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County Council, June 2

Council wrestles with next move on I-526 extension
Concern over lower sales tax revenues and impact on Greenbelt program
Warwick Jones

Chairman Pryor made an effort to find a solution to the I-526 impasse at last night’s Finance Committee meeting. But Council seemed unenthusiastic and sought time to dwell on approaching the issue.

The Committee broke for an executive session to discuss I-526 and a letter from the SC Transportation Infrastructure Bank (SCTIB). Uncharacteristically of late, the session was probably for only 10 minutes or so. Chairman Pryor noted that the SCTIB no longer considered the County in default in relation to the June 7, 2007 Intergovernmental Agreement. (This agreement bound the County, the SCTIB and the SC Department of Transportation to accept a $420 million grant from the SCTIB and to complete the I-526 extension to James Island) In a letter to County Attorney Dawson, the SCTIB’s Counsel said the action by Council on May 17 to rescind the “No Build” conclusion to the project cures the past default.

That was the good news. The bad news was in the conclusion of the letter,

“Pleased be advised that the SCTIB does not waive and reserves all rights and remedies is has or may have to enforce the aforementioned Intergovernmental Agreement with respect to future or other actions or omissions by any party to that agreement.”

On the face of it, the County is back where it started. It can complete I-526 and comply with the terms of the agreement though still wrestle as to where it finds the estimated $69 million above the $420 million SCTIB grant to complete the project. Or it can go back to its decision to abandon the project and face the legal consequences of again going into default. At a minimum this would probably mean paying back the $12 million already drawn from the grant. Or it can negotiate with the other parties to the agreement for some resolution which we believe is likely to be a "compromise" still close to the original proposal for the I-526 extension.

Chairman Pryor is trying hard to bring closure to the issue. Lat night he suggested that the Country hire a consultant to conduct a scientific poll of a thousand citizens on their views on completing I 526. He said the cost was an estimated $22,000. Many Council members applauded his efforts to resolve the issue but many were not happy about a poll.

Council member Qualey wanted more time to dwell of the suggestion. Council member Condon took issue with the wording suggested by the Chairman. Council member Rawl suggested that a consultant should be hired only after an RFP had been issued. But even so he warned of the precedent. Is Council going to conduct a poll every time an important issue confronts it? Other Council members asked the same question. Some also added that the results of a “scientific” poll were still not enough to make a difference to their view.

Council member Summey concluded his comments with “What we know today is that we don’t know” He called for a true public process. He rejected a referendum but had no recommendation for what specifically should be done. Council member Johnson sort of concurred. “We don’t have a plan”. She also noted that she had been bombarded with telephone calls and e mails, and that they seemed equally divided between both sides of the issue.

Council member Schweers said the issue was hot button and the public should be informed if there were to be any vote.

Nobody made a motion in support of Chairman Pryor’s suggestion. But the issue is not going to go away and it has to be resolved. Expect more action at future Council meetings.

Issue over Greenbelt Funding
Most of yesterday’s meeting was taken up with budget matters relating to Special Purpose Districts, Capital Improvement Plans, Debt Management Plan and the Transportation Sales Tax Expenditures.

Only the latter roused much interest. Staff noted that sales tax revenues were lagging well below the level anticipated when projections were made some years ago. This had created a potential problem for the Greenbelt Program. A $90 million bond issue was approved in 2006 to finance Greenbelt creation. The interest and amortization of the bonds were to be met from the sales tax proceeds. But staff noted if there was not a substantial improvement in sales tax proceeds, the County should think twice about a second bond issue planned for this year as there may not be enough funds to meet interest and amortization obligations in 2018 and beyond. And if it did not move ahead with the bond issue this year, the Greenbelt program would have to be deferred until the closing years of the sales tax life.

The obvious question was why couldn’t the bond issue be deferred to beyond this year? The simple answer lies with the fact that the first bond issue was approved by the sales tax referendum. This referendum approval has a life of 5 years according to state law. Any bond issue relating to the sales tax after 5 years falls under the rules relating to General Obligation Bonds the issuance of which is capped at 8% of the assessable value of property in the County. It seems that GOBs under consideration by the County will take the total outstanding GOB limit close to 8% so staff was reluctant to suggest deferral.

Council was asked why the same problems did not affect the “roadwise” program. It did, Council was told, but there was scope to delay projects and spending to ameliorate the shortfall.

Staff also stated that they were obligated to tell Council of the pending problem even though it was not likely to surface some years hence. Yes, there were other things Council could do. It could meet any shortfall from the Debt Service Fund, it could raise the millage rate. It was also possible that sales tax revenues would recover and the problem would go away.

Council took no action.

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