Update: Potential Port of Port Royal buyers say high cost, insurance questions killed deal

The high cost of part of the Port of Port Royal property and questions about an insurance settlement are among the issues that kept the latest attempt to purchase the property from closing, one of the potential buyers said.

The contract was terminated Friday at the end of the due diligence period for Palmetto Alliance, the property group which had offered the S.C. Ports Authority $15.4 million for the entire property in June.

The property will now be transferred to the state's General Services Division for auction, per state law passed last year.

A new appraisal will be conducted and the land must sell for 80 percent of that value at auction.

Among the issues with the most recent contract was that the residential portion of the 317-acre property, known as the Bluff Neighborhood, was priced too high, said actor and producer Matt Battaglia, a member of the property group. The Ports Authority denied requests to have that portion of the property reappraised, Battaglia said.

In April, the minimum bid for the residential area was set at $8.47 million.

The Ports Authority did allow the buyers to buy less than the entire Bluff Neighborhood parcel and extended due diligence more than a month, but the moves didn't save the deal.

Battaglia also said the Ports Authority did not disclose details about insurance money after a July fire burned down a building that housed Port Royal's seafood market and dock operations. The fire also destroyed an adjacent warehouse and caused some smoke and water damage to what was Dockside Restaurant.

Ports Authority attorney Neil Robinson said Monday that the agency had given the potential buyers all available information about the insurance claim and that the settlement has not been finalized. The Ports Authority also agreed to sign over rights to the insurance money when the sale closed, Robinson said.

Ongoing legal disputes over the railroad line right-of-way also clouded the issue, Battaglia said.

A lawsuit filed this month by area property owners against the S.C. Ports Authority and town of Port Royal seeks money for the abandoned railway property they say is their's and was illegally claimed by the Ports Authority and town when the railroad was abandoned.

Robinson said that case might be handled for the state by the attorney general after control of the property is transferred. He said the railway property was granted to the Ports Authority by deed and not easement and that the ownership rights of those suing end before the rail line.

Still, though the property in question is only a small part of the port property for sale, it could affect the timing of the sale, Robinson said.

Battaglia said Palmetto Alliance members could be interested in an upcoming auction but that questions remain.

"Though we are willing and able buyers, even if we wanted to close, there is no way that the seller could provide clear title, much less clarity to many issues needed in order to make a subsequent closing," Battaglia said in an email.

Follow reporter Stephen Fastenau at twitter.com/IPBG_Stephen.

Related content:

• Port of Port Royal sale falls through again, Dec. 11, 2015
• Port of Port Royal development plans unlikely before sale closes, Oct. 4, 2015
• $15-million offer accepted for Port of Port Royal property, June 17, 2015

This story was originally published December 14, 2015 at 9:40 AM with the headline "Update: Potential Port of Port Royal buyers say high cost, insurance questions killed deal."