LOCAL GOVERNMENTS should stick to what they do best: deliver basic services. That's the lesson - a very expensive one - the city of Columbia should learn from a lawsuit recently decided in its favor.
Although the suit claiming that taxpayers owed four businesses money for work on a hotel that city officials had recklessly pursued sounded dubious from the outset, we had no idea how a judge would rule. After all, Columbia had mishandled the hotel matter from the start. While Fifth Circuit Court Judge George C. James Jr. issued a rare summary judgment declaring that the city doesn't owe the plaintiffs any money, Columbia's earlier dogged pursuit of a publicly financed hotel as well as its later decision to pay an architectural firm for interim work fed the companies' belief that they deserved to profit from a project that never got off the ground.
Gary Realty, Garfield Traub Development, Turner Construction and the architectural firm Stevens & Wilkinson had claimed that Columbia owed them $4.3 million for designing a facility that was never built.
Even with the victory, Columbia had to spend more than $1.2 million - $462,114.86 for expert witnesses and $778,886 for legal fees - defending the case. And it still might not be over. Judge James has been asked to reconsider his ruling; if he holds fast, an appeal is likely.
Columbia wouldn't be in this fix had City Council not wandered outside of its purview to try to build its own hotel. This ordeal should be enough to convince City Council not to stray far from its traditional responsibility of providing basic services such as water and sewer, law enforcement and garbage pickup. It's not a developer or a hotel owner, and it has no business trying to be one.
City officials were out of their element when they decided to get into the hotel business in 2003, tasking Edens & Avant Real Estate Services to assemble a "dream team" to guide the city through the process and, if the city decided to go forward, build the hotel. Edens & Avant left the group when the city backed out.
The city's pursuit of its own hotel not only led to this lawsuit, but also delayed the construction and opening of a convention center hotel, leaving the publicly owned center temporarily without an amenity that is necessary for its success. After justified public outcry, the city sought a private developer, ultimately choosing Greenville developer Bo Aughtry over the remnants of the dream team and other bidders, to build what is now the Hilton.
It was that wise change of course that prompted the lawsuit by the dream team. Columbia officials said the team had freely worked under a nonbinding agreement to build the $70 million hotel, knowing full well that if the city backed out they wouldn't be paid. Attorneys for the city said an April 2004 vote requesting proposals from developers to build a private hotel indicated the council didn't think the city-owned project was feasible.
The businesses argued that the council never specifically voted that a public hotel wasn't feasible and claimed that a memorandum of understanding the city signed constituted a contract. Judge James said it did not. His order dismisses all claims except a $1.6 million one by Stevens & Wilkinson for "interim architectural fees" it says the city owes it for work performed from July 2003 until March 2004.
In that case, Circuit Judge Casey Manning ruled this spring that City Council's July 2003 vote to pay Stevens & Wilkinson $650,000 constituted a contract; he left the amount owed to be determined at trial. Columbia, which has appealed the ruling, contends that the 2003 payment settled the matter; Stevens & Wilkinson says it continued working beyond that with the city's consent.
Although the city has had to pay steep legal fees and is yet to resolve the Stevens & Wilkinson matter, Judge James' summary judgment is a big break for taxpayers; it could save the city millions. That's probably the best that can be hoped for from a very bad situation. Going forward, City Council must stick to the basics and stop putting taxpayers at such unjustifiable risk as it conducts Columbia's business.