A new report warns a funding bank South Carolina uses to finance major roads projects is accumulating large amounts of debt that are well beyond similar programs in other states.
The report released Thursday by the Legislative Audit Council recommends the state Transportation Infrastructure Bank tighten its rules and eventually be folded into South Carolina’s larger highway agency. The agency was created by legislators in 1997 to help finance large construction projects that cost more than $100 million. It’s perhaps best known for financing the building of the Ravenel Bridge across Charleston Harbor in the early 2000s.
But conservative lawmakers have increasingly criticized the agency in recent years for the expensive projects it funds that do not follow the same priority rankings as the Department of Transportation.
Some of the Legislative Audit Council criticisms included that the bank uses its borrowing capacity to make more than three times as many grants to county and city governments as it loans, creating an unsteady revenue stream. “The term bank is almost a misnomer,” lead auditor Andy Young said. “Banks loan out money. But the Infrastructure Bank, because it gives away the money, they have to depend on a stream of revenue from the (legislature) to repay those bonds.”
The bank also has more than six times as much debt than the state Department of Transportation, at nearly $2 billion last year compared with $311 million at SCDOT. The bank board’s chairman Vince Graham told a House panel Thursday the Infrastructure Bank has been given stronger borrowing ability which makes it more feasible than SCDOT. He recommended against giving the additional capacity to SCDOT, arguing the audit did not study the potential impact of doing so.
Nevertheless, the audit notes South Carolina’s bank borrows far and beyond what its counterparts in other states handle. Auditors also reviewed what similar agencies in Florida, Missouri, Ohio and Texas had committed since 1997 and found the South Carolina’s Infrastructure Bank’s $4.8 billion in pledges were nearly double those four states’ counterparts combined ($2.6 billion). However, the audit notes some of those states finance projects via other means.
The report also questions an apparent lack of set criteria for what is considered a worthy project. Auditors note the bank does not have any regulations in place that clearly define a project’s eligibility. The bank also does announce publicly when it has funds available, does not use consistent standards for approving grants or loans and sometimes even awards funding to projects that were not on a county’s initial application.
“The process they have reduces the probability that the needs will be legitimate,” Young told South Carolina Radio Network. “There’s no real structured process. Most of their projects are not even on the SCDOT priority (rankings).”
Those uncertain requirements and lack of public notice may have given certain counties an edge in applying for grants. The report notes Charleston and Horry counties have raised more than $1 billion through the Infrastructure Bank since its creation, while 38 of South Carolina’s 46 counties have gotten under $200 million. 32 counties have received less than $10 million, while 15 have never received any assistance.
Graham agreed that the approval process could be made more transparent, noting that the board is working to improve public notification when funds become available and will now require applications on all funding requests. Board members have also defended the apparent disproportionate benefit by arguing wealthier counties like Aiken, Charleston, Horry, and York dedicate their own share of local taxes to make state Infrastructure Bank assistance more favorable and likely.