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Scribe| By: David Slade of The Post and Courier Staff | |
| Originally Published on: 7/30/05 |
Sale of bankrupt nonprofit's land depends on water
A long-running dispute over a proposed waterline on Johns Island is jeopardizing plans by Sea Island Comprehensive Health Care to sell most of its land to a developer in order to emerge from bankruptcy.
Earlier this year a North Carolina developer offered the struggling nonprofit $3.5 million for 43 acres of land surrounding Charleston's small Angel Oak Park, home of a live oak that's said to be the oldest living tree east of the Mississippi.
Sea Island needs the money in order to repay creditors, including the Internal Revenue Service and employees who are owed back wages.
The land deal is contingent upon water being available to the property, and St. John's Water Co. says it can't provide any because opponents have blocked construction of a new 30-inch water main.
"Right now, St. John's Water Co. has no water that could be available to them," said Gaines Smith, an attorney for the customer-owned utility. "The only way we could provide water is if we got that 30-inch line."
The battle over the waterline pits conservationists and many Johns Island residents against the water company and development interests. Opponents say a 30-inch line would encourage sprawl, and that a 24-inch line would suffice.
The water company announced plans for the 30-inch waterline in 2001, saying it was needed to meet current and future demand. The issue has been mired in litigation.
Sea Island has filed a motion in U.S. Bankruptcy Court in Charleston, asking a judge to force the water company to provide service to the land it proposes to sell, while the water company argues the court does not have the right. A hearing is scheduled in September.
"We would love to have more water to sell, but we don't have it," Smith said.
The water company said in court filings that it is operating at maximum capacity, it has about 3,000 individuals on a waiting list for service, and its ability to expand service depends upon the outcome of litigation over the new waterline.
Sea Island's attorney, J. Ronald Jones Jr., was traveling on business Friday afternoon and could not be reached for comment. In court filings, he argued that a bankruptcy judge could require St. John's to provide water because availability of water is a key part of the land sale central to a court-approved bankruptcy reorganization plan.
If Sea Island were unable to consummate the land sale, that would at least delay plans to repay the nonprofit's debts. Sea Island would need to come up with an alternative plan to raise money, and could risk being forced to liquidate its assets.
"We're willing to go forward, if there's water," said Truett Nettles II, a local attorney representing the potential buyer, River Birch Development.
Sea Island owns a nursing home and health-care clinics. The organization offers programs and services on Edisto, James, Johns and Wadmalaw islands and in Hollywood, including home health care, child care and programs for the elderly.
Jones said in a court filing that the Charleston Commissioners of Public Works could potentially provide water to the land Sea Island wants to sell if St. John's Water will not.
CPW Assistant General Manager John Cook said the utility has no more capacity on Johns Island than the local utility, which buys water wholesale from the CPW.
"Our lines are tied in to their lines," Cook said. "The issue of water capacity has to be resolved."
There are three lawsuits pending between St. John's Water and opponents of the 30-inch line.
"The (bankruptcy) court will not let this go on forever," Nettles said. "I certainly hope they work it out."
SEA ISLAND WATERLINE TIMELINE
1972 -- Sea Island Comprehensive Health Care is founded to provide services to low-income residents of the Sea Islands.
1980 -- The organization obtains approval to own and operate a nursing home.
1999 -- Sea Island loses its Medicaid and Medicare certification for 132-bed Hermina Traeye Memorial Nursing Center because of chronic health and safety violations. A private operator then leases and operates the facility.
2001 -- St. John's Water Co. proposes building new 30-inch water main, large enough to serve about 16,000 homes.
2002 -- Sea Island struggles with financial problems, misses payrolls. Meanwhile, St. John's Water seeks zoning approval for the new waterline, which is denied.
2003 -- Sea Island's financial problems continue. St. John's Water appeals the zoning board's denial of approval for the waterline, wins on appeal, but the ruling is itself appealed.
2004 -- Sea Island seeks Chapter 11 bankruptcy protection, continues to operate while attempting to sell most of its undeveloped land. St. John's Water and opponents continue to litigate. A plan to sell part of Sea Island's land to a developer and use the rest to expand Angel Oak Park falls through.
2005 -- Sea Island files a reorganization plan, centered upon the $3.5 million sale of 43 acres of land to a North Carolina developer. The plan is contingent upon water being available to the property. Opponents of the St. John's waterline collect enough petition signatures to force a vote among the utility's customers on the issue. St. John's Water sues to block the vote.
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