A Letter to Aiken City Council Regarding Savannah River Site Litigation Settlement Funds, Mischaracterization of Downtown Aiken, and the Bailout of the $9.6 million Pascalis Project Properties General Obligation Bond

by Don Moniak

March 18, 2023

This past June, the South Carolina General Assembly legislatively allocated the City of Aiken $26.2 million dollars of state funds obtained from the the Attorney General’s 2020 “plutonium settlement” with the federal government. Another $0.9 million was allocated to the nongovernmental Friends of the Railroad Depot for the city-owned historic railroad depot on Union Street. Aiken County as a whole received $168.85 million—less than the $223 million in the originally City of Aiken’s original lobbying request.

The state budget law requires that the plutonium funds to be requested by county governments from the state Executive Budget Office, approved by the state’s Joint Bond Review Committee, and then managed and monitored by the counties. 

Newly obtained Savannah River Site Litigation Settlement Fund Request Forms reveal irregularities, inconsistencies, and questionable practices in the City of Aiken’s funding requests, including: 

• The false characterization of downtown properties home to small businesses like Taj Restaurant, Newberry Hall, and Vampire Penguin as “blighted.” No legal designations of “blight,” which under state Community Development Law require an area to meet at least five of seventeen criteria, have been applied to any part of downtown Aiken.
• A vague and misleading request for $25 million in funds for “downtown and Northside Redevelopment” that cited a misleading estimated project cost of $60 million. More than eighty percent of the cost estimate, $50.2 million, was for a line item called “other capital outlay” that lacked any details, as well as any reference to a downtown parking garage.
• Grouping of the payoff of the $9.6 million general obligation bonds issuance, used to purchase downtown properties for the failed Pascalis project, with the $50.2 million “capital outlay” line item. The project wish list that was later publicly disclosed showed tens of millions of dollars of projects completely unrelated to downtown redevelopment—including one water system development project north of Interstate 20. The $60 million total project cost created the false impression that paying off the bond was essential to redevelopment elsewhere in the city, and functioned as a shroud to divert attention from the unwise $9.5 million Project Pascalis property purchases. 
• A failure to publicly disclose that funding decisions were made by the city prior to any public discussion on the future use of the plutonium settlement funds—-a discussion that never involved the citizen input promised by Mayor Rick Osbon and City Manager Bedenbaugh following the collapse of Project Pascalis.
• A misleading claim that “redevelopment of the City’s Northside” was a key part of the project. The total of plutonium settlement funds to date proposed in the most recent City Council budget amendement, for Northside redevelopment within city limits, is zero.
  
  Following is a letter to Aiken City Council and City Manager Stuart Bedenbaugh containing questions about the plutonium settlement fund requests, and a timeline of the proceedings. 

“Dear City Council and City Manager Bedenbaugh, 

On November 14, 2022, Aiken County Administrator Clay Killian signed and approved three “Savannah River Site Litigation Settlement Fund Request Forms” that collectively requested $27.1 million dollars from State of South Carolina plutonium (Pu) settlement funds allocated to  the City of Aiken. The request included $60 million of estimated project costs for the $25 million pot of money in the “downtown and Northside redevelopment” funding pot. The funding request information was never publicly disclosed.  

 Following are questions for six subject categories pertaining to these legally required requests for state funds, followed by the background for these questions. But the overall question is why were are do many irregularities and inconsistencies mark the process for managing the $25 million Pu settlement pot for “Downtown and Northside Redevelopment?” 

1.  When did the City of Aiken submit these forms, and when was City Council informed this request had been formally made? Why were these documents withheld from public disclosure and discourse until released in response to a FOIA request? 

2. Why were citizens told there would be “public input” sessions regarding the future of these funds after the these request forms had already been submitted to Aiken County to send to the state’s Executive Budget Office? 

Why did City Council only hold “work sessions” pertaining to the Pu Settlement Funds, but never a formal public hearing or other public input session as promised by Mayor Osbon and City Manager Bedenbaugh? 

