POINT-COUNTERPOINT: Contract termination was ill-advised
EDITOR’S NOTE: The Observer-Reporter is debuting “Point-Counterpoint,” featuring the opinions of Dave Ball and Gary Stout, two frequent contributors with opposing viewpoints. This month, the newspaper asked: “Washington County Commissioners Nick Sherman and Electra Janis have voted to end the longtime county contract with the Washington County Chamber of Commerce. Should they have terminated the contract?”
The recently terminated economic development contract between Washington County and the Chamber of Commerce has been prominently featured in this newspaper over the past two years. Before Diana Irey Vaughan retired as commissioner, she joined with Larry Maggi in September 2023 to finalize the $1.6 million contract over 10 years. The contract called for an initial five-year term followed by a five-year option period.
The agreement required the chamber to provide staffing, plans and updates on economic development for the county. Commissioner Nick Sherman voted against the initial contract. When he and Electra Janis became majority commissioners, they began a crusade to undermine the deal.
In my view, a careful reading of the contract makes it clear that the commissioners’ ill-advised decision to terminate the agreement eliminated a successful and important resource with the region’s second largest chamber. The decision to cancel, without one year’s notice or evidence of a breach on the chamber’s part, also obligated the county to pay substantial liquidated damages of 50%. The chamber has announced it will seek the contract’s designated penalty payment of $460,000 from county taxpayers, unless Sherman and Janis reconsider.
The agreement’s intent was to establish a “cooperative arrangement” where the chamber and county work together to foster economic development and growth. The contract commits the county to “provide assistance and support as may be requested, including coordination of activities among public and private parties and in seeking grants for economic development.”
Instead, the two Republican commissioners have fought the intent of the contract at every opportunity. Despite having seats on the chamber’s board, they have failed to regularly attend meetings, ignored chamber reports, and offered little constructive input on advancing this highly successful project to promote economic development.
Notwithstanding the commissioners’ intransigence, there is no evidence that the chamber has not met its obligations under the contract. These include the promotion and marketing of Washington County to prospective employers, providing assistance, the maintenance of a database of sites for new businesses, and the hiring of qualified staff.
The county’s payment responsibilities are clearly defined. These include liquidated damages in the event the county unilaterally terminates the arrangement without the designated notice or good cause.
It is important to point out that while the five-year “initial term” of this contract was new, the county and chamber have entered into similar one-year economic development agreements since 1999. Until Sherman and Janis became majority commissioners, disagreements were minimal and this “county-public,” “chamber-private” partnership for economic development reaped over-the-moon results for Washington County.
In a statement concerning the contract termination, Sherman announced, “At this time I feel it would be irresponsible to fund a contract that we’ve had zero return on our investment for the money.” However, a very different picture emerges from the 2024 Southwestern Pennsylvania Business Investment Scorecard for Washington County.
Last year, over $35 million in new capital investments were secured by the chamber for our community. The chamber was only paid $140,000 to perform its contractual obligations, a significant return on investment. Had Sherman and Janis fulfilled the county’s contract responsibilities and cooperated, the results could have been even better.
In their search for excuses to end the agreement, the commissioners have cited the need for “budget cuts.” But this contract was in no way dependent on funding from the recent state or federal budget impasses. Moreover, no budget cuts to other less productive county programs have been announced. Without the chamber’s work product, the county will be obligated to develop and fund an internal economic development program at great expense.
I am not disputing the commissioners’ right to oversee how funds are managed or which projects are prioritized. But the actions of Sherman and Janis to terminate this long-standing, productive arrangement to provide economic development, was imprudent and will be costly.
The citizens of Washington county deserve better cooperation between its elected officials and the business community; not a quagmire of no collaboration, made-up excuses and unsupported finger-pointing.
Gary Stout is a Washington attorney.