Millions from Columbia hotel sale could be claimed in lawsuit, Columbia owes $6M
The city of Columbia is expected to receive $2.5 million from selling a downtown property to a private hotel developer, but will the city get to spend that money? High-profile local attorney Dick Harpootlian thinks not.
Harpootlian wants that money to go to his client, the owner of the once-historic, now-demolished Constan Car Wash in Five Points, who the city owes more than $6 million to after losing a legal battle against the car wash operator last year.
Harpootlian filed a motion in circuit court Tuesday arguing for his client, O. Stanley “Chip” Smith, to receive the proceeds from the city’s sale of 1136 Washington Street to Kessler Enterprise, Inc. to begin to pay what a judge has determined the city owes Smith after the city removed a retaining wall that protected the car wash from severe flooding. The removal of that wall led to the destruction of Smith’s business, Harpootlian said. The car wash closed in 2022 and was later demolished.
“We’ll do this every time they sell a piece of property,” Harpootlian told The State. If the city were ordered to pay Smith the money from the sale of the Washington Street property, it would only cover a portion of what the city owes in the case. The city has plans to sell several other Columbia-owned buildings.
“I don’t want to be in a position where we’re seizing fire trucks and having to sell them. So that’s why you undertake this process,” Harpootlian added.
Kessler is buying the Washington Street property for $2.9 million, but will receive a $400,000 credit back from the city for the hotel project, bringing the effective sale price to $2.5 million.
Columbia City Councilman Tyler Bailey, who is also an attorney, told The State he wants to see the case closed however possible.
“Ultimately I would like to see this case resolved and everyone walk away,” Bailey said. That could mean through the appeal process: “I think the city believes it has some sound legal arguments on appeal,” he said. But it could also mean an agreement between the city and Harpootlian and Smith.
City ordered to pay millions in car wash verdict
In July, Judge Robert Hood ruled that the city must pay Constan owner Smith $4.2 million, plus interest, because the city demolished a section of wall that the car wash owner said was there to prevent severe flooding. Factoring in daily interest, the city now owes more than $6 million.
City leaders have said they plan to appeal the verdict. That appeal is still pending. Harpootlian said he believes state statute allows him and his client to attempt to get paid, even while that appeal is still underway.
“[Smith is] wanting to be compensated for his loss. He doesn’t have an operating business. And the city should operate like any business that has a judgment against it; post a bond, pay the money, settle the case, whatever,” Harpootlian said. “But there doesn’t seem to be any interest [from the city] in doing anything but just waiting for us to accumulate $1,800 a day in interest.”
After the July ruling, the city asked the judge to reconsider, writing in a court filing that “the $4.2 million judgment here represents a massive expenditure of taxpayer funds, with a direct impact on the City’s budget and its ability to provide essential public services.” The city is self-insured and is responsible for paying the verdict itself, but it did not budget for the multi-million dollar ruling.
A city spokesperson added at the time, “Even if we had insurance, this type of action would not be covered.”
Constan Car Wash, built in 1950, was a beloved fixture in Columbia. Its founders — married couple O. Stanley Smith Jr and his wife, Connie (the “Con” and “Stan” in Constan) — are credited with helping stoke excitement for the Riverbanks Zoo. Smith famously bought a tiger cub named Happy and housed him at the car wash — a decade before the Riverbanks Zoo opened. Happy died at the zoo a few years after it opened.
$6 million verdict issued amid tight city budget
The $6 million payout would come from the city’s stormwater system fund, which could potentially mean delays and a reprioritization of infrastructure projects the city has been working toward in recent years, according to a past statement from the city.
In June, the city passed a particularly tight budget, with roughly $10 million in new expenses. Among them included $2 million to operate the freshly-renovated Finlay Park, an additional $2 million for temporary housing for homeless residents, and $2 million to continue raising salaries for public safety workers.
City leaders acknowledged that it was a notably tight budget and said selling several city-owned properties would help refill Columbia’s coffers. The city is in the midst of an $11 million redevelopment of the former Aflac building on Huger and Laurel streets into a new police department headquarters. Once the department is under one roof, the city plans to sell several department properties, including 1 Justice Square, and the Metro Region Headquarters at 1800 Main St.
Also for sale is the city-owned property at the corner of Bull and Taylor streets, where Columbia leaders envision new apartments and a rooftop bar.
Columbia Mayor Daniel Rickenmann did not comment on Harpootlian’s motion, but instead shared his excitement over the Kessler plans in a statement shared with The State Tuesday.
“We remain focused on the long-term benefits this project brings to our community,” Rickenmann said in an emailed statement Tuesday evening.
Kessler deal to bring 4-star hotel downtown
Kessler Enterprise plans to build a 4-star Grand Bohemian hotel in the center of Columbia’s downtown. The Grand Bohemian brand has a reputation for being high-end and artistic, with museum-quality art installations and upscale amenities. It’s this reputation that city leaders say can help elevate the city and attract more private investors who want to be in Kessler’s orbit.
“Known for its distinctive blend of art, culture, architecture, and hospitality, the Grand Bohemian brand has become an iconic placemaking force across the Southeast,” a city press release about the deal reads.
The deal drew criticism from some, including local hotelier Rick Patel who said he offered the city $5 million for the property. City leaders also took a $10,000 trip to a Kessler property in Savannah prior to signing the deal with the company. That deal was already well-underway when 17 city employees and several city council members visited the Savannah hotel in December, according to past reporting by The State.
The extras included in the Grand Bohemian model were what ultimately convinced city leaders it was worth selling the property to Kessler, despite receiving offers for more money. Because the city listed the property through a private broker, it was not legally obligated to choose the lowest bidder.
“We’re looking at this actually from less of a local view as well. We’re looking at things from a regional, national view of how we move Columbia forward,” Councilman Peter Brown previously told The State.
