SCDOT spending tens of millions on the nonexistent I-73; can’t account for $8M

September 13, 2019

Investigative Reports

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By RICK BRUNDRETT

Some 37 years after the idea was first proposed, Interstate 73 in South Carolina exists only on paper.

Yet since 2004, the state Department of Transportation has spent at least $77 million on the project – much of it for design costs and land purchases along the proposed route from North Carolina to the Myrtle Beach area, The Nerve found in a review of DOT records.

Although not a drop of concrete has been poured for the actual interstate, DOT included widening U.S. 301 and 501 and replacing a bridge over I-95 as part of the project, according to the records, which were provided to The Nerve under the state’s open-records law.

But DOT can’t account for $8 million spent over the past 15 fiscal years. In fiscal 2004-05, $1 million was appropriated under a state budget proviso for the “routing, planning and construction of I-73.” Every year afterward, including the current fiscal year that started July 1, the designated amount under the proviso was $500,000 for the same purpose, budget records show.

In response to a Freedom of Information Act request in June for specifics on the proviso spending, DOT told The Nerve that it “does not have documents providing the information you have requested segregated in the manner you have requested.”

The Nerve twice last month asked DOT chief Christy Hall in writing to explain how the $8 million was spent. She didn’t respond to either inquiry, despite The Nerve providing her with a copy of an annual DOT invoice to the state Department of Commerce requesting a $500,000 transfer under the budget proviso.

The proviso has appeared annually under Commerce’s section of the state budget, though the funds have “always been transferred to SCDOT,” Commerce spokeswoman Alex Clark said in a February email to The Nerve.

When asked what authority Commerce has to legally make the transfers, Clark replied: “SCDOT is the state agency responsible for road construction. The authority to make the funds available to SCDOT is implicit in the proviso.”

The Nerve later submitted an open-records request for Commerce emails related to the I-73 project. Included in those records were several invoices from DOT to Commerce requesting the proviso funds.

Of the $77 million in identified DOT spending from Feb. 3, 2004, through Feb. 26 of this year, nearly $27 million, or about 35% of the total, was paid collectively to The LPA Group Inc., a Columbia-based engineering firm, and Pittsburgh-based Michael Baker International, which purchased LPA in 2010 through a subsidiary, The Nerve’s review found. On its website, Michael Baker International describes itself as an engineering and consulting firm with nearly 100 offices nationwide.

The LPA Group’s Columbia office did not respond to a phone message last week from The Nerve seeking specifics on the work done on the I-73 project. A spokeswoman in Michael Baker’s corporate office couldn’t immediately provide a response.

Another $10.8 million was paid during the 15-year-old period to road contractor C.R. Jackson Inc. – one of DOT’s highest-paid vendors, records show – which has offices in Columbia, Darlington and Conway. Company president Steven Jackson declined comment when contacted last week by The Nerve.

DOT records provided to The Nerve did not give details of the work performed by paid vendors, but instead listed only broad spending categories, such as “US 301 US 501 S-63 bridge over I-95 along S-63,” and “I-73 from I-95 in Dillon County to Conway/Myrtle Beach area in Horry County.”

Buying up private land

Millions also have been spent over the years to buy private property along the proposed interstate route, DOT records show. More than $2.8 million, for example, was paid by DOT to the Florence-based law firm of Willcox, Buyck and Williams, which represents DOT in land condemnation cases.

Another approximately $17.7 million was paid to “Synous Bank”; a 2017 entry detailing the expenditure was listed among payments to the Willcox law firm, records show.

Lee Underwood, a spokesman for Georgia-based Synovus Bank, told The Nerve last week he could not discuss specific clients, but in a follow-up email said the bank has “accounts with many of the major law firms in the state (South Carolina),” adding that “it’s possible that some of the I-73 transactions could be land purchases (with) the funds flowing through escrow accounts.”

Contacted last week, Reynolds Williams, the Willcox firm’s CEO, told The Nerve his firm has done “a lot” of land purchase work for DOT over the years on the I-73 project. He said he couldn’t immediately provide specifics on the affected properties, though he noted the “overwhelming bulk” of payments to his firm reflected in DOT records were the purchase amounts paid to land owners.

Williams also said his firm uses Synovus Bank for real estate escrow accounts, though he didn’t know whether the bank was involved with I-73 transactions handled by the firm.

Williams has ties to powerful state Sen. Hugh Leatherman, R-Florence, who is the longtime chairman of the budget-writing Senate Finance Committee. As The Nerve previously reported, Leatherman appointed Williams to the S.C. Retirement System Investment Commission, which oversees billions in assets; and also is a listed business partner with Williams in a company called East Florence Properties.

Leatherman also sits on the governing boards of the State Transportation Infrastructure Bank, which funneled several billion dollars over the years to large construction projects in select counties; and a regional economic development organization known as the North Eastern Strategic Alliance (NESA), which, as The Nerve reported then, commissioned a 2011 study supporting the I-73 project.

Of the $1 million designated in fiscal 2004-05 to the I-73 project under the state budget proviso, $100,000 was earmarked to NESA to “contract for staff coordination services for the I-73 Committee.” In a related matter, DOT records provided to The Nerve show that the agency paid more than $575,000 to Dallas-based C&M Associates Inc., which produced a 2016 study for DOT and the Federal Highway Administration on the I-73 project.

More I-73 money sought

Plans to build I-73 in South Carolina began to take shape after the U.S. Congress in 1982 authorized the study of a new highway connecting I-95 south to U.S. 17 near Myrtle Beach – the state’s tourist mecca.

DOT spent tens of millions over the years on the project, though no part of the actual interstate was built. In 2017, the U.S. Army Corps of Engineers approved a permit for the interstate, which would stretch from outside Rockingham, N.C., through Marlboro, Dillon and Marion counties to S.C. 22 (the Conway Bypass) in Horry County north of Myrtle Beach.

When fully complete, the interstate is expected to cost at least $2.4 billion, according to DOT.

Earlier this year, DOT submitted an application for a $348 million federal grant to design, acquire remaining rights-of-way and construct the southern leg of the interstate from U.S. 76 in Marion County to S.C. 22. The application shows that DOT is counting on more than $203 million through a hospitality tax in Horry County which contracted with the department in December to help fund the I-73 project in the county as the main match for the federal grant.

But a lawsuit filed in March against the county by Myrtle Beach on behalf of the city and other affected municipalities in the county could prove to be a major roadblock to the grant after a judge initially sided with the plaintiffs. In court papers, Myrtle Beach contends, among other things, that the county reauthorized the collection of a hospitality tax from the affected municipalities without municipal approval.

DOT expects “Phase I” of the I-73 project to be completed in five years, according to its federal grant application.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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