Exclusive: Columbia city attorney warned council not to sign Bull Street deal

jwilkinson@thestate.comSeptember 13, 2013 

— Columbia City Council voted against its own attorneys’ advice when it approved a deal with a Greenville developer to redevelop the old State Hospital campus on Bull Street.

In a confidential memorandum to council obtained by The State newspaper and dated July 8 — the day before the vote on the biggest land deal in modern Columbia history — attorney Ken Gaines advised members not to approve the agreement unless “definitive” funding sources for $50 million in taxpayer-funded improvements to the property were identified.

“While we recognize that it is City Council’s decision to approve or disapprove the Bull Street Development Agreement, we have an ethical duty to advise that the Bull Street Development Agreement, as currently drafted, exposes the City of Columbia to significant legal and financial risks which could be detrimental to the City of Columbia,” Gaines wrote, along with Beaufort attorney Dave Tedder, an expert on development agreements hired by the city to review the proposal.

The attorneys warned that Greenville developer Bob Hughes could easily achieve benchmarks of 120,000 square feet in retail development and $75 million in investment, which would make the city “liable for funding more than $50 million in as little as three years.”

Chief among the concerns were funds to build a parking garage after Hughes developed property “equivalent to a single Wal-Mart or Lowe’s shopping area,” according to the letter. A second garage would have to be built when private investments reached $75 million.

Gaines and Tedder estimated the cost of each garage “to be at least $16 million, and more likely $24 million to $32 million.

“We have not yet seen a plan that can provide these funds for the infrastructure the City is contracting to provide,” they wrote.

Council members Moe Baddourah and Leona Plaugh said the memo’s concerns about funding sources were the main reason they voted against the deal.

“Absolutely,” Plaugh said. “I felt like the document reflected some of the concerns that I had all along.”

Baddourah is running for mayor against incumbent Steve Benjamin, one of the deal’s chief negotiators.

“The people of Columbia are now on the hook for $71 million, and we don’t know where that money will come from,” he said in a written statement Friday. “The specific sources of those funds were never identified, which is one reason I was so adamantly against rushing to approve it. The Bull Street deal was handled secretively and with limited public input, and as a result the people’s interests were given short shrift.”

Supporters of the deal noted that while no “definitive” funding source has yet been identified, chief financial officer Jeffrey Palen prior to the vote presented council with a laundry list of sources to pay for $31.25 million in roads, water and sewer and other infrastructure and $40 million for two parking garages. Those 17 sources included general obligation bonds, local hospitality taxes, accommodation taxes, water and sewer funds and franchise fees.

Benjamin said Friday that council members listened to the attorneys’ advice and decided to move forward anyway.

“Ken many times has shared his opinion, and sometimes we listen, and oftentimes we disagree,” Benjamin said. “But the city being business-friendly and getting things done is very important. … It was important to come to the table with a problem-solving attitude instead of the typical Columbia approach that we can’t get it done. We had to think big-picture and be visionary.”

Council member Brian DeQuincey Newman said he was “comfortable” with the choices Palen offered.

“Even though (the attorneys) raised those concerns, it was not an issue with me and obviously didn’t raise any concerns that would prohibit me from voting in favor of the project,” he said. “We’ve got a number of different options. Although we haven’t selected one funding source, we have several options, and in my mind that is better.”

City Council last week voted to issue $7.4 million in general obligation bonds, which would be paid by tax dollars. The bond issue allows the city use the money either for Bull Street infrastructure or to purchase new “rolling stock,” such as police cars and garbage trucks.

Read the letter

Bull Street Development agreement by thestate

Staff writer Clif LeBlanc contributed.

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