Rural Center controversy topples chairwoman

Valeria Lee, who remained defiant toward calls for her to step down as recent as two days ago, told fellow board members in an email that she was leaving so the Rural Center could move forward.

"For the Rural Center and everyone it touches, the past few months have been incredibly difficult," Lee wrote. "My goal as chair during this period was to create a process and plan to move our mission forward. The transition team is in place to do that, and we can hope soon to have a clear path for the future."

Kim Genardo, spokeswoman for the governor's office, said Gov. Pat McCrory considers Lee's resignation "a step in the right direction."

The nonprofit Rural Center uses state and federal money to provide grants to support business and infrastructure development in 85 North Carolina counties.

Two weeks ago, state auditors criticized the center for a lack of oversight of its grants, charging that the organization doesn't verify that grant recipients are using their money for the intended purpose. Lee denies that allegation.

"My real regret is that the good work that has been done has been diminished by what has come forward as an accusation that somehow there was impropriety at the Rural Center," she said. "To my knowledge, that has not been the case."

Auditors also questioned the salaries paid to President Billy Ray Hall and several vice presidents, saying they were excessive when compared with similar programs elsewhere.

Hall resigned a day after the audit came out, and McCrory's budget chief froze the spending of state money by the center and even suggested the state might try to recoup some of the money in the center's accounts.

Last week, lawmakers approve a budget that eliminated all state funding to the Rural Center, instead calling for the creation of a Rural Infrastructure Authority within the Department of Commerce to handle its duties.

Rep. Paul Stam, R-Wake, supported that measure.

"There has been a lot of good done, but it has been done in the wrong way and based upon political favoritism," Stam said Wednesday. 

The center's board on Monday named a five-person committee to help shift more than $100 million in state tax money and development grant commitments to the Department of Commerce and determine the future of the center and its 50 employees.

Some board members want to keep interest earned off the public funds to continue limited Rural Center operations. The new committee will determine within the next month whether to dissolve the center or continue some functions.