A lot of people in Charleston are probably asking themselves the same question today:
Why didn’t I buy some property north of Calhoun Street 15 years ago?
As David Slade reports, the Charleston School of Law is about to sell a lot at the corner of Meeting and Woolfe streets for something in the neighborhood of $12.5 million. Or, about $300 a square foot.
So, just about typical Charleston prices.
The problem some people have with the deal is that the school acquired this one acre 13 years ago for just $865,000 … from the city of Charleston.
Which means the school stands to make about 14.5 times its money off a deal involving tax dollars, and will commit the unpardonable social faux pas of selling a gift. And that’s essentially what the land was. The city bought the lot for more than $1 million and sold it to the law school at a 25 percent discount.
For that reason, critics now think the city should collect that $12.5 million, instead of the possible $2,865,000 it currently stands to make.
That’s a completely understandable reaction, but let it go.
We were never going to get that money. This is a law school, after all.
Think they don’t know a little something about contracts?
The city bought that land specifically for the law school.
Upper King Street had not yet turned into mini-Manhattan by 2005, and it seemed like a good idea to entice the school to build its permanent campus just north of Calhoun.
The city wanted to help the school succeed and promote other development. It protected itself in the deal with a reverter clause, which basically said the property would be returned to the city if the law school didn’t use it.
Well, they’ve used it all right. As a parking lot.
Law school officials say the property isn’t really large enough for its campus, which is true. So school officials went back to the city to renegotiate its deal in 2017 — fully admitting they wanted to sell the parcel.
City attorneys determined the law school technically had lived up to the terms of the agreement. With no legal justification to take back the land, City Council unanimously supported a renegotiation to gets its money back and at least $1 million in profit, perhaps more depending on the final sales price.
Why, a reasonable person might ask, didn’t the law school just pay off the loan and then sell the land — and keep all the profit?
Well, because the city smartly attached the reverter clause to the property itself. It could only be used for law school purposes, rendering its value nil on the open market.
The law school needed to shed the reverter, and the city used that to turn a slight profit. That’s about as good as it was going to get without going to court with a whole campus of lawyers.
And the city didn’t want to do that.
Would it have been better to get $12 million (less legal fees)?
Most people would say sure. County Councilman Joe Qualey ridiculed the sale this week at a public meeting, suggesting that money could go toward flood mitigation or affordable housing.
If they could get it. A room full of city lawyers and politicians decided they couldn’t.
Fact is, if the city was in the business of land speculation it would be buying up houses South of Broad and any number of other places on the peninsula.
And if it did, people would raise Cain. They’d be taking property off the tax rolls and playing investment games with taxpayers’ money. Although it’s hard to see how they’d lose in this market.
All this consternation is sort of like realizing you would have won a nice poker pot if you hadn’t folded early. Can’t do that or you’ll go crazy.
The bright side is that the city didn’t get sucked into a deal with developers and end up with a $33 million money pit of a hospital. And the mayor said he’d put the profit on this into affordable housing, which the city sorely needs.
Charleston got what it wanted out of this deal, at least originally: a law school in the middle of downtown. And no one can say the city hasn’t helped the school.
As a bonus, the school promised to stay on the peninsula.
Just hope the city got it in writing.
Reach Brian Hicks at firstname.lastname@example.org.