s alleged breach of the interlocal agreement the two cities signed in 2015 regarding the new 9-1-1 Center.

County officials have repeatedly stated that one of the reasons for switching to an ad valorem sales tax distribution method in April was that Rockingham and Hamlet had not contributed to the costs of operating the new 9-1-1 Center. The cities argue that these statements and the action of changing the sales tax distribution method constitute a breach of the agreement between the parties, which specifically stated that the cities were not required to pay anything towards to cost of the new, state-of-the-art facility.

This agreement effectively ended eight dispatchers’ employment with Rockingham and Hamlet and allowed them to interview to work for the county at the new facility. The agreement was sought by the county because it would help it secure grant funding to build the 9-1-1 Center. In the grant application from Emergency Services Director Donna Wright, it repeatedly states that the facility would not be possible without grant funding, and the agreement between Rockingham, Hamlet and the county is cited as support for the need for the grant.

The letter obtained by the Daily Journal states that the two cities are prepared to file suit against the county “immediately” in the Richmond County Superior Court, but are first seeking mediation in accordance with Section R of the agreement. If litigation becomes necessary, the cities intend to name the current and former members of the Richmond County Board of Commissioners and the current and former county managers in their official and individual capacities, making them liable for damages awarded to the cities, according to the letter.

“We would seek a jury trial, and we intend to allege breach of contract, actual fraud, constructive fraud, negligence, gross negligence, civil conspiracy, negligent misrepresentation, unfair and deceptive trade practices, and negligent supervision,” reads the letter.

The cities have calculated their damages for the 2020-2021 fiscal year relating to the breach of contract to be nearly $500,000. This amount represents the salaries for dispatch staff that the cities argue the county has attempted to make them responsible for by changing to an ad valorem sales tax distribution method. These damages could be tripled under the North Carolina Unfair and Deceptive Trade Practices Act, according to the letter.

The two cities are being represented by T.C. Morphis Jr. of The Brough Law Firm. Morphis is also the city attorney of Hamlet.

The letter argues that the “plain language” in the original agreement “makes it clear that neither Hamlet nor Rockingham can be required to pay any funds whatsoever toward the operation and maintenance of the (9-1-1 Center).”

“(The 9-1-1 Center) is intended to be a self-sufficient entity financed by 9-1-1 fees, grants and funds provided by the county,” reads Section G of the agreement.

Section H of the agreement signed by both cities states that, “The County will not charge (Rockingham or Hamlet) any fees for taking over their call taking and dispatch functions.”

“Recent public statements by County officials, however,” the letter reads, “have made it clear that the County intends to use some or all of the funds it will acquire through the ad valorem tax distribution method to finance the (9-1-1 Center). In effect, the County will be charging the Cities fees to operate the Center in violation of the Agreements.”

The letter adds that county staff and elected officials “either knew or should have known” when the agreement was signed if the county would eventually need help from the cities to fund the 9-1-1 Center. Rick Sago, who was county manager at the time, did not respond to multiple requests for comment sent to his personal email this week on whether the Board of Commissioners knew of this facet of the agreement and about his understanding of the county’s ability to afford to run the new facility on its own.

Emergency Services Director Donna Wright did not respond when asked in May when she or county officials became aware that more funds would be needed from the cities to cover the expenses of the 9-1-1 Center.

Past statements by county officials

Prior to the vote by the Board of Commissioners on whether to change to an ad valorem sales tax distribution method on April 6, County Manager Bryan Land made direct reference to the 9-1-1 Center as a reason for this change.

Land’s full statement to the commissioners before the vote, according to the Daily Journal’s recording of the meeting, was as follows: “(The consideration of a change to ad valorem) was to offset some of the additional expenses shifted from the municipalities to the county level. It seems like more and more of those expenses are being shifted to the county. You remember, in the last year-and-a-half, two-year’s time, we’ve had the ETJ added on from Hamlet and Rockingham, we’ve had the 9-1-1 Emergency Services Center added on, we’ve acquired (eight) employees from Hamlet and Rockingham. No contribution from the municipalities for either of these. It just seems like a trend we’re going to see more and more in future years.”

In his budget message on June 2 given during the monthly meeting of the Board of Commissioners, Land again lamented the tax increase of $0.04 in the 2018-2019 budget, which he said “didn’t even cover the additional budget for the Emergency Management Department due to the county-wide consolidation of services.”

“As a reminder,” he continued in the meeting, “eight former municipal employees are now county employees due to this change. No funding has been made by the municipalities to the county to offset this expense to the county taxpayers.”

In an email sent on May 25, 2018, Land asked then-Hamlet City Manager Jonathan Blanton consider including a contribution to the county in Hamlet’s budget for fiscal year 2019-2020 to assist in covering the salaries of the new dispatchers the county would be hiring.

“I realize the the 18-19 budget is nearing completion, however, when conducting your planning for 19-20 budget year can you look (at) the possibility of providing some funding from the City of Hamlet for the 4 dispatchers that we will be acquiring soon?” Land asked Blanton. “Hamlet will realize some substantial savings not only from the elimination of these employees’ positions but also in the technology that would need to be purchase in the near future … We are looking at an increase in expenditures in year 1 in excess of $1.4 million, subsequent years will see an increase of approximately $700,000 annually.”