The following letter, signed by 39 South Carolina taxpayers and residents as of February 27, 2023, has been sent to the ten-person South Carolina Joint Bond Review Committee (JBRC), which is tasked to “study and monitor policies and procedures relating to the approval of permanent improvement projects and to the issuance of State general obligation and institutional bonds; to evaluate the effect of current and past policies on the bond credit rating of the State; and provide advisory assistance in the establishment of future capital management policies.”

Any state-funded capital project must be reviewed and approved by the committee. The committee last met on January 25, 2023, and is next scheduled to meet on March 23, 2023.

Dear Joint Bond Review Committee members,

On Monday night, February 27, 2023, Aiken City Council will vote on the second reading of an ordinance to “amend the 2022-2023 Budget to include Plutonium Settlement Funds.”

The proposed amendment involves $16.1 million of the $25 million allocated in Line Item 72(I) of the Savannah River Site Litigation appropriations in House Bill 290: “City of Aiken/Aiken County- Redevelopment and Economic Development in Downtown and Aiken’s Northside Toward I-20, $25,000,000.” According to the Executive Budget Office, the funds are intended for “revitalization and redevelopment for areas that have fallen into disrepair or are currently underutilized.” 

This line item is one of the few allocations in the final legislative appropriation of settlement funds that was not project specific. While the funding was approved by the State’s Joint Bond Review Committee, Part 72.1 of the legislation requires “Funds in this item may be released to fund an eligible project at the direction of the Executive Budget Office, upon the Executive Budget Office’s receipt of a written request from the receiving county.” According to Aiken County Council, the county has yet to receive this $25 million disbursement from the Executive Budget Office.

We undersigned citizen tax payers of South Carolina request the Joint Bond Review Committee reconsider the $25 million disbursement of Savannah River Site Litigation Funds, to allow for a project-specific approach to releasing these state funds and avoid any subsequent wasteful or unintended expenditures.

1. The $3 million proposal to repair the Fairfield Street Bridge in downtown Aiken, which has been closed due to structural deficiencies since 2017, should be approved. This project clearly falls within the broad project purpose of “revitalization and redevelopment for areas that have fallen into disrepair or are currently underutilized.” 

2. The $3.5 million proposal for the Northside Gravity Sewer project should be deferred until the City of Aiken identifies how this project on unincorporated county property affects county residents, notifies County residents of its annexation and growth plans, and reports whether this project is primarily maintenance-related or expansionist in scope. It is unclear how this project qualifies as a “revitalization and redevelopment effort for areas that have fallen into disrepair or are currently underutilized.”

3. The $9.6 million proposal to pay off the principal of the General Obligation bond used to “purchase downtown property” should be rejected. The properties in question are presently known as the “Pascalis properties” and were purchased by the Aiken Municipal Development Commission (AMDC) through a grant from the City of Aiken raised via this general obligation bond. The properties were purchased as part of a demolition and redevelopment plan involving half a block of downtown Aiken, known as Project Pascalis, that was formally canceled by the developer and the AMDC in September, 2022.

The reasons to reject this $9.6 million project request are as follows:

a. The true nature of the property purchases were not revealed to citizen taxpayers during the approval and hearing process.

When the bond ordinance was approved following during two public readings in August 2021, City Council and the AMDC presented the funds as necessary for a “land bank” proposal to purchase “blighted” properties in Aiken’s ~575-acre “Parkway District.” In reality, it was a proposal to purchase seven properties, held in an assignment contract by the Aiken Chamber of Commerce, from two property owners in a 1.7 acre area where nine small businesses were operating.

Only one building in the Pascalis demolition zone lacked a tenant, and the two buildings associated with the Hotel Aiken were closed for a reported renovation. It was not a blighted area and had not been declared a blighted area.

