(An update to Project Pascalis Legal Costs) (Update, November 13, 2025: Response to FOIA request 341-2025 provides a July 14, 2022 letter from the City’s Insurance and Risk Fund denying a claim, and the City’s tally of legal expenses through early June of 2025).
by Don Moniak September 13, 2025
The City of Aiken and numerous other entities and individuals were sued on July 5, 2022. In Blake et al vs City of Aiken et al; or the Pascalis lawsuit, plaintiffs alleged that the City of Aiken, its Municipal Development Commission (AMDC), Design Review Board (DRB), and City Attorney violated numerous state laws while pursuing the $75-100 million demolition and redevelopment project known as Project Pascalis.
When the lawsuit was filed, there was an expectation among City officials that the City’s insurance would cover legal costs; and in fact the City filed a claim.
For example, on June 29, 2022, in response to concerns that any cancellation or restart of Project Pascalis could result in legal action by the preferred Pascalis developer, RPM Development partners, City of Aiken Economic Development Director Tim O’Briant wrote to AMDC members that:
“Each commissioner is fully covered by the City of Aiken’s policy with the SC Municipal Insurance Reserve Fund.” (sic; In actuality, it is the South Carolina Municipal Insurance and Risk Fund, or SCMIRF).
O’Briant would also write on July 5th (Figure 1) to commissioners, after the Pascalis lawsuit was filed, that “please be assured that the City’s tort insurance fully covers each of us named in the suit as a group and individually.”
Figure 1. July 5, 2022 email from Tim O’Briant to AMDC Commissioners.
That same evening, AMDC attorney Gary Pope Jr. wrote to AMDC Chairman Keith Wood, stating his belief that SCMIRF would be assigning counsel “fairly shortly.” (Figure 2)
Figure 2: Email from AMDC Attorney Gary Pope Jr. after the Pascalis lawsuit was filed.
No such coverage or counsel has occurred, or is expected to occur. A claim was filed in July 2022 and was under review for at least two months. Ultimately, the claim was apparently denied–a FOIA request for that denial letter is pending. (Update: The denial letter and City’s tally for legal costs can be viewed via FOIA 341-2025).
The City’s contract with the South Carolina Municipal Insurance and Risk Fund (SCMIRF) calls for SCMIRF to cover many, but not all, legal actions filed against the city. The insurance policy states:
“SCMIRF has the right and duty to defend any Suit asking for covered Money Damages….SCMIRF will only defend any action or suit seeking Money Damages brought against the Member or Covered Person.”
The Plaintiffs in the Pascalis lawsuit did not ask for monetary damages, they only asked the Court for injunctive relief (stop the project) and declaratory relief (find violations of the law and instruct remedies.)
The policy also states that SCMIRF will not defend against claims involving “Dishonest or Criminal Acts,” and exempts “Any claim or liability arising out of fraudulent, dishonest, or criminal acts, including without limitation the willful violation of a penal statute or ordinance, committed by or with the consent of the Member or by a Covered Person.”
The Pascalis Lawsuit did not openly allege the willful violation of state law, but did infer the possibility of such actions.
These are two possible reasons why SCMIRF denied the City’s claim and is not defending the City; which in turn is bearing all of the costs of the lawsuit.
Table 1 shows the costs through May of this year. Since that time, there has been a costly deposition of two AMDC Commissioners; which was attended by at least five of the defendants’ lawyers.
As reported in Project Pascalis Legal Costs, only the City of Aiken can provide the most up-to-date and precise figures.
Table 1: Project Pascalis Litigation Costs Incurred by City Taxpayers, as of June 1, 2025.
The City of Aiken’s business license tax dispute involving an Aiken business that is co-owned by an Aiken City Council member is now entering its fourth year. The core issue is the constitutionality of a municipality taxing property outside of its jurisdiction. The case is scheduled to be heard by the State of South Carolina’s Administrative Law Court on January 21, 2025. Since the case involves a complex, uniform business license tax Ordinance, the administrative court judge’s ruling could affect municipalities across the state.
As of October 31, 2024, the City’s legal fees for the case have exceeded $80,000.
The case of City of Aiken vs Edward Woltz began in November 2021, when Aiken resident and businessman Ed Woltz was quietly cited by the City with a business license violation for failure to pay business license taxes on some of his rental properties that are situated both inside and outside of the City of Aiken, and for not possessing a business license for those properties. Mr. Woltz is an Aiken City Councilman who had been reelected to a second term just a few weeks prior to the citation. His current term ends this year.
In early September 2022, an agreement was reached to dismiss the criminal case in return for Mr. Woltz paying the back taxes. A tax reassessment for 2018 through 2022 was sent to Mr. Woltz and payment of $11,477 was made, but under protest.
The Aiken law firm of McCants and Nance was then hired to represent Mr. Woltz, his wife and business partner Holly Woltz, and their rental company S&C properties in an appeal of the assessment. At that point, the case became Edward Woltz, Holley Woltz and S&C Properties vs City of Aiken. Subsequently, the Columbia law firm of Robinson, Gray, Stepp, & Laffitte, LLC was hired to represent the City.
A hearing on the case was delayed until June 8, 2023, when a day of testimony was conducted in Aiken City Council chambers. Two weeks later, Aiken City Council’s designated hearing officer Kelly Ziers issued a ruling in favor of the city.
The Zier ruling stipulated that the Woltzes and S&C Properties owed $13,086 for four years of back taxes and penalties for ten properties within Aiken city limits, and an undisclosed amount for the more than dozen properties located outside of the city that are not subject to a business license tax by any other government body. Zier also ruled that because the Woltzes operated their rental business from within the City, the City was within its rights to collect taxes on all properties, both inside and outside of the city limits.
The appeal reiterated two of the arguments advanced during the city’s hearing; that property owners with only one residential rental unit are not required to obtain a business license, and that many of the Woltz’ rental properties are located outside of the City of Aiken—thus “taxing real properties which are not located within its jurisdiction or its lawful right to do so.”
In response, the City filed a Motion to Dismiss, contending that the Administrative Law Division lacks jurisdiction because the Woltzes were challenging the constitutionality of portions of the business license tax Ordinance.
The Motion to Dismiss was denied in December 2023, with Chief Administrative Law Judge Ralph King Anderson III writing, in part, that
“This court has subject matter jurisdiction in this court…Petitioners do not argue the Ordinance is unconstitutional in all of its applications; rather, they argue it is unconstitutional as applied to their particular circumstances as owners of more than one rental property in, and outside of, the City of Aiken.”
In other words, the administrative court ruled that it can hear challenges on the parts of the Ordinance applicable to the Woltzes case, though not the entire Ordinance since most of it does not directly pertain to the case.
Since the denial of the Motion to Dismiss, the contested case hearing date has been pushed back three times, the most recent due to Hurricane Helene. It is presently scheduled for January 21-22, 2025.
According to invoices obtained via a Freedom of Information Act request, the City of Aiken has paid more than $80,000 in legal fees to the Columbia law firm of Robinson, Gray, Stepp, & Laffitte, LLC. between September 1, 2022 and October 1, 2024
Nearly one quarter of the fees, $15,760.20, was charged during the month of June 2023 (Figure 1), when the first hearing was held. A nearly equal amount was spent preparing and defending the City’s Motion to Dismiss at the end of 2023. At this rate, the case will likely cost the city more than $100,000 for a case involving just a fraction of that amount in disputed rental properties back taxes.
Figure 1: Portions of the June 2023 invoice, the most expensive month for the city in the appeals case.
Footnote:
* Robinson, Gray, Stepp, and Latiffe monthly invoice amounts and hours billed for the Woltz business license appeal, for period of September 1, 2022 through October 1, 2024. Data obtained via a Freedom of Information Act request.
