Richland County Council is giving the team of private companies that has been running the county’s at-times controversial transportation penny program until the end of August to turn over information related to changes made to projects within the program.
On Aug. 1, Council voted to give the penny program’s Project Development Team until Aug. 30 to turn over information about certain change orders for penny projects, as well as expenditures related to those changes.
Council also voted to ask accounting firm Cherry Bekaert, which audited the PDT in 2017, to release information about the change orders. Previously, the release of those details to the public has been prevented by a non-disclosure agreement.
The Council’s Aug. 1 vote came days after District 6 Councilman Joe Walker III sent a letter to Cherry Bekaert demanding a full release of the 2017 audit of the PDT. The collection of private companies has, since 2014, been paid $6 million a year to manage the county’s transportation penny initiative.
The transportation penny program, which was approved by voters in a contentious 2012 referendum, is a 1 percent sales tax that is set to raise $1 billion over a two-decade period for road and other transportation projects in the Midlands. It is also a critical source of revenue for the COMET bus system.
The county’s relationship with the PDT is coming to a close. Its agreement with the private companies ends on Nov. 3, and the county plans to bring administration of the program in-house.
In his letter to the accounting firm, Walker notes that members of Council were only allowed to see certain findings in the 2017 audit after signing a non-disclosure agreement. He says Council members received a “mandate” to sign the NDA before viewing the information.
“I question the validity of forcing an elected public official to maintain confidentiality as it pertains to the results of a publicly funded audit on a public tax program,” Walker wrote in his letter to Cherry Bekaert. The councilman went on to say that the public “deserve[s] to know” the full findings of the audit and that, if the full findings aren’t made public, he has constituents that are prepared to go to court to compel them to be released.
On Aug. 1, the PDT — which is comprised of three companies, Brownstone, M.B. Kahn and the former ICA Engineering (now named HDR) — issued a statement in regard to the audit, which noted, in part, that the PDT is a “private business entity” and that it has “gone above and beyond the contract requirements [with the county] and provided full access to all of the PDT’s records.”
“The Cherry Bekaert audit was limited in scope and was not an audit of the penny program,” the statement reads. “The service provided was an audit of the financial statements of the Richland PDT, a private entity. Any findings noted in the report were applicable to the internal controls of the PDT, a private business entity and not in the management of the penny program.”
At the Aug. 1 meeting, Councilwoman Joyce Dickerson expressed frustration, saying she wanted to see “all receipts that are pertinent to this penny.” She said she wants to see the information before the county’s relationship with the PDT ends.
“I’m really so sick of it, I really don’t know what to do,” Dickerson said. “So somebody get those documents from [the PDT]. I know they’ll be leaving in a little bit, but I want it before they go.”
Richland County’s transportation penny program has long been dogged by controversy.
Questions about the initiative began to fester in 2015, when the state Department of Revenue began to look into penny spending. Rick Reames, who was director of the state tax agency at the time and has since moved on to the private sector, said the department’s probe into the penny “uncovered millions of dollars of potential fraud, waste and abuse.”
The county and DOR subsequently shot lawsuits back and forth at one another, and the legal escalation eventually led to a March 2018 opinion from the state Supreme Court. That opinion called into question a number of expenditures that were being paid with penny tax money, including monthly $25,000 payments to a pair of public relations firms, $550,000 in penny money used to establish a small business leadership fund, and cash for what the court called a “vague and duplicative” mentor-mentee program.
Years of rancor about those expenditures came to a head in February, when County Council agreed to begin reimbursing the county’s transportation fund for millions of dollars in penny tax expenditures that were unallowable per the S.C. Department of Revenue and state Supreme Court. Council authorized an initial $1 million payment from the county’s general fund, likely the first of several. There were approximately $3.4 million in expenses that should not have hit the penny fund budget.
Meanwhile, the county is struggling to fund all of the projects that were promised in the initial penny referendum. It is looking for ways to handle a roughly $140 million increase in costs since the measure initially passed.