Horry County’s Flawed I-73 Agreement

By Paul Gable

The Financial Participation Agreement between Horry County and the South Carolina Department of Transportation, approved by Horry County Council November 28, 2018, appears to have many flaws not discussed before a resolution was passed allowing Horry County Administrator Chris Eldridge to sign the agreement.

Generally the agreement provides that Horry County will provide up to $25 million per year from Hospitality Fee revenues to fund the construction of I-73 within Horry County (the Project) and SCDOT will oversee the project from design through construction.

The written agreement states, “SCDOT shall provide an Annual Work Plan to the county on the activities proposed by March 31 that the county shall approve prior to June 30 before commencing work in the succeeding fiscal year.”

I find the use of the word “shall” interesting here in that it means a strong assertion or intention of something happening. Are we to take it to mean the county intends to approve the work plan prior to each June 30th? Does this mean county council really has much of a choice in the decision?

At least a half dozen times during the over one hour discussion about the project and the agreement county council members were told by then council chairman Mark Lazarus and/or county staff members, predominantly administrator Chris Eldridge and attorney Arrigo Carotti, that no money could be spent on the project without prior approval from county council.

To support those statements, Carotti quoted to council the first sentence of Section III (D) of the agreement which reads, “SCDOT shall not enter into a construction contract without the County’s prior approval based on considerations that the contract provide a meaningful connection to the proposed I-73 corridor in part or in its entirety.”

What Carotti did not quote were the next two sentences of Section III (D) which read, “The County’s prior approval shall not be required to enter into contract agreements for improvements to SC-22, provided the cost thereof does not exceed the estimates provided in the Annual Work Plan. Nor shall the County’s prior approval be required for any right-of-way acquisition agreement or consultant agreement for work of the Project provided the cost thereof does not exceed the estimates provided in the Annual Work Plan.”

Why does SCDOT have such leeway in certain areas without prior approval from the county if all the money is coming from the county?

Section V Payments by the County provides, “The County shall maintain an account balance which shall be sufficient to cover the Project expenses for the relevant fiscal year including annual payments to the consultants, contractors or SCDOT…”

Combine the SCDOT commitments that can be made without prior approval with a sentence from Section VI that deals with default. “In the event of default by the County on funds advanced by SCDOT hereunder…”

If no work can be done and no money spent without prior approval by the county, as the former chairman and county staff said, and the county must maintain a fund balance sufficient to cover the fiscal year expenses, why in the world would SCDOT be advancing funds?

Has SCDOT already committed to right-of-way acquisition agreements and/or consultant agreements for this project that the county will be responsible for paying? If so, who benefits from these agreements?

Section IV (B) of the agreement states, “SCDOT makes no financial commitment pursuant to this agreement.”

The above goes so far as to state that the county will pay SCDOT for services it provides. This is such an important project, as our local legislative delegation keeps telling us, that they can’t even get SCDOT to pay for any services it provides.

There is no provision in the Financial Participation Agreement specifically addressing bonding for the project. Council member Harold Worley questioned twice who would be bonding the project (It is inconceivable that this project would be on a pay as you go basis). Eldridge dodged Worley’s questions by saying the first time that he “anticipated SCDOT” would do the bonding and saying the second time the “County would not hold the debt.”

But is the county responsible for paying off the debt even if it is held by SCDOT?

The agreement provides that the county may terminate the agreement upon 30 days written notification, but is responsible for all costs incurred prior to termination…”

Does this mean if SCDOT bonds the project based on $25 million per year from the county that the county must pay off those bonds even if the agreement is terminated?

Did county council approve this agreement based on a one-sided, pro agreement presentation by the former chairman and county staff?

Council was provided with a copy of the agreement in their agenda package for the November 28, 2018 budget workshop, but how many even bothered to look at it?

Such was the rush to get the agreement approved prior to the end of 2018 that it never went through the normal committee process prior to being discussed by council.

With so many needs demonstrated by the recent flooding from Hurricane Florence with respect to US 501, SC 9 and SC 22, for example, is the highest and best use of the Hospitality Fee revenue for a new road project? Is this really the time to allow SCDOT to obtain right of way agreements and consulting agreements for that new road?

I submit that council did not do its due diligence before approving this agreement. It should take another look at the Financial Participation Agreement with a view as to whether it was provided a thorough understanding of the county’s potential liabilities and a second consideration of other needs.


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