Alongside City Managers, City Attorneys are among two of the most powerful unelected officials in most municipalities. The Aiken City Attorney has served at the pleasure of Aiken City Council since the Council-Manager form of government was adopted in the mid-1950s.
Since 2012, Aiken’s Municipal Code has dictated that the City Manager is responsible for preparing the City Attorney’s contract, which Council must then approve.
Attorney Gary Smith III has served as the City Attorney since 1995. No formal contract, as defined by city code, exists between him and the City Council.
According to City of Aiken records, the City Attorney’s office is composed not only of Mr. Smith, but the entire law firm of Smith Massey Brodie Guynn and Mayes (SMBGM); some of whose members perform city work under his direction on an as-needed basis. One prominent example from May 2021 involved a title search and document preparation directly related to Project Pascalis.
By Don Moniak August 10, 2024
Local governments employ legal counsel that provide a variety of legal services, including preparation of ordinances, contracts, and leases; providing legal representation and advice; filing court actions against nuisance properties; acting as the Parliamentarian during public meetings and hearings; and recommending other attorneys for more time-consuming, specialized, and complex legal matters.
South Carolina towns, cities, and counties can hire full-time, in-house attorneys whose only client is the government body; or independent contractors that may be part-time and have private clients. Independent contractors are also not subject to the state’s ethics laws.
Aiken County employs the in-house approach, with Attorney Brad Farrar occupying the position. The Cities of Aiken and North Augusta both employ independent contractors—Gary Smith III and Kelly Zier, respectively. (In most situations, the prosecution of criminal cases is tasked to the Solicitor’s offices).
Aiken City Attorney’s Office: 1958-1994
In 1958 Aiken City Council approved its first City Code of Ordinances after the formal adoption in 1955 of a Council-Manager form of government. Section 4.01 stated that the City Attorney “shall be appointed by and subject to removal by the City Council.”
By the time the City Code was revised in 1980, both changes in wording and structure had occurred.
First, a Department of Legal Services had been established that included both a City Attorney and a City Solicitor; with the latter representing the city in all “criminal and related proceedings” and the former representing the City in other matters.
Second, the new code stated that “The city attorney and city solicitor shall be appointed by, and serve at the pleasure of, and be subject to removal by the city council. The city council at its discretion may appoint one person to serve as the city attorney/city solicitor, and in the event of such appointment, it shall be considered one position or office.”
From 1985 to 1993, the late Attorney Jim Holly was the last City Attorney to hold this in-house, dual role.
In October 1993, Mr. Holly requested that Council convert him to a part-time status as City Attorney, with a “full-time staff attorney that will also serve as the City Solicitor.” In February 1994, this arrangement was formally approved when Council appointed Paul Anderson as City Solicitor.
After converting to part-time status, Mr. Holly became a concurrent partner in the law firm of (Robin) Braithwaite, (Clark) McCants III, (James) Holly, and (Gary) Smith III. The firm’s specialty was representation of insurance firms. The only local clients were SRP Credit Union and the City of Aiken.
Figure 1. Colony Park Drive offices of SMBGM.
The Gary Smith III Era: 1995 to Present.
After City Attorney Holly resigned in early 1995, attorney Gary Smith III, who had also joined Braithwaite et al as a partner in 1992, submitted a proposal to City Council to become the next part-time City Attorney, again operating as an independent contractor. The proposal implied that the entire law firm was also under retainer:
“We would like to propose offering our firm’s services to the City of Aiken in the following manner. The City would pay a monthly retainer of $2,500 at the beginning of the month. The present retainer is $3,000. In return for this retainer, the City would receive up to 30 hours of billable time. Any hours over this 30-hour minimum would be billed to the City at the rate of $80 per hour—the present billing rate is $90 per hour.” (emphasis added in italics). (Pages 7-11)
On July 24, 1995, after receiving several other resumes during the search for Holly’s replacement, Aiken City Council held a Special-Called Meeting to discuss appointing Mr. Smith. At the end of the meeting, he was approved by a unanimous vote. The meeting minutes read:
“Councilman Radford moved, seconded by Councilman Perry and unanimously approved, that Gary H. Smith III, of Braithwaite, McCants Holly & Smith Attorneys, be appointed to serve as part-time City Attorney on a monthly retainer basis.”
Braithwaite, McCants, and Holley all moved on to different practices, and Braithwaite et al was gradually supplanted as the City’s law firm by Smith, Massey, Brodie, Guynn and Mayes (SMBGM); whose website lists a founding date of 1992–the same year Smith became a partner in Braithwaite et al.
Unlike Braithwaite et al, SMBGM specialized in different areas of the law. No longer was the city employing a firm whose clients were predominantly distant insurance companies; it was employing a firm that also eventually specialized in real estate law—much of which involved local cases.
In 2001, City Council adopted another updated Code of Ordinances, but not until 2012 did the Ordinance governing the Department of Legal Services change.
That change came in March of 2012, when City Council amended that part of the city code, Section 2-281, pertaining to the legal department. The amendment (Figure 2) involved three substantive changes that all increased the power of the City Manager over the legal department.
First, the City Manager was granted the power of consent to combine or dissolve a combined City Attorney/City Solicitor position.
Second, in the absence of a combined position, the City Manager was granted the power to appoint, and terminate, the City Solicitor, giving them full authority over the position.
Then-City Manager Richard Pearce explained that it was already the practice for the City Manager to supervise, and evaluate the performance of, the City Solicitor. He rationalized that the practice was at odds with City Code, and the code needed to be consistent with the practice.
However, the power to appoint the Solicitor had not been the practice prior to the amendment. As it was written, the City Council relinquished power in a manner that provided the City Manager veto power over any decision by Council to restore a combined City Attorney/City Solicitor position.
The amendment also mandated that a contract for both offices “be prepared by the city manager’s office;” with contract terms to include “compensation details, malpractice insurance coverage requirements, worker’s compensation insurance requirements, and other details which may be deemed important by the city manager and city council.”
Figure 2: 2012 Amendment to City Code of Ordinances pertaining to the Department of Legal Services.
No such contract has ever been produced for the City Attorney position. In neither of the meeting minutes for 3/12/12 and 3/26/12 were there discussions of a grandfather clause for Mr. Smith; nor were there any indications of when or if Council expected a contract to be produced and executed for the City Attorney position.
On December 28, 2016, Mr. Smith wrote to then City-manager John Klimm to ask for an increase in his firm’s retainer fee, indicating again that it was the firm being hired, not just himself, and that the firm’s other attorneys could work on city business “when their services may be needed.” This ultimately meant that the fees charged by the firm were in fact variable.
“Currently, the City pays my firm a monthly retainer of $3,000.00. In return, the City receives 30 hours of legal services. Additional hours are charged at the rate of $110.00. This rate schedule has been in effect since 2002. I am aware that my firm receives a substantial amount of fees from the City each year. I do want you to be aware that this hourly rate is substantially lower than my usual hourly rate of $400.00 that I charge my private clients.
I would propose to modify my firm’s fee agreement as follows. The monthly retainer would be increased to $4,000.00 with the City still receiving 30 hours worth of service. The City would be billed for hours in excess of the 30 hours at the rate of $150.00 per hour. When services may be needed from other lawyers in my firm, those services will be billed to the City at their normal billing rate. I know this is a significant increase, however, it is the first time I have asked for a modification of the fee arrangement since 2002.” (emphasis in italics added).
Mr. Klimm did not prepare a contract for City Council review. Meeting agendas for both of Council’s January of 2017 meetings do not indicate that he informed Council of the pay increase. The 2016 fee arrangement, coupled with the 1995 proposal, continues to function as a contract—one which only identifies compensation but no other elements of the city code’s requirements.
(The current legal requirements for the Department of Legal Services remain defined by Section 2-281 of City Code.)
