By RON AIKEN
After Nerve story, penny group pays $26K in fines, fees for retroactive business licenses
When you’re caught with your pants down, step one is to pull them back up.
Just two days after The Nerve revealed that the contracting group hired to control the Richland County penny tax program – Richland PDT, LLC – had been operating illegally without business licenses since 2014, the PDT team spent $26,636 to retroactively purchase required business licenses from the City of Columbia for 2014, 2015 and 2016.
Step two is secure against future embarrassment, and on that score the the Richland PDT, which is comprised of M.B. Kahn, Brownstone and ICA (which is now Omaha, Nebraska-based HDR, Inc.), got a helping hand from Richland County’s Business Service Center with a decision to exempt the group from licensure in a ruling that defies the county’s own ordinances governing business licenses. The move saved the PDT additional tens of thousands in fees and fines and ongoing embarrassment, but experts reviewing the decision have significant questions about its legality.
According to the State of South Carolina/Richland County Ordinance No. 069-07HR, “every person engaged or intending to engage in any calling, business, occupation or profession … in whole or in part, within the unincorporated areas of the county is required to submit a completed application for a business license accompanied by the appropriate fees for the privilege of doing business in the county.”
The ordinance goes on to specify that regardless of where a business is located, whether in unincorporated Richland County or elsewhere, if it does any business whatsoever in Richland County, it needs a license. The only exemption the ordinance is if a business is a charitable enterprise. Otherwise, a license is required.
In a letter addressed to Ross Tilton, Program Administrator for the Richland PDT, dated Monday, May 23 (The Nerve‘s story came out May 18), Business Service Center Director Pam Davis concluded that that the PDT, which runs the Richland County Penny Tax Program in all of Richland County, does not need a Richland County business license.
“Thank you (Tilton) for taking the time to meet with me this morning. After considering the information you provided regarding the circumstances of this business, i.e., location of business, number of employees, and where business activity is conducted, I conclude that no Richland County business license has been needed in the past, and no Richland County business license is needed at this time.”
When questioned about this decision directly at a council meeting Thursday night by Richland County councilman Seth Rose, Davis wrote him an explanatory letter with the heading: “Why Doesn’t the Richland PDT Need a Business License?”
In a copy obtained by The Nerve, Davis acknowledges that any business located in or operating in Richland County needs a license. Davis further acknowledges that Richland PDT is located in the City of Columbia, which is why it needed a City of Columbia business license.
However, Davis makes the leap to say Richland PDT does not need a license because, she wrote to Rose, “According to the Richland PDT Program Administrator, Ross Tilton, the Richland PDT has NO (author’s emphasis) employees. Therefore, the legal entity called Richland PDT, a Joint Enterprise does not itself conduct ANY business operations.
“On this basis, the Richland PDT does not need a Richland County business license.”
Business license experts, local contractors and county government employees say those reasons do not make sense.
“There is no language in our ordinance for number of employees having anything to do with a license or the definition of a business,” a business license inspector with Richland County who did not want to be identified told The Nerve.
In the ordinance, the definition of “business” is “a calling, profession or activity engaged in with the object of gain, benefit or advantage, either directly or indirectly.”
The Nerve gave a copy of Davis’ letter to a current county employee with knowledge of penny tax operations and the original PDT contract to look over. He said that the idea that Richland PDT has no employees is “ludicrous.”
“The original contract lists seven people as the PDT leadership team with titles and everything,” he said. “Clem Watson, David Beaty, Dale Collier, Jennifer Bragg, Anthony Lawrence and Ross Tilton. They’re right there in the contract,” the source said. “They’re paid with PDT funds directly. Seriously, if you look at (Davis’) letter to Ross, right there on the letter she uses his official PDT title, not his M.B. Kahn title. The letter disputes itself.
“I’m flabbergasted that the county and Pam (Davis) would try this. If there’s no employees, why did the county pay $500,000 to set up the PDT’s business at Arbor Lake Drive with 20 individual offices for engineers and program managers, construction managers, you name it. I guess none of those positions were filled?
“And why, if the PDT has no employees, is the PDT paying five people $1,200 a month for a car allowance?”
Any potential argument that the PDT does not need a Richland County license because it has not yet performed work in unincorporated Richland County isn’t accurate, according to Armstrong Contractors president Mike Armstrong, a Small and Local Business Enterprise contractor with the Richland County.
His firm just broke ground on a paving project on Jouster Road near Elgin in unincorporated Richland County and told The Nerve Thursday afternoon that PDT inspectors have been on site monitoring progress every day since work began earlier this month.
“The PDT folks who oversee the whole job have an engineer on staff who is with us every inch of the way,” he said.
The Richland County source who saw the letter said the most obvious question has no answer.
“How can Richland County admit the PDT does need a license for Columbia if they have no employees, but not for Richland County?,” the source said. “I mean, ‘ding ding ding!’ Either you admit it’s a business that needs a license or you don’t.
“They’re an LLC. They file taxes. They collect money. They’re registered with the Secretary of State. I think this will come as a shock to the rest of the Columbia business community who pays for those fees. They can’t be very impressed with this decision. This is the one group who is getting – heck, who has already gotten – more money from Richland County than any other business in county history, and they don’t have to pay any business license fees based on that revenue.
“And all because Richland County is taking the word of Ross Tilton that there are no employees? Tilton is on the PDT team and signs the PDT’s application for checks from the county as the PDT’s ‘construction manager.’ Of course he’s going to say they don’t need one. It’s crazy.”
The Nerve reached another contractor in Columbia who maintains a business license from both the county and city with experience watching county inspectors shut down businesses operating without a license.
“When the flood hit, we were working alongside companies coming in from Ohio, from Alabama, from Washington state, from all over,” said William Hinson, owner of SERVPRO of Richland County. “Some weren’t legit, but the ones that were, they got business licenses because they knew they had to. The ones who didn’t, inspectors shut down and made them leave.
“I don’t know about the penny tax group, but as a general contractor, if I come to your house and do work, if I don’t have a license, you don’t owe me a dime.
“If I have to have (a license) for mine, you should have to have one for yours. It spreads the cost out. If they waive theirs, they need to waive mine.”
A larger contractor who has had work with the county and maintains licenses in multiple counties and municipalities across the state said the PDT claiming its exempt and Richland County going along with it doesn’t seem fair.
“Does that mean (the county is) going to waive(the license) for all the highway contractors, the primes and the 10-20 subs, too, doing work under the PDT?,” he asked. “What about the concrete finishers, grassing and seeding, guard and rail, road striping, paving, earthworks, tree clearing?
“If you don’t collect the revenue from the business license fees from the business the subs, how can you charge the subs, too? Business licenses are a huge generator of revenue. As a small business, I have to bust my tail to pay those fees all over the state. I say if the PDT isn’t paying, then everyone on that job site shouldn’t have to pay. What’s fair for one should be fair to all.”
For the Richland County source, the entire scenario paints a poor picture.
“First they didn’t know they needed a license until it comes out in the press, then they scurry over with their tails between their legs and get one,” the source said. “Then instead of doing the right thing and getting one from the county for whomthey’re named, the county who funds the entire business, they convince the county takes the word of a PDT member that they don’t need one.”
“It would be a comedy if it weren’t a tragedy.”
Reach Aiken at (803) 200-8809. Email him at email@example.com. Follow him on Twitter @RonAiken and @TheNerveSC.