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A Conservation Bank for Charleston County?

Some serious issues
Warwick Jones, Editor

Within the next few weeks, County Council will consider the creation of a Conservation Bank to serve Charleston County. While the name and its implied purpose may resonate pleasingly with citizens, it should be rejected by Council, at least in its present form. Its creation will fly in the face of the oversight that voters were led to believe would be put in place for spending of the half-cent sales-tax proceeds. The entity that will be considered is not a bank. It will simply be another non-profit group but with a board that arguably could be controlled by the County Council, and with easy access to the sales-tax proceeds. There may well be good reason to form a conservation group to focus on Charleston County, but it should not have some of the offending powers proposed for the new Conservation Bank

The proposed entity is not a bank
Let's start with the basics. The proposed entity is not a bank. And unlike a bank it cannot "leverage" funds. This point is made because the words "bank" and "leverage" have been used by the proponents of the entity to imply that the entity has some special ability to raise funds for conservation purposes. In fact the entity will have no more ability than any other non-profit dedicated to conservation. In the view of the author, the word "leverage" is an inappropriate word for this and other non-profits to use. A better word would be "complement".

A bank or finance company "leverages" the funds of its shareholders to raise funds through deposits and other borrowings. In simplistic terms, an equity base of say $1 million may enable the bank or finance company to raise another $4 million by borrowing, effectively leveraging $1 million into a total of $5 million. The proposed Conservation Bank, or the SC Conservation Bank formed a year or so ago, does not have this power or ability. Indeed they would fall foul of the law if they attempted such.

"Leverage" is a corrupted word
"Leverage" as used by the non-profits is simply the ability to join with other non-profits to jointly finance a conservation project or to apply for funds from State or Federal sources. The conservation banks have no special ability in this though in the case of the SC Conservation Bank, the State Government does allocate funds, presently about $15 million a year. If one of these non-profits were to commit say $1 million to a project, convince other non profits to join it to the tune of say $2 million and raise another $1 million from Federal sources, the original $1 million would be "leveraged" to $4 million according to their usage of the word.

The Conservation Bank ordinance was prepared by Council member Bostic, and as he stated, much was drawn from the ordinance that created the SC Conservation Bank. The ordinance for the new bank was considered by the Finance Committee of County Council at the beginning of May and referred to the Greenbelts Advisory Board (GAB) for its comments. The GAB asked for more time and was given 4 weeks. This was not enough for the board and it requested another deferral by the Finance Committee. The Committee in June agreed to defer consideration for 120 days but also have a public hearing on the proposal.

A potential conflict with the GAB
Our issues with the proposed bank lie primarily with the potential conflict it will have with the GAB as it exercises its oversight role. The Bank will be able to disperse sales-tax funds without GAB review. It looks to a large allocation of sales tax proceeds, and indeed will need some of these funds simply for establishment. It will also have a Board that arguably could be controlled by County Council or a faction thereof. As well, there are clauses that have been omitted in the proposed bank ordinance, or are substantially different to those in the SC Conservation Bank Act. These omissions and differences need to be aired in public.

It is interesting that the ordinance that would create the Conservation Bank has no reference in any way to the GAB, Parks and Recreation Commission, or the greenbelts consultant. In the ordinances that created the sales tax referendum and the GAB, the roles of these entities are paramount, and central to the disposition of sales-tax funds for greenbelts. Ignoring the roles of these entities is either a blatant oversight at best, or extreme arrogance at worst. After all, the GAB and the retention of a consultant were part of the process to assure voters in the sales tax referendum that there would be appropriate oversight. Are the powers of the GAB to be usurped by the Conservation Bank despite the promise made to voters about the role of the GAB?

Plans to use Sales tax funds without GAB oversight
The proposed bank will draw its funds directly from the sales tax. The amount has not been defined but Council member Bostic used $10 million by way of example. Any contribution to a conservation project less that $500,000 could be made without review by either Council or the GAB. Any contribution above this amount would be subject to review only by the Council. The only oversight exercised by the GAB would be to approve allocations of funds to the Bank which it could disperse at its leisure. This is clearly against the substance and spirit of the ordinance that created the GAB. The GAB, and the Transport Advisory Board (TAB), were to be oversight bodies, to ensure that the sales tax funds were spent wisely and on worthy projects. They were designed to ensure that political considerations would not get in the way of decision making. The Conservation Bank as proposed would have the liberty to spend as it chooses, with Council oversight beyond amounts over $500,000.

