Charleston County Doesn’t Owe $11.6 Million to Infrastructure Bank, Lawyer Says

October 12, 2012

Investigative Reports

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I-526Charleston County won’t have to repay $11.6 million to the State Transportation Infrastructure Bank if the county scraps the controversial Interstate 526 extension project, says a lawyer representing an opponent of the project.

The money was spent on buying rights-of-way, and for engineering and environmental studies. The county received the money from the Infrastructure Bank, which contends the county would have to repay the amount if it doesn’t complete the project.

County Council last year voted against extending the highway but reversed itself after the STIB threatened to seek repayment of the $11.6 million.

A Charleston attorney representing the Coastal Conservation League – a long-time opponent of the project – contends that the county wouldn’t owe anything to the STIB if it passed on the project; and that instead, the S.C. Department of Transportation would be responsible for repaying the amount.

Chris DeScherer, an attorney with the Southern Environmental Law Center, sent a letter outlining that position to the Conservation League, Infrastructure Bank, Transportation Department and County Council last week.

The Transportation Department purchased rights-of-way for the project for a total of nearly $6 million, and it “is worth noting that the properties at issue were purchased by the DOT in the DOT’s name – not the County’s,” according to the letter, a copy of which DeScherer provided to The Nerve.

“It’s my opinion that the county can make a compelling argument against paying back the $11.6 million,” DeScherer told The Nerve.

DeScherer believes that the default claims are unfounded threats that project proponents are using to push the project forward.

“Some folks may agree with me and some may not, but that’s my opinion,” he said. “The county has a very robust argument against paying the money back.”

The Nerve this week sought comment from Transportation Department and STIB officials, but they either declined to comment or didn’t respond.

County Council members contacted by The Nerve had strong opinions about DeScherer’s position.

“That’s (DeScherer’s) legal opinion; you can put out five different lawyers and get five different opinions,” said Teddie Pryor, the council chairman. “If he feels so strongly about it, have them put up the $11.6 million.”

In an editorial Thursday in The (Charleston) Post and Courier, Pryor wrote that “since the (Coastal Conservation) League is confident that there will be no consequences for halting the project, I would welcome their pledge to reimburse the citizens of Charleston County the $11.6 million amount.

“Somehow I doubt that pledge will be forthcoming.”

Elliott Summey, County Council’s vice chairman, told The Nerve that the county’s contract with the STIB says that the county would be responsible for repaying the money should it drop the project.

“All right Conservation League, put your money where your mouth is,” Summey said. “My opinion on lawyers and consultants – you can pay them to tell them whatever you want to hear. The contract lays out specifically that we would have to pay the money back.”

According to Section 8.4 of the contract, whenever a default occurs, the county must repay the STIB.

“The county shall pay the bank…fees and expenses incurred by the bank in…an event of default,” the contract reads.

It goes on to say that if the county or DOT fails to repay the owed amount, the state treasurer, can freeze funds to the county or DOT and use that amount to complete payments to the bank. Because the South Carolina Transportation Commission, which governs the DOT, voted last month not to take over completion of the project, Charleston County would be the only potential debtor, according to Summey.

Still, not all county council members think they’re on the hook for the $11.6 million.

Council member Dickie Schweers told The Nerve that some council members’ statements about the consequences of defaulting are just “saber-rattling.”

“I have said it all along – just because the SIB says we’re in default, doesn’t mean we are,” Schweers said. “That’s their opinion. I think the determination would have to be made by a judge.”

I-526, or the Mark Clark Expressway, is a near-20-mile half circle that stops at the Savannah Highway in West Ashley on the west end of Charleston, and at U.S. 17 on the city’s eastern side near Mount Pleasant. Charleston County proposed to expand the road to the James Island Connector by adding eight miles and extra lanes.

Supporters of the project, which has been planned and discussed since the 1970s, say that the road would clear up traffic problems and encourage safety. Opponents contend it would harm the environment, and that the state has more urgent road needs.

County Council members said they plan to wait three to four weeks to get the Transportation Department’s official notice of rejecting completion of the project, and to hear back from the county attorney on legal options.

Reach Legette at (803) 254-4411 or derek@thenerve.org.