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County Council, May 15

Country to lease Naval Hospital for social services hub
Courtenay Drive property to be sold to MUSC for Children’s Hospital
Warwick Jones

The sale of the County’s property on Courtenay Drive and abutting MUSC had been considered for some years. A number of agencies occupy the buildings. To construct another building to house the agencies and others to which they were allied, would have cost an estimated $34 million. This was more than the County could afford. But the sale, and the solution to better locating the agencies, became possible when the County was offered a lease over space in the old Naval Hospital.

Last night, accompanied by the enthusiasm of County Administrator Taylor and others, Council approved the sale of the Banov/Charleston Center to MUSC at its appraised value of $14 million. It also approved the lease of 92,921 square feet of space at Chicora Gardens a.k.a. old Naval Hospital, for a 25 year term. The lease price was not reported. The owner of the building has agreed to spend up to $1.6 million on renovation preparatory to occupation.

The enthusiasm for the dual deal was shared by the entities that would be moving into the new building and vacating that on Courtenay Drive. Tenants that would be relocated include DAODAS, Banov Health Department, Whipper Barony Health Clinic, the County Coroner and Vital Records. New tenants would include services relating to veterans and child health. Fulfilment of the County’s plan would make Chicora Gardens a social services hub within the County.

One speaker noted that the new building would make it much easier for “clients” to be served. The services were presently spread over a number of locations and often in areas poorly served by public transport. A single location and well served by public transportation would make it easier for these “clients” to receive service. MUSC representatives also spoke with enthusiasm for the sale. The acquired property would be used to expand the Children’s Hospital.

Council member Summey also noted that the move could help plans by North Charleston to advance its Shipwatch Square project. The Square fronts Chicora Gardens and has been held back by the reluctance of a “big box” grocer to participate in the development. The patronage of a grocery store is likely to be much higher with Chicora Gardens tenanted, and attracting patients and “clients”. The purchase of the Naval Hospital property from the City of North Charleston also carried an obligation to provide for a grocery store, either on the property, or on the property across the road, according to newspaper reports. The presentation by the County last night also noted the possibility of a store on the Naval Hospital property site.

The Naval Hospital became redundant with the closure of the naval base some 20 years ago. The General Services Administration sold the building to the City of North Charleston in 2012 and the City sold it to an investment group and the present owners early this year.

Not all Council members were enthusiastic about some aspects of the deal approved last night. Council member Qualey noted that there really were two deals. He had no criticism of leasing space in Chicora Gardens and relocating services. But he thought that the sale of the property on Courtenay Drive should have been put out to bid. Maybe the County could have received a higher price. He also noted that MUSC, as a non-profit, did not pay taxes. We think the Council member has a point but we also note that the sale price was an independent appraised value. It was not a bargain sale. Chairman Pryor also noted that there was a gentleman’s agreement with the hospital that it would be given the right of first refusal if the County considered the sale. He acknowledged that this agreement existed before his time. But even if the County were to recognize this agreement, it did not preclude the County from seeking bids, in our view. It is possible that some Council members may have shared Council member Qualey’s view but they remained silent. Maybe a higher price could have been achieved. But who wanted to stand in the way of expanding the Children’s Hospital?

Other items discussed last night included a fee in lieu of taxes (FILOT) program to aid expansion by IFA/Rotorion North America LLC. The company makes transmission parts for the auto industry. It plans a $21 million expansion and which will lead to the employment of an additional 125 persons. The FILOT scheme will freeze property taxes at the 6% level for 25 years. Without the FILOT, property taxes would have been levied at a 10.5% rate.

Council member Darby questioned as to why the County was giving up revenue. Staff noted that the 10.5% rate was high by comparison with other states. To attract major industry, the County needed to offer the FILOT scheme, staff said. And indeed, some states offered a tax free incentive. Council member Summey noted that South Carolina’s high property tax for industry was a left over from Governor Tillman’s days when he attempted to preserve the state’s agrarian predominance. Columbia has not moved to reduce the high tax rate but has allowed counties and municipalities to use the FILOT scheme to attract manufacturing investment.

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