The Carroll County Public Service Authority (PSA) agreed Monday to repay $34,019 to federal funding agency Rural Development. Meanwhile, inspectors from Nehemiah Engineering will be allowed to return to work on inspection services for the Fancy Gap water and sewer project pending approval of an amended contract.

During a special PSA meeting Monday, county attorney Jim Cornwell told the PSA it had received two letters from Rural Development Area Director Travis Jackson relating to a conflict of interest issue involving the PSA and Nemehiah.

Rural Development stopped funding construction inspection services to the Fancy Gap project in April because of what was deemed a conflict of interest. The conflict arose from Nehemiah employee Joshua Hendrick also serving as a member of the Carroll County Board of Supervisors beginning in January. Hendrick has since resigned from the company to alleviate the conflict of interest.

Cornwell told the PSA that Jackson requested the repayment of $34,019 to Rural Development for funds that were paid to Nehemiah after Jan. 1 when Hendrick took office on the board of supervisors. Cornwell said a second letter noted Rural Development would consider a request allowing Nehemiah to resume inspection services in the future.

Cornwell said the PSA had already discussed a plan with Nehemiah President Jeremy Hendrick, Joshua’s brother, about a repayment plan to the PSA. Under the plan, Nehemiah would pay the PSA $5,670 for five months, and $5,669 the final month. Those funds would be used to repay Rural Development.

“I propose to you to prepare a contract amendment with Nehemiah that would allow them to return to work and start the payment plan,” Cornwell said.

PSA member David Hutchins said the county’s auditors have noted in the past that partial payment plans may not be looked upon favorably in regards to the county audit. County Administrator Gary Larrowe said the county has already talked to its auditors, however, and have been assured such a payment plan would be fine in this case.

Hutchins said he thinks Nehemiah has done a good job with inspections. He said the PSA was also put in a tough position of having to use Authority staff on inspections in the meantime. He then made a motion for the PSA to repay Rural Development through the six-month repayment plan with Nehemiah. If Nehemiah is okay with the amended contract, he added in his motion to authorize staff to sign the contract allowing Nehemiah to return to work. The motion was seconded and approved unanimously by a 5-0 vote.

“It has been painful to Nehemiah, painful to the Authority and painful for those folks out of work,” Hutchins said. “It would be my hopes that we have resolved the issue and we would be able to move forward.”

Other PSA members echoed those comments, although James Light still had concerns over sentiments he expressed at a June 19 meeting.

“I’m glad to see it partially resolved and everybody back to work. But I still maintain they are innocent until I see the gray areas cleaned up,” Light said. “And hopefully we will be talking soon about being able to get them their $34,000 back. There are too many gray areas and that is my question.”

At the conclusion of the June 19 meeting, the Carroll PSA unanimously approved a four-page letter to send to Rural Development requesting Nehemiah resume work on the project now that the conflict has been resolved. PSA Chairman Dr. Tom Littrell read the letter aloud, noting Franklin County Commonwealth’s Attorney Timothy Allen’s opinion that a conflict of interest had existed with the Fancy Gap projects from January until Rural Development funds were suspended in April.

The letter to Rural Development states the determination was not based on federal regulations, however, and that Allen’s opinion could possibly be reversed.

“We understand Mr. Allen’s opinion may be appealed to the Attorney General of Virginia as provided by statute,” Littrell said, reading from the letter. “Should Mr. Allen’s opinion be reversed or Mr. Allen determines that an exception to the Virginia Conflict of Interest Act applies or the Attorney General opines that no conflict existed, the Authority reserves the right to reconsider and reverse this determination.”

Light wanted a clarification on what Allen meant by an exception to the Virginia Conflict of Interest Act.

“If that were clarified we could use that to change our determination because that’s been the gray area the whole time, exception,” Light said. “Answer that, what is the exception? Answer that before it gets to a court battle with the Attorney General and this thing gets uglier and more time consuming. I’d like to know what the exceptions are before it gets that far. Nobody has had the backbone to say what those are.”