By Molly Parker
mparker@scbiznews.com
Published April 24, 2009

Leading Senate lawmakers recently offered Veterans Terminal to North Charleston Mayor Keith Summey if he would take the gift in exchange for putting rail lines through the heart of a years-long project to redevelop his city.

Summey declined, saying his position is not for sale.

In offering to take Veterans Terminal away from the S.C. State Ports Authority and give it to North Charleston, the lawmakers wanted Summey to allow Norfolk Southern to access the former Navy base property through the northern end.

“I’m interested in Veterans Terminal,” Summey said, “but not at the cost of everything else we’ve done.”

Summey said he recently sent word to the Senate lawmakers who had offered to orchestrate the deal — he declined to name them.

Colossal mess
The offer illustrates just how far lawmakers are willing to go to ensure that both CSX and Norfolk Southern have equal near-dock rail access to the new North Charleston port terminal under construction on the former Navy base.

CSX has access to the base from the southern end, but the railroad company has no plans of sharing with chief rival Norfolk Southern

Those pushing for a compromise say a solution is vital to the well-being of the Port of Charleston and the economic health of the entire state.

But the Veterans Terminal offer is just one moving piece in a complicated — some might say bizarre — debate involving rivaling railroads, a 7-year-old memorandum of understanding, legal threats, a proposal for a new maritime facility on Charleston’s upper peninsula and legislative wrangling designed to gain the upper hand.

“It is a colossal mess, is what it is,” said Rep. Jim Merrill, R-Daniel Island.

Merrill recently sponsored an amendment to a House bill — much to Summey’s chagrin — naming the S.C. Public Railways as the property owner of the railroad that runs onto the former Navy base, where a city-backed residential and business development is planned in addition to the container terminal.

Merrill said his intent was misunderstood and the amendment is meant to provide the option of northern rail access — but not meant to force it there.

“I think some people are reading into this and hyperventilating way too early,” Merrill said.

Slap in the face
The amendment prompted Summey — who called it a “slap in the face” — to lash out in a lengthy opinion piece on his city blog. That turned up the heat on the brewing debate.

The mayor has sent a letter to the Army Corps of Engineers asking the agency to halt construction on the terminal because northern rail access would be in violation of a memorandum the city and S.C. State Ports Authority penned in 2002. In that memorandum, the SPA agreed to “use rail access exclusively from the south end of the property.”

Allowing northern rail access would hinder years of economic development work by the city to rebuild the neighborhoods in the footprint of the shuttered Navy base, Summey said. It also would thwart the Noisette Co.’s plans to build a live-work community on its 340-acre share of the property. The rail line that would service Norfolk Southern runs through the heart of the project.

The city and Summey are preparing for a legal fight against the state.

“It seems like they are a bit schizophrenic,” said Derk VanRaalte, deputy city attorney for the city of North Charleston. “No offense to schizophrenics.”

No quid pro quo deal
Summey said he would like North Charleston to own the 110-acre Veterans Terminal, which handles noncontainerized break bulk cargo, because it could add an additional tax base to the city. Under such a scenario, North Charleston would lease the land to a private operator and the city would act as a landlord.

Late last year, discussions began between Summey and lawmakers on a plan in which the city would use tax revenue generated from Veterans Terminal to pay for a portion of the $182.5 million access road the S.C. Department of Transportation is expected to build to serve the new container terminal.

Summey said that tax-increment financing district plan would free up money for the DOT to fund an interchange improvement project off Interstate 26 in Jedburg, where several prominent national developers are planning massive logistics parks.

Senate Transportation Committee Chairman Larry Grooms said he is open to such a trade.

“Everything is on the table,” he said.

Whether or how the Legislature could transfer ownership of the land from one public body to another is not exactly clear.

Summey said he will not accept the terminal as part of any quid pro quo offer that requires him to allow northern rail access. He said there is no carrot large enough to lure him from his stance.

“I will fight it with every breath I’ve got, and my council is on line to do the same,” he said. “There is a way it can work in the south end.”

Summey says a potential solution is to utilize the 180-acre Ginn property on Charleston’s upper peninsula and allow Norfolk Southern to serve an intermodal facility constructed there by the SPA, the state or a private party. Neither S.C. Public Railways nor Norfolk Southern is keen on the idea. They argue it would wreak havoc on downtown traffic while still leaving Norfolk Southern at a competitive disadvantage.

Prepared to fight
Lawmakers are as headstrong on this debate as Summey is.

Grooms, R-Bonneau, said he will go to all lengths to ensure that the terminal under construction on the former Navy base can be equally served by both of the region’s major railroad companies.

He said that could mean forcing rail access through the northern end of the Navy Yard against Summey’s and the Noisette Co.’s will.

“We’re very comfortable that, if this were to be litigated, we believe we would win the legal right to send trains out of the northern end of the base,” Grooms said. “I’d rather not do that, but if that’s the only option to protect the economic well-being to the entire state, I think we’ll have to do that.”

Grooms argues that S.C. Public Railways’ owning of the line would not violate the memorandum of understanding between the city and the SPA, because S.C. Public Railways was not a party to the agreement. The SPA does not operate the railroad, he noted.

Forcing CSX’s hand
As with Merrill in the House, Grooms is supporting an amendment to a Senate bill that would declare S.C. Public Railways as the owner of the rail line’s right of way through the former Navy base.

The issue also is pending in court. The state-created Charleston Naval Complex Redevelopment Authority has asked for a legal determination on whether the rail line’s right of way was included in the state agency’s transfer of property to Noisette. The RDA argues it was not and that it therefore belongs to RDA, which wishes to deed it to S.C. Public Railways.

Grooms said he favors a plan to allow both railroad companies to service the terminal from the south end. But moving forward with plans to provide Norfolk Southern with rail access from the north “just might be what it takes for CSX to come to the negotiating table,” Grooms said.

Thus far, CSX has declined to offer to share its line with Norfolk Southern, but Grooms said the company might have a change of heart if it becomes apparent that state leaders will stop at nothing to ensure both Class 1 railroads have equal access to the Port of Charleston.

S.C. Public Railways President Jeff McWhorter said he would be surprised if CSX buckles. It would be the equivalent of forcing Piggly Wiggly to share its grocery store with Food Lion, he said. A call to CSX was not immediately returned.

Extra-inning politics
Grooms said the amendment was added to the Senate’s budget bill late last week because it is unclear whether the bill to which Merrill added his amendment in the House — one restructuring the SPA board and prescribing new rules for the agency — will win final approval before the close of session.

“But I do believe we will have a state budget this year,” Grooms said.

Summey said he was unaware of the Senate amendment.

“They can play any game they want, that’s fine with me, but they better be able to play an extra-inning ballgame, and they better be ready to play some hardball,” he said.

Reach Molly Parker at 843-849-3144.