AMDC Land and Asset Transfer Deferred Due to Conflict of Interest Issues During Disorganized and Indecisive Meeting

by Don Moniak

(Update, April 4, 2023: The audio tape and meeting minutes of the March 13th AMDC meeting described here have been obtained via a Freedom of Information Act Request. At the 32 minute mark of the tape, City Attorney Gary Smith can be heard intervening in the discussion about the transfer of properties. After some discussion about the ethical dilemna described in this story, he recommends that Council continue the discussion and act at the March 27th meeting to dissolve the AMDC, which would achieve the intended action of transferring AMDC properties to the City of Aiken. This provides evidence that the March 27th vote to dissolve the AMDC was primarily about transferring properties, and that dissolving the AMDC was a secondary motive at best).

March 15, 2023

One month after assuming the role of governance of the Aiken Municipal Development Commission (AMDC), Aiken City Council met for the first time as the commission late Monday afternoon, March 13, 2023, for a special-called meeting. It was the first meeting of the AMDC since a special-called meeting in September 29, 2022, when the remaining six commissioners voted to officially end Project Pascalis. The last regularly scheduled meeting was held on June 14, 2022–two weeks before Project Pascalis effectively ended.

The proceedings were messy at best, and better resembled a parody of a public meeting. Poor preparation by city staff and the legal department were a root cause of much of the indecision and confusion that characterized the meeting.

Omitted from the meeting agenda was approval of the September 29, 2022, AMDC meeting minutes that contains the motion to cancel vital elements of Project Pascalis. Staff also failed to prepare a listing of AMDC properties, did not provide copies of proposals for leasing 106 Laurens Street, and could not tell Council/Commission how much money the AMDC has in its checking account.

Of the four agenda items, only one passed smoothly: the cancellation of “scheduled meeting of the AMDC” for the next day, March 14th. The meeting was not on the city’s calendar, and would have been illegal due to the absence of a posted agenda twenty four hours in advance.

Election of Officers

The meeting began with the election of officers. Council/Commission members Ed Girardeau and Kay Brohl were elected as AMDC Chair and Vice Chair, respectively. After there were no nominations for the position of Secretary/Treasurer, the new commission elected City Clerk Sara Ridout to the position.

Later in the meeting, City Attorney Gary Smith had to revisit the vote and inform the commissioners the secretary/treasurer vote violated AMDC bylaws which requires members to be officers. The Council/Commission then voted to elect Lessie Price to the position.

“Approval of Staff Recommendation,” Absent a Staff Recommendation

The second series of miscues occurred during discussion of the selection of a tenant at 106 Laurens Street, most recently the former home of Beyond Bijou clothing boutique (which recently relocated to the former True Value hardware store on South Laurens). The AMDC issued a Request for Proposals for “ parties interested in leasing commercial property at 106 Laurens Street SW…. for an abbreviated lease term to expire January 31, 2024,” with subsequent month to month tenancy.

The  vacancy is in one of three commercial spaces within the historic, Beckman Building, also known as “The Palmetto Block.” The AMDC purchased the 19th century structure on November 9, 2021, for one million dollars from Shah Enterprises, LLC (Agent: Neil Shah). The building was part of a $7.5 million real estate package known as the Shah Property that included five other properties—Hotel Aiken, Holley House, Taj Aiken Restaurant, McGhee Building, and Warneke Cleaners.

The Aiken Design Review Board approved the building’s demolition at the request of the AMDC and RPM Development Partners, LLC (Agent: Ray Massey) on March 1, 2022; in conjunction with the approval of the demolition of the Hotel Aiken. The 6-1 vote to demolish the Beckman Building was made despite the building being occupied by of three successful, taxpaying, small businesses; as well as the complete absence of identifiable structural problems in the demolition application.

The DRB rescinded the demolition on December 6, 2022–more than two months after the official end of Project Pascalis— and only after the persistant prodding of concerned citizens.

On Monday, after Vice-Chair Kay Brohl pointed out that staff had not provided the commissioners with any of the proposals, Council/Commission approved a motion to continue the item to the next meeting, then turned around to approve a motion to reconsider the motion before finally approving a third motion— to accept the recommendation of City Manager Stuart Bedenbaugh.

Despite the agenda item clearly reading “approval of staff recommendation for lease of property,” Mr. Bedenbaugh did not possess a recommendation in hand regarding the three applicants—Flawless Glow Cosmetics Studio, Radioactive Pinball, and Assurance Financial—-but promised to decide within 72 hours.

Transfer of Property and Financial Assets.

Next on the agenda was the “Resolution to Request the City Council of the City of Aiken to Authorize the AMDC to Transfer its Interest in All Real Property, Personal Property and Financial Assets to the City of Aiken.” The resolution would leave the AMDC in place, but without any assets or property.

The AMDC officially owns ten properties: the seven downtown properties that formed most of the Pascalis demolition and redevelopment project, and three vacant parcels on Williamsburg Street collectively known as the Jackson Petroleum property. The former were obtained at a cost of $9.5 million in November 2021, the latter at a cost of $175,000 in March 2021.