3. How could a project-specific request be made to pay off general obligation bonds before City Council approved making that request through the budget amendment process?

 4.  Why did the $25 million request include a project cost estimate of $60 million when the list of projects were not part of a single project? Why was the $50 million request for “Other Capital Outlay” not broken down by project?

5. Within the $60 million request for the available $25 million, Mr. Bedenbaugh wrote that the General Obligation Bond issuance costs involved “land/building purchase in blight downtown area.” When were the Pascalis project properties declared blighted? Why is the City of Aiken/AMDC leasing a renovated motel room to a city employee in a “blighted area,” and why did the City of Aiken/AMDC issue a request for proposals to lease commercial property at premium rental rates if the area is blighted? Most importantly, why is the city mischaracterizing an area as blighted that when no area of town has received such a legal designation as defined by state Community Development Law? 

6. On March 13, 2023, Council removed the agenda item pertaining to a “subrecipient agreement” with Aiken County that allowed for the legal disbursement of Pu/SRS settlement funds. Why was this agenda item removed? 

Likewise, sometime between March 7th and March 10th, an agenda item involving the second reading of an ordinance amending the 2022-2023 budget to allow for the addition of  Pu settlement funds was also discarded—despite being advertised in two public notices published on March 3rd and 7th. Why was this second reading delayed a second time? 

Background: 

June, 2022. The State legislature passed a budget that allocated $525 million from the August 2020 agreement between the state and federal government regarding long-term storage of 9.5 metric tons of surplus plutonium from the nation’s nuclear weapons material stockpile. The City of Aiken received $27 million in three different funds. Another $75 million unilaterally allocated by Attorney General Alan Wilson to two contract law firms working on the case is being litigated before the South Carolina Supreme Court. 

September 27, 2022. The Aiken County legislative delegation office sent a letter to the City of Aiken detailing the requirements for obtaining state plutonium settlement funds, which was shared with Council after receiving it. This information was not publicly revealed until a November 28, 2022, Council work session and the letter was not included in any Council agenda packets until March 13, 2023.

October 20, 2022.  The Schofield Neighborhood Association (SNA) held a meeting at Smith Hazel Recreation Center. Attending that meeting were Mayor Osbon, Councilwomen Gail Diggs and Lessie Price, and City Manager Stuart Bedenbaugh. 
During that meeting (1), in response to advance questions about the Pu funds from the SNA, Mr. Bedenbaugh stated the city was “fairly open to how we spend it.” 
Mayor Osbon was specifically asked  by Mandy Drumming, “Are you going to reach out to the community;” to which he answered “Yes.” 

November 14, 2022. Clay Killian signed his approval of three legal Savannah River Site Litigation Settlement Fund Request Forms submitted by the city since September 27th. 

a. $1.2 million was requested for Generations Park Improvements, of which $700,000 involved two line items regarding construction of a new turn lane, and three additional line items totalling $0.5 million. 

b. $ 0.9 million was requested for the City of Aiken Railroad Facilities Renovation on behalf of Friends of the Aiken Railroad Depot. Three line items were listed, including $100,000 for “professional services fee” for exhibit design and layout and a collective $800,000 for exhibit construction and installation. 

c. $25 million was requested for three items pertaining to Downtown and Northside Redevelopment, which had a total cost estimate of $60 million. 

i.  $9.5 million for “Building Purchase”, “downtown Building/Land Purchase of several parcels/GOB payoff;” 

ii. $0.1 million for “GOD issuance costs for land/building purchase in blight downtown area.” 

iii. $50.4 million for “Other Capital Outlay,” described as “Water, Sewer, and stormwater improvements, park improvements.” 

The project description included 

“redevelopment of the City’s Northside for the purpose of improving water, sewer, stormwater, and parks necessary to provide a safe community for residents and visitors.” 

