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Pawleys Island: To secure beach grant, town may issue bond
By Charles Swenson
The town of Pawleys Island is seeking a $1.5 million line of credit to help leverage state funds for a beach nourishment project. It’s an unusual step for the town that has limited assets, no municipal property tax and no credit rating. But it’s the only way the town can leverage state funds to cover half the cost of a project estimated at $13 million.
“We went to South State Bank with three years of financials,” Mayor Bill Otis said. “If we go in this direction, under state law it will be a tax-exempt bond issue.”
It will be the first time the town has borrowed money since its founding 32 years ago. And while $1.5 million is the current estimate, that could change with the project’s costs.
The town is preparing a plan to pump 900,000 cubic yards of offshore sand onto its beachfront. That would be enough to create a dry sand beach along the 3.5 miles of oceanfront, according to the firm that is designing the project. After storms in October 2015 caused erosion along the South Carolina coast, the General Assembly approved $30 million for beach projects. It is available to local governments as grants from the Department of Parks, Recreation and Tourism.
PRT will contribute up to half the cost of a project. Pawleys Island has $5 million on hand from a local accommodations tax that is earmarked for beach management. Before it can apply for a PRT grant, the town has to show it has the remaining $1.5 million.
The problem isn’t unique to Pawleys Island. Linda Tucker, city administrator for the Isle of Palms in Charleston County, has a PRT grant application on her desk. “I can’t submit it because I have to document that I have the money from everywhere else,” she said.
Isle of Palms is seeking state and federal permits to put nearly 2 million cubic yards of offshore sand on its beach. The project is estimated at $20 million. “We’re trying to get all those funds together,” Tucker said.
Isle of Palms plans to use a mix of tax revenue, private donations and federal funds to match the state funds. Unless it can document that it has those funds, PRT will mark its application incomplete. “There would be several [PRT] applications without that clause,” Tucker said.
Otis will ask PRT whether a letter from the bank approving a loan will meet the grant criteria. His hope is that the bank will then allow the town to draw on the funds as needed and convert it into a four- to five-year note at the end. In addition to the cost of borrowing the money, the town will also have to hire a bond attorney to complete the transaction.
The town of Edisto Beach has already applied for $5 million from PRT toward an $11.7 million beach nourishment project. Planning for that work was already under way when the state funds became available. Like Pawleys Island and the Isle of Palms, Edisto hired Coastal Science and Engineering to design and manage the project.
Pawleys Island had planned to submit permit applications for its project last month, but it will now wait until after Coastal Science staff meet with regulators next week. That will allow the firm to make any changes to the project before the applications are put out for public comment. “It should shorten the entire process,” Otis said.
It should also help the town firm up the project’s cost. A major portion of that cost will be for putting the dredge in place offshore, and other projects have seen that mobilization cost come in above estimates, Otis said. If that happens at Pawleys Island, the town could scale back the project, but it could make more sense to seek additional funds.
“There are definite economies of scale once you get the dredge mobilized,” Tucker said.
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