SC agency to use $15 million from Bull Street sale for equipment, bricks, mortar

cleblanc@thestate.comAugust 23, 2013 

— The $15 million the state mental health agency is counting on from the sale of the Bull Street property will go for overdue building and equipment needs – not directly to patient care, the agency’s chief negotiator for the sale said.

The agency calculates it has $25.6 million in unfunded, deferred maintenance costs within the next four fiscal years across the entire department, according to its analysis dated Aug. 15. Just during the fiscal year that began July 1, the agency asked the Legislature for $52 million for construction projects.

Some mental health advocates say they wish the money went more directly to the 100,000 patients served yearly by the S.C. Department of Mental Health.

Bill Lindsey, director of the state chapter of the National Alliance on Mental Illness, an advocacy group, said he’s aware of the agency’s financial pinch. Between fiscal 2008 and 2012, the Legislature cut the department’s funding by $87 million, according to agency figures.

Still, “I would hate for all that money to go to capital needs when there is such a need for more psychiatrists, more psychiatric nurses,” Lindsey said of the $15 million. “I would rather see it go to services than bricks and mortar.”

That’s the legal argument his advocacy organization made in 2006 to the state Supreme Court during a court fight over the sale.

“The sale of the State Hospital property affords South Carolina a unique opportunity, one that if not realized will be lost forever: the chance to make good on the state’s promise to its citizens with mental illness,” the advocates wrote to the justices.

Mark Binkley, a mental health department deputy director who negotiated the sales contract with Hughes Development Corp., said the $15 million indirectly will benefit patients.

That’s because maintenance costs would have to come from the department’s budget if not for the payments that are scheduled to flow into the agency’s coffer during the next seven years.

Binkley said the agency for years has been planning to phase out use of the few facilities on the sprawling Bull Street property that continue to serve patients.

“The Bull Street campus is eventually going to go away,” said Binkley, who continues as the agency’s liaison to Greenville developer Bob Hughes. “It’s superfluous to our mission. The truth is the campus costs us money we’d rather be spending on services.”

Upkeep of the Bull Street property is costing the department about $309,000, including security patrols, during the current fiscal year, agency figures show. Most of the property and its buildings have been unused for years. Public access is restricted.

The department might not see any money from the sale this calendar year, Binkley said.

That’s because he and Hughes are in talks about pushing back timetables in the contract.

The most immediate decision involves a document called a “parcel pricing plan.” That document is part of the sales contract and would spell out the order in which Hughes plans to develop parcels of land.

The pricing plan triggers the clock for the first-year payment, according to the sales contract. The deadline for the first pricing plan is Wednesday – 30 days after City Hall officials signed a disputed development agreement with Hughes.

Hughes is to pay $1.5 million within 12 months after filing the payment plan. That payment would be the first installment, which then would climb in annual increments of $2 million to $3 million, until the seventh year’s $1 million payment. That would bring the total to $15 million.

The pricing plan “is there to guarantee his performance of the entire contract,” Binkley said of Hughes.

“These (annual payments) are the minimums that are due to us whether he has any sales or not,” Binkley said. “If he doesn’t have the sales to total those amounts, he’s either got to put in the cash or potentially be in default. We still get our money ... and we look for a new developer.”

Binkley said he has no reason to believe that Hughes will default.

The agency believes Hughes is acting in good faith and that’s why it’s going to adjust not only the initial pricing plan but the annual payments, Binkley said.

The contract allows for the agency to make more from the sale.

“We could potentially get more than the $15 million,” Binkley said. A profit-sharing plan is in place in the event Hughes can sell parcels at high market rates.

“We can participate in his profits,” Binkley said.

Bull Street by the numbers

$15 million - Purchase price of Bull Street property

7 years - Time developer has to pay the purchase price

1 year - First payment due to mental health agency in about a year

Bull Street payment plan

The $15 million sales contract between the S.C. Department of Mental Health and Greenville developer Bob Hughes contains a seven-year payment schedule. But before any land is transferred, the agency and developer Bob Hughes are in talks to delay the payments. Here are the payment provisions in the agreement.

First year: $1.5 million

Second year: $2.3 million (brings running total to $3.8 million)

Third year: $2.2 million (brings running total to $6 million)

Fourth year: $3 million (brings running total to $9 million)

Fifth year: $3 million (brings running total to $12 million)

Sixth year: $2 million (brings running total to $14 million)

Seventh year: $1 million (brings running total to $15 million)

SOURCE: S.C. Department of Mental Health

Reach LeBlanc at (803) 771-8664.

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