This basic information about the actual real estate purchase intentions was withheld from citizens of Aiken until the first week of November, 2021, when the AMDC announced Project Pascalis , a $75-100 million project involving the demolition and redevelopment of the 1.7 acres and forced relocation of nine small businesses.

b. The properties were purchased without due diligence and were an unnecessary and ill-advised investment of taxpayer funds. The properties were purchased for $9.5 million without the AMDC or City of Aiken conducting any appraisals, and only required property inspections on two of the seven properties. After the Chamber of Commerce took assignment of the properties in late May of 2021, two developers offered the AMDC only $1 million for the most prominent property, the Hotel Aiken, in response to a solicitation for proposals that was not publicly advertised as mandated by SC Community Development Law. This offer was less than half the agreed-to price of $2.25 million in the assignment contract.

Existing Aiken County appraisal data, which City officials routinely use as a point of reference for other purchases and sales of city properties, showed the property + improvement values were collectively appraised by the Aiken County assessor at $4.683 million of market value. But since the AMDC intended to demolish the property, it essentially paid $9.5 million (not including demolition costs) for land with an appraised market value of $1.487 million. On a per-square-foot basis, the AMDC paid nearly five times more than the Aiken County appraised market values of the land at surrounding business properties. Notwithstanding the fact that the AMDC essentially assigned a zero value to the buildings on the seven properties (which were consigned to demolition), an alternative evaluation using recent sales of nearby business properties indicated the AMDC overpaid by “only” a factor of almost three.

These analyses in the summer of 2022 were validated in November 2022 by the revelation that the AMDC had signed a contract to sell the properties to the newly formed development consortium RPM Development Partners for $5 million, just one month after the commission had paid $9.5 million.

c. Aiken City Council counted its chickens a year before they hatched. According to the Executive Budget Office’s description of the entire $25 million line item allocation, submitted to the JBRC in January 2023, the City of Aiken’s “plan also includes the acquisition and assembly of land or properties for the purpose of redevelopment in the downtown area to promote economic development for the city, it’s residents and visitors

In reality, the bond was approved in August 2021, with the expectation of future allocation of plutonium funds, months before a single budgetary proposal was issued in the legislature. The bond was finalized in October 2021 and the properties were purchased in November 2021. Aiken City Council took an ill-advised risk by committing taxpayer funds in the expectation of state reimbursement from the Savannah River Site litigation settlement; which has resulted in a foolish expenditure of taxpayer funds.

The AMDC’s and City Council’s manifold instances of careless disregard for well-established business practices and fiduciary responsibilities should not be so easily finessed by conveniently applying Plutonium Settlement Funds to pay off the bond. In short, the proceeds from the bond issuance were used to further the folly of an illegally-formulated, ill-defined, and mismanaged project–which has now found a home in Aiken City Council’s dustbin.

d. There is no project. Since Project Pascalis was canceled in September, 2022, the general obligation bond is no longer associated with a redevelopment project or any project at all. Paying off the principal is not a development strategy, it is a bail-out strategy. Furthermore, the details of the failed project that resulted in the AMDC and City of Aiken owning seven properties in the downtown commercial district have yet to be fully revealed to taxpaying citizens. At a minimum, a full, independent financial and project audit should be completed prior to any state funds being released to the City of Aiken to pay off this unwise debt.

Summary: City Council has announced its intentions to transfer the Pascalis properties from AMDC control to city control and dissolve the AMDC. There is no development project presently involved with any of the properties. There is only a feasibility study underway for three of the properties. After the city takes control, it will replace the AMDC as a commercial real estate landlord for the six businesses that did not yield to the AMDC’s pressure to relocate; at least until the properties are sold on the open market, or transferred to another party.

Paying off the general obligation bond condones the city’s ill-advised investment, which no longer qualifies as a redevelopment project. Paying the debt for a failed project is not worthy of plutonium settlement funds that are intended to address real community needs: education, infrastructure, and well-planned economic development for the common good.

Thank you,

Donald Moniak
(and 38 South Carolina Taxpayers and Residents)