MYRTLE BEACH developer Burroughs & Chapin and its partners gambled that they could muscle past environmental, legal and political obstacles and build a taxpayer-subsidized city within a city on sinking sand just south of Columbia. Green Diamond, they called it.
The partnership put down $18 million in 1999 for 4,300 acres of flood-prone land, even though developing it depended on what the state Supreme Court described this month as “a host of factors which Columbia Venture had not fully explored and over which Columbia Venture did not exercise ultimate control.”
Among them: The partnership would have to either convince the Federal Emergency Management Agency to redraw its just-redrawn flood maps (it refused) or convince the Richland County Council to exempt it from an 18-year-old ordinance that prohibited most building in floodways (it refused) and assume financial responsibility for levies that might or might not protect the billion-dollar development (it refused). The partnership also would have to secure nearly a billion dollars in infrastructure and multi-county business park incentives it was counting on from local governments.
When the partners’ lobbying muscle proved flaccid, they took the county to court, claiming that its refusal to give them special treatment amounted to an unconstitutional “regulatory taking” and that taxpayers therefore owed them $43 million in expenses and lost (potential) revenue.
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Now finally, after 16 years of political and legal struggles that endangered taxpayers and nearby property, Richland County’s nightmare on the Congaree might finally be over.
Might be, because Columbia Venture still can appeal the state Supreme Court’s unanimous refusal to make taxpayers pick up its gambling debts. And given how reckless the partnership was in pursuing its taxpayer-subsidized live-work-play city just outside the real city, and given its absolute refusal to take “no” for an answer since its principal partner first ventured out of the Grand Strand, maybe we ought to expect an appeal.
Read the Supreme Court order
Meantime, though, we can take solace in the knowledge that for once, our political leadership stood up to a deep-pocketed special interest that thought it could buy its way past any objections to its risky venture — and even stick the taxpayers with all the risk. Who knows whether that audacity actually gave our leaders the backbone to reject the overtures?
The U.S. Constitution requires government to pay property owners when it takes their property — say, to build a freeway. But the courts have given government wide latitude to regulate how land is used, because what one property owner does affects the value not only of his own property but also of nearby property: If you open a strip club next door to my house, the value of my house plummets.
For a regulation to be considered an unconstitutional “taking,” for which the owner must be compensated, it must diminish the value of the property, it must interfere with the property owner’s “reasonable investment-backed expectations,” and the government must not have a legitimate reason for the regulation.
Two years ago, Circuit Court Judge John Hamilton Smith flatly rejected Columbia Venture’s regulatory takings claim. He noted that while the county’s restriction on building in floodways did diminish the potential value of the Congaree River property, it was a reasonable regulation, because a flood on developed property endangers the public health and safety and the taxpayers’ pocketbooks. Moreover, no reasonable person would have expected to be able to develop the land the way Columbia Venture wanted to.
Read my column about an actual ‘takings’ scandal
Indeed, a company that wanted nothing more than to build a golf course had backed out of a deal to buy the property in the spring of 1998, when it found out that FEMA was revising its flood maps and was likely to put 70 percent the property in a floodway. Months later, Burroughs & Chapin hired an engineering company to assess the flooding issues, and that company issued what the Supreme Court called a “cursory report” that made a series of completely unrealistic assumptions. The whole process showed such callous disregard for the law that an attorney wasn’t even asked to review the complex regulations that the engineers had dismissed as easy to work around.
As Judge Smith explained in his order: “(P)rior to purchase, Columbia Venture had made very little investment in actual engineering analysis of its levee. Columbia Venture did not know if it could convince FEMA to issue a Flood Map with no floodway. Columbia Venture did not know whether it could upgrade its levee to meet FEMA’s levee certification requirements. It did not know whether Richland County would ultimately accept responsibility for maintenance. It did not even have the financial resources in hand to undertake levee construction; in fact, Columbia Venture expected this cost to be paid through public financing.”
As Judge Smith’s order made clear, this wasn’t even a close call. A reasonable litigant would have given up at that point.
But Columbia Venture had already demonstrated that it was not reasonable, and I suppose if you’re a gambler, covering a couple more years of attorney fees for a potential payoff of $48 million looks like a good bet.
Earlier this month, the Supreme Court re-rejected the claim, agreeing with Judge Smith on all counts. Richland County, the court wrote, is not responsible for “the property owner’s gamble that he could develop the land as he wished despite the existing regulatory structure.”
In doing so, the court reminded Richland County and other local governments that they needn’t be bullied into abdicating their responsibility to make zoning and other land-use decisions that put the interests of the public ahead of individual interests. And it reminded those who rely on political muscle to manipulate government into underwriting their speculative ventures that they’d better bring enough muscle to win. Columbia Ventures didn’t, so now it has no one to pay off its gambling debts but itself.
Ms. Scoppe writes editorials and columns for The State. Reach her at email@example.com or (803) 771-8571 or follow her on Twitter @CindiScoppe.