EMMET COUNTY—When executives from a new Illinois company called Sovereign Deed first traveled to Emmet County in 2007 to talk to local officials about setting up shop at the Pellston Regional Airport, their promise of generating hundred of new jobs excited officials in this job-starved county.

But landing those prized jobs came with a significant catch: Sovereign Deed wanted county officials to keep details about its business plan—a plan that is now stirring controversy—a secret.

In January of last year, according to county documents, Emmet County Board of Commissioners Chairman Jim Tamlyn agreed to Sovereign’s secrecy demand: He signed a confidentiality agreement with the firm.

Commissioner Tamlyn, when asked about the secrecy agreement by the Great Lakes Bulletin News Service, claimed the move was necessary to bring new jobs to the community.

"I support jobs in our area," Mr. Tamlyn said. "This is the greatest place in the world to live, but every few months you will read where another factory is closing down, and people here are looking for jobs here so they can raise their family."

Emmet County Controller Lyn Johnson also defended the confidentiality agreement and pointed out that, effectively, it lasted for only a few weeks: By last February, the county was publicly discussing Sovereign Deed’s proposal.

But while Mr. Tamlyn’s reasons for signing the agreement might be well intentioned, its discovery by a concerned local resident raised conflict of interest and open government questions. And when the company’s highly unusual business plan was revealed last February, it fueled further criticism of the deal by some Emmet County residents. Adding to the controversy are questions reporters have raised about the background of the company’s founder, as well as his company’s track record.

A Very Unusual Business
It turns out that Sovereign Deed, a startup-up company headquarted in Vernon Hills, Ill., wants to make money by providing emergency services to customers caught in natural or man-made disasters. Sovereign Vice President Richard Mills said those services range from personal consultations on preparing for a disaster to outright rescues of its clients when, as the Petoskey News-Review put it, "infrastructure breaks down and when local emergency response services are overwhelmed."

The company would use Pellston’s airport, a publicly owned facility, as a private national emergency response headquarters. It is seeking a 99-year lease, along with permission to build an airport hangar and other infrastructure, on approximately 700 acres of airport land. County officials have spent years trying to find a business to locate on the parcel.

But over the last several months, some local residents have organized to oppose Sovereign Deed. One is local activist Ellis Boal, who said he finds the idea of a company rescuing only its clients, but not others caught in a disaster, to be offensive.

Mr. Boal, who filed the Freedom of Information Act request that revealed the confidentiality agreement, also questions Sovereign Deed’s job claims.

"There have been different figures for job numbers in the media and even on the Sovereign Deed Web site," Mr. Boal said. "It has gone as high as 500 jobs over five years, but then I’ve seen only 40 jobs, 80 job, 332 jobs, then there are 500 jobs. There has been no explanation as to why it jumps, which tells me they don’t really know what this deal is going to look like."

Local resident Tim Boyko also opposes Sovereign Deed’s proposal. He said the firm’s business model seems like it is based on post-9/11 paranoia, and wondered if the business model might include other, unannounced plans for the property at the Pellston airport.

"Why would you be going after this airport?" Mr. Boyko asked. "Well, you have an aquifer, infrastructure, you have a huge expanse of land, and a transportation hub. That is a very valuable asset."

Meanwhile, others are questioning the background of the company’s founder, Barrett Moore. Mr. Moore, an Illinois businessman, previously formed Triple Canopy, a multi-million-dollar company that provides armed security in Iraq. The Michigan Messenger Web siteand Northern Express, the region’s weekly alternative newspaper, reported that Triple Canopy eventually fired Mr. Moore and sued him for "raiding the company’s financial accounts to enrich himself and pay his personal expenses…"

Michigan Messenger also reported that Sovereign Deed was sued by a subcontractor who alleges that the company possesses a huge cache of gas masks that it never paid for. The Web site adds that Mr. Moore’s claims of prior military service are inaccurate. The site’s claims have drawn threats of a lawsuit from a company attorney.

"These defamatory statements are interfering with my clients' reputation and business operations, prospective business relations, and are otherwise causing significant damage to them," the attorney told the Web site in a letter posted on Sovereign Deed’s homepage.

"There is nothing to retract," said Jefferson Morley, national editorial director for CIM, publisher of Michigan Messenger and news sites in Colorado, Minnesota, Iowa, and Washington, D.C. "We stand by our reporting."

Mr. Boyko said the allegations against Mr. Moore should raise red flags for Emmet County. But County Chairman Tamlyn indicated he is not overly concerned about the intricacies of the prior litigation with Triple Canopy.

"Anything I’ve ever seen on this says it was settled out of court," he said. "Both sides came to an agreement and walked away."

Secrecy Draws Criticism
While activists and officials debate the merits of Sovereign Deed’s proposal and Mr. Moore’s background, others suggest that the most important aspect of the controversy is the willingness of the county’s top elected official to sign a confidentiality agreement that kept details of the company’s operation from the public.

The agreement states that Mr. Tamlyn will keep confidential the company’s business plans "to an extent reasonable and consistent with your duties and obligations as an elected official of Emmet County.

"Nevertheless, you agree to only disclose (details of Sovereign Deed’s business model) as is minimally required to meet your duties and obligations to the county," the agreement continues. "If and when such disclosure becomes necessary in the course of your duties and obligations, you shall promptly notify the company."

County Chair Tamlyn said Emmet County’s attorney, Kathleen Abbott, scrutinized the confidentiality agreement before he signed it.

But similar actions by officials in other states have spurred conflict of interest claims and even led to formal proposals to bans such practices. For example, the North Carolina Legislature recently proposed banning confidentiality agreements for government officials because of conflict of interest concerns.

In Union County, S. D., local officials drew fire for signing confidentiality agreements with an oil company seeking to build a very large refinery there. Residents dubbed the project "Guerilla" to underline the secret way the project was developed after local leaders signed confidentiality agreements.

And in St. Petersburg, Fla., the local paper heavily criticized city officials for signing confidentiality agreements with the local baseball team, the Tampa Bay Devil Rays, that concealed plans to develop a waterfront baseball stadium, saying it was a blatant conflict of interest that jeopardized public input on the project.

In northern Michigan, however, some officials defend confidentiality agreements involving public officials. Mr. Johnson, the county controller, claimed they are a necessary part of economic recruitment.

"If a company comes to you and says, ‘I want to build a plant here but I don’t want you to tell anyone. If you don’t agree to that, I’m going to go somewhere else,’ what are you going to do?" Johnson said. "If you say no, haven’t you hurt the public interest more?"

Whose Best Interest?
But when such agreements are eventually revealed, they can backfire. As first reported by the Great Lakes News Service last year, for example, a developer who proposed building an 1,800-acre amusement park on state land in Crawford County required local officials there to sign confidentiality agreements. That secrecy fueled months of speculation, suspicion, and innuendo about what was really being proposed for the state land.

Likewise, Mr. Boyko asserted that the county chairman’s confidentiality agreement contributed to the public’s lack of knowledge about the project and harmed the company.

"It chilled the whole discussion," he said.

Wisconsin lawyer Christa Westerberg, an expert on open government, said confidentiality agreements between government officials and private companies are not in the best interests of the public.

"You always have to be skeptical of requests for confidentially because they typically take place in cases where the public will want to know as much as possible about what’s going on," said Ms. Westerberg. "If you feel good about a development, why do you need to keep it secret?"

She added that, as a public official, "You are trying to protect the public and get the best deal from the developer. It’s not the other way around."