Chamber requests $460,000 payment from Washington Co. for breach of contract
11-year economic development agreement was terminated in November
The Washington County Chamber of Commerce notified county officials this week that it plans to pursue a nearly $460,000 exit clause payment one month after the commissioners voted to prematurely terminate a multi-year economic promotion contract with the agency.
Chamber President Jeff Kotula sent a letter to the commissioners Thursday requesting they make an immediate payment for breaching the 11-year contract just two years after approving the agreement for the chamber to help with job creation and economic development services in the county.
While there were opt-out clauses embedded in the $1.6 million agreement that went into effect in January 2024, chamber officials are asking for the full $459,079 that was to be paid to them over next three years because the county did not give the required one-year notice of termination. Commissioners Nick Sherman and Electra Janis voted Nov. 6 to terminate the contract, claiming the chamber had breached it. Commissioner Larry Maggi voted against that decision.
The chamber had been coordinating with the county to promote job growth and economic development since 1999 for an annual stipend until the formalized contract was approved in late 2023. Kotula questioned claims by Sherman at the time of the vote last month that the state’s five-month budget impasse precipitated the termination, especially considering the Legislature ultimately approved the spending plan less than a week later.
“With Commissioners Sherman and Janis canceling the contract, Washington County is now the only county in the state without a coordinated effort to attract jobs, assist local businesses with growth and expansion plans and attract employers,” Kotula said in a written statement while claiming the chamber spurred more than $35 million in economic impact last year at a cost of just $140,000 to the county.
Sherman scoffed at the effectiveness of the chamber and questioned whether it could provide proof of such economic impact since he said the organization had been “radio silent” with the commissioners over the last year.
“What were your actions that brought these businesses in?” Sherman rhetorically asked in a phone interview Thursday. “The old adage that this is how we’ve always done things doesn’t fly with me. At this time, if they’re not going to do the work then they’re not going to get paid.”
Sherman voted against the 11-year contract in September 2023 that was ultimately approved by Maggi and then-commission chairwoman Diana Irey Vaughan. He said Kotula has not lived up to the terms of the contract since the chamber president is supposed to chair the Local Share Account committee – Kotula resigned from that position in January – and he is not a board member on the Southwestern Pennsylvania Commission, as required by the agreement.
“This is something we anticipated,” Sherman said of the chamber pursuing the final payments for the contract. “We looked at this before we canceled this contract. It’s not something we did light-heartedly. We knew they could come back and seek damages. It’s our assertion that they breached the contract.”
Sherman said the commissioners plan to have a meeting later this month with chamber officials about moving forward with economic development and the terms and conditions of the unrelated tourism funding. However, it’s unclear whether the contract might be restored or if it could be reworked by both sides to move forward with a new agreement.
Kotula said he hoped the commissioners would reconsider the termination of the contract and restore the original terms, although he did not rule out litigation if the nearly $460,000 payment is not made per the terms of the agreement.
“We want to continue that work as a partner with the county and would be willing to resume our duties under the original contract terms. Not only could we start bringing jobs back to the county, but this would be a better outcome for county taxpayers who will pay nearly $460,000 for the county breaching the contract,” Kotula said. “Additionally, to replace the services provided by the chamber, the county will have to build its own bureaucracy, hiring additional county employees to manage it – which would cost the taxpayers even more of their money.”