McKinney v. City of Greenville

• Decision Date: 18 March 1974
• Docket Number: No. 19788,19788
• Citation: 203 S.E.2d 680,262 S.C. 227
• Court: South Carolina Supreme Court
• Parties: Wilton J. McKINNEY and Robert B. Bruce, Appellants, v. The CITY OF GREENVILLE et al., Respondents.

Page 680

203 S.E.2d 680

262 S.C. 227

Wilton J. McKINNEY and Robert B. Bruce, Appellants, v. The CITY OF GREENVILLE et al., Respondents.

No. 19788.

Supreme Court of South Carolina.

March 18, 1974.

Robert A. Clay, Greenville, for appellants.

C. T. Wyche and James C. Parham, Jr., of Wyche, Burgess, Freeman & Parham, W. H. Arnold of Love, Thornton, Arnold & Thomason, Robert O. Conoley, and E. P. Riley, Sr., of Riley & Riley, Greenville, for respondents.

PER CURIAM:

The order under appeal correctly disposes of the issues and, with certain deletions, will be reported as the judgment of the Court.

ORDER OF JUDGE EPPES

This matter comes before me on action for declaratory judgment, under The Uniform Declaratory Judgments Act, Section 10--2001 through 10--2014, Code of Laws of South Carolina, 1962, seeking a determination that a lease and option to purchase 100.62 acres of County lands, executed by Greenville County to Olin Corporation is invalid, and further, that the County should be enjoined from further compliance therewith. The Complaint further alleges that the purchase of an undivided interest in these lands by Greenville County from the City of Greenville, in order to enter into this agreement, is also invalid.

The lands in question are 100.62 acres within Donaldson Center, an industrial complex owned jointly by the City and County of Greenville and lying outside the City limits at the former site of Donaldson Air Force Base. The Donaldson Air Force properties, a total of approximately 2,450 acres, were purchased jointly by the City and County of Greenville in 1942, and leased to the United States Government for use as an air base. The air base was closed in the early 1960's, and since that time the City and County have jointly developed the property as an industrial park, through sales and leases to private industry. Immediately prior to the transaction in question on May 18, 1971, approximately 320 acres of the original tract had been disposed of, leaving approximately 595 acres available for further development, excluding the runway facilities.

In early 1971, members of the Greenville business community became aware of the interest of Olin Corporation, one of the 100 largest corporations in the United States, in constructing a new manufacturing facility, either in Greenville County, or elsewhere in South Carolina or on lands in North Carolina already owned by the company. Further discussions with representatives of Olin led to the conclusion that the location of this new industry in Greenville County would be of significant benefit to the economic development of the area. The new facility would manufacture polymer type film through a 'clean process' with very little by-product of a polluting nature, and would employ skilled workers, technicians and engineers. Further, this type industry would add to the diversification sought by this area to broaden the base of the economy. It was further clear that the other sites being considered by Olin presented strong competition, and that in order to attract Olin to Greenville, it would be necessary to make them an attractive offer.

The agreement finally entered into includes a lease to Olin of the 100.62 acres for successive periods of 10 years, 15 years, 25 years, 25 years, and 24 years, for a total of 99 years. No cash lease payments as such are required under the agreement, however, Olin is committed to place on these premises certain capital improvements so that by the end of each successive term of the lease the total capital investment thereon, subject to County ad valorem taxes, shall be as follows:

Initial term of 10 years, not less than ten million ($10,000,000) Dollars

Second term of 15 years, fifteen million ($15,000,000) Dollars

Third term of 25 years, twenty million ($20,000,000) Dollars

Fourth term of 25 years, twenty-five million ($25,000,000) Dollars

Fifth term of 24 years, twenty-five million ($25,000,000) Dollars

Until such time as the capital improvements specified for each term are completed by Olin, the lease is not renewable for the following term, and, on the other hand, when a total capital investment of twenty-five million ($25,000,000) Dollars has been made on this facility, Olin shall be entitled to a lease for the remainder of the 99 year period without further obligation for investment other than to maintain said properties in a good state of repair.

