Tensions were high during Tuesday's regular board meeting of the Kentucky Capital Development Corporation as the group reviewed and discussed the role and responsibilities of the board.
KCDC's legal counsel, Frankfort Attorney Bob Kellerman, was on hand to brief the board on regulations regarding open meetings laws, as well as financial requirements.
When the group began discussing the latter subject, Kellerman called their attention to KCDC's "Current Financial Procedures" which according to the date on the document, was written in March 1999, KCDC's first year of existence.
Bringing up the procedure triggered a long discussion regarding the movement of KCDC funding out of local banks and into a certified deposit ladder that yielded more interest.
Kellerman pointed out that the procedure requires two board members to sign off on any check or disbursement of any KCDC funds.
Board member Rich Rosen posited that the move did not count as a disbursement since the funds stayed in KCDC possession.
Clay Hulette, KCDC's secretary/treasurer and First Federal Savings Bank's Frankfort area president concurred with Rosen.
"I believe it is actually not a disbursement. I think it's a transfer, in fact, I think a wire transfer is the name of the transaction," Hulette noted. "That 1999 version is probably antiquated. We have come quite a ways since 1999 with electronic transfers and things like that."
Kellerman said that he did not disagree with Hulette or Rosen, but that the policy needs to be updated. He also noted that all investments needed to be approved by the board. Hulette responded that the board heard various proposals on how to handle the funds and ultimately approved the investment in September.
KCDC President and CEO Terri Bradshaw then interjected that the board never voted on the transfer. The minutes from the meeting in question note that the accounts would be reevaluated and moved as appropriate.
"Reading from the September minutes, that is what I understand that the minutes said," Kellerman told the board. "That's pretty broad if not specific. The board still hasn't approved this specific investment after it was done. If it was the board's intent to allow that to happen, great. I am not saying that they have done wrong, but it still needs to be approved."
Kellerman went on to say that the moves needed to be ratified.
To resolve the matter, Rosen made a motion to approve the fund transfer despite the confusion regarding signatures and to approve the ladder of CDs.
"Just looking at the interest in general and the overall dollar figure, this would bring us about $70,000 a year in interest which is grossly more than what we have been earning in the past," Rosen said after making the motion.
Despite the financial gain, Bradshaw and some of the other board members raised concerns that moving the funds out of the local banks and into CDs with national investment firm Edward Jones Investments, would damage local partnerships with KCDC.
"We have five or six banks that sponsor just about everything that we do," Bradshaw told the board. "If we have a sponsorship, it's a bank. When I got here it was explained to me that is why we did it, because they were our partners and that is why we had several accounts because we wanted to try to share the wealth for lack of a better explanation."
Rosen then countered by asking if the banks' sponsorships were equal or greater than the $70,000 that would be yielded by the CDs.
Board Chair Clay Patrick said that the financial moves made by Hulette were not what he was concerned about.
"That is not the issue that we are talking about," Patrick interjected. "We are talking about the actions that were taken, and they might have been great actions, the best we could get, but the board voted to have two people explore investment options."
Over the course of the next 45 minutes the board had a heated discussion about whether Hulette was authorized to move the funds without a vote.
It was noted that Hulette had sent out an email to all the board members and Bradshaw detailing the moves he intended to make if no one had any objection. He also noted that the money in question was split into several different CDs with varying term lengths so that KCDC could access it if needed.
Bradshaw said that she did not know that Hulette was going to move the funds, a claim that Hulette said was untrue. Both defended their respective positions by citing emails that they had sent and received.
Mayor Layne Wilkerson spoke in defense of Hulette's actions.
"I think as a funder of this organization, I would encourage you to earn as much interest as you can."
Before voting on the motion that he had made a half hour earlier, Rosen amended his motion to add that the KCDC executive committee will review the financial policy document and make changes before the next regular meeting.
The motion passed with Hulette, Rosen, Patrick and Kimberly Gester voting in favor.
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What exactly has Terri Bradshaw done with this pool of money in the past? May I offer a personal observation? After watching s couple if these KCDC meetings online, there seems to be dissension between Bradshaw and the new Directors appointed the City. IMHO, it seems like Bradshaw’s open disdain for Gester and Rosen is the epitome of insubordination! What is her problem? And this is the sole face of our community’s economic development representative. Surely we can do better than this.
Thank you Ben Mackin for this report.
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