The Firm’s City Workload
Section 2-285(9) of the Aiken Municipal Code allows for the City Attorney to “assign any of his duties “to another attorney retained or employed by the city.”
Those attorneys, as inferred in Mr. Smith’s 1995 letter and described more directly in his 2016 letter, can include his law firm partners and associates. The 1995 and 2016 letters apparently provide that engagement commitment.
It is difficult to gauge what percentage of the City Attorney’s office workload is completed by other members of the SMBGM law firm. The firm’s invoices to the City for the period between January 2021 to May 2023 show at least 53 billing entries involving Gary Smith’s partners or associates (Table 1).
SMBGM Law Partner
Number of Interactions
Brad Brodie
4
Mary Guynn
46
Ray Massey
2
Scott Patterson
1
Table 1: Number of billing entries for interactions involving SMBGM partners or associates; based on invoices obtained via Freedom of Information Act requests. The invoices provided have enough redactions, under the guise of attorney-client privilege, to shroud the purpose of any billing that involved his partners or associates. In other words, it is difficult to decide whether the billings were for city business, private business, and/or an adversarial situation. Only unredacted invoices would set the record straight.
Only three separate invoices from an SMBGM partner were included in the billing invoices obtained via FOIA requests. All three were from Attorney Mary Guynn. One involved a Smith-Hazel Park matter, but two other matters were redacted.
The Project Pascalis Job
Up until Project Pascalis, complaints of real or perceived conflicts of interest involving the City Attorney’s office were absent from the public record (2); and any ethics concerns would probably have remained under the radar, if they even existed, if not for SMBGM partner Ray Massey’s involvement in the Pascalis project.
Figure 3: April 30, 2021 meetings between City Attorney Gary Smith and two of his partners. The redacted lines are believed to say “status of the Shah and Anderson property,” and “status of Project Pascalis.”
As explained in The Pascalis Attorneys and The AECOM Plan, the first rendition of Project Pascalis began to quickly unravel on April 30, 2021. That day Smith had separate meetings, of which the subject is redacted, with partners Mary Guynn and Ray Massey. (The subject of the Guynn meeting appears to end with “property.”)
After May 6, 2021, the AMDC, City of Aiken, and the Aiken Chamber of Commerce scrambled to salvage the Project Pascalis property acquisition contracts held by WTC Investments LLC (Agent: Ray Massey). The process involved a title search and preparation of an “assignment” contract to transfer $9.5 million worth of Purchase and Sales Agreements (PSAs) from WTC to the Chamber of Commerce in what functioned to be a property holding contract for the City.
As a result of the transfer of control of the Pascalis properties, WTC Investments did not lose $135,000 in earnest monies.
The legal agent for WTC Investments LLC was, and remains, SMGBM partner Ray Massey; who in part represented WTC during the purchase negotiations for the Pascalis properties, and assisted with the contract preparations. And, as explained in the Project Pascalis Includes the Alley series, Massey was the leader of the investment group Aiken Alley Holdings, which owned a key property in the first version of the Pascalis project (3).
An SMBGM invoice for June 30, 2021, submitted under Ms. Guynn’s company email account, involves work completed by Guynn towards transferring control of the Pascalis properties to the Aiken Municipal Development Commission (AMDC) and City of Aiken via the Chamber of Commerce.
The invoice was broken down into two billings for May 17, 2021—document preparation and a title search (Figure 4).
Figure 4: Invoice from Mary Guynn for work related to Project Pascalis. The title searches are obviously related to the project, as they were required for the transfer, or “assignment” of the Purchase and Sale Agreements (PSAs) held by WTC Investments to the Aiken Chamber of Commerce. The 2.3 hours, upon information and belief, involved the preparation of the Assignment documents. The May 2021 invoice from the only other attorney to work on the project, Gary Pope Jr of the Pope-Flynn law firm, billed no work for the period May 6 to May 31st. This left only the City Attorney’s law firm as the best and only available candidate to prepare an Assignment of a Purchase and Sale Agreement—as Ms. Guynn is a prolific and highly competent real estate attorney. City Manager Stuart Bedenbaugh, who is known to quickly deny allegations, has twice refused to confirm or deny that SMBGM prepared the Assignments of the Pascalis properties to the Chamber of Commerce, an action that saved WTC Investments $135,000 in earnest monies. In other words, it makes good sense for Guynn to have prepared the contracts—-except for the fact that the original contracts were prepared by members of SMBGM and the contracts involved the city obtaining commercial properties at a cost of $9.6 million.
SMGBM partner Ray Massey is the registered agent for WTC, represented the firm in negotiations for the Pascalis properties, and led an investment group whose property was within the original Project Pascalis footprint. Unless the City of Aiken provides an unredacted version of this invoice and discloses its contents, there is no way of knowing whether or not it states “Assignment of Shah and Anderson properties to Aiken Chamber of Commerce.” But, based on all available information, the wording in red is considered accurate.
According to SMBGM’s May of 2021 invoices, Smith communicated with Guynn via email twice and in a meeting once on May 17th. Two of the billings involved document reviews, while another involved a meeting. Another billing entry on May 14th names both Guynn and AMDC Executive Director and Pascalis project organizer Tim O’Briant. That was the day that WTC and the Chamber almost consummated the sale of property that WTC did not own. (4) One week later the Pascalis properties were assigned to the Aiken Chamber of Commerce; meaning that at least some of real estate legal work—that was technically conducted on behalf of the Chamber, and which saved Ray Massey’s client and investment partner WTC Investments, LLC, $135,000 in earnest monies—was billed to the City of Aiken.
Figure 5. Screenshot of the part of the May 2021 SMBGM invoice with billing information from City Attorney Gary Smith.
_______________
Coming Next: The City of Aiken’s Alley Project is Another Long Mismanaged Situation.
Footnotes:
(1) Photo of the 1980 City of Aiken Code governing the qualifications and many of the duties of the City Attorney position. The current qualifications and job requirements are in Section 2-281 of the city code.
(2) Up until the late 2010s, it does not appear that any SMBGM partner was involved with city-related business that involved city property or the potential expenditure of city funds to subsidize a public-private partnership project.
Nor was the issue raised in 2021 when two parcels of city property were sold to an associate in SMBGM, Scott Patterson, for $150,000. Although the sale was approved in September 2021, a title dispute created by a “scrivener’s error” prevented the closing until June 2022. During that time, Mr. Patterson represented the City of Aiken in court proceedings to rectify the title situation. In June 2023, half of the property was sold for $280,000; yielding a $130,000 profit in one year; with two more acres still on the market.
Smith did on occasion properly recuse himself when his partners were involved, even peripherally, in any city-related business; a practice that increased after ethics issues were raised during Project Pascalis and in the Blake et al vs City of Aiken et al lawsuit where Smith was named as a defendant. He was also named as a defendant in two appeals of the Newberry Street privatization ordinance.
All those cases were dismissed due to jurisdictional issues—the SC Ethics Commission, and not State District Courts, are considered the arbiter for all ethics complaints involving public officials.
Smith is not considered a public officer or member by the Commission, and instead is considered an independent contractor. As such, he falls under the Commission’s precedent-setting ruling in 2014 that independent contractors are not subject to state ethics law.
(3) In the May 4, 2021, memorandum to the AMDC Executive Committee, AMDC Executive Director Tim O’Briant described an offer from Weldon Wyatt:
“(Wyatt) asked about our interest in the Alley fronting properties (likely $3 million) and the Harrison insurance parcel ($700,000 +). He would very much like those included in any deal. I told him we had no interest and could complete a slimmed project on solely the Shah and Anderson parcels.”
