Tax Increment Financing is a complex system that allows local governments to finance development projects with the revenue generated by the development. It is a part of South Carolina Community Development Law because the legislature found that:
Incentives must be provided for redevelopment in areas which are, or threaten to become, predominantly slum or blighted. (1)
The process is highly controversial because the revenues generated by TIF come at the expense of future tax revenues, the system has led to a lowering of criteria for determining blight and its precursors, it generally functions as a taxpayer subsidy for developers, and the program is open to abuse and subject to corruption. (2).
In Aiken County, TIF has earned a bad reputation from two instances. More than a decade ago there was a failed effort to convince County Council to use TIF for residential developments on undeveloped land. The City of North Augusta has used TIF to fund its Riverfront Park (originally “Project Jackson”) development after the Aiken School Board approved it, which provoked litigation against the city that ultimately was decided in the South Carolina Supreme Court.
So TIF is a touchy subject, and city officials like to defend Project Pascalis plans by speaking negatively about TIF. For example, during the May 9, 2022 Aiken City Council public hearing regarding privatization of Newberry Street, council member Kay Brohl emphatically declared:
We are not North Augusta, we are not doing TIF.
The Aiken Municipal Development Commission (AMDC) and City of Aiken insist that TIF is unnecessary for Project Pascalis, mostly due to the existence of $25 million in South Carolina Plutonium Settlement funds allocated to “Downtown and Northside Development.”
As it turns out, the City of Aiken is not as different from North Augusta as Ms. Brohl asserted. On April 27, 2021 AMDC Executive Director Tim O’Briant wrote the following message to Weldon Wyatt and Chip Goforth:
Here is the proposal for a full market study related to Project Pascalis from AECOM. Such as report would be required by law if the County considers a TIF for the project. I’d like to get these guys, or another firm if you have suggestions, started so we can be ready for the TIF debate ASAP. Let’s discuss.(2)
At no time have AMDC officials acknowledged that TIF was even an option, but clearly it was enough of an option to provoke a call for a legally required study. While City officials vehemently deny that TIF is an option for Project Pascalis, this email reveals the AMDC was considering it as a backup plan and preparing to use it.
With rising costs facing the development, will the City attempt to backtrack and return to a TIF scheme?
For Reference
(1.) Tax Increment Financing for Redevelopment, which the city could attempt apply to the “conservation area” in the Project Pascalis project area, is at: https://www.scstatehouse.gov/code/t31c006.php
Until now, the AMDC has only revealed Option 2A (1) from its early 2021 deliberations. Option 2A was forwarded to select developers, along with a project “summary” (2) in a private solicitation for a request for proposals for an area only encompassing the “Shah Property” and Newberry Hall — but not The Alley. This solicitation represented a change in the direction of the project management, but not in the overall project vision detailed in the never released Option 2, a vision involving a radical redevelopment of The Alley.
The Early Days of Project Pascalis: Option 2 Emerges
One week after the Aiken Municipal Development Commission (AMDC) announced a major, vaguely defined redevelopment effort named Project Pascalis, commission Chairman Keith Wood and Executive Director Tim O’Briant signed a cost sharing agreement with Weldon Wyatt’s GAC, LLC. (3) As with the Wyatt-Boudreaux agreement, references to “historic preservation” are absent. Demolition was the only consideration, and renovations were not options.
Boudreaux Group architecture and its two subconsultants moved forward with an aggressive schedule of site visits, workshops, research, and preliminary design. While the Boudreaux Group was working on behalf of GAC, LLC, it was also designing for the Alley property recently obtained by Ray Massey’s Aiken Alley Holdings, and city owned property across from it, although no agreement detailing this arrangement is publicly available yet.
The week of April 12 passed without the scheduled “presentation to city council and invited stakeholders,” and the AMDC only discussed the project in closed executive session on April 13th.
On April 15th, Weldon Wyatt and Newberry Hall’s Myrtle Anderson signed a purchase and sale agreement for $2 million and options for the business’ operators to negotiate to repurchase a new building, operate the new conference center, and even be compensated for lost income during construction.
Four days later the “Project Pascalis Conceptual Plans” were complete and ready for review. The plan’s aerial view continued to match the description in the Boudreaux-Wyatt agreement, with the Aiken Antique Mall and the east half of The Alley remaining in the project footprint.
(Note: click on images, below, to enlarge views).
Option 2: First-floor view of Project Pascalis footprint
The conceptual plans, obtained on July 2, 2022, via a Freedom of Information Act request, featured “Option 2,” with the Hotel Aiken and Laurens properties replaced by ground floor retail below a three story apartment complex, a “Boutique Hotel” at the corner of Richland and Newberry, a conference center/apartments/garage complex replacing Newberry Hall, and street pattern changes on Richland and Newberry Street.