Where is the oversight?
One should add here that the annual allocation to greenbelts from the sales tax proceeds is likely to be only $7 to $8 million in the early years of the tax. The proponents of the Conservation Bank are suggesting that the bank should dispose of a considerable part of these proceeds.

It is the ability to disperse sales tax funds without GAB review that is the most concerning. There is also the issue as to whether and the proposed Bank can legitimately use sales tax funds for its running expenses, even if the GAB were to review this need. Remove these issues, and there is probably no reason why the proposed bank could not be formed. The writer still has issues with some clauses in the Ordinance. But as long as funds dispersed are not sourced by the sales tax, or the dispersal is approved by the GAB according to the still-to-be-determined definition of "greenbelts", then the issues are moot.

Election of directors is also an issue
The Board of the proposed bank will consist of so called experts - an accountant, a realtor, a lawyer etc, each with some defined experience. We take issue as to whether such collective expertise is really necessary but it is the election of these directors that causes us most concern. Each member is appointed by a majority of County Council. It is possible, at least theoretically, for a faction of Council to appoint all the members of the board.

The ordinance that created the GAB and TAB recognized the risk of political interference in their operations. To minimize such a risk, each member of the respective boards is appointed by a single member of Council, not the majority. Is control by a faction of Council still possible? The answer is of course yes, but the process becomes much more difficult. We note also that 3 members of each Board are appointed by the 3 major municipalities of the County.

We wonder whether the access to sales-tax funds as proposed in the Conservation Bank ordinance would survive a court challenge. There could be a lot of citizens prepared to fund a challenge if affronted by the powers of the proposed Conservation Bank.

No funds are marked specifically for properties with public access
Other areas of the proposed Conservation Bank ordinance are gray and need to be fully discussed. Take the issue of access of the public to properties that have been acquired by non-profit groups and financed by the Conservation Bank. The SC Conservation Bank makes specific provision for this mandating that 10% of all funds should be allocated to properties allowing public access. The proposed Conservation Bank is silent on this issue. We know that public access is a major issue for some citizens and indeed, for some council members. Maybe the issue will get an airing in a public hearing. But a vote by Council on the ordinance creating the Bank is likely to occur before the recently retained consultant can collate the response from the public hearings. These hearings, were part of the process to develop the Comprehensive Greenbelt Plan.

Funds may be used for management of properties?
A similar argument can be applied to the use of funds for financing management of properties acquired with Conservation Bank funds. The SC Conservation Bank does not allow funds to be used for management. The framers of the legislation probably thought that if a municipality or non-profit group considered a property worth while for acquisition then they should provide the funds for management. The argument is particularly cogent for a municipality who might be looking for a total free ride on a project. Interestingly, the proposed Conservation Bank omits any reference to the use of funds for management. Is there some sinister reason? Do the framers of the proposed Conservation Bank ordinance hope to ease the burden of some non profit group? We don't know but the omission from the proposed Conservation Bank certainly begs the question why? This issue is another that needs a public airing.

The issue of management could also be extended to the Conservation Bank itself. The ordinance relating to the sales tax referred to greenbelts. It did not refer to the management of greenbelts. Does the diversion of sales tax funds for the management of the Conservation Bank constitute a "proper" use of these funds? The County has decided that it can use the funds to finance the management of the sales tax proceeds with the employment of dedicated personnel. But can it extend sales tax proceeds to management by third parties such as the Conservation Bank?

Stepping back and looking at the defined targets of funds dispersed by the proposed Conservation Bank, we wonder how realistic they are. Councilmember Bostic has drawn heavily on the SC Conservation Bank in defining these targets, in fact, most "targets" are repeated word for word. But the canvass of the SC Conservation Bank is so much larger than that of Charleston's proposed bank. It has the whole County. What scope is there for protecting endagered species, outstanding examples of an ecosystem, or outstanding geologic features in Charleston County? Unfortunately, the County has already been heavily developed and the "targets" are not colors in its palette.

One sided view of local press
County Council Chairman Stavrinakis indicated that a public hearing on the proposed Conservation Bank is necessary. We hope the community is afforded such an opportunity. We would also hope that the daily newspaper media might offer a more balanced view. It has endorsed the formation of the bank. It has pointed to the good done by the SC Conservation Bank and implied that the proposed Conservation Bank should do equally good. May be it can. But other conservation groups are doing admirable work in the region and there is no reason why they could not perform as well as the proposed Conservation Bank. The differences in regard to funding, the accountability of the funds, and the accountability of the two banks were ignored in the newspaper's editorial. And these are the real issues. One wonders why no attempt was made to address them.

Warwick Jones is a member of GAB and the above are his personal views

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