The “Alley fronting properties” had been purchased by Aiken Alley Holdings LLC on March 15, 2021. At the time of the memo, WTC Investments, LLC had a contract to purchase the adjacent Harrison insurance building on Newberry Street. Sometime after May 6th that contract was assigned to Aiken Alley Holdings, which bought the property on June 6, 2021.
(4) On May 14, 2021, WTC and the Chamber were prepared to sign a Purchase and Sale Agreement (Figure 6) for the “Shah Property”—but WTC only owned the right to buy the property, not the right to sell it.
Thus, an assignment of the property contract from WTC to the Chamber had to first occur. It is believed to have been prepared by the City Attorney’s law firm, and then passed on to the involved parties.
A document titled “HotelAiken.doc” was forwarded by Tim O’Briant to Ray Massey on May 18th; with O’Briant writing “Does this suit you all?”
Massey replied, “Let me get with Chip (Goforth);” a partner in WTC Investments (“the “C” in WTC).
The date of the final transactions was May 25, 2021. First, the assignment was signed (Figure 7). Then, a newly prepared PSA between the Shah family’s entities and the Chamber was signed (Figure 8). The latter PSA included the provision that the Chamber could make a future assigment to the City of Aiken or the AMDC. (Figure 9). The same process occurred with the Anderson Property (Newberry Hall) on June 3, 2021.
Six months later, the AMDC would acquire the properties for the original collective price of $9.6 million, thus formally initiating the second version of Project Pascalis; and eventually kicking off perhaps the most contentious debates ever over the future of downtown Aiken. A month after the AMDC acquired the properties, a Purchase and Sale Agreement was signed with RPM Development Partners. RPM, which stands for Raines, Purser, and Massey, had Ray Massey sign that contract to purchase the Pascalis properties for $5 million—a nearly fifty percent reduction in the price paid by the AMDC.
Figure 6: The legally invalid May 14th PSA between WTC and Chamber of Commerce. Figure 7: Signatures for the Assignment document between WTC and the Chamber, which was necessary prior to the Chamber signing a PSA with the various Shah entities. Figure 8: PSA signatures of Chamber of Commerce and the various Shah family enterprises.Figure 9: Assignment language in the May 25, 2021, Shah-Chamber PSA.
On December 5, 2023; then-City of Aiken Economic Development Director Timothy O’Briant was terminated by City Manager Stuart Bedenbaugh. By day’s end the termination was classified as a voluntary resignation.
Six months after O’Briant’s abrupt departure, Aiken City Council approved a Fiscal Year 2024-2025 budget that defunded and disbanded the four-year old Economic Development department.
by Don Moniak July 3, 2024 (updated July 26, 2024)
On December 5, 2023, former Aiken Economic Development Director Timothy O’Briant reportedly resigned, without notice, from his position with the City of Aiken. It was the City’s most notable high-level employee departure since City Manager John Klimm resigned in early 2018.
The resignation occurred nearly three years after the Aiken Standard had dubbed O’Briant as the “Economic Development Czar.” In his other capacity of Executive Director of the Aiken Municipal Development Commission, O’Briant was the primary orchestrator of Project Pascalis; perhaps the most controversial, and certainly the most ill-fated and expensive, economic redevelopment plan in City of Aiken history.
In a brief January 8, 2024, story on O’Briant’s new position as Administrator for the City of Pickens, SC, Aiken Standard reporter Matthew Hensley noted that “O’Briant didn’t discuss his abrupt departure from Aiken city government on Dec. 5 or some of the circumstances that preceded it, an arc that stretched from the controversy surrounding the failed Project Pascalis to the mayor he served, Rick Osbon, meeting his ouster in Teddy Milner.”
As explained in Much More than a Figurehead, city employees serve at the pleasure of the Aiken City Manager. Neither the Mayor nor the rest of City Council can legally interfere in personnel matters, except “for the purposes of investigation and inquiry.” Mr. O’Briant was not an exception to this aspect of Aiken Municipal Code; he did not answer directly to the Mayor of Aiken or to City Council as a whole.
Records obtained via Freedom of Information Act (FOIA) requests (1) to the City of Aiken provide insights into an eight-month chain of events in 2023 that led City Manager Stuart Bedenbaugh to compel Tim O’Briant to abruptly depart the City’s payroll.
The paper trail shows that, prior to submitting his resignation letter on December 5, 2023, Mr. O’Briant was asked to resign by City Manager Stuart Bedenbaugh. The justification for this action was that O’Briant had used the power of his official position to obtain city property, in this case a city security surveillance video, and then used it for personal use in a private lawsuit. Bedenbaugh alleged the video was obtained under false pretenses; an assertion that was vigorously challenged by O’Briant.
However, the mere use of a city record for personal gain is a violation of the City’s Employee Handbook; in which the Code of Ethics mandates that employees “refrain from using their positions for personal gain and keep confidential all information not available to all citizens that is acquired by virtue of their position.”
Furthermore, Section 2-3 of the Aiken Municipal Code states that:
It shall be unlawful for any person to take any record from any municipal office of the city, without the consent of the officer having control of such records.
When O’Briant failed to resign, Mr. Bedenbaugh, who is the officer with final say over city records, terminated him. Only five minutes after Bedenbaugh notified City Council of his termination decision, O’Briant submitted a resignation letter to Bedenbaugh. Later in the day, he emailed Bedenbaugh to dispute the claim that he’d surreptitiously obtained the confidential city property, and cc’ed that email to City Council. By the end of the day, Bedenbaugh had agreed to reclassify the departure as a voluntary resignation.
The next day, O’Briant wrote to Bedenbaugh to request a severance pay package. His email contained an implied threat of a lawsuit against the City for wrongful termination. Ultimately, a severance agreement was reached and a payout of up to $36,500 was made—although the final amount has not been confirmed.
Six months later, City Council approved the City’s Fiscal Year 2024-2025 budget. Other than carryover funds from the previous year, the Economic Development Department was defunded. The remaining staff of one was transferred back to the City Manager’s office, where economic development tasks originally were managed prior to the formation of the new department in January 2020.
The Paper Trail
The chain of events leading to Mr. O’Briant’s departure from the City payroll began on April 17, 2023. The information is presented in chronological order, but the full chronology—particularly the events prior to April 27, 2023—was not fully known until mid-May 2024. (Updated July 26, 2024 with additional documentation obtained since Jun3 1, 2024.
April 17, 2023. After receiving an unwritten request, City of Aiken IT Director Robert Popenhagen provided O’Briant with security surveillance video footage of City Council chambers from Council’s April 10th meeting. The request was made in-house, not via a written FOIA request made as a private citizen.
(The South Carolina Freedom of Information Act (SC FOIA) specifically identifies such security surveillance video as not subject to public disclosure; it does not even qualify as a public record under FOIA:
“ Information relating to security plans and devices proposed, adopted, installed, or utilized by a public body, other than amounts expended for adoption, implementation, or installation of these plans and devices, is required to be closed to the public and is not considered to be made open to the public under the provisions of this act.” (SC 30-4-20(c))
Indeed, in response to FOIA requests, the City has at least twice cited this provision when denying public access to City Council Chambers surveillance videotapes.)
In a brief April 17th email exchange with O’Briant, Popenhagen also referred a second unwritten request from O’Briant for body camera footage of the post-adjournment period of the April 10th meeting to Aiken Public Safety (Figure 1).
Twenty minutes later (Figure 2, paragraph one), O’Briant filed a FOIA request to the City, from a private email account, for the body camera footage, asking that it be preserved “as potential evidence in pending or imminent civil litigation” (Figure 2, paragraph two).
April 21, 2023. Aiken City Solicitor Laura Jordan, who serves as the City’s FOIA Officer, denied the FOIA request. Since SC law only allows release of body camera footage by law enforcement agencies, she also referred O’Briant to the Aiken Department of Public Safety, (Figure 2, paragraph 3).