Option 2: Five-story “Boutique Hotel” at the corner of Richland and Newberry. To the left is the 5-story conference center/parking garage/apartments complex at the corner of Newberry and The Alley.
Most dramatically, the plan envisioned retail space topped by four stories of apartments on the north side of The Alley; three stories across from it on city owned property, and a three story, elevated, enclosed walkway above the east entrance connecting apartments and providing a pathway to the parking garage.
These plans were never shared as promised in mid-March by AMDC officials. The plans were shown to some of Massey’s newly acquired tenants. One of them is Stacy O’Sullivan, co-owner of “Art and Soul” gallery in The Alley. In 2019, “Aiken Blend” wrote of her and business partner Kim Rising’s presence in The Alley in an “entrepreneur of the week” profile:
Art and Soul of Aiken isn’t exactly what you would call a “traditional” gallery. It is a place where local Aiken area artists can display their work in a free spirited and supportive space. Stacy O’Sullivan and Kim Rising established this co-op style business three years ago in a hidden store front on Richland Avenue. Two years ago, the business moved into the Alley. Since then, the two have had nothing but success. (4)
Their success must not have impressed her new landlords. O’Sullivan has described a visit from Massey and investment partner Todd Gaul, during which they revealed conceptual plans for their building, stating “We know this will take permits and such, but The City loves projects like this and it will not be a problem.”
O’Sullivan also describes an effort by Massey and Gaul to “illegally evict” them from their four-year old business home, and their intent to triple the rent, all while paying lip service to serious maintenance issues such as flooding in the recently renovated alley following heavy rains
Happy Days End
While Massey and Gaul might not have anticipated a problem with the city, they should have anticipated one with Weldon Wyatt, especially considering his abrupt and unexplained withdrawal in January, 2020 from a purchase contract with Aiken County for the “old hospital” property at 828 Richland Ave E.
Between April 19th and May 14th, two things happened. First, the preliminary cost estimates were completed on schedule. The estimates include a total budget of $118,372,104 and ninety eight cents; and total costs for “demolition and abatement” of the “Hotel Aiken, 108 Laurens Street, Holley House Motel, and Retail/Office Richland, Newberry, and The Alley” of $712,248. (5)
Second, the man described by the AMDC a month previously as an “experienced and well-capitalized” private developer bailed on yet another major development on Mayor Rick Osbon’s wish list. Similar to the unexplained cancellation of the “old hospital” deal, the reason for the Project Pascalis exit remains a mystery.
Instead of reassessing the project, AMDC officials scrambled to salvage the effort to demolish and reconstruct a major portion of historic downtown Aiken. As previously reported in A Project Pascalis Timeline, on May 14th “The Chamber of Commerce takes ‘assignment’ of the Shah property contracts, while the AMDC seeks funding to purchase them on behalf of the city. This all occurs behind closed doors.” (. ) Not until June 2 would the Chamber also arrange for “assignment” of the Newberry Hall property.
The absence of a contract continuation with Newberry Hall’s owners did not deter the AMDC from immediately seeking a new developer for both the Shah and Newberry properties. On May 19th the AMDC sent its private solicitations for Requests for Proposals to continue the project—minus the Aiken Alley Holdings property and the Aiken Antique Mall.
There is no known formal agreement between the AMDC and Aiken Alley Holdings, but some form of unwritten agreement must have remained. Six days after the Chamber of Commerce took one for the team by taking assignment of the Newberry Hall property, Aiken Alley Holdings, LLC closed on the purchase of longtime State Farm agent Joseph Harrison’s 121 Newberry Street for $675,000, adding to the holdings in the original Pascalis footprint.
Just over three months later, Massey was present at a “public meeting” at Victor’s Restaurant in Florence, SC hosted by the Raines Company. Two months later he was the agent for the newly formed RPM Development Partners, LLC; a consortium of Massey and other local, unnamed investors, the developers Rainesco and Lat Purser. In early December, 2021 RPM was named the Pascalis developer, pending a master agreement, although the legal advertisement for RFPs was not submitted until mid December.
(1) The AMDC placed “Option 2A” on its “transparency page, but not Option 2; probably because a FOIA or other official request only asked for information pertaining to the AMDC’s private RFP solicitation in May 2021. This is known in some circles as willful nondisclosure.
In the solicitation, the AMDC offers to privatize a part of Newberry Street. The entire solicitation remains secret to this day, withheld under a FOIA exemption by the City of Aiken, despite fact that FOIA clearly states the city “may” release the documents. The AMDC does not deny the solicitation is only for demolition, not renovation of Hotel Aiken and surrounding properties.
(5) Draft Preliminary Order of Magnitude Cost Estimate Analysis. Project Pascalis. Obtained via the SC Freedom of Information Act from the City of Aiken, July 2, 2022.
