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Government by Stealth

The State exposes intrigue behind the financing of the Hunley museum
The State newspaper recently ran a three part series entitled Government by Stealth. It was written by John Monk. The focus was the proposed Hunley Museum and it's likely extraordinarily high cost. It highlighted the role of Senator Glenn McConnell in pushing for the development and the unusual and questionable steps he took secure finance. To realize his vision for the museum, the Senator drew in Clemson University, which seemed a willing partner in the intrigue, even if it meant sacrificing financing educational objectives.

The State newspaper does not have a large circulation in Charleston. We thought the series was of such interest that citizens would like to view a condensed version. The series, which is very lengthy, can be viewed on The State's web site. ( Press here, Search for Government by Stealth in the site's archives). Editor.

How senator steers sub under radar
The cost of preserving and promoting the Hunley submarine has soared to nearly $100 million - thanks largely to a powerful politician's behind-the-scenes work to steer public money towards his pet project. The Hunley is one of South Carolina's biggest financial undertakings in modern times. Not counting university expansion projects, the Hunley ranks behind only a few large road and bridge projects. It even exceeds the $62 million State House renovation in the 1990s. Glenn McConnell, president pro tem of the state Senate is the Hunley's biggest booster. He also has been the driving force behind the spiraling price tag for the preservation and promotion of the Confederate sub. McConnell has pieced together the money keeping the project out of the public arena and away from State House debate. And he is personally authorized much of the spending of the project's public money in an arrangement the state's comptroller general says is "obviously outside the framework the state has provided for disbursement of public funds".

The $97 million for current and planned Hunley projects far exceeds McConnell's estimate in the late 1990s, Then, McConnell was trying to get the sub raised from the Atlantic seabed where it had lain since 1864. "We have looked at figures somewhere we think, between $5- $10 million to conserve it, to endow it", McConnell said at an October 30, 1997 meeting. The McConnell and other Hunley supporters predicted back then, that private donors would pay much of the sub's costs, but more than 85% of the projected costs are expected to be paid by taxpayers, according to a State newspaper analysis.

McConnell used his considerable influence to:
• Personally approach agency heads, college presidents, and mayors to ask for services, parking space and health insurance for Hunley workers. He has acted as a super agency head, collecting money from other state agencies instead of going through the public legislative budget process.
• Help arrange for Clemson University to take over the sub's preservation at a time when federal grants are dwindling and visitors to the Hunley's conservation lab are falling off. To help pay for it, Clemson plans to tap into state money designated for university research projects that have the potential to attract high-tech and medical jobs.
• Act as a Hunley paymaster apparently without any clear legal authority. McConnell has personally authorized the transfer of millions of public money from the State Budget and Control Board to a Hunley foundation, whose members he has appointed for 10 years. No other lawmaker has such access to state accounts; access, the state's comptroller general said, is outside the state's normal framework for disbursing public money.
• Neutralize senators who might question Hunley spending. McConnell protected other Senator's pet projects in exchange for favorable votes on Hunley issues. Crossing McConnell on Hunley funding, one lawmaker says "is not worth the scars"

No public debate
Unlike many projects whose expenses are known and debated, much Hunley funding is fragmented, tucked away in various state agency budgets. For example:
• The Department of Public Safety (DPS) each year provides $100,000 for a highly trained guard for the Hunley lab, which is open to visitors on weekends. DPS also monitors the Hunley 24 hours a day via closed-circuit television.
• The State agency in charge of land at the former 1600 acre Navy base in North Charleston donates a building used to house and study the Hunley. The lease of the Charleston Naval Complex Redevelopment Authority building is valued at $300,000 per year, according to a Hunley Foundation audit
• The Department of Archives and History has five Hunley employees on its payroll, the total salaries this year are $204,266. The College of Charleston has four Hunley workers on its payroll; the total salaries this year are $239,320.

