Frustrated by the lack of progress on a container terminal in Jasper County, state Sen. Tom Davis saw an opportunity on Wednesday to give the project a push forward following more than a decade of what he terms lip service but little action.
In exchange for his support of a plan to borrow $550 million for improvements at the Port of Charleston, Davis, a Beaufort Republican, wants to wrest control of the Jasper Ocean Terminal project from the State Ports Authority and give it to Jasper County officials, who see it as a way to escape the unemployment and education woes that have marred their corner of South Carolina's Corridor of Shame for generations.
"The State Ports Authority is finally motivated because they want their $550 million," Davis said during a state Senate hearing on the proposal to issue more than half a billion dollars of taxpayer-backed bond debt to pay for a rail yard and barge system supporting Charleston's port.
Senators on Wednesday gave the bond resolution the second of three needed approvals following hours of debate exposing distrust of the port operator by some legislators and a maritime agency that's pushing up hard against its debt limits, with no one but state taxpayers to turn to for funding.
That last fact played into Davis' hands, as the Lowcountry senator who's complained for years about what he terms the SPA's ambivalence toward Jasper turned the bond request into an offer Charleston port officials might not be able to refuse.
Davis said he had been prepared to filibuster the bond resolution, adding: "I'm not letting that bond bill pass until that Gordian knot in Jasper is cut."
Instead, he and other senators agreed to quickly work toward an agreement transferring the SPA's half-interest in the proposed Savannah River terminal to Jasper County. The other half of the project is owned by the Georgia Ports Authority, which would have to go along with the proposal and abandon plans for a new terminal on Hutchinson Island north of downtown Savannah and a Talmadge Bridge replacement that would let bigger container ships visit Georgia's port.
Davis on Friday started drafting an agreement to transfer the SPA's half-ownership to Jasper County.
There are a lot of moving parts to the plan, but state Sen. Hugh Leatherman — who introduced the bond resolution — said its conclusion could simply be a matter of "getting the attorneys in a room."
Others say the proposal might not be so easy — or quick.
The Senate hopes to bring the bond resolution back for final approval by that side of the Legislature on Tuesday, and some lawmakers say they hope a deal between Jasper County and ports authorities in South Carolina and Georgia can be hammered out by then.
"I haven't had a lot of time to think about it," Jim Newsome, president and CEO of the SPA, said Thursday. Newsome said he's willing to talk with Davis about the proposal "and see where it goes."
"I would have to have some detailed discussions about the feasibility of that," he said of the plan to turn South Carolina's half of the Jasper terminal over to Jasper County. "I haven't had those discussions with anyone."
A spokesman for the Georgia Ports Authority did not respond to a request for comments.
Davis said he's confident Georgia will back the plan and abandon its proposed in-state expansion because Georgia's fast-growing port will need more capacity sooner than the Port of Charleston. He said the SPA's decision to build a new terminal in North Charleston — doubling the port's current capacity — pushed the Jasper project back by more than a decade, to 2035 at the earliest. Georgia's decision to develop Hutchinson Island, he said, was only in response to that delay.
"That changed everything," Davis said, "because Georgia was looking to Jasper to handle the extra capacity it had coming online in 2025 to 2028."
In a 2018 email to Davis, GPA Executive Director Griff Lynch said "it is clear that Georgia and South Carolina do not have the same timeline requirements for additional terminal capacity."
"Therefore," Griff wrote, "it is imperative that the Georgia Ports Authority look for intermediate solutions to nearer term capacity demands in Savannah."
Once the SPA's timeline changed, Davis said, "Jasper was gone."
Newsome said the SPA's plans for Jasper have always been contingent on need, and with the new North Charleston terminal — which is named after Leatherman, one of the port's biggest benefactors — opening in March, that need is a long way off.
"Our position has always been that the Jasper terminal is an important piece of infrastructure in the southeast port network that will be built when it's needed," Newsome said.
The roughly 1,500-acre Jasper Ocean Terminal was first announced in 2007 as a solution to future overcrowding at the Charleston and Savannah terminals. Ports authorities from both states share equally in the costs, although South Carolina and Georgia have to date spent just a combined $19 million toward the Jasper terminal's estimated $5 billion cost.
