Header A bank that’s not a bank

Traffic comes to a halt on Interstate 26 as it approaches the Interstate 526 interchange on Wednesday. The State Infrastructure Bank which funds major transportation projects could play a role in road upgrades around the Lowcountry.

Critics say the State Infrastructure Bank is broke, doesn’t prioritize its projects, offers little to the state’s smaller counties and should be dissolved.

Supporters say the bank has performed well over its 12 years, has begun prioritizing projects and remains the state’s best bet for making big improvements to its highway network. They also point to other states, such as Alabama, where lawmakers are using it as a model.

These are the voices bending state lawmakers’ ears as they decide what to do with the State Infrastructure Bank — what changes it needs and whether to give it more money.

And two Charleston projects — the Arthur Ravenel Jr. bridge and the still unfinished part of Interstate 526 — loom large as examples of what the bank has done wrong and right.

This is about more than a bureaucratic turf war. The bank’s future may affect how quickly some major projects get tackled, whether they are the road improvements needed around Boeing’s North Charleston plant, the final phase of the Berlin G. Myers Parkway in Summerville — even a wider Interstate 26 connecting the Lowcountry and Upstate.

And its future activity also will be shaped by the fate of its most controversial project approved to date: the long-delayed extension of Interstate 526 across western Charleston County.

Donald Leonard, president of a Myrtle Beach real estate and development firm, has served as the bank’s chairman since it was created in 2003 and is waiting to see what happens next.

“Nothing has changed about the bank,” he said. “We would just welcome additional funds so we could do more.”

More than a decade ago, South Carolina’s leaders were stumped on how to pay for a new bridge over the lower Cooper River, a project that promised to cost more than half a billion dollars.

Their solution was to create a State Infrastructure Bank, which wasn’t really a bank at all but a new arm of state government run by political appointees and given a stream of state dollars, borrowing powers and a mandate to make local cities and counties chip in money, too.

Since its creation, the bank has served as a catalyst for more than 100 projects in 28 counties and six cities totalling $5.3 billion, more than $2 billion of which came from the bank, Leonard said.

Its most conspicuous project is the Arthur Ravenel Jr. Bridge over the Cooper River, named after the former state senator from Mount Pleasant who helped create the bank and finance the state’s most expensive bridge to date.

State Rep. Chip Limehouse, the Charleston Republican who serves on the bank, said it also played an important role not only in building the Ravenel bridge but also widening U.S. Highway 17 in both Mount Pleasant and between Jacksonboro and Gardens Corner.

“If you went by the old pay-as-you-go system, you’d never get these projects under construction,” he said. “The Ravenel Bridge would have never been built.”

State Sen. Larry Grooms, the Charleston Republican who heads the Senate’s Transportation Committee, said the bank’s structure allows it to borrow money at a lower interest rate than would otherwise be possible, “so that means you could build more highways with less money.”

The bank has only two full-time employees and outsources its engineering, legal and financial services to keep its costs down. Leonard said its operating costs are less than 1 percent, and the bank board members have agreed to give their fees back to the state.

The bank operates in an unconventional way.

Instead of looking at the state’s overall needs and selecting projects, the bank waits for cities and counties to bring projects to its board, which then analyzes them and scores them on 37 criteria. Those that rank high enough —and most have —are funded, provided that the respective cities and counties contribute to the projects, too. And there’s a $100 million minimum, though some localities, such as Florence County, have met this threshold by bundling together several projects.

Coastal Conservation League director Dana Beach said the state’s transportation spending has improved since the passage of Act 114 in 2007, but finishing Interstate 526 — to which the bank committed more than $400 million before that act passed — is a perfect example of misplaced priorities. He noted that project ranked only 15th on the list for the Berkeley-Charleston-Dorchester region — and far lower relative to all projects in the state.

And Beach is not alone. Grooms said I-526 faces “some very high environmental and financial hurdles,” though only the bank or Charleston County Council have the power to pull the plug.

The bank already has committed $558 million to the project, but its future is clouded because its cost is expected to exceed that sum. And it’s unclear who — if anyone — will cover that extra cost.

