Is Lexington Flushing Taxpayer Money?

Timing, as has been said, is everything.

Lake and Main started looking at the Town of Lexington problems with Carolina Water Services/Bue Granite Water in the Spring.  A FOIA request was submitted and fulfilled in May and a series of clarifying questions were forwarded to the Town Administrator, Mr. Britt Poole.  Mr. Poole was hesitant to answer those questions because of pending litigation, presumably the condemnation hearings regarding Blue Granite’s I-20 wastewater treatment plant.  He did offer to discuss them “off the record, but L&M decided that not having anything quotable was not useful.

For a variety of reasons, L&M was unable to pursue the story with the vigor it required until a few weeks ago when it was learned that the court proceedings were pending.  FOIA requests were submitted to update the information received four months prior as were the questions for Mr. Britt.  Those questions were modified to allow him some leeway to respond without compromising the Town’s position before the court.

It was only earlier this week during a chance encounter with a member of the Town Council that it was learned those proceedings are to begin next week!

Even more serendipitous, while yesterday’s piece, the initial one on the subject, was being finalized for posting, the presiding judge was rejecting Lexington’s offer of $2.2 million (erroneously reported here as $1.6M) as compensation to BGW to condemn the facility under eminent domain.  So, the case goes to trial with jury selection beginning Monday.

There is a difference of $11.2M between what the Town is offering and what BGW is asking.

Sources have told L&M that in Friday’s hearing, the Town tried to sway the judge by referring to the President of BGW’s (Catherine Heigel) previous position as Director of DHEC, the state agency with regulatory authority over utilities such as water and sewer – Blue Granite Water.  Apparently, the judge found that argument irrelevant and will want arguments to concentrate instead on the value of the property.

The Town will contend that in 2017, while DHEC Director, Ms. Heigel testified before the South Carolina House of Representatives Healthcare and Regulator Subcommittee that the I-20 facility was “worthless.”  Now that she is President of the company, her opinion of it’s worth has changed to favor BGW.

A transcript of those hearings, however, don’t support the Town’s contention.  Here is what she said:

Here’s the reality. If you tie — just very openly — if you tie an underperforming system into a regional system, you are likely going to have this — this — the system that takes it over — well, first of all, you’ve got the issue of is there compensation that is paying for that and does this entity give up what it has, that it believes it has value in — that no one else believes has value — there’s that issue, but let’s assume that you — you are able to satisfactorily address that.

Clearly, she is speaking hypothetically and is actually addressing the problem of a difference of opinion regarding valuation rather than stating her idea of it’s worth.

Interestingly, this is what Ms. Heigel said next:

In the new — you know, in the case of the Town of Lexington, if they take this system on, they’re going to have additional costs to deal with that and to — to bring that up, which translates into, likely, rate increases, which translates into broader constituent discontent, which translates into fewer votes, which translates into getting voted out of office potentially.

I’m just — that’s just the roadmap. And so, ultimately, fixing these issues costs money.

“Additional costs and rate increases.”  That is precisely what is happening.

In the FOIA request submitted in the Spring, L&M asked for a  list of costs incurred by the Town in it’s pursuit of CWS properties. This included another facility in addition to.the I-20 plant, the one being litigated, although the bulk of the sum WAS for I-20.   That total as of four months ago was almost $5M, a figure no doubt larger today.

Should the jury decide in the Town’s favor to the tune of it’s recommended $2.2M, taxpayers will pony up about $7-8M (incurred expenses plus compensation) for property it could have had years ago for far less.  The Town, however, using the Steve MacDougall business model of eminent domain, gambled and will likely lose.  But, so what? It ain’t their money they’re gambling with.  Besides, they can make it back by the rate increases that HAVE ALREADY BEEN INSTITUTED.

But wait! There’s more!

Suppose the jury rules in BGW’s favor?  What if they look at the income the Town will pull in and decides it’s worth more than the Town is offering?  Why, those very rate increases are going to make that plant look like a pretty lucrative enterprise.  While it’s not likely BGW will get the full $13M it’s asking, if it were to get only HALF, $6.5M, that and the $4M or $5M ALREADY spent is a substantial amount of Town – sorry – taxpayer money Mr. MacDougall is spending.

But wait! There’s more.

L&M has been told that in such cases when a jury awards a condemnee (BGW) even 51% of it’s requested compensation, the government (Town of Lexington) must also pay the condemnee’s legal costs.  That ain’t gonna be cheap and will, no doubt, be in seven figures.  So, there’s a very real potential that the Town will ultimately pay out – previous expenditures, court settlement and BGW’s legal costs – in excess of $13 million.

And NONE of the decisions about this money have been made in public.  As reported in Friday’s post, there are no Coumcil public agenda minutes that record any votes specific to pursuing eminent domain condemnation, setting the compensation figure, rejecting previous offers by CWS/BGW or delegating authority to make those decisions.

It is likely that the Council entrusted that authority to the Town Administrator, Mr. Poole.  Britt is an intelligent and trustworthy gentleman, but he is not an elected official.  With millions of taxpayer dollars being spent, shouldn’t citizens be aware of at least some of what’s going on?  Is it proper that taxpayers find out about this stuff from a puny blog site?

Transparent it isn’t.

/CS/

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