Olin shall be obligated to pay all property taxes legally assessed against the value of all of the improvements placed by it on the leased premises, as well as any personal property located thereon, but no taxes shall be payable by Olin on the value of the land itself.

In addition to the lease with extensions described above, Olin is granted an option to purchase the 100.62 acres at any time during the initial term of 10 years for $2,500 per acre, and during any subsequent extension period for the then appraised fair market value, excluding the value of improvements placed thereon by Olin. Whether or not the option to purchase is exercised, Olin is obligated to expend on the premises during the first 10 year period beginning with the date of the lease, a minimum of ten million ($10,000,000) Dollars, construction to begin within two (2) years of the execution of the lease and to be pursued with reasonable diligence. (Testimony indicates that Olin's investment to date, some 18 months after the execution of the lease, is already in excess of ten million ($10,000,000) Dollars.)

If Olin fails to extend the lease at the end of any term, fails to exercise the option to purchase, or is required to abandon the premises by reason of default all improvements becoming a part of the realty, shall revert to Greenville County.

In the event the lease is terminated by reason of Olin's failure to begin within two (2) years and complete with reasonable diligence capital improvements of at least ten million ($10,000,000) Dollars during the first ten (10) year term, Olin shall pay as liquidated damages the sum of $70,000, plus $3,000 per month for each additional month, or part thereof, after the first two (2) years until the lease is terminated pursuant to its terms.

The lease recites in its preamble that under the provisions thereof, and the taxable value of improvements comtemplated thereby, the property tax revenues payable to Greenville County will exceed the annual return that might be derived by the County from any other available sale or lease of the property in question.

Prior to the execution of the agreement, the County of Greenville had purchased from the City of Greenville the City's undivided interest therein at a price of $3,500 per acre, so that the transaction as finally consummated was between Olin and Greenville County. Apparently, since the City of Greenville could not share in the tax revenues contemplated by the agreement, they preferred not to be a party to the lease or the option to sell.

The Complaint, in a comprehensive treatment of the transaction, alleges that the lease is invalid for a number of reasons which may be summarized as follows: (1) the statute under which Greenville County entered into this agreement (Act Number 573, of 1967, creating the Greenville County Council, as amended by Act 111 of 1971 Section 1, Subitem 3 of Item (b) of Section 9) violates the South Carolina Constitution, Article III, Section 31, which prohibits donation of lands belonging to or under the control of the State to private parties, and Article X, Section 6, which provides that the credit of the State shall not be pledged or loaned for the benefit of any corporation; (2) the lease itself violates the same constitutional provisions; (3) even if the statute involved meets constitutional requirements, the lease does not comply with the statute since neither the lease not the option properly takes into account the value of $3,500 per acre established by the purchase of the City's interest, and the agreement cannot be justified on the basis of the other consideration relied upon by the County; (4) the agreement is ultra vires, an abuse of authority and discretion and violative of Greenville's fiduciary obligation to Plaintiffs and other taxpayers of the County in that in involves a 'donation' of public property to private use, a disposition of County properties at less than fair market value, would remove valuable properties from tax rolls (in the case of the lease), would be unfair to other industries which have purchased properties in Greenville County, and would amount to competition by the County with private industry; and (5) the agreement is invalid since, in order to enter into same, Greenville has purchased, and obligated itself to pay for, the City's undivided one-half (1/2) interest for use other than for a public purpose thereby violating constitutional and statutory limitations.

The Complaint prays for a determination that the statute in question violates the Constitution, that the lease agreement is illegal, ultra vires, against public policy, an abuse of authority, in violation of Greenville's fiduciary duty, and that the deed from the City of Greenville to the County of Greenville is invalid.

The Defendants, Greenville County, and Olin Corporation, have answered generally in the same vein, admitting the execution of the lease agreement with opinion to purchase and denying any constitutional or other defects in the statute or the lease agreement. More specifically, these Defendants allege that Article III, Section 31 of the South Carolina Constitution is not applicable since it applies only to lands belonging to or under the control of the State, but even if the Section is applicable, the statute and transaction in question do not permit or involve a donation since they satisfy all requirements for proper consideration; the statute requires 'fair and reasonable value' for any disposition of County properties, and the agreement requires fair and...