The Price of Liberty is Eternal Vigilance

The Watch


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City Council, February 9

Mayor yields on budget process, but not on televising Council meetings
Tenants for J.S. Tennant House at last, questions on bond issue
Marc Knapp

We have often expressed concern about the budget process of the City - the lack of information and the very limited time that Council members have to consider the budget document before voting on it. But after the prodding of some Council members and particularly from Council member Gregorie, things have changed. In a letter to Council members tabled last night, the Mayor has made a number of recommendations that will open up the budget process and allow more scrutiny. Council embraced the recommendations. The Mayor suggested:

• Three new budget execution review sessions will be held during the year and will; be used to answer in details all questions on the 2010 budget

• The First 2011 budget workshop will be held on November 16 for 1.5 hours and a follow up budget workshop will be held a week later

• The first reading of the 2011 budget will be December 7 and the 2nd and 3rd readings on December 21.

The Mayor concluded in his letter that “the additions I have proposed will make a sound process even better. Mr. Bedard (the CFO) recommends and I agree that all and not a subset Council members have the expanded opportunity to actively participate in this expanded activity. The process detailed here is a strong and effective move forward”

We agree! We also hope that the new process will be followed in subsequent years though perhaps shaped for the better in the light of the experience of this year.

Need for televised meetings splits Council
The Mayor acceded easily and graciously to the requests for more light on the budget process. But he was resolute in his opinion about televising Council proceedings. It would be too costly.

Council member Gregorie leads the charge to televise Council meetings. The issue was addressed on two occasions earlier this year and again last night. Staff told Council that that considering the seating arrangements in the Council chambers, 3 cameras would be required. The cost of setting up the cameras and modifying the audio system would be about $125,000.

Council members noted that only one camera was used in televising meetings of other municipalities. But the Mayor said that these meetings were held in modern building and where the Council members sat at a linear or curve-linear table. Charleston’s chamber was one of the oldest in the County and could not be set up that way without compromising the historical integrity. (And the Mayor could have said he was not about to do it)

Council members Alexander and Wilson were skeptical about the need to televise Council proceedings. They never were asked by constituents to have proceedings televised. If citizens wanted to see proceedings, they should attend, Council member Alexander said. This drew a hostile response from Council member Gallant who said he had constituents who were interested but many were old or handicapped, and unable to make the meetings, an observation endorsed by Council member Gregorie.

The issue still remains unresolved with staff continuing to provide more details of costs and issues. A recording of a mock meeting in the Council chamber using only one camera is to be distributed to Council members for review for quality. Another issue is the ability for all citizens to access the televised proceedings. Comcast has an obligation, through its franchise agreement with the City, to televise proceeding for no fee but using only 1 camera. It if did televise proceedings there would need to be an arrangement with other cable operators to broadcast to citizens not serviced by Comcast.

Another chapter in the unhappy history of the JST Building
Council voted unanimously to approve the leasing of the 3 floors of the Josiah Smith Tennant House. And indeed there was no reason why they should have opposed the move. The City owns the building, the floors were vacant, and the tenants, the Trident Urban League and the South Carolina Association of Community Development Corporations were worthy non profit organizations.

We were tempted to remind Council of the history of the building and the expensive failure of the City and the previous occupant to realize the building’s promise. The City gave the building to the non profit Elpis some 17 years or so ago. It was to provide the anchor for the development for social services, for the East side community in particular. The non profit received a number of grants from the City, largely if not exclusively HUD monies. As well, it received considerable private donations, helped by the high-profile individuals that sat on the Elpis and associate boards.

Charlestonwatch has written frequently on Elpis and the building. We noted that some $5 million was received by Elpis over the years in grants, donations and bank funding. This had allowed the renovation of the building but the social services to be provided were missing or barely apparent. Residents of the Eastside, who we questioned about the services, just shrugged their shoulders, or worse.

We expect the City would like to sell the building. It is a fine historical building and seemingly well restored. But it has been the recipient of over $1 million in HUD funds. This complicates any possible sale for if it is sold for commercial purposes, all of the HUD moves become repayable, we understand.

The combined rents of the tenants amounts to $5800 a month or about $70,000 a year. This compares with the City’s notional purchase price of the building of $1.4 million. The City took over the building to satisfy a bank debt. We guess that the rent would barely cover the notional interest.

We ask questions on the $2.1 million proposed bond issue
I was the only speaker at the Public Hearing on the proposed $2.1 million Accommodation Tax revenue bond. The City at its last Council meeting indicated that it planned to make the bond issue to finance restoration of the City markets. Council members were also told that income derived from the City markets was expected to be more than sufficient to meet interest and amortization payments. But the bond was linked to the Accommodations Tax to provide greater security for the bond holders.

I asked why the interest rate, at 6.2%, was so high and why wasn’t the interest, tax free like other municipal bond issues. Unusual, the Mayor responded immediately and drew also on City Attorney De Saussere. The interest was state-tax free for investors resident in South Carolina but it still bore a Federal liability. The Federal liability remained because a private entity (the company managing the market) would be an indirect beneficiary.

We won’t dispute the legal opinion but we find it hard to accept the high interest rate. I would have assumed a rate of about 4.5% would have been more appropriate in this market. But according to the Mayor, the City approached a number f local lending bodies and all baulked at the bond, bar one, the Bank of America. It was the only body to agree to a 20 year term and that was its rate. Take it or leave it! The City will take it.

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