Ryberg Again Tries to Block Sembler Subsidies

February 4, 2010

Investigative Reports

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The NerveRepublican S.C. Sen. Greg Ryberg of Aiken is continuing his one-man war against millions of dollars in proposed state subsidies for an upscale shopping mall planned for the Jasper County area.

By an overwhelming margin, the Senate Finance Committee on Tuesday approved a bill that would grant the subsidies to the Florida-based Sembler Co.

Ryberg, a member of the committee, subsequently slapped what’s known as a minority report on the bill.

Ryberg’s move puts the legislation on the Senate’s contested calendar, significantly increasing the procedural hurdles it faces and making passage of the bill anything but a foregone conclusion.

He blocked the legislation last year, too.

With the state facing potential teacher furloughs and other impacts of a more than $500 million budget hole, Ryberg described the proposed subsidies as a huge mistake. “If it only makes sense with our money, then it doesn’t make sense,” he said of the project.

The chief sponsor of the measure, Finance Committee member and Democratic Sen. Clementa Pinckney of Jasper County, hailed the committee’s passage of his bill as a “great day” for a project that he says will bring jobs to an area desperately needing economic development.

Unlike many state incentives, Pinckney said of the proposed Sembler subsidies, “There’s no money up front. The company must earn its own way.”

The committee took up the bill immediately after a Finance subcommittee approved it.

The scene at the proceedings, held in a room in the Gressette Building on the State House grounds, provided a glimpse at the inner workings of the legislative process in the General Assembly.

A bevy of Sembler Co. lobbyists was on hand, as was a throng of supporters of the would-be mall. They had loaded onto buses to travel from the Lowcountry to Columbia to demonstrate a show of force and urge passage of the bill.

The supporters included residents of communities near the project site and a contingent of local government officials from the area, such as Hardeeville City Councilman Bill Horton and Ridgeland Mayor Gary Hodges.

Jasper County Chamber of Commerce director Keith Horton was on hand as well. He said he commuted on his own, and that he wasn’t sure who paid for the cost of the bus travel.

The Jasper Chamber has formally endorsed the bill.

The turnout filled the room and flowed into the hall, prompting the committee to open two other rooms for attendees, many of whom wore red and white stickers reading “We Need Jobs.”

Ashley Batson, a lobbyist for the Sembler Co., helped pass out the stickers before the meeting started.

Another Sembler lobbyist, Larry Marchant, president of the Columbia consulting firm The Palmetto Policy Group, responded to questions from members of the subcommittee.

Sen. Harvey Peeler, R-Cherokee and majority leader of the upper chamber, asked Marchant whether it would be a deal breaker for Sembler and the company would not build the mall if it did not get the subsidies.

“That’s correct, sir,” Marchant replied.

The incentives would flow to the company via state sales tax revenue generated at the mall, named Okatie Crossings. A portion of that money would be rebated to the company for up to 15 years to offset its infrastructure costs for the project.

Estimates of the subsidized amount range from $40 million to about $131 million.

During Tuesday’s proceedings, the job creation and capital investment thresholds for Sembler to receive the subsidies were increased from 1,000 to 1,250 and $100 million to $200 million, respectively.

Lawmakers also:

 

  • ratcheted up, from 500 to 625, the employment level the mall would have to maintain to continue getting the tax break;
  • added a “claw-back” provision, which would suspend the subsidies for one year if employment falls below 625, and allow the state to recoup the previous year’s refunded sales tax revenue.
While Ryberg has fought the subsidies more or less on his own, chiefly arguing that they would provide an unfair advantage for a common economic activity, he received some reinforcement Tuesday from Republican Sen. Tom Davis.

Davis is not a member of the Finance Committee. But he represents Beaufort County, in which part of Okatie Crossings would sit.

Davis told the subcommittee that the subsidies proposed for the mall pose problems with regard to equity, investment policy and constitutionality.

Concerning the latter, Davis cited a February 2009 written opinion from the office of state Attorney General Henry McMaster.

The opinion addresses aspects of similar subsidies the Legislature passed for an “extraordinary” commercial development such as the Sembler project. A court could find that tax break unconstitutional, the opinion says, on the grounds that it constitutes special legislation and does not adequately serve a public purpose.

Said Davis: The Legislature is “asking for a lawsuit” if it passes the Sembler bill.

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