Lawmakers Approve $200K Earmark for ‘Paper’ Project

July 13, 2015

Investigative Reports

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ColoringS.C. lawmakers for years have bypassed the normal budget process by quietly slipping in earmarks for thousands – and sometimes millions – of tax dollars for their favorite organizations.

But in rejecting Gov. Nikki Haley’s veto of a $200,000 earmark sponsored by Rep. Bill Herbkersman, R-Beaufort and a member of the budget-writing House Ways and Means Committee, the General Assembly last week went a step further:  It approved spending taxpayer money for a nonprofit housing development that has existed for years only on paper.

That’s what the Governor’s Office warned some House members about “Osprey Village,” a planned residential development in the Lowcountry for developmentally disabled adults, according to internal documents from the Governor’s Office obtained last week by The Nerve.

“Osprey Village does not exist – it has remained a concept since its inception seven years ago,” Katherine Veldran, Haley’s director of legislative affairs, said in an email Tuesday morning to some House members – hours before the House and Senate overrode the veto (Veto No. 32) by required two-thirds votes.

The House originally voted Monday to sustain Haley’s veto of the line item under budget Proviso 118.14 but changed its collective mind on Tuesday – despite the push by the Governor’s Office to kill the appropriation, which will be funneled through the state Department of Health and Human Services (HHS).

The packet of information sent by Veldran to House members included background information on the proposed Osprey Village; two years of federal tax returns for the nonprofit organization, called Osprey Village Inc.; and a July 4 letter from HHS Director Christian Soura to House Speaker Jay Lucas, R-Darlington, and Senate President Pro Tempore Hugh Leatherman, R-Florence, which noted, among other things, that the agency didn’t request funding for the project.

Under House rules, an earmark is defined as “an appropriation for a specific program or project not originating with a written agency budget request or not included in an appropriations act from the prior fiscal year.”

None of the internal documents obtained last week by The Nerve identified the lawmaker who sponsored the $200,000 earmark for Osprey Village, nor did Haley’s written veto message. But a House budget document obtained by The Nerve shows it was sponsored by Herbkersman, who was chairman of the Ways and Means Committee’s Legislative, Executive and Local Government Subcommittee for this fiscal year’s state budget.

Contacted Friday by The Nerve, Herbkersman acknowledged he sought the earmark for the project and defended its purpose. He contended that directing public funds now to the nonprofit organization for future support services for developmentally disabled adults, including allowing them to be “gainfully employed,” will save tax dollars in the long run by keeping them “out of the state system.”

“I feel it’s a giant investment in families,” he said.

Herbkersman criticized Haley, a Republican, for vetoing the earmark, pointing out she didn’t oppose separate $5 million appropriations last fiscal year and this fiscal year for the proposed International African American Museum in Charleston, which, like the planned Osprey Village, exists so far only on paper.

“Number one, it’s pandering,” Herbkersman said about Haley’s support of the museum appropriations, though he added he generally supports museums. “Number two, it’s hypocritical. She let $10 million go to a museum that’s not there.”

The Nerve on Friday sent a written message to Haley spokeswoman Chaney Adams seeking reaction to Herbkersman’s remarks, but received no response.

The $200,000 appropriation for Osprey Village is about $26,500 more than the organization’s entire year-end 2014 balance, according to the organization’s federal tax return on file with the S.C. Secretary of State’s Office.

“We will begin housing services after construction of our site is complete (target mid 2016),” according to the return, filed in April this year by Jeff Norkus, the organization’s board treasurer. Previous tax returns give the same construction target date.

Neither Norkus nor Bill Lincicome, the board president, responded Friday to phone messages left by The Nerve. Other listed board members include retired NFL quarterback Ken Anderson.

Herbkersman told The Nerve he is not related to anyone on the 14-member board and would not benefit financially from the proposed residential development. His listed occupation on the General Assembly’s website is “Eco-Developer/Redeveloper.”

The website for Osprey Village website says it was founded in July 2008 by “parents of adults with developmental disabilities.” The organization’s most-recent federal tax return lists no paid “key” staff and a Hilton Head post-office box number as its mailing address.

The website describes the proposed residential village as “an intergenerational community that is open to anyone who would like to have the opportunity to interact and live in a ‘neighbor helping neighbor’ village.” The site says the village will provide a “walkable neighborhood close to shopping, health care, entertainment and employment opportunities,” with a “variety of planned housing options” for residents.

The number of planned housing units or total projected cost is not listed on the site. The organization’s tax return for last year shows it garnered $58,611 in gross profits (in her email to House members, Veldran said those profits are generated by a Bluffton-area thrift store), and raised another $16,107 in contributions.

Although the Republican-controlled Legislature in the end overrode Haley’s veto of Herbkersman’s earmark, the House sustained vetoes (Nos. 30, 31) of two other earmarks under the same budget proviso (118.14), sponsored separately by Democratic Sens. Brad Hutto of Orangeburg and Floyd Nicholson of Greenwood. Hutto proposed $250,000 to “Low Country Healthy Start,” a program of the nonprofit South Carolina Office of Rural Health Inc., while Nicholson sponsored a $50,000 earmark for the Greenwood division of another nonprofit known as “Healthy Learners.”

In her veto message, Haley said those earmarks, as well as the Osprey Village earmark, “represent well-meaning but highly local efforts that we see duplicated across the state.”

“Many churches, social non-profits, and start-up health companies wish for the opportunity to receive supplemental funds or seed-money to launch initiatives,” Haley wrote. “Each of these organizations should seek private investment or philanthropic contributions to further their private efforts.”

Contacted Friday by The Nerve, Hutto and Nicholson said Haley shouldn’t have lumped their proposed earmarks in with the Osprey Village project.

“I don’t know where she got that,” Hutto said about the veto message. “It’s (Low Country Healthy Start) been around for quite awhile.”

“It’s not a start-up program,” said Nicholson about his earmark. “I really don’t think she understood what the program was.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook or Twitter @thenervesc.