The discussion began with a recusal from Council/Commissioner Mayor Rick Osbon, due to his Osbon Dry Cleaners competitor Warneke Cleaners being a current tenant on AMDC-owned property. After a reminder from Mr. Bedenbaugh that the Williamsburg Street properties were adjacent to Sutton Marine (Owner: Ed Woltz), Council/Commissioner Ed Woltz recused himself.

After Mr. Bedenbaugh explained a path forward for the City to finally take official ownership of the AMDC properties and assets, newly elected Chairman Girardeau asked for citizen comments.

I was the only speaker on the topic, and inquired as to why commissioners Lessie Price and Gail Diggs had not recused themselves, due to their membership on the Board and Executive Committee of the Aiken Corporation. If the two recused, there would be no meeting quorum and therefore no vote.

City Council’s agenda for that evening included a resolution to approve a $250,000 Professional Services Agreement with the Aiken Corporation. The contract identifies Aiken Corporation as the initial developer and marketer, and ultimate property manager, for four of the Pascalis properties—Warneke Cleaners, McGhee Building, Taj Restaurant, and Holley House.

The vaguely defined project involves a proposed off-site Savannah River National Laboratory downtown office complex on the demolished Warneke and Holley House properties, and “rehabilitation and reconstruction” of Taj Aiken and the McGhee Building for retail use.

In addition, the Aiken Corporation’s Executive Committee had voted, on February 8, 2023, to “sign an agreement with the City of Aiken to share in the costs of hiring McMillan, Pazden, and Smith Architecture with professional and consulting services for downtown development.” (1)

The conflict of interest scenario was enough to provoke a discussion on alternatives. City Attorney Gary Smith offered the option of tabling the motion, with City Council then acting at its March 27th meeting to formally dissolve the AMDC; which would result in the AMDC’s assets reverting to the city.

Section 13 of the AMDC bylaws addressed dissolution of the commission and acknowledged the commission existed at the pleasure and continued approval of Council:

“Upon dissolution of the Commission for any reason, all assets of the Commission shall be conveyed and transferred to the City of Aiken to be used to carry out similar activities.”

In the ensuing discussion, Council/Commissioner Lessie Price asked for a clarification on which properties were involved; as staff had not provided any details of AMDC assets in the agenda packet, and City Attorney Smith had failed to identify the properties when preparing and/or approving the resolution’s language.

Price also had to ask how much money the AMDC had in the bank. The city’s Economic Development Department staff, who are also the AMDC’s staff, could not answer the question beyond a rough estimate of $100,000.

Six Months of Ineffective and Indecisive City Council Leadership

Project Pascalis was officially cancelled on September 29, 2022. That day, AMDC Chairman Keith Wood and Vice-Chairman Chris Verenes issued personal statements that acted as pleas for an investigation. No reported investigation into alleged staff irregularities and legal violations ensued, and on December 9, 2022, the two leading commissioners resigned in protest. City Council has yet to meet with the former commissioners to discuss their concerns and allegations.

On December 14, 2022, Commissioner David Jameson, the last member of the commission’s “Executive Committee,” resigned. In his resignation letter, Jameson identified the relatively simple and straightforward South Carolina Community Development Law as the culprit in the demise of Project Pascalis, writing: “the statute that governs the actions of the AMDC is riddled with contradictions and nearly insurmountable obstacles.”

Commissioner Jameson, whose role as Aiken Chamber of Commerce President often overlapped with his commission role, failed to provide a single example in support of that statement. The statement was also at odds with AMDC Chairman Keith Wood’s repeated expressions, in public comments prior to and after the Pascalis cancellation, in support of full compliance with the Community Development Law.

City Council has always had the simple and most practical option to dissolve the AMDC by rescinding its founding ordinance that resulted in Chapter 11 of the Municipal Code. Instead, Council allowed the AMDC to flounder after September 29th. Eventually, it took the circuitous route of assuming governance in order to vote to transfer property and financial assets; and then have to vote again as Council to take ownership of property and financial assets.

In the meantime, the only successor to Project Pascalis was initiated behind closed doors and arguably in violation of the same state Community Development, Freedom of Infomation, and Ethics laws highlighted in the Blake et al vs City of Aiken et al lawsuit. Since the cancellation of Project Pascalis, Aiken City Council and city staff began closed-door negotiations for the future of AMDC properties—which Council has long claimed are beyond its jurisdiction—with representatives of the Savannah River National Laboratory’s contractor, secretly chosen a developer without a public Request for Proposals, and proceeded to pursue a decision made without any redevelopment plan. Call it Project Labscalis.

Footnote:

(1) The list of board participants at the February 8, 2023 Aiken Corporation meeting included:
Gail Diggs and Lessie Price;
Two Aiken Planning Commission members: Sam Erb and Jason Rabun;
USC-Aiken Chancellor Daniel Heimmermann;
Three members of the Chamber of Commerce Executive Committee: Chairman Jason Rabun, past-Chair Norman Dunagan, and future-chair Charlie Hartz.