Washington County commissioners voted to terminate an 11-year, $1.6 million contract with the local Chamber of Commerce that was designed to promote economic development and job creation. The decision, made in a split vote during a regular board meeting, was driven by concerns over the legality of multi-year government service contracts and alleged breaches by the chamber. Commissioners Nick Sherman and Electra Janis supported termination, while Commissioner Larry Maggi opposed it. n nCounty officials argued that long-term agreements for governmental functions are invalid under state legal precedent, citing a Supreme Court distinction between proprietary and governmental contracts. They also claimed the chamber failed to meet specific obligations, such as maintaining property listings and staffing dedicated economic development roles. Additionally, budget constraints influenced the move, as the county would have paid $148,526 in the next fiscal year. The termination takes effect on January 1. n nSherman stated that continuing the agreement would be fiscally irresponsible given the lack of measurable outcomes. “We’ve seen no proposals or communication regarding how this funding is being used,” he said. “I opposed this contract from the start because it lacked a comprehensive long-term strategy.” n nJanis echoed these concerns, calling the termination a clear cost-saving measure amid competing financial demands. “With evidence of non-compliance and tighter budgets, this was an obvious choice,” she said. n nBoth commissioners expressed openness to future year-to-year partnerships with the chamber, but Maggi questioned the decision, asking, “If this is canceled, what’s the replacement plan, and how will it be more cost-effective?” n nChamber President Jeff Kotula expressed surprise, stating he was unaware the contract was under review until contacted by media. “We were completely caught off guard,” he said. “This halts the county’s efforts to attract businesses and grow jobs, not ours.” n nHe disputed claims of breach, noting that funding came entirely from local sources, not state or federal programs. Kotula also challenged the county’s refusal to honor the termination clause, which would require payment of nearly $300,000—approximately double the next year’s scheduled amount. “We expect them to uphold their contractual obligations,” he said. n nThe original agreement, approved in 2023, formalized the chamber’s role in economic development, including chairing the Local Share Account committee and representing the county on the Southwestern Pennsylvania Commission. While Kotula stepped down from the LSA committee and is not on the SPC board, he argued that designees were permitted under the contract. County Solicitor Gary Sweat maintained that the contract’s invalidity frees the county from full liability, though the chamber insists on compensation. n
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Washington Co. commissioners terminate economic development contract with chamber
The Washington County commissioners in a split vote terminated the 11-year contract that was scheduled to pay $1.6 million to the county’s Chamber of Commerce to promote economic development. n nCommissioners Nick Sherman and Electra Janis voted during the board’s regular meeting Thursday to end the lengthy contract that was approved just two years ago, while Commissioner Larry Maggi voted against the motion. n nCounty officials said the decision to terminate the contract was over their belief that the multi-year contract for government services was invalid and claimed that the chamber had breached the agreement by not abiding by certain terms. Officials added that the current budget impasse played a factor, using it as a cost-saving effort moving forward in which they were expected to pay $148,526 next year, although the termination does not go into effect until Jan. 1. n nMaggi and former county commission chairwoman Diana Irey Vaughan voted to approve the 11-year agreement in September 2023 that included an opt-out clause after five years, while Sherman criticized the contract and has made it known he wanted to end it. The chamber had been providing economic development support since 1999, although the agreement was on a year-to-year basis up until 2023. n n“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,” Sherman said in a written statement. “We have not had one meeting or communication about proposals for this funding in the last year. I stand by my initial vote in 2023 to not enter this multi-year contract using taxpayer dollars that did not address a long-term comprehensive plan for economic development.” n n“As we look at places to cut, this was a no-brainer with the contract breach as we have other financial priorities that are the focus. I must do right by my constituents,” Janis said in her own written statement. n nSherman and Janis said they are open to revisiting future “year-to-year” economic development contracts with the chamber, although Maggi questioned the reasoning for terminating it. n n“If my colleagues cancel this, what is the plan to replace it and how can we do it for less?” Maggi said in a written statement. n nThe decision caught chamber President Jeff Kotula by surprise since he did not know terminating the contract was even in consideration until he was contacted by the news media Wednesday afternoon. n n“First of all we were totally blindsided by the decision by commissioners Sherman and Janis to end job creation efforts in Washington County,” Kotula said in a phone interview Thursday. “I want to be clear, this isn’t stopping the chamber’s efforts. It’s stopping the county’s efforts to try to attract companies and promote job growth.” n nKotula was not sure what the county would be doing to spur economic development and job growth since he had not heard of any in-house plans moving forward. n n“It’s very disappointing to us, not only the chamber but the entire business community that they are not placing any priority to attract businesses to the county,” Kotula said. n nThe contract paid the chamber $140,000 in both 2023 and 2024, and then increased by 3% every year until the agreement expired at the end of 2033, meaning it would be paid $1.6 million over 11 years. n nThe contract included stipulation that the chamber had to maintain a listing of all available property sites in the county, meet with potential new businesses about various initiatives, employ staff for specific economic development efforts and have comprehensive plans and updates. It also formalized previous expectations, such as having Kotula chair the Local Share Account committee and be a sitting board member of the Southwestern Pennsylvania Commission. n nKotula stepped down from the LSA committee earlier this year and is not on the SPC board. He said the commissioners never appointed him to the SPC board and he was permitted to tap a “designee” to chair the LSA committee, but county officials chose a different candidate instead. n n“Making claims the chamber is in breach, that’s totally false. They’re also claiming it’s for budgetary reasons, but also a breach. But they don’t communicate with us,” Kotula said. “I don’t understand it. None of our funding for this contract comes from the state or the federal government. None of our money comes from those sources. … If that’s the case and the (state Legislature) passes the budget next week, will they reinstate our contract?” n nCounty Solicitor Gary Sweat reviewed the contract and said while there is a termination clause that would require the county to pay 50% of the remaining three years, he did not think the county should be held to those terms. n n“The Supreme Court has said that multi-year contracts that offer government services are invalid and go against the policy of not being able to saddle succession boards with long-term contracts,” Sweat said in a written statement. “The court has made a distinction between contracts that involve governmental function and proprietary functions. Proprietary contracts can be multi-year.” n nKotula disagreed and said he “trusted they would honor the contract” when it comes to the termination clause that would pay the chamber nearly $300,000. n n“Why would they pay (nearly) $300,000 to cancel it instead of the $148,000 (annual) contract? We expect them to honor it,” he said.