Plenty of debt, lack of trust
Last week's debate revealed tension between some legislators and the SPA, who said they feel the maritime agency isn't transparent or responsive to their questions and concerns.
"They're arrogant, they don't return calls ... and they essentially dare you to do something," Davis said.
Sen. Sandy Senn, R-Charleston, said the SPA had not taken time to outline its plans for state bond spending with the local legislative delegation, mayors and councilmembers whose communities will be most impacted. It's an oversight Sen. Nikki Setzler, D-Lexington, said "would offend me" if he were treated in the same manner.
"They currently act with impunity if you ask some people in Charleston," Senn said of the SPA.
Newsome said the SPA wants to be transparent, and "if we need to do a better job in communicating with the Charleston delegation we will."
He said the coronavirus pandemic has prevented the SPA from meeting with stakeholders as often as normal, but the rail yard and barge system have been discussed publicly for years and should surprise no one.
It's been only in the past few weeks, however, that the proposal was floated to have state taxpayers foot the bill.
Sen. Shane Martin, R-Spartanburg, said he'd prefer the SPA pay at least some of the projects' costs but admitted the agency has little wiggle room when it comes to taking on more debt.
The SPA is at 94 percent of its borrowing capacity, having taken on $1.7 billion in debt in recent years to help shore up Wando Welch Terminal in Mount Pleasant, buy new cranes and other equipment and build the first phase of the Leatherman Terminal.
At this point, the SPA only has about $4.3 million of borrowing capacity left, Martin said — far short of the rail yard and barge costs.
"It would make it easier if I knew they had to come up with some money," he said.
Newsome said the SPA's finances are sound and the borrowing cap is an in-house standard rather than anything bond agencies have required, adding current bond covenants are less strict.
"We're bumping up against (our own) planning targets, but we're far away from our covenant targets," he said.
Besides, Newsome added, without all of the recent spending Charleston's port would have long ago been abandoned by shipping lines in need of deeper harbors, taller cranes and expanded cargo yards. The Port of Charleston, now one of the nation's fastest-growing seaports, set a cargo record in 2019, moving 2.43 million containers through its terminals. It came within fewer than 130,000 containers of breaking that mark in 2020, despite early-year slowdowns due to the coronavirus.
A 'new day' for legislators
The spending plan proposed by Leatherman, R-Florence, calls for up to $400 million toward construction of a rail yard at the former Navy base in North Charleston, where CSX Corp. and Norfolk Southern trains would haul cargo to and from the Leatherman Terminal.
Another $150 million would pay for a barge program to move shipping containers by water between the Wando Welch and Leatherman terminals. The containers could then be taken to and from the rail yard via a private road.
Leatherman said the projects are vital for the Port of Charleston to compete with other East Coast ports for the growing amount of cargo moving through the region. Construction for both projects is expected to take about two years.
The proposal would require the SPA — a quasi-governmental agency — to be more transparent about how it spends its money. For example, the SPA would have to file quarterly financial and progress reports with legislative oversight groups and post audited financial statements about the project on its website. The financial controls are, in part, legislators' response to their failure to properly oversee an unrelated nuclear plant expansion that failed in 2017, costing taxpayers billions of dollars.
"The South Carolina Ports Authority needs to understand it is a new day in this General Assembly," Setzler said Wednesday. "The port is going to have to be responsive to 170 members of this General Assembly and realize that their finances are going to be looked at."
The $550 million represents about 5 percent of the state budget that lawmakers have control over spending, and the state would repay the bonds at $43 million a year over a 15-year period. The last time South Carolina issued bonds to that scale was in 1999 when the state borrowed $750 million for school buildings.
Jasper County ranks among South Carolina's poorest counties, with a per capita income of $24,566. Many of its 30,073 residents commute to jobs across the river in Georgia while the local economy gets by largely on travelers stopping for gas and fast food along Interstate 95. The county's hopes for future development got a boost last fall when state officials agreed to build a new exit on Interstate 95 that will link to the planned 4,100-acre Riverport Business Park. That project will include industrial sites that could benefit from a nearby seaport.