MOUNT PLEASANT — As residents of this fast-growing town made development a top election issue in 2015, Mount Pleasant became South Carolina’s most-sued municipality for development-related disputes.
And that’s proving to be a costly honor.
Town officials recently added $500,000 to the municipal budget for legal defense in five lawsuits filed last year — four in which the town was sued for blocking developments. The fifth lawsuit questions the town’s decision for allowing a development to proceed.
A half-million dollars is roughly what the town spends to fuel its police vehicles annually, but that amount could just be the start.
Behind the cost of lawyers await millions of dollars in damage claims if the town loses some of the development cases, particularly those involving a proposed apartment and retail complex called The Atlantic on Ben Sawyer Boulevard, and two involving construction of multi-family homes at Park West.
At the town’s urging, the Municipal Association of South Carolina has started offering insurance coverage for development permitting lawsuits — only Mount Pleasant has purchased that coverage, so far — but the insurance doesn’t cover the cases filed last year.
While costs to the town’s taxpayers are rising, some developers suing the town claim to have already lost millions due to decisions variously described as “arbitrary and capricious” or unconstitutional.
Middle Street Partners, developer of The Atlantic, claims more than $6.2 million in profits were lost after the Town Council declined to approve an impact statement for the project, which complied with the town’s zoning rules. The development was opposed by Sullivan’s Island residents and Mount Pleasant’s Save Shem Creek group.
In another case, developer DR Horton alleges the town “had no discretion or ability to prohibit” dozens of townhomes planned at Park West, but nonetheless did so.
And while developers sue the town for blocking development, the Save Shem Creek Corp., a nonprofit group headed by former Town Council member Jimmy Bagwell, is suing the town for allowing an office building and parking garage at Coleman Boulevard and Mill Street.
The project, the suit claims, was “secretly approved” and puts residents at risk of “injury to their aesthetic and recreational interests in enjoying and observing Shem Creek and its attendant marine and wildlife.” The lawsuit seeks to reverse the approval for the office and parking garage building, which is under construction.
In a counterclaim, the town says “the filing of this lawsuit was intended solely for the ulterior purpose to advance the political agenda of the plaintiff, harass Town Council, and cause the town thousands of dollars in legal fees...”
The Municipal Association of South Carolina insures the town for legal claims, along with 112 other towns and cities in the state.
Heather Ricard, MASC’s director of risk management services, said lawsuits over development are relatively uncommon, and until Jan. 1, no insurance coverage against such claims was offered by the association.
The number of development lawsuits filed against Mount Pleasant last year was higher than the number filed against all other towns and cities MASC insures during each of the two previous years, Ricard said.
“We did add what’s called a limited land use litigation coverage endorsement this year,” Ricard said.
That means the town gets up to $1 million of partial coverage when sued for certain development disputes.
It’s not so much that conflicts over development are unusual, but most get resolved in the appeals process. In Charleston, for example, development controversies involving projects on the peninsula are frequent — recent ones involve a planned cruise ship terminal and the Sergeant Jasper apartment building — but have typically involved court appeals of regulatory decisions, rather than lawsuits seeking damage awards from the city.
Mary Graham, head of the Developers Council at the Charleston Metro Chamber of Commerce, said some disputes arise because public opposition to particular projects often occurs only after time and money has been spent. By the time residents see what a proposed building is going to look like, design and engineering work has been done and the development may already be moving through the review process.
“The developer, just to get to that stage of the process, likely spent hundreds of thousands of dollars,” Graham said. “Citizens get very vocal and push back against elected officials — not just in Mount Pleasant — but if projects meet the requirements then there are no reasons to deny them.”
“You can’t keep changing the rules as someone is going through the approval process,” she said. “Whether people like developers or not, developers are businesses that employ people.”
In Mount Pleasant last year, the Charleston Metro Chamber of Commerce and the Save Shem Creek Corp. supported different candidates in the Town Council election. The candidates who advocated putting the brakes on development won, and some have made attempts, so far unsuccessful, to reverse course on town projects such as building a large traffic circle on Coleman and Chuck Dawley boulevards.
The conflicts over growth pressures in Mount Pleasant aren’t so much new but instead revived once development soared after the recession ended.
Two decades ago, roughly 4,500 residents signed a petition aimed at blocking plans for the I’On development, where developers were going to build a dense mix of homes with some commercial buildings mixed in. Plans to hold a voter referendum on the subdivision’s zoning approval by Town Council were quashed by a judge.
The I’On development later was lauded nationally as a model of new urbanist planning, but the 1997 zoning controversy played a role in a push-back against the pace of Mount Pleasant growth that prompted Town Council in 1999 to approve a decade-long plan limiting building permits for single family homes.
The goal of the permit caps, which have since expired, was to keep residential development from outpacing construction of roads and schools.
After the recent recession, with no permit limits in place, the yearly number of dwelling units permitted by the town soared from a low of 167 at the bottom of the recession in 2009 to 1,341 in 2014.
Reach David Slade at (843) 937-5552 or twitter.com/DSladeNews.