Figure 1. Email from IT Director Robert Popenhagen pertaining to the availability of body camera footage from the April 10th City Council meeting. Prior to this email, Popenhagen had provided O’Briant, in his official position, with security surveillance video footage of the meeting. There was no FOIA request filed. Six months later, Aiken City Manager would assert in a response to an actual FOIA request that city staff did not intend to convey the video for O’Briant’s personal use (see Figures 3 and 4).
Under SC FOIA, surveillance footage such as this is specifically “required to be closed.” Access to such video could provide parties with malicious intent with critical insights on security vulnerabilities. (click to enlarge)
Figure 2. Response to FOIA request made by Tim O’Briant, that includes the original request. SC Code 23-1-240(G)(1) states that “Data recorded by a body-worn camera is not a public record subject to disclosure under the Freedom of Information Act.” SC 23-1-240(G)(5) allows for certain private parties to obtain body camera footage, “pursuant to the South Carolina Rules of Criminal Procedure, the South Carolina Rules of Civil Procedure, or a court order.” These parties include “a person who is the subject of the recording,” and “a civil litigant if the recording is relevant to a pending civil action.”
The definition of a “pending” civil action is a lawsuit that has been filed, but is still in the litigation process. There is no mention of “imminent” civil action in the SC Code. As such, O’Briant arguably had no statutory right to the body camera footage, as there was no “pending” civil action, and he was not the subject of the footage. However, the law does provide some discretion to law enforcement agencies. (click to enlarge)
April 27, 2023. O’Briant vs Moniak and Eureka Research, LLC was filed in the Second Judicial Circuit’s Court of Common Pleas. The lawsuit alleged slander and libel, in part based on discussions made during the post-adjournment period of the April 10th meeting. City Manager Stuart Bedenbaugh assured City Council in an email that the lawsuit was filed as a private individual, and not as a city employee (The Complaint and subsequent filings are available at O’Briant vs Moniak et al).
(Updated, 7/26/24: In responses to two FOIA requests, City Solicitor Jordan acknowledged withholding emails between O’Briant and his personal attorney that involved the lawsuit; meaning that O’Briant was conducting personal business of a legal nature though his city email account—-see Footnote 1).
November 3, 2023. The surveillance video footage (3) of the April 10, 2023, Aiken City Council meeting was introduced and shown by the Plaintiff during the Defendant’s Deposition.
“1. Copy or copies of the City of Aiken’s protocol, procedure, rule, or any other record that governs usage, distribution, availability, retention, and disposition of City of Aiken Municipal Building surveillance videos, including but not limited to Aiken City Council Chambers.
2. A copy of any subpoena, request for information , and/or FOIA request for all of, or part of, the surveillance video of Aiken City Council April 10, 2023 public meeting, taken from the back of near the back side of the room and facing Council.
3. A copy of the chain of custody record, letter of transfer, or any other record detailing the process by which the April 10, 2023 surveillance video of City Council Chambers, both during and/or after its public meeting, was provided to the law offices of John Harte.”
November 27, 2023. Aiken City Manager Stuart Bedenbaugh personally responded to the FOIA request by writing that O’Briant had obtained the video without divulging his intent to use it in a personal civil action (Figure 3).
Figure 3. Aiken City Manager Stuart Bedenbaugh’s official response to FOIA No. 374-2023. (click to enlarge)
Tuesday, December 5, 2024.
10:46 a.m. Bedenbaugh informed City Council members that he had terminated O’Briant’s employment, “effective immediately,” due to the procurement and use of the surveillance video for personal purposes (Figure 4).
Figure 4. The email from City Manager Bedenbaugh to Aiken City Council. (click to enlarge)
10:51 a.m. O’Briant emailed a resignation letter to Bedenbaugh. (Figure 5). The Aiken Standard quoted from the letter in a report published three days later.
Figure 5. The resignation without notice letter. The City of Aiken’s Employee Handbook states that, “Any City employee resigning from their position is expected to give at least a 2 week written notice to the Department Director. In addition, the employee is expected to complete an exit interview.” (click to enlarge)
1:34 p.m. Referring to Bedenbaugh’s email to Council, City Councilman Ed Girardeau wrote to O’Briant, in part, that “ Kay left a message that she was upset and Ed’s was what the F*** is going on?” (Figure 6).
Figure 6. Email from City Councilman Ed Girardeau. “This” referred to was the email conveying the termination, as seen in Figure 4. Kay appears to refer to Councilwoman Kay Brohl, and “Ed” to Councilman Ed Woltz. (click to enlarge)
2:52 p.m. O’Briant wrote to Bedenbaugh, cc’ed to all City Council, APS Chief Charles Barranco, assistant City Manager Mary Tilton, Human Resources Director Tracy Lott, and former Mayor Rick Osbon, disputing Bedenbaugh’s version of events (Figure 7).
(Update 7/26/24. In his letter, O’Briant alleged that Bedenbaugh was aware that the video had been obtained, and had been kept fully informed of the status of O’Briant vs Moniak. More emails recently obtained via FOIA do provide some support for the latter assertion. Three emails show that O’Briant was monitoring Moniak’s FOIA requests and forwarded via email three requests (See Footnote 4 for an example).
Figure 7. Letter from Tim O’Briant to Stuart Bedenbaugh. In the letter, Mr. O’Briant argued that the surveillance video was subject to release under SC FOIA rules, even though SC FOIA specifically states that security surveillance does not qualify as a public record subject to FOIA.
However, O’Briant never filed a FOIA request for the video, but instead obtained the video via his official city position, and for personal use. As such, the only issue is whether it was obtained under a surreptitious rationale. That issue remains in dispute; a case of “he said, he said.” (click to enlarge)
5:20 p.m. Mr. Bedenbaugh bcc’ed Council that:
“After I sent the below email, I received a follow up email from Tim requesting this matter classified as a resignation and I so accept that.”
Wednesday, December 6, 2024.
8:54 a.m. O’Briant emailed Bedenbaugh with a severance package request of $35,789 (Figure 8). The email also shows that a resignation was demanded prior to the termination (paragraph two) and subsequent reclassification as a resignation; O’Briant threatened a wrongful termination lawsuit, and Bedenbaugh’s termination email to City Council was twice referred to as “defamation.” Attached was a proposed Resignation Release and Covenant that eventually served as the basis for the final severance agreement.
Figure 8. Email requesting $35, 789 severance package, a threat to sue the City, and two allegations that Bedenbaugh had defamed O’Briant. (click to enlarge)
1:52 p.m. Bedenbaugh granted a portion of the severance package request while indicating approval of a sick leave payout and six week’s severance pay required Council approval (Figure 9).
Figure 9. The granting of part of the severance pay. (click to enlarge)
By the end of the day, Mr. O’Briant had provided a signed Covenant and Release that can be viewed here.
Friday, December 8, 2023. Bedenbaugh sent a severance package agreement to O’Briant and asked to concur. A request was made to first remove a clause barring future employment (Figure 10), which was later granted.
Figure 10. Emails indicating that the City had initially proposed a “no rehire” provision. (click to enlarge)
December 11, 2023. Following the end of its regular meeting, City Council met in closed-door Executive Session. The meeting minutes state that:
“Mayor Milner stated City Council will go into Executive Session pursuant to Section 30-4-70(a)(1) and (2) of the South Carolina Code for the discussion of employment, appointment, compensation, or promotion, of a person regulated by City Council and to receive legal advice where the legal advice relates to a pending, threatened, or potential claim or other matters covered by the attorney-client privilege, settlement of legal claims, or the position of the public agency in other adversary situations involving the assertion against the agency of a claim.
“Specifically, the City Council will receive legal advice regarding the possible settlement of a threatened claim against the City.”
