Infrastructure Bank Draws Fire As Political Arm

Infrastructure Bank Draws Fire As Political Arm


Eric K. Ward
The Nerve
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Written By: Eric K. Ward
The Nerve
Wednesday, April 20, 2011

The director of South Carolina’s leading environmental group says a controversial road-building project in Charleston serves as a poster child for how the state Transportation Infrastructure Bank suffers from legislative cronyism.
And, in a perhaps surprising twist, the self-described father of the Infrastructure Bank acknowledges that it is influenced by politics
.
Created under state law in 19
97, the Transportation Infrastructure Bank is a stand-alone state entity that helps finance major highways projects. But, it is not an agency per se and operates with little to no staff.
Rather, the Infrastructure Bank is a funding body that works closely with the S.C. Department of Transportation in partnering with local governments to put together deals to pay for large road construction improvements. A seven-member board oversees the bank.
The governor appoints the board chairman and one other member of the panel. The two most powerful members of the General Assembly – the House speaker and the Senate president pro tempore – also appoint two members each, including one lawmaker from each of their respective chambers.
Thus, in practical terms, the Legislature controls the board in appointing four of its seven members, two of whom are lawmakers.
The chairman of the state Department of Transportation Commission, which governs the DOT, serves as the seventh member of the Infrastructure Bank board.
The bank draws on funding from several sources, including state gasoline tax revenue, state motor vehicle registration fees, contributions from private parties and matching money from local governments.
The Infrastructure Bank also issues bonds and generates a huge portion of its funding through that process.
On Tuesday night, Charleston County Council cast a final decisive vote against the controversial project in the port city, a proposed extension of Interstate 526.
Dubbed the Mark Clark Expressway, the extension would run about 7 miles from one end of U.S. 17 in the West Ashley community to the James Island and the Johns Island areas, crossing the Stono River with two bridges.
The expressway is budgeted at $489 million. The Infrastructure Bank pledged to finance $420 million of that under an intergovernmental agreement for the project signed by the bank, the county and the DOT. The county would have to cover the rest of the cost.
The idea of extending I-526 has been in the works since the early 1970s
, according to a Department of Transportation web page about the project.
However, the design of it as envisioned in the would-be expressway has provoked opposition among many Charleston residents. Generally, they object to it for environmental and aesthetic reasons and contend that improving existing roads would be a better, more efficient use of scarce transportation resources.
Sensing that sentiment, the County Council shot down the project.
The state’s premier environmental group, the nonprofit Coastal Conservation League, opposes the expressway on the same grounds. But the organization also sees the project as symptomatic of a larger problem.
“To me it is the poster child for the need to reform our [South Carolina’s] transportation funding system,” says Dana Beach, director of the Coastal Conservation League, which is headquartered in Charleston. “It was a project that very few people wanted.”
Very few people, that is, except three very powerful ones, Beach says: Charleston Mayor Joe Riley, S.C. House Speaker Bobby Harrell and Senate President Pro Tempore Glenn McConnell.
As it happens, Harrell and McConnell, both Republicans, both represent Charleston County districts. And, by virtue of their legislative leadership positions, they each appoint two members to the Transportation Infrastructure Bank board.
Under the bank’s enabling legislation, two of those appointees are legislators, one from each chamber. Currently, they are Rep. Chip Limehouse, another Charleston Republican, from the House; and Sen. Hugh Leatherman, R-Florence and chairman of the budget-writing Senate Finance Committee, from the upper chamber.
Describing the proposed I-526 extension as “effectively an earmark,” Beach says it exemplifies a broken system in which two powerful legislators basically control the Infrastructure Bank board. “That has got to change if we’re going to move this state forward in any number of fields,” he says.
A phone message left for Riley on Monday with Charleston media relations director Barbara Vaughn was not returned.
Email and phone messages for Harrell; his spokesman, Greg Foster; and McConnell also were unreturned.
Beach says Harrell and McConnell, as the leaders of the Legislature, have a responsibility to advance statewide goals rather than just the parochial concerns of their districts. “And that is not what’s happening here.”
He likens the Infrastructure Bank’s governing panel to a “shadow board.”
“The solution is to terminate the Infrastructure Bank and fold its function into the DOT,” Beach says.
Doing so, he argues, would make the agency the sole, transparent entity managing the state’s transportation investments because the DOT operates under prioritization requirements that the Infrastructure Bank does not have to follow.
Translation: The bank is susceptible to political influence from the legislative component of its board.
While it might be surprising, Buck Limehouse, who describes himself as “kind of the father of the Infrastructure Bank,” does not contest that point. And he would know: He served as chairman of the Department of Transportation Commission under two former governors and as DOT director under a third.
“You’re on the right track with the way the decisions are made with the politicians sitting on the [Infrastructure Bank] board,” Buck Limehouse says.
He offers that assessment even as his son, Chip Limehouse, is serving as one of the board members.
But at the same time, Buck Limehouse says that, beyond the politics of the board, the bank has a long history of successful projects that are benefitting the public and would not have been possible without the Infrastructure Bank’s funding leverage.
He cites the new Cooper River Bridge in Charleston, a visually impressive, eight-lane expanse completed in 2005, as the greatest example of the bank’s successes.
The bridge cost $626 million to build through fixed Infrastructure Bank financing, but would have been more than three times that amount under a traditional pay-as-you approach that always leads to higher costs, Buck Limehouse says. “So, the proof is in the pudding.”
He also says the bank selects projects for funding based on an application process. “It’s not closed doors where they’re smoking cigars and picking pockets.”
Still, Buck Limehouse says Beach’s idea of merging the bank with the Department of Transportation is workable. “It could be folded into the DOT if that’s the way you wanted it,” he says.
Reach Ward at (803) 254-4411 o
r eric@thenerve.org.

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