House Panel Undercuts Input on Sembler Bill

May 3, 2010

Investigative Reports

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The NerveProposed handouts on behalf of South Carolina taxpayers to a politically connected out-of-state company to build an upscale shopping mall in the Lowcountry have been like the proverbial Energizer bunny this legislative session.

A bill to grant the giveaways to the Florida-based Sembler Co. keeps (you know the rabbity slogan) going and going and going.

Most recently, however, a bright spotlight that has been illuminating the path of the legislation got unplugged, or at least dimmed.

Not literally. But it is safe to say that an S.C. House subcommittee meeting last week, during which a raft of changes were made to the bill, was not exactly publicized with all the fanfare of, say, a recent tax day Tea Party rally on the grounds of the state Capitol.

But given how much interest the bill has generated, and how controversial it has been, the subcommittee should have made a better effort to give people an opportunity to attend the meeting, says a well-known South Carolina legal expert in open-government issues.

“It just doesn’t seem appropriate,” Columbia attorney Jay Bender says of the subcommittee’s notification of the meeting, provided at the last minute with almost no lead time.

Bender’s clients include the South Carolina Press Association. The Nerve’s parent organization, the South Carolina Policy Council, is an associate member of the Press Association.

Although the subcommittee meeting received virtually no pre-publicity, a green contingent of a broad-based coalition opposed to the Sembler bill plans to put the spotlight back on it tomorrow.

Tuesday is legislative lobby day for the state’s conservation community, and many of its members plan to be out in force at the State House urging lawmakers to act for clean energy and other issues – and against the Sembler legislation.

“We’ll talk about it whether there’s an action item (on it) or not,” says Dana Beach, director of the Coastal Conservation League, one of South Carolina’s most respected environmental groups.

The goings-on with the Sembler bill last week unfolded late Tuesday.

Serving Notice?

A subcommittee of the House Ways and Means Committee had posted notice that the panel would meet 1.5 hours after the House adjourned that day. On the subcommittee’s agenda: the Sembler legislation and two other bills.

Sponsored by Sen. Clementa Pinckney, D-Jasper, the Sembler measure had cleared the Senate and now it was the House’s turn to consider it, beginning as usual at the subcommittee level.

But the House was in session as the day is long Tuesday, not adjourning until 6:30 p.m.

So, right before the chamber called it a day, Rep. Bill Herbkersman, R-Beaufort and chairman of the subcommittee, took to the floor of the House and announced that his panel would convene immediately after adjournment.

So much for the 1.5-hour notice.

It was more like .33 hours later – 20 minutes to be fairly precise – when the subcommittee convened, proceeding to mark up the Senate’s Sembler bill like it was a high school book report.

Transparent? Letting the sunlight in on the legislative process?

Rhetorical questions, it would seem.

Whether the subcommittee’s notification of its meeting was legal, though, is not merely an academic question.

Indeed, the state’s open-government law – the S.C. Freedom of Information Act – requires legislative subcommittees to provide notice of their meetings.

But the statute provides an out for the panels.

Section 30-4-80 of the FOIA says in part, “Subcommittees of standing legislative committees must give notice during weeks of the legislative session only if it is practicable to do so.”

Bender, who is an expert on the Freedom of Information Act, says the “only if it is practicable to do so” clause provides an escape hatch for the subcommittee. “I don’t think the law was violated,” he says of the meeting.

Nevertheless, Bender says it would have been better for Herbkersman to cancel the meeting and reschedule it with enough lead time to “give people an opportunity to find out about it.”

All Herbkersman-Like

Herbkersman, in whose district part of the Sembler mall would be built, did not return two phone messages and an e-mail from The Nerve sent to his State House office last week.

This is not the first time the lawmaker has raised eyebrows on legislative process grounds.

In a maneuver The Nerve reported March 24, House Minority Leader Harry Ott, D-Calhoun, suggested that Herbkersman had asked a fellow representative to sponsor a budget proviso to provide a $10 million state loan to the annual Heritage pro golf tournament on Hilton Head Island.

Leveraged against the state Insurance Reserve Fund, the loan would be made to Beaufort County and repaid within five years with the county’s accommodations tax proceeds, according to the proviso. It passed the House on a voice vote.

Meanwhile, the spotlight shining brightly on the Sembler bill this legislative session magnifies Bender’s point about people having an opportunity to learn of the subcommittee meeting.

Initially, the Senate’s version of the bill would have provided tens of millions of dollars in state tax breaks to the Sembler Co. – money straight out of the general fund that pays for education, law enforcement and other essential state government services.

The corporate welfare was proposed as rebates on a portion of sales tax revenue generated at the shopping mall to help offset infrastructure costs associated with it.

Sembler has pitched the mall, named Okatie Crossings, as a destination retail location with some high-end outlets, such as Ferragamo, that do not currently operate in the Palmetto State.

The mall would be built on the Beaufort-Jasper counties line – mostly in the latter – off Interstate 95 near the small towns of Hardeeville and Bluffton. It would cover about 270 acres.

Okatie Crossings enjoys support from some lawmakers, local elected officials and residents of the project area who see it as a potential economic boon. They say it would generate hundreds of millions of dollars in capital investment and create thousands of jobs where unemployment runs high and opportunity low.

Defeating State Subsidies

But to the opponents, the Sembler bill was unacceptable, whether because of the proposed taxpayer underwriting of the mall or because of the environmental impacts of it.

The greens object to Okatie Crossings on the grounds that it would lead to the paving of some 200 acres in a watershed already imperiled by polluting storm-water runoff. “You know, God does a far better job of treating water than we do,” Beach says.

In addition to the Coastal Conservation League, the opposition includes the Policy Council, the South Carolina Club for Growth, the South Carolina Association of Taxpayers and a bevy of Lowcountry residents.

The opponents coalesced early in the legislative session; and, with Republicans Greg Ryberg of Aiken and Tom Davis of Beaufort leading a charge against the tax breaks in the Senate, the opposition sent the state subsidies down to defeat.

Those would-be incentives for Sembler had all the elements of a well-worn, how-to manual for mining the General Assembly for such freebies: a team of high-priced lawyers, lobbyists and consultants working for the company; and a $3,500 contribution from Sembler to Lt. Gov. Andre Bauer, who presides over the Senate.

To some who are familiar with the company, the subsidies deal traces to its founder and chairman, Mel Sembler, whose national political connections include overseas ambassadorial stints under both of the Bush presidents.

“It’s all about payback to Mel Sembler for being such a staunch Republican fundraiser,” says Jon Peluso, a retiree who lives in Sun City, an affluent, conservative bedroom community near the site of the planned mall.

The bill that emerged from the Senate is a scaled-down measure that would allow a local option sales tax on items purchased at Okatie Crossings to pay for public infrastructure to support the mall.

That’s the version Herbkersman’s subcommittee revised. The panel’s changes include lowering the job creation threshold that the Sembler Co. would have to meet to cash in on the incentives from 1,250 to 1,000; and allowing the company to count construction jobs toward that number.

If the House passes the bill, it would have to be reconciled with the Senate legislation in what’s known as a conference committee.

The outcome of that scenario would be anything but a foregone conclusion.

What does not seem to be in question is whether those in the Sembler Co.’s employ will continue to try to wrangle the most lucrative deal they can out of the Legislature.

Reach Ward at (803) 779-5022, ext. 117, or eric@scpolicycouncil.com.