Present at the meeting were:
City Manager Stuart Bedenbaugh City Attorney Gary Smith City Clerk Sara Ridout Assistant City Manager Mary Tilton Aiken Public Safety Director Charles Barranco City Solicitor Laura Jordan, IT Director Robert Popenhagen Human Resources Director Tracy Lott.
The minutes of the meeting are sealed, as allowed by SC FOIA, but the subject was most likely the matter of O’Briant’s departure from the city payroll and the associated threat of a civil action or other legal claim against the City.
Defunding and Disbanding the Department
On June 10, 2024, Aiken City Council approved the City’s budget for Fiscal Year 2024-2025. The Economic Development Department budget showed only carryover funds from the previous year. No funds were allocated for salaries.
At City Council’s special May 5, 2024, budget work session, Councilman Ed Girardeau noted the proposed change in the City’s organizational structure (Figure 11 ). According to the meeting minutes: “Councilman Girardeau noted the Economic Development funding over the years and the request for funding for FY 2024 – 25. He asked for an explanation of the funding for Economic Development. Mr. Bedenbaugh stated we have moved some of the expenses to the City Manager’s Office. Ms. Rooks pointed out that the $1.7 million in FY 2023-24 includes the $750, 000 for Kershaw and $400,000 for Williamsburg from Plutonium funds that was designated for Williamsburg and Kershaw Projects.”
No other Council members reportedly objected to the abrupt change in direction. There was never any subsequent discussion of the disbanding and defunding of the Economic Development Department during an additional Council work session, nor during the two public hearings leading up to Council’s approval of the budget on June 10th.
The decision to defund also meant the end of hospitality tax allocations to the Economic Development Department. The department had been entrusted with $323,458 in FY 2022-2023, and budgeted $244,955 in FY 2023-2024. (Figure 12)
Figure 11. The FY 2024-2025 approved by the Aiken City Council on June 10, 2024, showing the end of funding for the Economic Development Department. The budget can be found in the June 10, 2024 Council meeting agenda packet . (click to enlarge)
Figure 12. Portions of the Hospitality Tax budget data for the past three years. (click to enlarge)
Footnotes:
(1) This story remains incomplete due to the City’s classification of numerous emails as “exempt pursuant to S.C. Code 30-4-40(a)(7). Exemption seven pertains to “correspondence or work products of legal counsel for a public body and any other material that would violate attorney-client relationships.”
Among the email records that were exempted was correspondence, via his city email account, between “Mr. O’Briant and his personal legal counsel.” (Figure 13). (Update, 7/26/24: In the response to FOIA request 102-2024 for emails FROM O’Briant between May 1, 2023 and August 30, 2023, City Solicitor Jordan wrote that “There were 50 emails that were withheld as being exempt (due to attorney-client privilege) from disclosure. (Some) emails to and from personal counsel did involve O’Briant v. Moniak.”
Figure 13. Response to FOIA request 393-2023. Ms. Jordan would later state there were eight emails in total that were exempted from this FOIA response. The response shows that Mr. O’Briant was utilizing his city email account, and thus in his official capacity, to communicate with his attorney regarding a private lawsuit. (click to enlarge)
(2) Five FOIA requests in total were submitted in regard to, or related to, this issue; but also served as investigative material for other topics, such as the $20 million SRNL project. Links to the FOIA requests and records provided in the responses are as follows:
Also, on March 5, 2024, the Author made a formal request to Aiken Public Safety, as well as questions regarding the tapes, for access to the body camera footage. Two months later the request was resubmitted and subsequently honored on May 13, 2024. The video, which did not validate any of the Plaintiff’s allegations, could be described as follows:
“A police officer is seen standing next to Moniak in a non-confrontational manner. The officer asked the City Manager and Mayor when the next meeting is scheduled. The answer was April 24, 2024. The officer advised Moniak that he could speak again at that time. Moniak responded, ‘sure, sure, you bet,’ and left the room peaceably.”
(3) The surveillance video could be described as:
“People milled about Council Chambers after adjournment. O’Briant and Moniak could be seen having a short discussion. Moniak approached City Council and entered into a discussion. At the same time, O’Briant departed Chambers through the private door leading to the room where Council holds Executive Sessions. Shortly thereafter, two Aiken Public Safety Officers entered the room and one approached Moniak. Another brief discussion ensued between city officials, the officer, and Moniak; who could then be seen leaving peaceably.”
(4) FOIA 181-2023 (Figure 14) was forwarded to Bedenbaugh one hour and seventeen minutes after it was filed.
Figure 14.
The responses to this FOIA were the topic of Aiken City Council Rules of Order; The story documented how two City Council members criticized another Council member via private, behind-the-back text messages; all during a public meeting.
The Aiken Corporation is presently moving forward as the City of Aiken’s preferred, sole-source, developer of a $20 million “Mixed-Use” downtown office complex being funded by State of South Carolina plutonium settlement funds.
Since the money is allocated for use in developing “offsite” infrastructure for the Department of Energy’s (DOE) Savannah River National Laboratory (SRNL), Aiken Corporation is seeking a long-term lease arrangement with the SRNL operating contractor, Battelle Savannah River Site (BSRA); but has yet to ink any agreement.
The project’s high profile has renewed discussion regarding the relationship of the City of Aiken to the Aiken Corporation.
A review of Aiken Corporation and City of Aiken records indicates the Aiken Corporation is not a subsidiary of the City of Aiken, was not created by Aiken City Council, and does not serve at the discretion of the City Council. Aiken Corporation is a stand-alone, private, not-for-profit organization with a long-standing partnership with City Council that was established by a resolution, but not by ordinance. The Aiken Corporation also is not a Community Development Corporation as defined by South Carolina Law.
Aiken City Council cannot dissolve the Aiken Corporation, but it can defund it. Only the Aiken Corporation’s Board of Directors can dissolve the organization itself. If that were to happen, its assets and properties would be transferred back to the City of Aiken.
The City and Aiken Corporation also have a Landlord-Tenant relationship. The City of Aiken has a 99-year ground lease arrangement with Aiken Corporation for the property upon which the Aiken Corporation’s “Amentum” office building is situated.The City of Aiken has the right to sell the property to a third party and, under certain conditions, can terminate the ground lease and take ownership of the facility. The Existing Landlord-Tenant Relationship
The Aiken Corporation (ACorp) is best described as a not-for-profit organization whose primary contributor is the City of Aiken. Its major source of income derives from a quarter-million dollars per year of rental revenues (1) from its Newberry Street office building currently leased by the Amentum Company. The organization also has a Subchapter S company called L.E.D. Inc. which acts as its property management arm.
All income is designated for use to advance the Aiken Corporation’s mission “to diversify and expand the City’s economic base and improve the quality of life in Aiken.”
The most recent three-year lease between ACorp/LED and Amentum was signed on January 23, 2023. The current rent is $20,500 per month.
The Aiken Corporation Building sits on property owned by the City of Aiken. In December of 2000, the City signed a 99-year “ground lease” with the Aiken Corporation, giving them control of the property as well as an option to purchase it. While taxes are paid by ACorp on the building itself, the actual land is exempt from taxation due to its government ownership (Figure 1).
Figure 1: Aiken County Assessor’s Office property values for the Aiken Corporation (Amentum) building at 106 Newberry Street, SW. Land value and assessment is set at $0 due to City of Aiken ownership. Aiken Corporation owns the building, which was funded by City of Aiken loans, and has leased it to a series of Savannah River Site contractors since 2001. The City of Aiken owns the actual land and leases it to Aiken Corporation under the terms of a 99-year ground lease.
