A new audit into the State Farmers Market claims South Carolina agriculture officials did not follow good real estate practices when they purchased sections of the site from a property owner who had donated the maximum allowed towards the reelection campaign of South Carolina’s agriculture commissioner.
The report released by the Legislative Audit Council on Thursday warns an appraiser who evaluated the $7 million sale may have relied too heavily on the limited liability corporation that benefitted from selling the land. It also said Agriculture Commissioner Hugh Weathers should have informed legislators that a political donor owned the property when he asked those legislators to set aside funds for the purchase.
But Weathers angrily accused the audit of making inappropriate insinuations of a political quid pro quo even though no laws were broken.
State Rep. Ralph Norman, R-Rock Hill, requested the audit last year after the Department of Agriculture paid $7.06 million for about nine acres of additional property at the farmer’s market in 2013. Three years earlier, the market relocated from its old downtown Columbia location to the site near Dixiana in order to provide better highway access for the larger wholesalers which operate on the property.
Norman, a real estate developer in his private life, had criticized the deal at the time. But legislators approved the purchase, helped by Weathers’ assurances that doing so would help make the public-private Farmers Market more profitable. Lawmakers have set aside $300,000 for the market each of the last three budget years to cover its operating expenses. The report stated the Farmers Market is not self-sustainable without those funds.
“Taxpayers deserve better than this,” Norman told South Carolina Radio Network on Friday. “The Farmer’s Market shouldn’t get one dollar of taxpayers’ money with this kind of record.”
Much of the controversy over the deal had to do with a Columbia developer whose limited liability corporation purchased crucial tracts of land at the market shortly after it opened. The land purchased by Stern Market Properties, LLC would eventually include a retail building, another structure for produce distribution companies, and the front gatehouse. The LLC’s owner Bill Stern is well known in the Statehouse for his political connections and his frequent donations to Republicans. He also serves as chairman of the State Ports Authority Board of Directors. Campaign records filed with the South Carolina Ethics Commission show he contributed $3,500 to Weathers’ 2010 reelection campaign (the maximum allowed under South Carolina law).
The auditors said Weathers should have disclosed Stern’s contribution when the Department of Agriculture (SCDA) asked state lawmakers to approve the deal. The audit makes it clear that no laws were violated by the donation — which Weathers had mentioned on his 2010 campaign filings — and they “could not find information that this donation impacted the purchase of the land.” But they said such disclosures create “a more transparent vetting process,” especially since Stern was never referenced by name in the formal request to the Joint Bond Review Committee or the Budget and Control Board.
The SCDA angrily responded to the report, saying in a written response that the audit “does not present a complete picture of the State Farmers Market background, purchases, and operations, and should not be presented to the public as such.” Weathers wrote in the response that auditors were intentionally looking towards “negative findings.”
“There is a strong indication of impropriety regarding a political contribution to the campaign for re-election for the Commissioner of Agriculture,” the agency said, adding that the LAC itself noted no laws were broken. “Statements with blatant political overtones have no place in an unbiased review.”
Weathers said there was no requirement for him to disclose that Bill Stern was a campaign donor beyond listing it in his 2010 campaign filings. SCDA officials said the commissioner was out of the office and not available for an interview Friday.
The audit also found the Department of Agriculture used only one appraiser when it attempted to purchase Stern’s land in 2012. It stated the appraiser relied on rent income and gate receipts that were provided by Stern’s firm without the usual documentation. The final appraisal also did not account for water restrictions that the EPA had placed on the land due to a neighboring Superfund site off the property.
The appraiser ended up giving a nearly $7.08 million value to the land, which had a tax value of $1.18 million. Stern’s firm had paid less than $2 million just three years earlier. The SCDA response accused auditors of distorting the profit that Stern made off the 2013 sale, saying the $1.75 million his LLC paid for the property in 2010 did not include the improvements he made or the tenants who began leasing stalls at the site during those three years.
“Given the unique nature of the Farmers’ Market, as the only one of its kind in the Columbia area, a second appraisal could have provided additional information,” the auditors wrote. “A second opinion could better ensure that a fair market value was paid for the property and that issues relevant to property valuation, which may have been missed by one appraiser, are adequately examined.”
Weathers answered that Stern’s firm had already done its own appraisal even before the state commissioned its own, essentially meaning two appraisals were done after all.
Norman said he will bring up the audit when the House GOP Caucus meets on Saturday. “I’m very upset about it and it’s inexcusable for the taxpayers to have to put up with this,” he said Friday. “If you go out and rent a car, you sign more paperwork than they did to justify over $7 million.”