The legislative Joint Bond Review Committee this morning is expected to consider approving the proposed $7.06 million purchase of State Farmers Market property owned by S.C. Ports Authority Chairman Bill Stern.
An appraisal done in January put the value of the property at $7.075 million, so by that measure, it would appear that state taxpayers aren’t getting fleeced in the deal pushed by the S.C. Department of Agriculture.
Then again, maybe not.
Lexington County property and tax records and Agriculture Department documents reviewed by The Nerve show that:
- Stern, through one of his companies, Stern Market Properties LLC, purchased four lots totaling about 27 acres in the Lexington County market along Charleston Highway in September 2010 – the same month the market began operating – for $1.57 million. The latest appraisal by the Marshall Dodds Company Inc. in Columbia, which was hired by the Agriculture Department, puts the value of one of those lots that the department plans to buy – a 9.73-acre parcel known as Lot 25 – at nearly $6.1 million.
- The appraisal of Lot 25 includes improvements to the property – namely a 31,090-square-foot wholesale vendor building and two open-air produce sheds totaling 38,766 square feet. Lexington County property records list the total taxable value of the property, including the buildings, at slightly more than $3 million – about half of the appraised value.
- The Marshall Dodds appraisal lists the value of a tiny, 85-square-foot front gate house owned by Stern, where truckers pay fees to haul their produce primarily to the wholesale vendors in the market, at $990,000, or about $11,650 per square foot. The Agriculture Department in documents provided for this morning’s meeting said the acquisition of the gate house “includes a perpetual income stream”; agency spokesman Martin Eubanks in an email response Tuesday to The Nerve said based on the appraisal, the projected annual revenue from the gate house – none of which the department currently receives – would be $125,000, all of which the department would retain minus operating costs.
- Total annual operating costs for the Agriculture Department with the purchase of Stern’s property are projected at $319,500 for each of the next three fiscal years. Eubanks in his response said the estimated $125,000 in annual gate-house fees “should increase based on 24-hour manning.”
The Nerve this week left several phone messages for Stern at his private development company, called Stern & Stern and Associates and located out of a Columbia-area bank building he owns. He did not respond, though he told The Nerve last year that the proposal by Agriculture Commissioner Hugh Weathers to buy his property was more of an inquiry, not a finalized deal, and that he wouldn’t have profited even if there were a deal. He also said then that as the Ports Authority chairman, which oversees the operation of South Carolina’s ports, he does not have any confict of interest with his involvement in the market.
“Somebody would have to tell me what the conflict is,” Stern said at the time.
Lexington County tax records reviewed this week by The Nerve show that most of the approximately 36 acres owned by Stern through companies registered with the state under his name, including WV Investments LLC, FM Building C LLC and Market Outparcel Development LLC, are assessed no property taxes, but instead appear to be covered through a county fee-in-lieu-of-taxes (FILOT) agreement, which greatly reduces a property owner’s tax bill. County officials could not be immediately reached Tuesday to confirm the FILOT agreement.
Stern’s property includes the Corbett Building, which houses a restaurant, exhibition kitchen, a country store and space for other agricultural vendors. The state leases that building at an annual cost of $195,000, Stern said last year, though it is not included in the proposed $7.06 million purchase.
Weathers didn’t make public Stern’s connection to the market until after a May 30, 2012, story in The Nerve. A proposed $16.3 million state appropriation last fiscal year to expand the Farmers Market was later dropped.
The Nerve reported last year that Agriculture Department documents indicated that the state was losing money on the Farmers Market and wanted Stern’s property as a means to make the market become profitable.The market has been described in agency documents as a public-private partnership, with the department operating facilities for direct sales from South Carolina growers, and privately owned companies having their own wholesale or retail businesses.
Lawmakers this fiscal year, which started July 1, earmarked $7.06 million toward the purchase of Stern’s property through the state Capital Reserve Fund – a “rainy-day” fund that lawmakers have raided in recent years for various projects. Total projected acquisition costs, including “investigative studies,” are listed in documents provided for this morning’s meeting at $7.1 million.
A separate state budget proviso (44.12) this fiscal year requires that any sales contract for Farmers Market property be approved by the Joint Bond Review Committee (JBRC) – a 10-member legislative committee chaired by Sen. Hugh Leatherman, R-Florence and the Senate Finance Committee chairman – and the five-member S.C. Budget and Control Board, chaired by Gov. Nikki Haley and whose members include Leatherman; House Ways and Means Committee Chairman Brian White, R-Anderson and the JBRC’s vice-chairman; S.C. Treasurer Curtis Loftis; and state Comptroller General Richard Eckstrom.
S.C. Rep. Ralph Norman, R-York and a developer, has been a vocal critic of the proposed Stern land deal. Questions surrounding the plan compelled Norman and five other York County-area lawmakers in August 2012 to request that the Legislative Audit Council, the General Assembly’s investigative arm, conduct another audit of the Agriculture Department’s handling of the relocation of the Farmers Market from Richland County to Lexington County. The latest audit has not been completed, though more than a year has passed since the request.
In a Feb. 12 letter to the Marshall Dodds Company, Norman questioned the appraisal of Stern’s property, asking why, for example, no written confirmation of income and expense figures for the wholesale vendor and open-air buildings that were provided by Stern was included in the appraisal; and how the $900,000 appraisal of the front gate house was determined.
Norman declined comment when contacted Tuesday by The Nerve.
Update: 10/16/13 – The Joint Bond Review Committee this morning approved the $7.06 million purchase without comment.
Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.