Work was well underway this summer to install sidewalks and improved drainage along Magnolia Street in Columbia, one of many neighborhood projects across Richland County funded by a one-cent increase in the sales tax.

Then the project stopped halfway through and the crews left.

The problem? The construction company had not been paid for its work. 

The payment glitch, which caused the project to sit idle for several weeks, was fixed when the county made its overdue payments. But it's only the latest issue to cause headaches for county leadership since the voters approved the tax in 2012 after being given a specific list of projects.

When pitched to voters, the projects were billed as a needed investment to help with congestion in a region that had added 100,000 residents in a decade — with more expected to come. Since them, however, a series of controversies has dogged the projects and dented public confidence in the whole endeavor.

Now the private company overseeing implementation is leaving after five years, while county leaders scramble to complete everything that was promised, despite substantially higher costs than earlier estimates. With that changeover looming in November, the county just welcomed a new administrator, Leonardo Brown, who formerly headed up operations in Smith County, Texas, and is working to get up to speed. 

'The scope was always off'

Among the many controversies that have involved the work: Some penny tax funds were spent on items such as a small business partnership program and public relations that aren't allowed by law, the S.C. Revenue Department has said.

For a while, the Revenue Department withheld distribution of the tax funds until ordered by the S.C. Supreme Court to resume. The county was ordered to cover the challenged spending with other funds beside the penny tax.

County Council believed it had a need to ensure that local businesses took part in penny projects and that residents knew what was going on with the project, Chairman Paul Livingston said. They are legitimate expenses but needed to be paid out of other funds than the penny, added Councilman Bill Malinowski. 

John A. Carlos II

Construction workers smooth out a new sidewalk on North Main Street this stretch of road is being developed by the Richland County Transportation Penny Department. John A. Carlos II / Special to The Post and Courier

The county still is resolving the dispute. The state agency and county have been told to enter into a dialogue over what the Department of Revenue considers legitimate penny tax spending. The department is preparing an audit, and the judge in the case has issued a 120-day stay as both sides seek some kind of agreement. 

There also is community frustration about the slow pace of projects and which ones have been selected to be tackled first during what will be, at most, a 22-year program. Specifically, council members say they have heard complaints about why a major downtown streetscaping project around Colonial Life Arena, where the University of South Carolina plays basketball, is already complete, while work has not begun on many other projects.

One downtown project was given $50 million, while the entire penny tax budget for paving hundreds of unpaved roads was set at $45 million, said council member Dalhi Myers. That's just one case of where the cost projections proved low while ambitions were high. "The scope of what we could do with that money was always off," Myers said.

'Difficult to press pause'

When the referendum went before Richland County voters, its backers wanted to reassure the public that the money would be spent on specific projects. So a county-wide list of street widening, sidewalk, greenway and other projects was published, along with estimated prices.

But construction costs have risen steeply since those estimates. Costs for road projects are up about 25 percent in South Carolina in recent years, a rate even higher than the nation 20 percent increase in recent years, said David Beaty, project manager for PDT, the private company that has been overseeing the penny tax projects.

With the regional economy strong and the state also offering contracts for its gas tax work, the demand for contractors has been high, pushing up prices, he said.

The result is a shortfall of about $140 million between what the Richland penny is likely to bring in and the expected cost of the promised projects. 

Some council members see the county's taking over project management as a way to save millions of dollars going forward. That was a big reason cited when the council agreed in March to let its contract with PDT lapse. The decision came in a 6-1 vote with five abstentions. 

Councilman Joe Walker III, who moved to end the PDT contract, said that the company was overcompensated. "This PDT contract is incredibly lucrative," said Walker, a business owner who was not in office when the county first signed contract in 2014. 

PDT, a consortium of three companies, has received about $29 million over the five years for its project oversight, plus additional fees for taking on added roles such as some in-house project design, Beaty said.

Walker said he believes many projects are being shoved through by PDT to try to give it more business before the contract ends Nov. 1.

Even if a project is going to cost way above the referendum estimate, there's a push to write more contracts, even as costs mount above the likely revenue, Walker said.

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"There’s an incredible surge to get things done while the PDT is in charge," he said. "It’s difficult to get anyone to press pause."

Beaty said his goal at PDT is to get as many projects as far along as possible before handing the effort over to the county. PDT and the county have met weekly to ensure that the county knows about every project and process in the works, he said. 

Overall, Beaty said, more than $250 million of funding has been allocated to projects in the first five years of work, while about $300 million of the total $1 billion in projected revenue is earmarked to operate the Comet bus system. "The public should be pleased with the work that has been performed," Beaty said.

It's understandable that some residents are frustrated by what they see as slow progress, Beaty added. The first phases of a project, such as design and acquiring rights of way, can take years. That means that residents won't see much as initial work takes place, he said. 

Livingston said it's clear that some outside assistance was necessary for the penny projects because of the large scale of the work, adding that PDT has done a solid job overseeing the first part. "I rate them very well," he said.

He said he remains concerned about whether the county is ready to keep the momentum going after PDT departs, adding, “In the past four months, it has slowed at a pace that I’m not comfortable with."

Finishing the list

Meanwhile, County Council is looking for ways to handle the projected $140 million increase in costs and deliver what voters were promised.

Council members are debating whether to ask project designers to scale back the remaining nine road widening projects that are forecast to be over budget to match what was estimated back in 2014. 

The idea of dropping a few of the greenway projects from the list also has been mentioned, but several council members believe that voters need to see every project completed that was put forth before the referendum.

"The penny is a promise," said Councilwoman Chakisse Newton, who was elected in 2018. "It's a promise that we're going to do this work."

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