County to Citizens: ‘Work Harder’

September 24, 2013

Inside Insight

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Hampton Inn hotel- Seneca

The redistribution of wealth is alive and well in the Upstate .

At the September 17th Oconee County Council meeting, the council voted 4 to 1 to extend a 20-year, $50,000 a year tax credit to Serene Hospitality, LLC, owner and developer of a Hampton Inn hotel located in Seneca. The council also granted the company a FILOT (fee in lieu of tax) agreement. All this for a $10 million investment.

Let’s back up to the beginning of this deal.

Sanjay Desai, owner/member of Serene Hospitality, LLC, held a 30 percent membership interest in Clemson Grande Lakefront Condominiums, LLC.  In 2007 that company purchased the Lake Hartwell Inn property in the City of Clemson to build the Clemson Grande Lakefront Condominiums.  The project was never built. The corporation had a contentious relationship with the City of Clemson, with city officials urging the corporation to clean up the site and progress with construction – to no avail. Four years later and construction not even started, the corporation filed for Chapter 11 and on November 11, 2011 the bankruptcy order was filed, leaving a long list of creditors in its wake.

By April 25, 2012, Sanjay Desai, had formed a new corporation in the name of Serene Hospitality, LLC, and by June 25, 2012 had secured $1 million in public funds from Oconee County, and another $1 million in public funds from the City of Seneca. By September 26, 2012, funds were deposited into a bank account for Serene Hospitality, LLC to use to pay construction bills on the Hampton Inn being constructed within Seneca.

In our research, we were unable to find whether a cost-benefit analysis was done. In any case, one was not given to all of the Oconee County Council members for their review before making any decisions on the use of taxpayer’s money. The county’s Ordinance 2012-17, which lays out this project for approval, specifically states that the “county has determined the project would benefit the general public welfare of the county by providing service, employment, recreation or other public benefit not otherwise provided.” The City of Seneca, located within Oconee County, has at least three hotels already. So, at the County Council meeting on September 17th, resident Brit Adams asked the question: “What is the benefit or service being provided to the general public that is not already available?” No answer was given.

The Ordinance further stated that “the benefits of the project will be greater than the cost.”  Again, how do you know this if no cost-benefit analysis was done?

Brit Adams asked Paul Corbeil, member of the County Council, “How can you use taxpayer money to fund a private developer who will be in direct competition with already existing hotels? Does this not put the other businesses at a disadvantage?” His response: “They’ll just have to work harder to do a better job.”

Wow.

In another public statement made by Mr. Corbeil on September 14, 2013, he said, “There are no Oconee County general funds or economic development dollars being paid to the developer of this property.”  He was corrected at the September 17th County Council meeting: indeed the funds did come from the Economic Development fund.  Mr. Corbeil stated he was wrong on his previous statement.

It took four citizens to gather extensive research on this project in less than a week, while the county had fifteen months. It’s obvious to these four citizens that Oconee County did not do their due diligence on this project before committing taxpayers’ money. This is a project that:

  • competes with already existing businesses;
  • had no cost-benefit analysis done, or at least not one that was distributed to Council members;
  • provides no “new” service or benefit to the general public; and
  • is closely connected to a developer/owner who, in a previous project, failed to deliver on a deal involving public money and instead steered the project into bankruptcy, leaving only creditors in its path.

Although, partnerships of this kind are legal in the state of South Carolina thanks to the Budget and Control Board opening that door in February 2010, a question still remains in the minds of many citizens: Is this right or not? Is the use of taxpayer money to prop up private businesses a legitimate use of government funds?

Oconee County is now trying to pass a referendum to add on a 1 percent sales tax increase on the ballot next year for “Special Projects.”  The County Council has already spent millions of dollars of taxpayers’ money on a county-wide broadband system, a private subdivision development, and now a hotel – to name only a few.  What’s next? Do they want to go into the restaurant business and compete there as well?

All this is worth thinking about for citizens of Oconee County – and indeed to citizens of the state’s other 45 counties – as you drive over potholes because the county (or the state) doesn’t have the money to cover road maintenance. Is this the reason you voted for your elected officials – so they could play investment banker with your dollars?

Editor’s Note: Judy Adams  of Seneca is a Citizen Reporter for The Nerve.