Columbia, SC — IT’S LONG BEEN time for the owners of 4,460 acres of mostly flood-prone land along the Congaree River to admit the truth: Their dream of building a “city within a city” called Green Diamond went under because it couldn’t float — literally or figuratively — not because of anything Richland County did.
A circuit judge said as much in a recent ruling clearing the county of any responsibility for Columbia Venture’s inability to develop its property. Judge John Hamilton Smith, serving as a special referee in the matter, wrote that “at the outset, Columbia Venture’s investment-backed expectations of extensive development on a floodplain are necessarily diminished by the backdrop of uncertainty, risk, and regulatory limitations associated with floodplain development.”
In other words, as I’ve said over and over again, this simply was a bad business deal that didn’t materialize. It’s the kind of risk business people take every day. And when you take big risks in hopes of big rewards, you’ve got to be willing to accept that failure is a possibility. Instead, Columbia Venture wants the taxpayers of Richland County to subsidize their high-stakes failure.
Which is why I don’t expect the group to give in now. Essentially, the new way for them to get a return on their investment is to extract it from the public coffers. So, I fully expect Columbia Venture to appeal this latest ruling.
I certainly understand that these investors are upset that their dream development failed. In a different location, it would have been a good concept that not only would have deepened their pockets but also would have bolstered the entire Midlands economy. When Myrtle Beach developer Burroughs & Chapin came to town in 1999 touting the project, it produced a grand plan to build a $1 billion development over a 10-year period that included new homes, new residents, new jobs and new taxes.
But the fact that both Columbia and Richland County passed on Green Diamond is telling. The fact is that they had serious doubts that it could be built safely and without extraordinary public liability.
And they had reason to be concerned. The federal government had determined that a large portion of the land was highly flood prone. And no matter how tempting or promising a project appears to be, building on low-lying land along a river is extremely risky. On any given day, a river — including the Congaree — is bound to do what rivers do: overflow its banks.
That being the case, it made no sense for a local government to approve work on levees or take responsibility for maintaining levees to allow development of a huge project that stood a good chance of one day being under water.
While they’re fighting to get the public to pay for their risky business, it’s hard to believe that these investors didn’t fully understand the chance they were taking in buying flood-prone land along a river. Or was it that they didn’t care?
It was clear from the outset that Burroughs & Chapin was used to getting what it wanted, and that it intended to do so this time as well. The developer waltzed into town and hired some of the Midlands’ most influential and high-profile politicians, lawyers and consultants. The company and some of its supporters gave thousands to various political campaigns. It was so aggressive that people wondered whether the company’s deep pockets had cleared the way for it to obtain a free pass to build on the flood-prone property.
But in February 2002, as a result of the Federal Emergency Management Agency’s determination that the land was flood prone, Richland County did the only wise, prudent and common-sense thing it could do: adopted a new flood-insurance map placing 70 percent of the property within an undevelopable floodway.
Two years later, the developers sued the county, seeking reimbursement for lost property value as well as development costs and lawyer fees. The case has hung around for years now, even as related legal matters have been resolved.
But Judge Smith’s ruling takes us another step toward resolution. He ruled that the developers knew they were taking a risk when they poured $18 million into riverfront property.
In response to the ruling, Mullen Taylor, the county’s lawyer, with McAngus Goudelock & Courie, declared: “We just fought off a claim for $43 million.”
That would have been a pretty good return on the investors’ $18 million investment. The only problem is that Richland County didn’t doom this project and has no responsibility to pay for a bad gamble on the part of investors.
Unfortunately, if Columbia Venture continues its fight, taxpayers will continue footing a legal bill that surpassed a half million dollars a long time ago. All over a water-logged development deal that never had a chance of floating. Go figure.
Reach Mr. Bolton at (803) 771-8631 or email@example.com.