With penny tax defeat, Beaufort County’s US 278 project stalls: Funding dilemma unfolds

In a significant decision during Tuesday night's Beaufort County Council meeting, members voted to have County Administrator Michael Moore formally notify the State Infrastructure Bank that the county does not have the $190 million needed to continue the U.S. 278 Corridor Project. This large-scale project, initially estimated at around $292 million but now reaching up to $488 million, was intended to address structural issues on the eastbound MacKay Creek bridge and alleviate congestion on U.S. 278 from Moss Creek Drive to Spanish Wells Road.

Months earlier, the council considered raising property taxes if a proposed 1% sales tax to fund the project did not pass in November. However, when voters rejected the sales tax by a 55% to 45% margin, many of the council members quickly dismissed the idea of a property tax increase, citing strong opposition from constituents.

District 7 Councilmember Logan Cunningham, who attended the meeting virtually, expressed frustration over the council's handling of the funding dilemma. "How are we going to fund this without raising property taxes?" he asked, noting that he had raised this concern in previous meetings, even after ethics complaints were filed against him and other council members for the suggestion. Cunningham left the meeting before the vote, criticizing the council for what he perceives as delays in making critical decisions.

With the nine present council members, the council also voted to request SIB to hold the $120 million grant awarded for the project, rather than reallocating those funds to other state projects. The county will similarly keep their funds accumulated for the 2018 sales tax earmarked for the corridor project.

State Senator Tom Davis, who represents Beaufort and Jasper Counties and played a key role in securing initial funding, in a call voiced a related concern: if Beaufort County cannot secure the necessary funds, the Department of Transportation may take over bridge repairs directly. DOT's focus, Davis explained, would be limited to immediate repairs on the bridge spanning west to east from the mainland to Pinckney Island. Cunningham expressed concerns that DOT's involvement could lead to further congestion, as only one lane in each direction might remain open during repairs, which he further argued would be "a repair, not a complete fix." Jared Fralix, assistant county administrator of infrastructure, also noted that the DOT might intervene if the county's timeline fails to meet the bridge's immediate repair needs.

The project's environmental phase is nearing completion, and it requires Federal Highway Administration approval before proceeding to design and construction, according to Fralix's notes. However, without a clear financial plan, the future of the project remains uncertain.

How did this all start? A letter from the SIB, dated Nov. 7, set a strict timeline for the county to explain its funding plans within 15 days. The letter reminded the county of its responsibility to address the funding gap per the intergovernmental agreement and emphasized the need for detailed financial information before the SIB would consider any additional grants. Originally committing $120 million, the SIB based its support on a $292 million cost estimate; with updated costs nearing half a billion dollars, the county now faces a $190 million funding gap.

With limited avenues for funding, Fralix presented potential ways to cover the shortfall at the council meeting, including:

Applying for a $190 million federal grant next fall for large bridge projects

Issuing general obligation bonds if the SIB provides additional funding

Considering future referendums for a transportation or capital project sales tax in the coming years

Additional funding options could involve:

Local contributions from regional transportation funds that could total as much as $14.5M pending the approval of three state and local government agencies

Impact fees and admission fees, though some of these funds are already committed to other projects and may not be available for several years

Fralix dismissed other potential funding ideas, such as tolling or reallocating funds from other projects, saying that tolls cannot be put on an existing road and there are no other local projects to divert funds from.

Project future and economic impact Despite the county's decision to inform the SIB of its financial limitations, Davis suggested this might not be the end of the U.S. 278 Corridor Project. Davis said the situation could change if state and federal support increases. He indicated that if Beaufort County secured an additional $90 million, the project might still move forward, particularly with potential state and federal funding to bridge the gap. However, he acknowledged that such a solution would require significant local investment.

"Without some local assistance in addressing the shortfall," Davis said, "the chances of getting additional money from the SCDOT or the SIB are remote."

Davis emphasized that there is also still an overlooked piece of information that needs thorough consideration: the economic impact on Hilton Head if the DOT proceeds with only replacing one span of the bridge.

He highlighted the broader implications for the county as a whole, particularly if Hilton Head's contributions — revenues and economic assistance — diminish compared to historical levels. He believes these additional factors warrant discussion and careful consideration, noting that it is his responsibility to ensure decision-makers have all relevant information at their disposal to make a well-informed choice. He plans to meet with officials from the South Carolina Department of Transportation and the SIB to discuss the potential impact on future funding and the project's overall feasibility.

There are still several key questions that need to be answered in the coming weeks.