The Hunley Foundation, called the Friends of the Hunley, reimburses the College of Charleston and the archives department for the Hunley employee's pay. Routing their pay through state agencies enables Hunley workers to receive state health and benefit retirements, which aren't available through the foundation

The newspaper filed freedom of information requests with more than 20 state agencies, but without a complete formal financial audit in which all records are made public, it's difficult to be certain that all Hunley funding has been included. What The State found includes:
• $42 million to be spent for a proposed Hunley Museum in North Charleston
• $35 million to be spent on the first phase of a Hunley centered campus built by Clemson, also in North Charleston
• About $3.5 million in state money is being spent to buy a Civil War collection of 10,000 paintings maps, books and other objects destined for the museum

Few in state government had any idea of the costs of various Hunley projects in the pipeline. "I don't have a clue", Governor Mark Sanford said last week. Informed that projected costs were $97 million, Sanford said that sort of unrecorded spending is a prime example of state government dysfunction.

Clemson signed onto shaky project, papers show
Clemson University surprised many last fall when it announced it would take over the long-term preservation of the Hunley submarine and build a $35 million Hunley-centered campus in North Charleston. The takeover would bring thousands of jobs Clemson press releases said at the time. But Clemson internal documents obtained through the SC Freedom of Information requests reveal a financially shaky Hunley project and showed just how strong - and open-ended - Clemson's financial commitment would be. The documents show Clemson moving forward with the takeover even though it knew it was bringing cash to a financially uncertain venture

Clemson's takeover amounts to a bail out of the cash-strapped Hunley project, according to Clemson's own assessment. Although no one has publicly said so, the Hunley preservation project, once fat with state and federal grants, now has debts, Clemson records show. And they show that Clemson proceeded even though its assessment was that the sub's money sources were dwindling

Clemson as part of the takeover deal, would receive scientific assets worth at least several million dollars. It also would pay off more than $265,000 in Hunley debt. Clemson officials raved about the chance to get the Hunley, and its "show piece (conservation) laboratory" where it is housed in North Charleston. "It. (the Hunley project) is probably the only thing happening at Clemson, right now, that can get us an hour-long special on National Geographic or Discovery Channel". Joe Kolis, Clemson's Director of Special Projects wrote to top university officials in an August 25 e mail. Once it has the Hunley lab, Kolis said, it can start to preserve famous underwater artifacts from the American Revolution. "If that sort of project does not get us the national reputation points to move up to the top 20, then there is no other project at Clemson that will".

The need for money
Last year's Clemson's Kolis inspected the foundation's financial records and concluded that the Hunley is on financial thin ice. "The main source of problems for the Friends of the Hunley is that tour membership and gift shop income is dropping rapidly" wrote Kolis in an e mail to top Clemson officials. In a recent interview, Kolis confirmed through his inspection of the Hunley records, and estimated Clemson's yearly commitment to preserve the Hunley could be upwards of $800,000. Under the deal, the foundation will continue operating the gift shop at the lab and keep raising money on the preservation and promotion. Before the deal was signed Kolis told Clemson officials, if the Hunley project proves too expensive, the powerful McConnell can help. "I would rather take my chances that we get the senator to put some below-the-line funding in place for us for a year or two", Kolis wrote in an e-mail last August.

Under the Clemson - Hunley Commission contract, Clemson is supposed to have the Hunley Museum ready by February 2009. But the core work on the Hunley's long-term preservation hasn't begun. Similar projects of long-underwater ships in other states - the Monitor in Virginia and La Belle in Texas are taking 10 years or more to preserve. In fact, no one knows how long preservation will take. Kolis confirmed that uncertainty in an interview last week. much to the surprise of (President) Barker, who was not completely aware that preservation could take more than a few years.

Getting the cash
By September 8, Clemson had two of the three things needed for its new campus. It had 82 acres of North Charleston land. Now it needed $10.3 million from the state - that is the amount needed to upgrade the Hunley lab, buy more equipment and build the first stage of the campus. (Clemson would add its own $3 million to the $10.3 million from the state for a total of $13.3 million in cash). To win the money, the university must go before a panel and meet two conditions - have cash or assets to match the grant it is getting and show its project will spark jobs and economic growth.

