See if you can spot the exact moment this train went off the rails.
North Charleston bought the old Naval Hospital on Rivers Avenue for $2 million in 2012. The city turned around and sold it to some developers for $5 million.
Believing the developers would — or could — do what they promised, Charleston County signed a biblically long lease to rent three floors of the 10-story building for various government agencies.
The developers (surprise) didn’t develop. Charleston County (eventually) pulled out of the lease.
The developers declared bankruptcy, and blamed the county — even though they were more than a year behind schedule and hadn’t really done anything other than flash the Trump name.
Which should have been a red flag, not a selling point.
Thanks to bankruptcy court, the county had to buy the hospital for $33 million to avoid losing a lawsuit. Now, it might cost another $66 million to renovate their new acquisition.
Its elevators literally don’t go all the way to the top.
When you’re in a money pit, it’s probably best to quit digging.
But you know what? County Council members still may renovate that old hospital.
Let the screaming begin.
But first, let them explain.
Dot your 'i's
The correct answer to the original question is “all of the above.”
This has been a boondoggle from the start. But there are a few key failures, beginning with “believing the developers.”
After developers conceded they couldn’t make their deadline, then-Council Chairman Teddie Pryor signed an amendment to the lease agreement giving them more time.
A lot more time, it turns out. The amendment deleted the deadline and didn’t include a new one. You can blame Pryor, but what about the county attorneys who are paid to check those sorts of details?
When the developers inevitably ended up in U.S. Bankruptcy Court, a judge ruled that lack of a deadline gave the county no standing to cancel the lease.
Which put all the blame for the developers’ failure squarely on the county, which is baloney.
And here we are.
The value of the hospital didn’t suddenly increase. Bankruptcy court considered that 25-year lease the developers' main asset. The county actually had to buy its way out of that — the hospital just came with the deal.
And the building was so poorly "renovated" it still needs $66 million of work.
Councilman Joe Qualey, who has been against this deal from “all of the above,” says no way.
“It was a bad idea to begin with, it’s a bad idea now, and holding on to it is not going to make it a better deal,” Qualey says.
That’s what most taxpayers would say. So why are council members even considering this?
Well, they’ve seen what happens when they overlook details.
Cross your 't's
Council members are compiling a list of all the buildings the county owns, and all the space it leases — how much square footage, rents, like that.
They want to know if consolidating in a refurbished Naval hospital with a lot of parking would meet the county’s needs and, in the long run, save money.
Ha, you say. Well, they are dealing with a 25-year time frame here ...
The county isn’t a developer, and shouldn’t be a landlord. But, if they sell the hospital right now, we are certain to lose a lot of money.
The best comp is the Dewberry Hotel. A developer bought the old Mendel Rivers federal building a decade ago for $15 million. Estimates of its renovation ranged up to $100 million.
The difference is the Rivers building sits on some of the nicest real estate in the Lowcountry. The hospital doesn’t.
Which is why council got into this to begin with.
The neighborhood around the hospital is one of the most unfortunately blighted areas of North Charleston. While the rest of the Lowcountry is humming along, that area can’t even attract stores to fill basic needs.
So, although it’s a laughably bad idea politically, council is looking carefully before cutting their losses and adding to that blight. They’re so serious, no one knows how the vote would go if it were held today.
They may still lose money, and it may be the worst idea of all time but, given recent track records it's hard to blame them for studying before making another dumb move.
Here’s some advice for the county: Read the fine print and don’t sign anything until it’s been proofread twice.
One little omission can cost us $99 million.
Reach Brian Hicks at email@example.com.