Political Turbulence Over Aviation Center?

March 28, 2011

Investigative Reports

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The NerveS.C. Commerce Secretary Bobby Hitt supports a proposed University of South Carolina aviation research center, though he couldn’t change Gov. Nikki Haley’s mind about her opposition to a $5 million appropriation for the project, according to a lawmaker who pushed for the state budget request.

State Rep. Tracy Edge, R-Horry, told The Nerve last week that Hitt met with USC President Harris Pastides on the day Haley released a letter to House members during their debate on the 2011-12 state budget asking that they eliminate the appropriation.

The budget-writing House Ways and Means Committee initially listed the item as a capital reserve fund expenditure for this fiscal year, which ends June 30, though the joint resolution authorizing the expenditure wouldn’t take effect until 30 days after the end of the fiscal year.

But the full House had removed the line item when the joint resolution received the third and final reading on March 16, the same day the 2011-12 budget was passed and sent to the Senate.

“I was told by Pastides that he (Hitt) supports the project and was trying to turn Haley around,” Edge said. “There was just a misunderstanding between Hitt and his office, and Haley and her office.”

Edge spoke with The Nerve last week before and after USC benefactor and alumna Darla Moore on Thursday announced a $5 million donation to help launch the center.

The Nerve first reported earlier this month that aerospace giant Boeing would be a major player in, and likely a main beneficiary of, the proposed “Aviation, Innovation and Research Center,” dubbed “USC-AIR.”

The center, if funded with tax dollars, would be another in a long series of state giveaways to Chicago-based, multi-billion-dollar Boeing. In a series of stories in January 2010, The Nerve first detailed a taxpayer-supported incentives package, estimated to be at least $500 million, for Boeing’s 787 Dreamliner assembly plant under construction in North Charleston.

In a letter dated March 14, Haley asked House members to remove the $5 million appropriation for the aviation center from the state budget, noting, “In talking with Bobby Hitt, it is our belief that the funding for this project is premature.”

Edge said no one from Haley’s office or the S.C. Department of Commerce discussed their views with him before the letter was released, adding that Commerce had no prior involvement in the project.

In a conversation with Hitt after the letter was released, Edge said Hitt didn’t indicate that there was any problem with using tax dollars to fund the center’s startup.

“He (Hitt) was talking about Boeing being nervous about even being mentioned,” Edge recalled, adding, “Just because Boeing was nervous didn’t mean we needed to throw away $5 million.”

Edge noted that he and Pastides had “been talking for about a year” on the project.

In a surprise move Thursday, Moore, whom Haley ousted earlier this month from the USC Board of Trustees, announced that she would donate $5 million for the center and asked that state lawmakers match the gift, according to media reports.

Her announcement came two days after Sen. Jake Knotts, R-Lexington, introduced a bill (S. 713) that would give the General Assembly the authority to appoint an additional member to the USC board. Knotts, a frequent critic of Haley, was quoted in other media reports as saying it was his intent that the new seat, if approved, would be filled by Moore.

Following Moore’s announcement, Haley’s office thanked the Lake City native, who previously had pledged $70 million to the university and has the USC business school named after her, for the donation. But the Republican governor declined to accept Moore’s invitation for a state match, according to media reports.

“While the governor and Commerce Secretary Bobby Hitt both support and continue to work hard to bring aerospace companies and jobs to our state, they both believed the budget request for this project was premature in a budget year where we have millions of dollars in budget shortfalls and we are focused on returning to the basic core functions of government,” Haley spokesman Rob Godfrey said in a written statement released Thursday to the media.

“I thought economic development was a core function,” Edge told The Nerve in response to the statement from Haley’s office. “They’re obviously in a hole they can’t dig out of on multiple fronts. The public is not siding with Haley on this.”

Edge added, “It isn’t premature; I wouldn’t have worked to get (state) money if it was premature.”

The elimination of the $5 million appropriation for the aviation center didn’t save any money in the capital reserve fund, Edge said, explaining that the full House replaced the line item with separate, smaller one-time appropriations, mainly for equipment for various law enforcement agencies.

“It’s disingenuous to say we’re not going to spend money on the project to save money,” he said.

Edge also said he believes that the Senate would put up matching money if Moore required it for her donation.

Godfrey did not respond to The Nerve’s written questions last week seeking comment on Edge’s statements about Haley and Hitt. Hitt and Commerce spokeswoman Kara Borie also did not respond to similar questions.

USC spokeswoman Margaret Lamb on Friday told The Nerve in a written response that she would not be able to reach Pastides for comment before publication of this story, and that she was “not privy to his private conversations.”

She added, though, “The president is keenly aware of the challenges facing the state’s economy, but we hope that the legislature will recognize the economic benefits that a center will bring to the state.”

Boeing spokesman Rob Gross declined to discuss specifics when contacted last week by The Nerve, and instead repeated his statement in The Nerve’s initial story earlier this month.

“Boeing is supportive of efforts to create centers for higher learning in the state of South Carolina that will advance innovations in aviation and aerospace technology, materials and products,” Gross said in a written response. “We believe such efforts will help attract high-quality, high-technology jobs to South Carolina.”

The House Ways and Means Committee initially approved the $5 million expenditure from the state’s $110.8 million capital reserve fund, which in recent years has been used to help offset mid-year budget cuts, and for deferred maintenance and renovation projects at universities, colleges and other state agencies.

In a written statement provided earlier to The Nerve, USC said the $5 million, if approved by the Legislature, would be used to purchase “necessary equipment for research and training laboratories, and to support scientists, technicians and students who will be engaged in this important work.”

The university also said it had prepared related proposals for two endowed chair programs that would focus on developing “composite materials systems” used by the aircraft industry. Boeing, for example, uses composites, which are lighter than standard metals, in the construction of new aircraft, according to industry literature.

The endowed chairs programs, also known as the “South Carolina Centers of Economic Excellence,” use lottery money and non-state matches to attract top scholars in particular fields to the state’s three research universities – USC, Clemson and the Medical University of South Carolina.

USC spokeswoman Luanne Lawrence earlier told The Nerve that the proposed two endowed chair programs focusing on the aircraft industry would be part of the aviation research center. The university also plans to develop an aerospace engineering degree.

Lawrence said then that a site for the research center hadn’t been chosen, though she said it would have “components in Charleston” and “some on (the USC) campus.”

She also said it was “too early” to know the projected annual operating costs of the proposed center, or if taxpayers would be expected to cover those costs. Lawrence confirmed that the university held discussions with the S.C. Research Authority – a state-created and state-controlled technology and real estate company – and “others” about a “desire to build this center.”

Edge earlier told The Nerve it was his understanding that Boeing and other defense contractors, possibly including Lockheed Martin and Johnson Controls, would fund the operations of the proposed center. He said then that Boeing was the “main supporter” of the project.

Edge said last week he believes the aviation research center is an important economic development project that would help “mimic” North Carolina’s Research Triangle in the Raleigh area. He said the center would be similar to Clemson University’s International Center for Automotive Research (ICAR), which has close ties to BMW’s Greer-based operations.

Hitt, the Commerce secretary, was formerly the chief spokesman for BMW in South Carolina.

“I think it (the proposed $5 million appropriation) is good seed money that would pay off great dividends down the road,” Edge said.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org