Charleston County's new deal to complete Interstate 526 is an unprecedented legal and financial commitment by a South Carolina local government — one in which the county has agreed to most of the risk, state officials said Wednesday.
Next week, Charleston County officials are expected to travel to Columbia and explain why they agreed to the deal.
Earlier this year, the county, the S.C. Transportation Infrastructure Bank and the S.C. Department of Transportation struck a new legal agreement to revive the long-stalled project to extend I-526 for 7.4 miles, from Citadel Mall to the James Island connector.
The project, first conceived in 1972, has floundered since the bank agreed to build it in 2007, when its estimated cost was $420 million.
Its problems have stemmed from shaky political support in recent years, as well as ballooning costs. DOT Director Christy Hall said Wednesday the most recent estimate places the price tag at $725 million in today's dollars. She said the department likely will have an updated estimate in about two years, after more early design and permitting work is done.
Hall and state Transportation Infrastructure Bank Chairman John White appeared before a state Joint Bond Review Committee that is scrutinizing — and eventually would need to approve — the new deal.
White likened the agreement to a successful mediation in which both sides don't feel they got exactly what they wanted.
“I would also say as a result of the new intergovernmental agreement, there are those feelings on both sides," he said, "and there are also questions in regard to interpretation that still linger and will probably linger for some time."
Both White and Hall said they are satisfied that the deal's terms protect their agencies and the state.
Those terms include:
- The county and the bank splitting the estimated $24 million in preliminary costs 50-50.
- The county and bank splitting all construction costs on a 45-55 basis, until the bank has spent $420 million total. After that, the county pays everything, either from its transportation sales tax or any other lawful source.
- DOT will act as project manager and as a neutral third party to collect money from the county and the bank and use it to pay contractors.
- If the county doesn't pay, the state can withhold its revenues.
- If the county decides the project shouldn't move forward, the bank can recover 50 percent of what it has already spent.
- If the county stops paying its share, the state treasurer can withhold money that normally would be sent to the county.
- The county accepts all litigation costs. No lawsuit has been filed so far, but Ross Appel, a Charleston attorney representing the Coastal Conservation League, recently sent a five-page letter to the state outlining potential legal problems with the deal.
White noted the bank already has spent about $40 million on the project so far and would be on the hook for no more than $380 million more.
Hall said the risk on this project has been transferred to the county.
"There's no doubt going forward, once that (design-build) contract is signed by the county, they’re on the hook."
White said he still has not received a legal opinion from Charleston County indicating that it may enter into the deal, prompting a question from state Sen. Thomas Alexander, R-Oconee:
“We’re 10 weeks out, and we still don’t have that agreement?”
But most other lawmakers asked questions that seemed to show support for moving ahead.
State Rep. Leon Stavrinakis, D-Charleston, said, "You can often determine how important something is by how the folks who need it the most are behaving. Have you ever seen a local government come up with this much local money for an interstate?"
"Not to this magnitude," Hall replied, "No, sir."