“When you look at the highway needs in and around the Lowcountry, or just in and around Charleston County, I don’t see how this project would rank high on any type of priority list when you consider the other projects,” Grooms said.

Beach said I-526 shows “there is no role for an independent State Infrastructure Bank, none. The only reason it exists is to allow political influence to direct transportation funding.”

Grooms said the bank still has an important role to play, but if I-526 were to suck up all its available money, “then there would be some angry folks.”

“If that project were built and there was money to fund other projects, then I think people would be fine with that,” he added.

Grooms said his problem with the bank is that it has had no set criteria by which it has selected projects.

“They have applications, the members discuss the applications and they score the applications,” he said. “It’s very subjective, and it can go from project to project.”

When the state passed Act 114, it required the Highway Commission to rank projects, but that criteria did not extend to the bank. “That was one component I was unable to get in the reform bill,” Grooms said.

Leonard said the bank since has followed Act 114 as a matter of its own policy, but Grooms said while he applauds the bank for doing so during its last several decisions, state law should be changed to require the bank to do so “because a simple majority (of bank members) could change the policy.”

State Rep. Gary Simrill, R-York, has led a House effort to address the state’s highway needs, and part of that bill would restructure the bank and require it to follow Act 114.

“The faintest of ink is better than the strongest of speech,” he said. “You don’t want politics to play a part in infrastructure. I realize politics is pervasive, but as best we can, we want that kept out.”

Simrill said the greatest criticism of the bank came from those in smaller counties, places that had trouble finding projects that the bank could fund with its $100 million minimum. So his reform bill would lower that to $25 million.

The bank’s finances are somewhat of a moving target, as projects move along at different rates, it pays down bonds and receives income from cities, counties and the state government.

Jim Rozier is a former Berkeley County supervisor who now chairs the S.C. Highway Commission, said he was not familiar with the bank’s financial shape, though he is about to join its board

“I think there’s some difficulty in the future on money unless legislation changes,” he said.

Myles Maland, a project manager with the Coastal conservation League, has tried to study the banks’ finances and concluded that it won’t have any significant borrowing ability until 2036 — unless lawmakers act.

But Leonard said that’s not true: the bank has about $150 million that it can commit toward new projects.

“We’re in business,” he said. “The bank is in excellent financial condition, and we have maintained our A bond rating.”

That’s welcome news to Dorchester County, which plans to ask the bank at its next meeting to fund $117 million to complete projects largely started under its 2004 transportation sales tax, specifically the third phase of the Berlin G. Myers Parkway, widening U.S. Highway 78 from three to five lanes, and the Orangeburg Loop —a project to widen Orangeburg, Mallard and Jedburg roads toward Interstate 26.

Summerville Mayor Bill Collins wrote the bank to say these projects are the main concern of town residents. “Completion of the last leg of the parkway is vital for the economic development already occurring in lower Dorchester County,” he said.

At that same meeting, the bank also is expected to consider a request from the city of Charleston, which will ask to receive earlier payments of part of the $88 million that the bank has committed toward a drainage project to solve flooding on the Septima Clark Parkway, commonly known as the Crosstown.

Limehouse said the House Ways and Means Committee recently passed an amendment to funnel $50 million a year into the bank — a move that will help it issue $500 million worth of bonds. He is one of two lawmakers serving on the bank’s board and said the bank “has been the lifeblood of transportation in South Carolina.”

Simrill’s bill would make other changes to the bank, including a five-year moratorium on new projects, lowering the project minimum from $100 million to $25 million and expanded the bank’s board to 13 members, including all seven highway commissioners.

Only 11 of 46 counties have used the bank, though it has paid for cable barriers along interstate highways in several others. Lowering the minimum dollars involved would help more counties seek help from the bank.

“(Gov. Nikki Haley) said she wants economic development in all 46 counties,” Simrill said. “That’s hard to do if you don’t have the infrastructure in all 46 counties.”

Reach Robert Behre at 937-5771.