The Charleston Place – a luxury hotel in downtown Charleston, S.C. which is currently embroiled in a quarter-million dollar dispute with a group of South Carolina GOP heavyweights – owes U.S. taxpayers more than a hundred times that amount.
This outstanding balance stems from a $10 million government loan that was provided to the hotel in 1984. With interest, the outstanding balance on this loan – which originated from the U.S. Department of Housing and Urban Development – now totals more than $23 million.
How much has the hotel paid on its taxpayer-funded tab?
Not a dime.
Wait … what?
That’s right. According to an agreement negotiated with the city (and renegotiated in 1991), Charleston Place doesn’t have to begin repaying its debt until the hotel shows a positive net cash flow – something it has managed to avoid doing all these years thanks to some very clever accounting.
Details of this scam were first unearthed by reporter David Slade of The (Charleston, S.C.) Post and Courier more than seven years ago – although thanks to the “Chicagoland” nature of Charleston politics (mayor Joe Riley was instrumental in securing the loan) the hotel has been able to continue stiffing taxpayers since then even as private investors in the facility have made huge profits off of the facility.
The loan popped up on our radar after we were tipped off last week about the hotel’s legal battle with the Southern Republican Leadership Conference (SRLC).
Last week, The Charleston Place filed a lawsuit against South Carolina political consultant Robert Cahaly and the SRLC – which hosted a series of events at the hotel in conjunction with one of two 2012 “First in the South” presidential primary debates last month.
According to the lawsuit, Cahaly and the SRLC stiffed the hotel out of $227,800. The hotel accused both Cahaly and the organization of acting “wantonly, maliciously and in bad faith” and making “false, fraudulent and unsubstantiated claims in an effort to evade their responsibility for payment.”
The organization disputes that account, though, and is filing a counterclaim against the hotel alleging that it attempted to double bill guests.
Frankly, we care a lot less now about this $227,800 dispute and a lot more about the $23 million that The Charleston Place owes taxpayers.
Doling out such a loan is inexcusable to begin with (it’s yet another example of government picking winners and losers in the marketplace) but manipulating the repayment agreement in such a way as to stick taxpayers with an ever-escalating tab strikes us as flat out criminal.