FITSNews Exclusive – SC Land Sales Face Scrutiny

STATE BUDGET BOARD COULD FACE LAWSUIT OVER ABORTED AUCTIONS

FITSNews – April 14, 2008 – Believe it or not, a century ago this dilapidated dock and storage shed (pictured above ) was a vital hub of America’s coastal defense system.

An artillery depot for the old Fort Moultrie Military Reservation - part of the Endicott System of Coastal Defense - the shed supplied a steady stream of ammunition for the breech-loading artillery and 12-inch mortars that protected Charleston Harbor until the evolution of air power rendered such coastal fortifications obsolete.

Owned today by the S.C. Department of Health and Environmental Control, the property is likely to serve as a new municipal center for the town of Sullivans Island, but the way the S.C. Budget and Control Board (B&CB) has managed its disposition (and the disposition of another 311-acre tract of state-owned property in Summerville) has raised serious questions about the way South Carolina manages the sale of its surplus lands. 

It’s also exposed the B&CB to a potential lawsuit, sources familiar with the history of the two properties tell FITSNews.

Both properties were originally scheduled to be sold at public auction, which is the most transparent, profitable method of selling surplus property.

The Sullivans Island dock and depot was approved for public auction in March 2006, and the Summerville tract – which was previously a retreat for mentally-handicapped children – was approved for auction that same summer.

Yet for a variety of reasons, neither property ever made it to the auction block, and both properties are still owned by the state today.

What happened?

In one case a powerful Lowcountry politician is said to have intervened on behalf of a prominent Charleston real estate developer, and in the other case the process appears to have been intentionally delayed by B&CB staff seeking to take political advantage of the indictment of former State Treasurer Thomas Ravenel.

“Ravenel’s indictment had significant bearing on the state’s approach to selling surplus properties,” said a B&CB insider who spoke with FITSNews on the condition of anonymity. “One result (was) the termination of the auction concept.”

SUMMERVILLE SIDE-STEP

In September 2006, the B&CB awarded a competitively-bid contract to Charleston-based Harper Auction & Realty for the purpose of managing the state’s public auctions. At the time the contract was awarded, the 311-acre Summerville tract – then valued at $6.5 million – was at the top of the list of properties to be sold.

Yet before this company could begin its work, the board reversed its decision to auction the property and decided instead to sell it using sealed bids.

According to our sources, the driving force behind this controversial 3-2 vote was State Rep. Annette Young, who works for a Summerville homebuilding company.

Eventually, Charleston-based Idea Real Estate Group won the sealed bid, but the property was never sold because the terms of the bid were never met and the “contingency contract” the B&CB entered into with the company was never completed.

Idea Developer Gordon Geer – who was in charge of building a 780-unit development on the property – backed out of the deal for good this March.

That’s when Summerville City Council bowed to public pressure and refused to exempt his proposed “Pine Trace” community from a recently-adopted moratorium on new development.

Now, nearly two years after the state first approved putting the property up for public auction, it remains unsold and has lost nearly half of its value due to local restrictions and a sagging real estate market.

“I would question why they went to a sealed bid in that situation,” said State Rep. Jeff Duncan, who is in the auction business. “This is why we need a standard operating procedure for disposing of this surplus property, one that’s transparent and provides maximum value to the state.”

SULLIVANS SCRUTINY

On Sullivans Island, while the town itself has followed the B&CB’s guidelines and secured the $2 million needed to purchase the dock and depot from the state at fair market value, the process that enabled local officials to get to this point has been highly irregular, to say the least.

Two months before the property was slated to go on the auction block – and a little over a week after news broke about the Ravenel indictment - the B&CB called the state’s contract auctioneer, Mike Harper, and instructed his firm to stop any marketing efforts related to the property.

On the advice of his attorney, Harper declined to comment for this story, but our B&CB source related the substance of the agency’s request.

“We asked him if he was following developments in the Treasurer’s Office and he said ‘yes,’ that he was,” our source says. “We told him that with the uncertainty about Ravenel’s indictment the (B&CB) wanted him to stop any auction-related work. No one had the authority to tell him that, but that’s what he was told.”

That instruction, which came from the office of B&CB General Services Director Rich Robertson, was just the beginning of the agency’s curious treatment of Harper, whose contract with the board was eventually terminated in December of 2007.

Perhaps most curious is the fact that in one year of working as the state’s auctioneer, the B&CB did not allow Harper’s firm to bid even one property competitively.

Ironically, South Carolina celebrates “Auctioneering Day” later this week, and within the last two weeks the B&CB has begun soliciting new bids for another auctioneer.

Whether or not this one is ever allowed to actually sell a piece of property remains to be seen …

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