The first condition, putting up matching money was easy, 82 acres Clemson had been given and the buildings on them, had a value of $18.5 million, according to a Clemson appraisal. That value more than matched the $10.3 million Clemson sought. To make the second condition, Clemson told panel members the campus would create up to 4750 new jobs over more than 20 years with an annual payroll of up to $286 million. The panel didn't question Clemson's numbers. No outside group vetted the numbers.

Job projections were developed by Clemson using standard economic formula projections, President Barker said in an interview. Clemson put the numbers forward despite internal documents that showed officials were wary. Inflated jobs-projection numbers came out earlier for the school's ICAR automotive research project in Greenville, and school officials were worried about looking overly optimistic. "Do not under any circumstances mention anything about a number of jobs created" Kolis wrote in an August 3, 2005 e mail to Jan Schach, the Dean of the College of Architecture, Arts and Humanities. Ask Chris about the horror stories he is still suffering from the "20,000" jobs that ICAR will create".

The takeover contract between Clemson and the Hunley Commission will take effect when the SC Budget and Control Board formally approves selling $10.3 million in state bonds to raise money for the campus. "We are as anxious to get this project started as anyone", President Barker said.

With no market study, sub museum risks sinking
Officials who want to build a $42 million Museum for the Hunley submarine in North Charleston haven't done feasibility site, and market studies that experts say a crucial to knowing whether the project will work. And if the dwindling numbers of visitors to other smaller Hunley exhibits are any gauge, it's possible the mostly taxpayer-supported museum might fail to draw sufficient visitors and wind up being a white elephant. At $42 million, the future Hunley museum will be among the most costly in South Carolina, above the $16 million Columbia Museum but below the $70 million Charleston aquarium.

Senator McConnell declined to answer questions about the museum. In the past he has said - apparently without any studies to support it - that one million people would visit a Hunley museum in its first year. Experts say no big museum-like facility should be built without in-depth market studies. Such studies would test the viability of a location, a project's cost versus expense, and the appeal of the subject matter. Most importantly, already a $3 million Hunley exhibition in one of the state's hottest tourism markets, complete with a full-scale Hunley replica and a gift shop has failed. In December, the Hunley exhibit at Myrtle Beach's Broadway at the Beach, closed two years into an anticipated 15 year run. Broadway at the Beach is a 350 acre tourist mecca that draws 12 million people a year.

North Charleston Mayor Keith Summey acknowledged no market studies have been done for a Hunley museum. An attraction, a special as the Hunley would draw enough visitors to get the museum launched, he said. After that, the right kind of marketing and advertising will take care of the rest. Summey said that the city is donating $50,000 a year to the Hunley preservation. The city has $3 million in hand to move forward with the museum's design, he said
.
Why north of Charleston?
The city of North Charleston had plenty of Lowcountry competition in its bid to be the Hunley's home. It offered what the other cities did not. Lots of land and $13 million in incentives. It was, McConnell said, the best financial package. Under North Charleston's plan, the state will pay $7 million, federal government $9 million, and North Charleston and Charleston County together $18.9 million. Foundations and grants are expected to pay $6.9 million.

A surprise to some
In 2004, the state Senate when McConnell was president pro tem, quickly approved the North Charleston site. In the House, Representative "Chip" Limehouse, who represents the Patriots Point area, got the museum resolution bottled up in committee. Limehouse thinks North Charleston is isolated from additional tourist centers and would attract a few visitors. He said he stalled the resolution to provoke a public debate. "When you build a shopping mall or a motel, you have a market research study", Limehouse said in a recent interview. "They look at things like demographics and traffic count". McConnell, reacting to Limehouse, sent a letter to all House members criticizing Limehouse. Later someone slipped' the museum resolution into a budget measure. It quietly passed both legislative chambers in 2004.

Your Comments:

Personally I think that this needs to be scrutinized further and IF wrong doing has taken place then someone needs to be prosecuted. Senator McConnell needs to answer some questions here ! This is murky at the least.

Posted by: Paul at May 18, 2006 03:31 AM

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