Aiken Corporation, and its subsidiary the Aiken Downtown Development Association (ADDA), is, and always has been, dependent upon city resources. Annual financial reports (2) consistently show the City of Aiken is its largest, and generally its only, contributor (Figure 2). The City’s purchase of the Newberry Street property was financed by twenty years of rental revenue from facility lease-holders (3). City staff assists the organization with its monthly books. Even the largest contribution in 2022, a 25-acre parcel of land off York Street, was originally intended as a donation to the City of Aiken. (4).
Figure 2: FY 2022 (July 1, 2021 to June 30, 2022) Aiken Corporation tax filing, showing the City of Aiken as the sole contributor. In FY 2021, the city’s contribution was $60,000. Other cash funds in FY 2022 were derived from fundraisers ($25,546) and ADDA membership dues ($18,000).
The 99-year ground lease includes a provision allowing the City to sell the property, at which time Aiken Corporation could exercise the right of first refusal and purchase the property. Another provision allows the City, as landlord, to terminate the lease under certain conditions, and take ownership of the building (5).
In a sense, the Aiken Corporation could be viewed more as a steward of City property than a landlord in its own right. It owns a building that can revert to city property, and does not own the property upon which the building sits.
Aiken Corporation Charts a New Future.
One year ago, the organization seemed to be almost a historical footnote, an increasingly obsolete entity that was almost entirely displaced in 2019 by the ordinance establishing the Aiken Municipal Development Commission (AMDC).
As detailed in the three-part series The Amentum Model, the Aiken Corporation’s heyday was from the late 1990s to about 2010. The organization has been relatively dormant since that time. Today’s organization mostly deals in six-figure projects whose budgeting is, directly and indirectly, entirely dependent upon City of Aiken contributions, land transfers, loan forgiveness, and use of city assets.
In contrast to its usual six-figure projects, ACorp is currently pursuing an eight-figure project involving $20 million of the State of South Carolina’s plutonium settlement. The funds were legislatively allocated to Aiken County for, “Off-site Infrastructure Improvements for SRS/National Lab, including the Aiken Technology/Innovation Corridor.” The City of Aiken was awarded the funds after SRNL declared a preference for locating the facility within the city.
The project goal originally involved construction of a 45,000 square-foot office building on the downtown “Pascalis properties” for use by SRNL. The project has devolved into a 36,000 square-foot “Mixed-Use” facility, a colloquial term for a “Spec” building. On September 25th, ACorp’s Board adopted the recommendation of its subcontractor, McMillan Pazdan and Smith, to locate the facility on its newly acquired, one-acre Newberry Street, NW property; and not on property acquired by the city for the Pascalis project.
Despite the downsizing and movement to undeveloped vacant lots, the rough cost estimate of $20 million has not changed. Although unequivocally intended for use by SRNL, the future use has also devolved into mere speculation that SRNL will sign a long-term lease. Such an arrangement could net ACorp upwards of a half-million dollars in additional rental income; income that would be entirely dependent upon the budgetary whims of the federal government.
To sign a lease, SRNL’s operating contractor needs approval from the Department of Energy, as well as an annual allocation of upwards of a half-million dollars from the SRS annual budget. To date, this has not occurred. In July of this year DOE/SRNL distanced itself from the project.
The pursuit of this lucrative project in the downtown retail district began shortly after the cancellation of Project Pascalis. Following the AMDC vote to end that effort, the City of Aiken reinvigorated the Aiken Corporation by secretly enlisting it to pursue the $20 million SRNL project.
The Aiken Corp’s public prominence took a step up in March of this year, when it entered into a no-bid, $250,000 contract with the City in which it was cited as “The Developer.” The development role was contractually limited to “pre-development,” which included the pursuit of long-term leases with third parties—understood to mean the Savannah River National Laboratory.
Despite continued uncertainties and a lack of amendments to the March 13th contract, Aiken Corporation has moved forward with a Request for Qualifications (RFQ) to provide Architectural and Engineering services for the proposed “Mixed-Use” facility.
Figure 3: The Aiken Corporation website homepage features three men toasting with drafts of beer in front of the former Aiken Brew Pub, which is currently being renovated with private funds.
Mixed Messages About the Relationship.
Despite, its 27-year history and the emergence of the $20 million SRNL project as an Aiken Corporation endeavor, its actual relationship with the City remains murky.
This past April, City Attorney Gary Smith wrote to the South Carolina Ethics Commission that,
“The Aiken Corporation is a 501(c)(3) corporation that was formed by (Aiken) City Council in 1995 to promote economic development in the City of Aiken. Historically, two City Council members have served on the Board of Directors of Alken Corporation. The Bylaws of the Aiken Corporation provide that in the event of dissolution, the residual assets of the organization will be turned over to the City of Aiken to be used exclusively for public purposes.”
The Ethics Commission then issued an informal opinion that referred to the Aiken Corporation as an example of “a board, foundation, agency, etc. which is an arm or child of the council, i.e. created by council and existing solely at the discretion of council.”
On September 25th of this year, four other descriptions emerged.
On the morning of the 25th, the ACorp Board of Directors approved a recommendation for siting the “Mixed-Use” office building it hopes to lease to SRNL. K.J. Jacobs, representing Aiken Corporation subcontractor McMcMillan Pazdan and Smith, described his firm’s client as a “subsidiary:”
“The City does not control (the Old Hospital) site. We looked at the four sites controlled by the City or its subsidiaries.”
The context for that description was the elimination of the Old Hospital property from SRNL project consideration, and selection of its own property on Newberry Street NW; a process described in The Bomb Plant Reveal…Bombs.
Mr. Jacob’s assessment was not verified at Aiken City Council’s meeting that evening, where ACorp officers presented its recommendation to build the SRNL/“Mixed-Use” facility on its own property, which itself was acquired in an unusual fashion.
The discussion began at the fourteen-minute mark of the video-taped meeting. Board member Sam Erb cited the organization as a “Community Development Corporation,” which by legal definition is an independent organization; but did not describe the relationship.
Then, in response to a request by Aiken resident Lisa Smith for Council to explain the relationship between the two entities, Mayor Rick Osbon stated that the Aiken Corporation “seems almost like a cousin to the City.” His assessment was followed by ACorp Chairman Buzz Rich’s description of the relationship as a “private-public partnership.”
A review of the history and the terminology suggests that Buzz Rich had the only accurate description—that Aiken Corporation is a private organization that has maintained a long-term partnership with the City.
Is the Aiken Corporation a Community Development Corporation?
Unless the City or Aiken Corporation can provide evidence to the contrary, the answer is no. The ACorp’s incorporation papers from 1995 identify the organization as a 501(c)(3) “formed exclusively for charitable purposes,” with the mission to “diversify and expand the city’s economic base and to improve the quality of life in Aiken.” Early efforts towards that mission are described in a 2009 USC-Aiken Economic Impact Study.
Neither its founding documents nor its by-laws specify that ACorp is a Community Development Corporation (CDC). The Aiken Corporation meets only two of the six legal criteria (6) for a CDC as defined by SC 34, Chapter 43.
Downtown Aiken is a high-rent district, relative to Aiken County as a whole. On a per-capita and median income basis, the City of Aiken is one of the more affluent municipalities in South Carolina.
While the Aiken Corporation did conduct work on the Toole Hill housing redevelopment project earlier in this century, its primary mission has been focused on downtown Aiken, not on the low-income areas of Aiken. Presently, there are no representatives from Aiken’s lower income Northside communities on its Board of Directors, nor are any required per its recently amended by-laws.
Simply put, the Aiken Corporation is not a South Carolina Community Development Corporation.
Is Aiken Corporation a subsidiary of the City of Aiken that serves at the discretion of City Council?
This question has a two-part answer. City Council could choose to both defund ACorp and terminate its 27 year-old partnership established by resolution. But Aiken City Council cannot dissolve the organization. City officials, including City Attorney Gary Smith, have declined to offer evidence to the contrary.
