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County Council, March 19

CARTA loan of $7.6 million forgiven
Council member Rawl unhappy about mutual assistance agreements
Warwick Jones

Differing from most meetings this year, that of the Finance Committee last night was lively. The issue of forgiving a $7.6 million loan to CARTA was divisive, as was a 5-year tax abatement extension for Greenridge Properties LLC. County Sherriff Cannon was also taken to task by Council member Rawl over his department’s “assistance operations” outside the County but it seemed that few or any other Council members shared his ire.

The origin of CARTA’s $7.6 million liability to the County is complex. It was seeded some 12 or 13 years ago when it took on debt to finance operations. The debt grew in 2006 when CARTA mortgaged its maintenance facility to gather funds largely for equipment purchase. In an attempt to aid CARTA in meeting its financial obligations and necessary capital spending, Council allowed it to draw more than its 18% entitlement from the County’s half-cent sales tax but with the understanding that the over- draw would be paid back from future entitlements. This proved to be a forlorn hope, and continues to be.

The Committee last night was asked to forgive all of the $7.6 million liability. And it agreed to, though not without debate and division. Council members Schweers, Sass and Qualey were opposed but in the minority.

The Committee was told that CARTA is financially stretched and is incapable of meeting its commitment to the County, maintaining its current level of operations, and funding a capital replacement program. Chairman Summey, also the Chair of CARTA, told the Committee that the liability to the County impeded CARTA in its ability to gain grants from Federal and State sources. These grants were necessary for CARTA to remain viable.

Council member Schweers was the most vocal of Committee members in opposing the bail out. He noted that he was a member of the CARTA board some years ago and was surprised at the lack of action at that time to address the entity’s underperformance. He noted that buses ran on routes that were barely used. It was common to see buses with no passengers. The Council member clearly thought that CARTA had done little to improve its lot.

Chairman Summey scoffed at these remarks and although he did not refute the observations of Council member Schweers of some years ago, he took strong issue that problems were not being addressed presently. He noted a study underway by the COG/CHATS on routes which potentially could lead to major changes. There were also agreements with the Cities of Charleston and North Charleston to undertake new initiatives. That with North Charleston was announced yesterday and related to the takeover by the City of CARTA’s planned intermodal transportation hub. The cost of this development is projected at $14 million. Also, CARTA has agreed to sell its Dorchester Road property to Rushmark Properties LLC for $6.5 million. Part of the proceeds will be used to repay a $1.7 million debt over the property. Chairman Summey also noted other successful initiatives such as advertising on buses, revenues from which were running at about $800,000 a year compared with $130,000 some years ago.

Perhaps the most significant comment from Chairman Summey was the need of CARTA to replace its aging bus fleet and to address the demands made on the group by the rapidly growing population of the County. To do these things, it needed Federal and State grants, amongst other things. And with a debt of $7.6 million to the County hovering over it, and conspicuously in arrears, its success in getting grants was severely impeded.

Council member Johnson thought the City of Charleston would implode under the pressure of more cars brought about by the expected population increase. It seemed that she thought that the situation could only be saved by the expansion of CARTA. Predictably, she supported the loan forgiveness. Council member Darby also supported the forgiveness but asked an indication from Committee members as to whether they had taken advantage of a CARTA service. It seemed that only Chairman Summey raised his hand. Council member Darby suggested that Committee members ride the service to get a better idea of some of the issues.

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The Consent Agenda usually contains small and non-controversial items. Most times it is approved with minimal or no discussion. But it seems one item riled Council member Rawl – it was the “Sheriff/Law Enforcement Assistance and Support /Myrtle Beach”. We have seen such items many times on City and County agendas and typically they relate to mutual agreements between the County/Cities and entities in other Counties, to provide aid and assistance in times of emergency, or in operations that were mutually beneficial. That with Myrtle Beach was little different.

We’d opine that the Finance Committee would normally agree with such an arrangement with little ado. But Council member Rawl must have signaled his displeasure to the Committee Chair for yesterday’s proceedings began with an address by Sheriff Cannon on these inter jurisdictional arrangements.

Sherriff Cannon spoke of the typical arrangements that his department had with entities outside the County. These entities also included Federal agencies such as the Department of Homeland Security. He noted that when Hurricane Hugo struck Charleston, many of the surrounding counties and municipalities provided assistance without it being requested. There now were agreements in place for the mutual provision of assistance when needed. The Sheriff also noted the cooperation with other law enforcement agencies in important activities such as drug busts. These actions may occur outside the County but the County in a sense was still a beneficiary. He also noted that the experience gained by County law enforcement officers was invaluable.

Council member Rawl thought that if the County could provide personnel for these actions outside the County, then the Sheriff’s department was overstaffed. He questioned whether the County should take on the role of Homeland Security, and Immigration and Customs.

Apart from Committee member Condon, no other member of the Committee had questions for the Sheriff. The Consent Agenda, when it came up, was passed unanimously.

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The issue of a tax abatement extension for Greenridge Properties was confusing and strange. It seemed to us that a number of Committee members were also confused and indeed troubled by the issue but in the final vote, only two, Committee members Schweers and Qualey opposed the extension.

KST Holdings was granted a 5 year tax abatement some years ago and it has now expired. Last year it sold its assets to Greenridge Properties LLC for $3.6 million. The principal asset was a property on Carolina Commerce Parkway. Kaliban Inc, a tenant of Greenridge, has agreed to retain the 113 staff members of KST. What is strange in our opinion, is that under State law, and after meeting certain requirements including the new investment of $50,000, Greenbridge can now apply for a 5 year extension of the tax abatement.

Economic Development Director Dykes recommended that the County approve the extension on the basis of the economic benefit derived the transaction. The County will forego $88,452 in tax revenue over the 5 year period but thereafter accrue about $18,000 annually. However, other entities such as the City of North Charleston and the School District will receive an aggregate of $434,000 over the 5 year period and will be unaffected by the tax abatement.

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