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Senator Proposes Putting Himself on SCRA Board

One of the state’s most powerful lawmakers has authored a bill that would put himself both on the board of trustees and executive committee of a little-understood, state-controlled technology and real estate company.

Sen. Hugh Leatherman, R-Florence and chairman of the budget-writing Senate Finance Committee, told Finance Committee members last week that he and his counterpart on the House Ways and Means Committee should serve on the S.C. Research Authority board to gain a better understanding of the organization.

“Frankly, that’s one of the reasons we’re proposing to put Ways and Means and Finance on there – to give us some access to find out what’s going on there with them, what’s actually happening,” Leatherman said.

The committee voted to recommend Leatherman’s bill (S. 1331) with a favorable report to the full Senate, which quickly passed the legislation last week and sent it to the House, easily meeting a bill-crossover deadline.

Leatherman's bill, introduced on March 14, would allow the chairmen of the Senate Finance and House Ways and Means committees ( Rep. Brian White, R-Anderson, chairs Ways and Means) to serve on the 24-member Research Authority board of trustees, as well as on the board’s executive committee, which would be expanded from seven to nine members under the proposal.

The bill also would add the SCRA to a list of a state boards and commissions that lawmakers can join. Generally, S.C. law prohibits lawmakers from serving on non-legislative state panels.

Adding Leatherman to the SCRA board and executive committee would give him an even greater role in economic development projects statewide, as the Research Authority is among 11 state agencies represented on the S.C Coordinating Council for Economic Development, which doles out tens of millions annually primarily in local infrastructure grants to help attract industry or to help specific companies locating or expanding in South Carolina.

As a member of the S.C. Budget and Control Board and chairman of the state Joint Bond Review Committee, Leatherman has a big say in the issuance of taxpayer-backed bonds for economic development projects. He was a key player, for example, in approving a $270 million bond package for the Boeing Co.'s assembly plant in North Charleston.

Currently, the Senate Finance and Ways and Means chairmen each can appoint a designee to serve on the Research Authority board and executive committee, though they can’t appoint themselves. Under state law, other board members include the presidents of the state’s three research universities – the University of South Carolina, Clemson and the Medical University of South Carolina – the governor or her designee, and the Commerce secretary or his designee.

Besides giving him direct oversight of the Research Authority, Leatherman through his bill also would ban the SCRA from committing the “credit and taxing power” of the state. Research Authority attorney George Wolfe told Finance Committee members last week that any legal claims against SCRA would be limited to the authority and would not involve the state, under the proposal.

“The Research Authority is a corporation established by the state,” said Wolfe, a partner in the Columbia-based Nelson Mullins law firm and chairman of the firm's Economic Development Practice Group. “It is not the state itself.”

The taxing-power language is identical to wording in a House bill (H. 3743), introduced in February 2011 by House Speaker Bobby Harrell, R-Charleston, though the House version wouldn’t allow the Senate Finance and Ways and Means chairmen to serve on the SCRA board and executive committee.

Harrell’s bill has not moved out of Ways and Means.

Before last week’s affirmative vote on Leatherman’s bill, two Finance Committee members raised questions about the accomplishments of the Research Authority, which was chartered in 1983 through legislation.

The authority’s mission, according to state law, is to “enhance the research capabilities of the state’s public and private universities, to establish a continuing forum to foster greater dialogue throughout the research community within the State, and to promote the development of high technology industries and research facilities in South Carolina.”

“What have you been doing lately for the state of South Carolina?” Sen. Harvey Peeler, R-Cherokee, asked Wolfe.

Wolfe said the Research Authority works on “taking research that’s been developed” to “commercialize it.” As an example, he said SCRA worked with BMW in the Upstate to improve technology that allows methane gas from a nearby landfill to be used to help power a “significant part” of the company’s facilities.

Wolfe also said the Research Authority, through its affiliate known as SC Launch, has “put significant resources in support”of start-up technology companies. What he didn’t mention, however, is that SC Launch is funded entirely – to the collective annual tune of $6 million – with dollar-for-dollar tax credits offered to corporate and individual contributors to the program.

Although SCRA does not receive direct state funding these days, when it was created, the Legislature provided it with $500,000 and about 1,400 acres of undeveloped land, estimated at the time to be worth $10.7 million. The Research Authority has received other land grants since then.

It also is exempt from paying income, sales and property taxes.

SCRA touts, through a USC study paid for by the authority, that it had a $1.4 billion impact to the state’s economy last fiscal year. But nowhere in that study or in the authority’s fiscal 2011 annual report does it give any detailed list of S.C. companies it helped to launch or grow, or provide specifics about the number of jobs created at those companies.

Last year, Bill Mahoney, SCRA’s chief executive, told the Ways and Means Committee that about 30 percent of the authority’s work is in-state, and that the remaining 70 percent “take place across the globe.” Under its enabling legislation, the Research Authority is supposed to, among other things, "promote and encourage expansion of the research and development sector, with emphasis on capital formation and investments in research and development within South Carolina."

Mahoney also said then that SCRA directly employs about 220 people, about 70 percent of whom work in South Carolina.

SCRA’s gross revenues last fiscal year were expected to be about $180 million, most of which was derived from research and commercialization contracts with the United States military and large defense contractors such as Boeing, Lockheed Martin and Northrop Grumman, Mahoney told the Ways and Means Committee last year. The fiscal 2011 annual report, which came out later, listed total revenues at $195.2 million.

The House panel appeared then to be largely unaware of what the SCRA does. Some Senate Finance Committee members seemed to be as just in the dark last week.

Sen. Kevin Bryant, R-Anderson, asked Wolfe for a “one pager” listing SCRA projects with “some figures.” (Bryant was one of two senators who later voted against the bill when it reached the full Senate.)

Added Leatherman, “I think we will be surprised when we get that."

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.

 

Legislative Power Trip SCRA Legislation Incentives Higher Education General Assembly Economic Development

Sen. Kevin Peeler House Speaker Bobby Harrell Sen. Harvey Peeler Sen. Hugh Leatherman Rep. Brian White