Author: Paul Gable

Déjà vu for SC General Assembly

In November 2014, when everyone was talking about the upcoming SC General Assembly legislative session, three big topics were at the fore, ethics reform, transportation maintenance and repair funding and education funding.

One year later, as preparations are made for the second session of the 121st General Assembly, those three topics are still waiting to be addressed.

Real ethics reform falls into three areas – disclosure of all sources of income for members and their immediate families, disclosure of donor sources in these currently anonymous PACs and an independent process for ethics violation investigations.

Under our current ethics system, the House and Senate have ethics committees that essentially do nothing, and the SC Ethics Commission, which covers all other public officials throughout the state, specializes in collecting fines for late filing of disclosure documents.

All three areas have strong resistance, especially in the Senate, so expect another year where ethics is talked about much and accomplished not at all.

In the area of transportation maintenance and repair or general infrastructure funding, one lesson should have been learned with the floods of October – you can only ignore maintenance and repair of necessary infrastructure for so long.

When old, neglected infrastructure is hit with unusual conditions, it will fail. Some of the flood damage we saw would have happened anyway, but dams failing, bridges collapsing and roads washing out were as much a consequence of neglect as it was from the storm.

School funding, or rather equitable funding for poor, rural school districts is a subject that has been effectively dodged in one way or another since the Brown v. Board of Education Supreme Court decision of 1954.

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Who Has Information on Skydive Myrtle Beach?

The ongoing dispute between Skydive Myrtle Beach and Horry County Department of Airports has taken interesting twists and turns in recent weeks.

In 2014, Skydive Myrtle Beach lodged a complaint with the Federal Aviation Administration against Horry County Department of Airports alleging discriminatory actions against Skydive Myrtle Beach by HCDA.

In response, Horry County Department of Airports reported to the Federal Aviation Administration that Skydive Myrtle Beach was the subject of 112 alleged safety violations while conducting business at Grand Strand Airport.

According to Aaron Holly, a principal of Skydive Myrtle Beach, his business had never been notified of any of these violations and still has not received any official paperwork relating to any of them.

In October 2015, the FAA issued a 73 page Director’s Determination Report, in response to Holly’s original complaint, supposedly basing the report on those safety violations. Horry County subsequently used this report as an excuse to shut down Skydive Myrtle Beach operations at Grand Strand Airport.

County officials said FAA grant funding was in jeopardy if the Department of Airports didn’t act to shut down the business.

That’s not exactly true. A letter from Michael O’Donnell of the FAA to HCDA director Pat Apone, dated November 13, 2015, states in part, “The FAA also requested Horry County to submit a “corrective action plan incorporating acceptable risk mitigation measures and revised procedures under which safe skydiving operations may resume.”

The county was only supposed to suspend skydiving operations until a mitigation plan was submitted.

And the problem for HCDA gets worse.

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Curtis M. Loftis Jr., South Carolina’s treasurer

Fixing the SC Public Retirement System

It appears the SC General Assembly is finally realizing major work must be done to save the SC public retirement system.

This realization comes in the aftermath of a SC Legislative Audit Council report on the SC Retirement System Investment Commission (SCRSIC). “The LAC’s report reveals that our retirement and pension system’s longevity is in jeopardy and in need of immediate effective adjustments,” said SC House Speaker Jay Lucas.

What is bothersome is Lucas’ next quote attempting to take credit for discovering the deficiencies within the system: “Without the initiation of this report, we might not know the truly delicate state of South Carolina’s pension system. Although its findings reveal significant flaws and deficiencies, it gives the General Assembly a starting point to offer assistance to the RSIC by helping them institute corrective measures that will put South Carolina’s pension plan on a path to solvency,” Lucas said.

The LAC report called the retirement system “significantly underfunded” and that “it underreported risk” of its investments. It called for improvement in controlling conflicts of interest and pointed out the high fees paid and the low rate of return earned on its investments.

These are exactly the same criticisms SC Treasurer Curtis Loftis has leveled at the SCRSIC since taking office in 2011.

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Orchestrated Attack on Horry County School Board

Since early last month when the Horry County Schools Board of Education picked First Floor Energy Positive to build five new schools, there has been an orchestrated attack to denigrate that decision.

Much has been made of the fact that the First Floor proposals were over the initial budget while little has been said about all three finalists submitting proposals over budget.

Several news articles have said that the school board ignored the advice of a paid consultant, but never mentioned that consultant was hired by the board’s attorneys to answer technical questions only and not to make recommendations about the awarding of the contracts.

Those articles were quick to point out that M.B. Kahn was the only one of the three finalists whose proposal was ‘within striking range’ of the initial budget.

The news media basically got fed part of the story and ran with it.

These were not design-bid-build projects where the contract design generally goes to the lowest bidder. These were design-build proposals where the best, most complete proposal gets the contract as long as the cost is in the ballpark of the others.

Many other allegations of ‘misinformation’ are being circulated, even though those circulating them can be seen to have some ties, past and/or present, to one of the unsuccessful proposers.

However, First Floor Energy Positive was the only proposer who demonstrated the ability to deliver the schools on time.

In addition, several sources familiar with the selection committee process said there are things First Floor included in their proposals, that the others did not, which helped the selection committee understand what they were getting and, more importantly, were requirements of the Request for Proposal and SC law.

And, First Floor Energy Positive is the only proposer of the three finalists to have successfully built energy positive schools that are raved about by the North Carolina school districts in which they are located.

