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CaroLinks abandons Navy base site
By Dan McCue
Staff Writer
While there are several subtle variations of the story making the rounds on Charleston’s waterfront, it appears a withering of patience led to CaroLinks scuttling plans to establish a base for cargo distribution adjacent to Shipyard Creek in North Charleston.
The former Macalloy Corp. site, which is under contract with an undisclosed buyer, was to have been a cornerstone of the
CaroLinks efforts to develop a $250 million inland port system linking the Port of Charleston to Orangeburg through a unique barge and rail system.
Instead, the company has announced it will concentrate its efforts on developing a 789-acre inland distribution center at the intersection of Interstate 95 and U.S. Highway 301 in Orangeburg.
Sources with knowledge of the transaction said CaroLinks’ abrupt change in course came after brokers tired of repeated requests for extensions of the closing date on the property.
A total of five extensions were granted; the contract was allowed to expire on July 28, sources said.
Lucy Duncan-Scheman, president and CEO of CaroLinks, painted an entirely different picture, saying: “My concern became that we simply didn’t want to waste any more time.
“We want to get down to business and start the company our investors have been waiting for,” she added, suggesting that however close the Shipyard Creek deal might have once been to getting done, it was a long way from fruition.
All systems go until May
Since January, when Duncan-Scheman first went public with her intermodal plan, the North Charleston site has been the focus of considerable activity by her company.
As envisioned, cargo containers would be placed onto barges at the S.C. State Ports Authority’s Wando Welch terminal and hauled to a CaroLinks facility at the old Macalloy Steel plant adjacent to Shipyard Creek.
Trains and barges would then ship containers from Charleston to the Orangeburg County inland site, where cargo could be stored. The cargo would then be distributed by rail or by trucks.
The Shipyard Creek property is owned by Ashley II of Charleston, an investment partnership consisting of real estate developer/broker Robert L. Clement III, GreenHawk Partners and Cherokee Investment Partners, both of Raleigh, N.C.
It is managed by Magnolia Development LLC, which has the same principles; Clement’s CC&T Real Estate Services is the broker representing the property.
Representatives of these entities declined requests for comment for this article.
The partnership acquired the site to fulfill the larger dream of creating Magnolia, a large mixed-use development. However, the acquisition was something of a gamble, as the investors needed only 50 of the site’s 130 buildable acres to relocate the industrial businesses that were then located on the Magnolia development site.
To make the deal viable, Clement needed a tenant for the rest of the land and that meant bankrolling significant changes to the Environmental Protection Agency’s remediation plan.
The biggest change involved relocating the site’s storm water basin from where federal remediators had placed it to the north side of the development. That change is what made the site a viable location for CaroLinks’ planned operations.
By late spring, everything seemed on course. In May, Stuart Coleman, a CC&T associate working on the project, said CaroLinks’ principles were “ramping up to closing.”
In fact, he said, engineers for the company had been “studying the site to death” in anticipation of construction. “That’s pretty typical for this kind of real estate transaction,” he said.
At the time, CC&T had moved forward with road, sewer and water line construction at the Macalloy site and was designing buildings to the specifications of the other industrial businesses it is moving there.
But it was around that same time that the first signs of diminished progress on the project began to emerge. Just two weeks after Coleman’s comments, CaroLinks announced it had extended its option to buy the Orangeburg property, which is owned by Jim Roquemore, president of Orangeburg-based SuperSod, and Ben Copeland, CEO of the Patton Seed Co.
Gregg Robinson, executive director of the Orangeburg County Development Commission and a staunch ally of CaroLinks’ principals, downplayed the development at the time, saying, “We should learn within six months whether the property will close.
“We will know this year whether or not CaroLinks is going to be moving forward with the purchase of that land,” he said. “We are also working with them on the recruitment of new companies to that area and to help move the project faster.”
Then came the Sept. 19 announcement of the company’s change of strategy.
“For the time being,” the company’s statement said, it would no longer pursue acquisition of the Shipyard Creek property.
Port becomes stumbling block
Among factors CaroLinks cited for its decision were the same issues that have lead to delays in the approval of the S.C. State Ports Authority’s bid to build a new port terminal at the former Navy base in North Charleston.
These include state regulators’ concerns about truck traffic in the area, federal regulators’ concerns about the potential impact increased port traffic may have on the endangered North Atlantic right whale and uncertainties about the proposed access road for the new terminal.
Byron Miller, spokesman for the SPA, characterized the assertion as “curious,” particularly in light the SPA’s decision, on the very same day as the CaroLinks announcement, to let a $3.4 million contract for initial prep work on the Navy base site. This will lead to a $180-million construction and a site fill contract in the spring, he said.
“We’re moving ahead with port expansion in Charleston, and the permit issues have been ticked off one by one,” he added.
The SPA will address concerns over water quality issues near the planned terminal in three weeks to a month, and will shortly propose a number of conservation measures intended to safeguard the whale, Miller said.
SPA officials have met with CaroLinks officials on a number of occasions and are aware of the company’s concepts, Miller said. But the SPA is still unclear about what the business’ operational needs would be on the public marine terminals.
“They’ve not yet shared business volumes with the authority, so we obviously haven’t entered into negotiations on how they might be a user of the public terminals or interface with existing port customers,” he said. “If CaroLinks is talking about new business, investment and jobs for the state of South Carolina, that’s great. That’s what our ports are all about, so we’re obviously interested.”
Lender wanted EPA report
Shortly after announcing the company’s change in plans, Duncan-Scheman said that she had been “absolutely determined to close on the property,” but that the seller would not consent to a critical request from her lead lender, Barclays Bank.
“Barclays insisted that we have a close-out report from the Environmental Protection Agency that stated the remediation of the site had been successfully completed,” Duncan-Scheman said.
“We even suggested that the transaction be closed to escrow, with the money being released when we received the EPA report, but that was also unacceptable to the seller,” she said.
Without the Shipyard Creek property to serve as a staging area for rail, CaroLinks will now rely entirely on barges to move cargo containers from the Port of Charleston to the Orangeburg facility, Duncan-Scheman said.
“There won’t be a rail component out of Charleston, but we will have capacity at Orangeburg to put unit trains together,” she said.
The company has until mid-October to buy the Orangeburg property, but Duncan-Scheman said she hopes to acquire it sooner. She predicted that groundbreaking for the project could occur shortly after Christmas.
In addition to space and equipment to load and unload cargo, the planned inland port in Orangeburg will now also be home to what Duncan-Scheman described as “a major truck stop,” “serving not just the port, but trucks traveling to destinations throughout the Southeast.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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