Whereas the much smaller Generations Park and Railroad Depot requests were broken down into multiple cost items, no breakdown of the $50.4 million of “Other Capital Outlay” was made. November 14, 2022. Aiken City Council held a work session that included an agenda item titled: “Initial Discussion About Plutonium Funds.” In his agenda item memorandum to Council, Mr. Bedenbaugh wrote: 

“The City has received $ 26.2 million of so-called “ Plutonium Settlement Funds,” the proceeds of which derive from a settlement between the State of South Carolina and the federal government. A portion of these funds [$ 1.2 million] are specifically for Beverly D.Clyburn Generations Park while the balance [$25 million] are for downtown and northside improvements. A list of projects that could potentially be funded are attached.

At tonight’s work session, we would like Council input on potentially scheduling several special work sessions for public input about expenditure of these funds.” 

The referenced list of projects (below), many unrelated,  totaled $69,885,000; which was $9,885,000 higher than the total requested from the state. 

The agenda item was only briefly addressed. According to the meeting minutes, Mr. Bedenbaugh stated: 

“He wanted to set up some work sessions for discussion with Council and public input. He said the money is available from the State. It is unbudgeted money for the City, and we will ultimately have to do a budget amendment to account for these funds. He said he wanted Council to start thinking about projects for the funds. He said he wanted to start scheduling meetings so we can begin to determine the best use of the money.”

No references were made to the submitted request forms or the process by which the City would obtain funds. The fact that staff had already submitted for  the “”Reimbursement of $9.6M for purchase of downtown properties” was not disclosed. 

What was presented as an open question was, in fact, already a legally binding request. November 15, 2022: Mr. Bedenbaugh attended the SNA Association, but did not report on the progress of the plutonium settlement funds discussion. November 28, 2022. “Discussion About Plutonium Funds” was the second agenda item for a Council “work session.” 

Mr. Bedenbaugh’s memo, which included the same project list as November 14th, stated: 

“We would like to have additional sessions about the ‘Plutonium Settlement Funds,’ the proceeds of which derive from a settlement between the State of South Carolina and the Federal Government. A list of projects that could potentially be funded are attached and were shared November 14, 2022. At tonight’s work session, we would like Council to have some additional discussion and begin receiving input.” 

According to the meeting minutes, Mr. Bedenbaugh stated: “The listing totals greater than $25 million so he wanted to have some discussions with Council as to what projects Council wanted to designate. He said we also want to have some public input. He noted that the $25 million was designated for the northside and downtown improvements, economic development and infrastructure related improvements.” 

Council discussed the issue at length, but did not reach any consensus on a path forward, and did not solicit public input. Neither the fund request forms nor the details contained within the were  shared during the meeting or entered into the record. 

December 12, 2022. City Council held a work session with the Friends of Aiken Railroad Depot (FARD) to discuss the $0.9 million plutonium allocation for the train depot property developed by Aiken Corporation, now owned by the City of Aiken.

The money was obtained via lobbying from the Friends group–whose President Tim Simmons also sits on the Board of the Aiken Corporation; and the train depot is the only museum in South Carolina to receive Pu settlement funds. Meanwhile, little to no Council support was reported for the project of repairing actual railroad tracks—which was listed in the November 14 and 28 project possibilities. 

According to the meeting minutes, Mr. Simmons explained that his group “was asking Council for their permission” to pursue plans to “discontinue using the existing Depot as a Visitors Center and to use it for an upscale railroad museum.”  The meeting reportedly closed with Mayor Osbon stating “it seems there is a consensus for the project to move forward,” (indicating an informal vote during a session when votes are disallowed).

January 21, 2023. The City of Aiken announced its intent to demolish two Pascalis project properties and construct a 45,000 square foot office complex on behalf of DOE’s Savannah River National Laboratory (SRNL); using $20 million in plutonium settlement funds set aside for “SRS/National Laboratory Off-Site Infrastructure” somewhere in Aiken County. 