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HCSWA Moves to Cut Charleston Losses

The Finance Committee of the Horry County Solid Waste Authority board heard Thursday of moves to cut the losses the authority has sustained from its deal to process Charleston County recyclables.

According to HCSWA staff, Charleston County will pay the cost of transportation of its recyclables to Horry County for November, December and January in an attempt to allow the HCSWA to recoup its current losses.

In addition, any amount above 14.5% of residuals will be shipped back to Charleston for disposal.

But, even if the excess of 14.5% is shipped back to Charleston, that won’t solve the other key assumption in the contract that must be met if the HCSWA is ever going to turn a profit from the deal.

Every ton of recyclables above the 14.5% residual threshold means lost revenue that is needed for a profit to be realized.

The estimated profit of $1 million per year is based on a residual rate of not more than 14.5% and the ability to realize an average of $135 per ton revenue from the remaining 85.5% of recyclables processed.

One other problem is the amount of recyclable waste going to the HCSWA landfill.

Horry County Council made it specifically clear that it did not want any Charleston recyclables going into the HCSWA landfill. That space must be saved for Horry County trash and extended as much as possible.

The HCSWA told council it had an arrangement to send C&D waste out of the county in an amount equal to the excess recyclable residual amount realized. This was an airspace neutral arrangement.

The HCSWA claims a historic 14.5% residual rate for recyclables from Horry County.

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HCSWA Losing Money on Charleston Recyclables

Four months into a contract to process Charleston County recyclables at its material recovery facility, the Horry County Solid Waste Authority is losing money.

When the contract was being negotiated back in the summer and when it was presented to Horry County Council, the Charleston County deal was estimated to bring in $1 million per year in profits to the HCSWA.

Instead, the HCSWA is on track to lose at least that much by the end of the fiscal year.

Over the last two months (October and November) when all costs including trucking are reported, the HCSWA is losing approximately $125,000 per month.

The major reason appears to be false assumptions on how much of the incoming tonnage of recyclables would be sold.

In October and November, the total amount of recyclables arriving at the MRF was 4,386 and 4,238 respectively. The tons sold in those months were 2801 in October and 2,430 in November.

This left unsold recyclable tonnage of 3,383 (39% of the total) over the two months. The assumptions during the summer were that approximately 14.5% of incoming tonnage would be unsold residuals.

Horry County Council told the HCSWA it didn’t want any Charleston County trash to go into the HCSWA landfill. The HCSWA told council it would send an equivalent amount of construction and demolition debris (equal to the Charleston residual amount) out of the county.

According to sources familiar with the processing, approximately 700 total tons of C&D debris was sent to a landfill in Marion County in October and November. This leaves approximately 2,683 tons of residuals unaccounted for.

It is impossible to tell just how much residual tonnage is attributable to Charleston because Charleston County and Horry County recyclables are mixed when they arrive at the MRF.

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Horry County Department of Airports Inconsistencies

Looking at the Horry County Department of Airports through the years, a conclusion can be drawn that businesses operating at the various airports are treated differently.

It’s almost as if winners and losers are chosen by airport officials based on no apparent criteria.

Such an attitude is contradictory to instructions from the Federal Aviation Administration.

Accepting FAA grant money (of which Horry County receives millions every year) and free land conveyance of former Air Force property brings with it certain requirements of and assurances from the county. The most important of these is that the airports and their facilities must be available for public use in a non-discriminatory manner.

However, after discouraging Hooters Air from renting hangar space at Myrtle Beach International Airport by insisting on rental of $5 per sq. ft., the Horry County Department of Airports rented the same hangars to AvCraft for $2 per sq. ft.

That was only the beginning rent. Over a 10 year period the airport department kept reducing rent , in an attempt to keep AvCraft in business, until the company finally went belly up.

The Conway airport was home to the North American Institute of Aviation. The school did well until the late 1990’s when enrollment started to decline.

Local businessman Benjamin Creel bought the school at that point, but its losses continued to mount.

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Skydive Myrtle Beach, Horry County and Federal Law

The general aviation procedures at the Horry County Department of Airports seem to raise more questions than answers provided.

The county is currently involved in litigation with Skydive Myrtle Beach over the apparently discriminatory way in which the airport department attempted to treat the skydiving company.

While researching information regarding the ongoing litigation between Skydive Myrtle Beach and Horry County, I came across an interesting piece of information that brings into question leases between the airport department and several individual businesses operating at county airports.

Horry County proposed Skydive Myrtle Beach occupy a hangar at Grand Strand Airport under a space use agreement in which the county would charge Skydive Myrtle Beach $1,200 per month or 24% of the gross receipts of the business, whichever is greater.

The Department of Airport leases with Executive Helicopter at Myrtle Beach International Airport include an annual lease amount or 5% of the gross receipts, whichever is greater.

Skydive Myrtle Beach offered tandem skydiving operations to interested customers. Executive Helicopters provides helicopter sightseeing rides as well as maintenance services.

However, under the terms of what is commonly called the United States Anti Head Tax Act, it appears those charges on gross receipts may be illegal.

The US Department of Transportation, under which the FAA is included, is charged with administering the AHTA.

The AHTA prohibits a state or political subdivision (such as a county) from levying or collecting a: “tax, fee, head charge, or other charge [directly or indirectly] on — an individual traveling in air commerce; … or the gross receipts derived from that air commerce or transportation. 49 U.S.C. § 40116(b)(1), (4).”

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