Leave development to the private sector

Bluffton Mayor Lisa Sulka says she would gladly support a future effort by the town to develop affordable housing.

This comes after a closer look raises questions about the $1.3 million Wharf Street Redevelopment Project, in which the town bought land, built six cottages and sold them between 2009 and 2013.

Those questions and answers — including an investigation by the state Ethics Commission that cleared Sulka of any conflict — should warn all local governments to stay out of the development business. They simply lack the expertise to do it well.

Bluffton has good reason to be proud of the project, which won two statewide awards. Pretty homes line a street where previously an abandoned structure was littered with signs of drug abuse. And it addresses a long-running problem for Beaufort County, and one that is getting worse: affordable housing.

The cost of these homes were artificially low — a net $851,537 below development cost.

And there were strict requirements for buyers. To qualify for the homes, a single person could not make more than $39,100 a year, and income for a family of six could not exceed $64,800. Those caps were based on 80 percent of Beaufort County’s median income. Applicants also had to pass background checks and complete a first-time homebuyer course.

It addresses a need, but not in a manner that can or should be repeated.

We now know that the town paid too much for the land. The town paid the equivalent of $1.1 million per acre for a sliver of blighted land that was languishing on the market.

In two land purchases for this project, it town paid 99 percent of appraised value when it should not have. The recession was coming on strong. Banks had pulled back on financing. No other property was selling for the amount they paid. Why in the world didn’t the town offer the landowners less money? Based on the Multiple Listing Service data that we looked at, everyone else in Bluffton who was buying land at the time realized that they could get land for less. Why didn’t the town?

One factor is that the bulk of the money for this project flowed from Washington — $1,028,818 in federal stimulus money. Whether it’s federal tax money or local tax money, Bluffton had an obligation to be good stewards of it. Our reporting shows that this may not have been the case with the land deals that made the Wharf Street redevelopment project happen.

And even though Sulka was cleared by the state Ethics Commission on her connections to the buyer and seller, there remains a perception problem. As a real estate agent and the mayor of a booming town, Sulka will have to go to greater lengths to avoid questions.

Unfortunately, there is not a perfect answer to the affordable-housing problem. Bluffton, and other local governments, have bent over backward to provide incentives for private developers to meet the need. Meanwhile, Habitat for Humanity is producing great results, and maybe simply providing land for that organization to carry out its mission would be the best answer.

The Wharf Street project succeeded by actually getting houses on the ground. But it was a long and tedious process best left to the private sector.

This story was originally published February 4, 2017 at 10:57 PM with the headline "Leave development to the private sector."