Unlike the Aiken Municipal Development Commission (AMDC), the Aiken Corporation was not created by Aiken City Council. Whereas the AMDC was formed by a stand-alone ordinance, the Acorp was independently formed.
In fact, according to a June 5, 2002, memorandum from Aiken staff attorney Richard Pearce to Aiken City Council, “Aiken Corporation is not a division of the City of Aiken.”
There is no reason today to doubt Mr. Pearce’s 21-year-old assessment. Whereas the now dissolved AMDC was created by, and served at the discretion of City Council, the Aiken Corporation’s relationship with the Aiken City Council only involves a vague partnership contract not much different than the City’s relationship with the Chamber of Commerce.
”The outline for the Aiken Corporation includes resolutions with the Aiken Corporation, the Chamber of Commerce, and the Aiken Economic Development Partnership. Each of these resolutions simply states that the city will continue to cooperate with each of the groups.”
During the same meeting, Council approved a contract with Aiken Corporation to:
“begin a cooperative economic development effort, led by The Aiken Corporation, and supported by the City of Aiken; to jointly undertake the planning activities required to identify the specific goals and resources necessary for success; and to develop agreements that clearly identify the roles and responsibilities of each party in this endeavor.”
As such, Aiken Corporation can be viewed as an independent party that is dependent upon City of Aiken funding, but not as a subsidiary controlled by the City of Aiken.
Since it was not created by, and does not serve at the discretion of City Council, Council members Lessie Price and Gail Diggs clearly made the correct decision in late March of this year to resign from the Aiken Corporation Board of Directors in order to avoid any potential conflicts of interest. However, the absence of city officials as voting Board members leaves most decisions involving city funds in the hands of a self-appointed, unelected, private organization.
Summary
As a partner, the Aiken Corporation has been an erratic force in City politics and development. The peak of its influence was in the early 2000’s, followed by a slow waning. Its diminished power could be fully reversed with the infusion of a $20 million capital investment from the State of South Carolina via the City of Aiken.
If the “Mixed Use” office building ultimately houses SRNL, the Aiken Corporation stands to yield upwards of a half-million dollars in annual rental revenue. It can then use that revenue derived from government investment to influence downtown area development, but with little to no local government oversight.
Aiken Corporation has attempted to portray its role as an investor, but in reality, the organization has not taken any real risks in its pursuit of developer status and ultimate ownership. Its role is one of a classic rentseeker.
Whether the process in place even complies with the legislative intent of the $20 million allocation for an SRNL facility is questionable. A letter sent in September of this year to State Senators Tom Young and Shane Massey, asking “How is this not a misappropriation of funds?” has yet to be answered.
Footnotes:
(1) While the gross rental income hovers around $240,000 a year, the reported net income is closer to half of that. For example, in FY 2022, Aiken Corporation reported $240,000 in income and $112,000 in rental expenses.
“It is agreed that the rental payments hereunder constitute payment to Landlord for the value of the land which is stated to be One Hundred Twenty Thousand and No/ IOOs ($ 120, 000.00) Dollars. The One Thousand Three and No/ IOOs ($ 1, 003. 00) Dollars per month payable by Lessee to Landlord is scheduled to amortize the sum of $ 120, 000. 00 in 240 equal, consecutive monthly payments at Eight (8%) percent interest per a n n u m . Therefore, for purposes of exercising the option described hereinbelow in Paragraph ” 3″, the land will be fully paid for by Lessee in 20 years after the first payment due hereunder. After such 20 year period, Lessee shall pay to Landlord only the sum of One ($ 1. 00) Dollar per year for rent hereunder.”
“Potential Land Gift – Stuart Bedenbaugh reported that he was approached by Brad Brodie about donating some property on the northeast side of York St, across from the Vocational Rehab Center. Mr. Bedenbaugh stated that the City is not interested in obtaining the land but thought Aiken Corp would be. There are 25 acres of land where trees were removed, which is against the City’s Tree Ordinance. It will be August 2022 when the development restrictions will be lifted.”
(5) Section 14 of the Ground Lease states:
“Landlord reserves the right to terminate this Lease, and to re- enter and possess the whole of the Leased Premises without further notice or demand:
a) Upon any general assignment for the benefit of creditors of Tenant; b) Upon the leveying oa a write of execution or attachment against the property of Tenant and the same not being dismissed within sixty (60) days; c) Upon failure of Tenant to pay any installment of rent after sixty(60) days written notice that same is due; d) Upon failure of Tenant to perform all and singular the terms of any mortgage executed by Tenant (and the Note required thereby) to which Landlord has subordinated its interest; e) Upon failure of Tenant to perform any other covenant required to be performed by Tenant after thirty (30) days written notice from Landlord, or in the event more than thirty (30) days is required to perform such covenant, the failure of Tenant to c o m m e n c e the performance thereof within thirty ( 30) days and thereafter to diligently pursue such performance to completion.
(6) South Carolina state law 34-43-20(2) states:
“Community development corporation” means a nonprofit corporation which:
(a) is chartered pursuant to Chapter 31, Title 33.
(b) is tax exempt pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, as amended;
(c) has a primary mission of developing and improving low-income communities and neighborhoods through economic and related development;
(d) has activities and decisions initiated, managed, and controlled by the constituents of those local communities;
(e) has a primary function of developing projects and activities designed to enhance the economic opportunities of the people in the community served, including efforts to enable them to become owners and managers of small businesses and producers of affordable housing and jobs in the community served;
(f) does not provide credit, capital, or other assistance from public funds in an amount greater than twenty-five thousand dollars at one time or in one transaction. The department may adjust that dollar amount in the manner provided in Section 37-1-109.”
The Aiken Corporation only meets criteria (a) and (b):
The organization’s primary mission is not targeted towards low-income communities, as most of its work involves development in the high-rent downtown Aiken retail district.
Few of its activities are initiated by constituents, and most are initiated by its Board of Directors and City staff.
Few if any efforts are made to assist people to become owners and managers of small businesses and producers of affordable housing.
Most of the organization’s transactions exceed $25,000 and involve public funds or rental revenues derived from a very generous, 99-year lease on city-owned property.
Related Articles, in descending order of publication:
The Aiken Corporation Building was published in conjunction with this article to illustrate the changes in corporate tenancy in the Aiken Corporation Building.
Aiken’s Cousin Problem… covers the recommendation of the Aiken Corporation’s Newberry Street, NW property for the SRNL/“Mixed-Use” project; and the history of the acquisition of that property.
The three-part series The Amentum Model… chronicles the history of the development of the Aiken Corporation’s Newberry Street office building and the Aiken Performing Arts Center.
Letter to Battelle is a letter of concern regarding the project process and status to the Battelle Company’s chief liaison for the DOE/SRNL operating contract.
45,000 Square Feet Without a Tenant provides information about the DOE/SRNL disassociation with the project and the details of the DOE/SRNL operating contract.
A Question on Security is an unanswered letter to ACorp contractor McMillan Pazdan and Smith regarding Department of Homeland Security guidelines and rules for threat assessments at federal facilities.
The Future of Warneke Cleaners is an unanswered letter to Aiken Corporation contractor McMillan Pazdan and Smith regarding the zoning status of downtown dry cleaner.
Three Missing Pages covers the Aiken Corporation contract with the City of Aiken and provides extensive footnotes about the project timeline through April 2023.
Who Bought this Property chronicles how an Aiken Corporation loan from the City of Aiken was forgiven in exchange for ACorp purchasing a small property that facilitated the annexation of the new Steeplechase property.
The Agenda Setting Aiken Corporation describes how decisions are often made at Aiken Corporation Board meetings before being presented to City Council.
Project Labscalis Annual Operating Costs covers the total estimated costs for demolition and site prep, construction, and annual maintenance costs for the proposed SRNL building.