January 25, 2023. The South Carolina Joint Bond Review Committee approved the three settlement fund requests. 

January 27, 2023. Aiken City Council met for its annual “New Horizons” work planning session. The Pu settlement funding was on the agenda, and a new list of projects totalling only $25.4 million was included on page 19 of the agenda packet. At the top of the list was the $9.6 million to pay off the general obligation bond used to purchase the Pascalis project properties, followed by the new Northside Gravity Sewer station project, the Fairfield Street Bridge, Generations Park, Smith-Hazel Park, the airport property, the Aiken railway, and city sidewalks. 

New on the list were bike paths ($0.5 million), Williamsburg Street redevelopment ($0.4 million), and “structured parking.” The latter had no attached price tag, but a cost of $7 million was reported in the meeting minutes.  There was no parking garage in the settlement fund request–which again remained out of sight and out of mind during the proceedings. 

According to the minutes, a “consensus was reached on paying off the $9.6 million bond.” No other “consensus” was reported, although there was documented discussion of the Fairfield Street Bridge, the sewer line lift station, and the airport property.  

Mr. Bedenbaugh also reported that he had submitted a settlement request form for the SRNL project for consideration at the next Joint Bond Review Committee. February 13, 2023. City Council passed the first reading of an ordinance to amend the 2022-2023 budget to include plutonium settlement funds. The vote was to approve paying off the general obligation bond ($9.6 million), fund the replacement of the closed Fairfield Street Bridge ($3.0 million) and fund the new gravity sewer lift station ($3.5 million) north of the city limits, leaving $8.9 million in the funding pot. Not a single project on the Northside within city limits was in the ordinance. 

February 27, 2023. City Council adopted a resolution prioritizing New Horizon goals. At the top of the priority list were, “Downtown core improvements to include upgrades to Richland Avenue parcels, construction of a surface parking lot on Newberry Street, and pursuing a structured parking solution adjacent to the current Municipal Building.” 

March 3 and 7, 2023: A public notice advertising the second reading of the budget ordinance was published. 

March 6, 2023. The Design Review Board held a “special work session” to discuss the city’s application for a three-story parking garage on Chesterfield Street. The primary stated purpose of the garage, estimated to cost at least $7 million, is to provide parking for the proposed Savannah River National Laboratory downtown office complex. If funds from the $25 million funding pot are used for the garage, only $1.9 million would remain for other projects. 

March 9, 2023. The agenda for the scheduled City Council meeting did not include the advertised second reading, but did include “Approval of a Resolution Authorizing the City of Aiken to Enter into a Savannah River Settlement Appropriations Subrecipient Agreement with Aiken County.” 

March 13, 2023. The subrecipient agreement resolution was dropped from the agenda. No  explanation was provided when the change was announced or when Council was questioned about it later in the meeting. 

March 14, 2023. Despite the lack of a City-County agreement, County administrator Killian approved the SRNL settlement fund request and forwarded it to the Executive Budget Office. 

March 16, 2023: City of Aiken provided the SRS litigation settlement fund request forms in response to a FOIA request I submitted on February 10, 2023–thus utilizing the entire statutory time limit for FOIA requests. 

Footnote: 

(1) Notes from 10/20/22 SNA meeting: 

Stuart B: “$25 Million from Pu settlement. In terms of other use of money, there is also $1.2 million for Generations Park and the railroad depot money was a separate appropriation lobbied by friends of the railroad. 

We are going to have work sessions scheduled and council meetings. City will have to have a budget ordinance to move further. It can be used for brick and mortar, sewer and water, it is fairly open to how to spend it. Before the end of the Calendar year. 

Mandy: Can you name the groups who are asking the money: 

Stuart B. Other entities are the AMDC, this group. 

Mandy: You are going to reach out to the community ? 

Osbon: Yes. 

Myself: The AMDC was lobbying for $20 million . Are they still? 

Stuart B. : Not for that project.