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A Management Review of the Charleston Naval Complex Redevelopment Authority
September 2000

REPORT (PDF)     SUMMARY (PDF)

As requested by members of the General Assembly, we conducted a management review of the Charleston Naval Complex Redevelopment Authority (RDA). Since 1994, the RDA has been responsible for the redevelopment and reuse of federal property at the former naval base in North Charleston, which was closed in 1996. Because the U.S. Navy still owns the naval complex, the RDA has entered into master leases with the Navy and has subleased the properties to businesses, governments, and other organizations.

The audit requesters were primarily concerned about the methods by which the RDA leases out land, buildings, and equipment at the naval complex. We were also asked to review the RDA’s relationship with another state agency, the S.C. State Ports Authority (SPA), as well as the RDA’s compliance with the S.C. Freedom of Information Act.

One of the primary goals of the RDA has been to replace jobs lost by the closing of the Charleston naval base. When the base closed, 6,272 civilian and 8,722 military jobs were lost. As of May 2000, a total of 4,089 workers were employed at the complex. The RDA has also made progress toward renovating the infrastructure at the complex.

According to RDA officials, maximizing rent from subleases has not been a goal. The agency, however, has not adequately marketed available properties at the naval complex. Therefore, the RDA may have limited the pool of qualified businesses seeking to bring new jobs and economic development to the area.

Our findings include the following:

  • The S.C. State Budget and Control Board, which is responsible for overseeing state government leasing, reports that the RDA has complied with state laws and policies concerning the leasing out of real property.
  • In February 1995, the RDA issued a request for proposals to companies interested in subleasing all or part of the naval complex. Companies were permitted to submit proposals for different combinations of property and with different methods for determining rent. It is therefore not clear how the RDA was able to rank the companies.
  • Since 1995, the RDA has leased out piers, buildings, and other properties without adequate marketing. As a result, properties have been leased out without fully determining the level of interest from other potential tenants.
  • The RDA has not established written asking prices when renting its available buildings and piers.
  • The RDA has not adequately controlled the process by which its tenants sublease properties to other organizations. Tenants have sometimes not obtained the required prior approval. In addition, the RDA has not sufficiently controlled the rental rates charged by its tenants to other organizations.
  • When the RDA took over the management of Navy-owned equipment, the Navy’s inventories were inaccurate and incomplete. The RDA, however, did not immediately conduct a more complete inventory of its own. While theft may have occurred during the early years of the RDA’s management of the naval complex, poor record-keeping has made it impossible to determine what was stolen.
  • We found no material problems with the RDA’s current inventory tracking system, taking into consideration the inaccuracy of the Navy’s initial inventory and the difficulty of monitoring equipment that is constantly being relocated over a widespread area. However, the RDA does not hold tenants accountable for Navy-owned equipment that is damaged or missing, and does not charge for the use of extra equipment relocated from other facilities.
  • The RDA’s system for signing out building keys is ineffective as a means of controlling access to nonleased or unoccupied buildings. There also is little monitoring of vehicles exiting the complex. We observed no effort being made by gate guards to restrict access to the naval complex.
  • The RDA awarded a sublease with an option to purchase to the State Ports Authority for a large portion of the base, including four piers and 38 buildings. As with other tenants, the RDA did not adequately market these properties. To make properties available to the SPA, six small businesses will not be permitted to renew their subleases.
  • The State Ports Authority, in August 1999, awarded a license to a private company called Charleston International Ports (CIP) to operate a cargo terminal on properties subleased from the RDA. The SPA official who negotiated the sublease with the RDA and the license with CIP resigned in January 2000 and accepted a job from the owner of CIP. While not employed directly by CIP, he is involved in matters concerning the CIP license. The State Ethics Commission, in a confidential opinion, found no prohibition to this employment. However, we have concluded that the current ethics law may need to be strengthened.
  • The RDA is generally in compliance with the state Freedom of Information Act (FOIA) regarding public access to RDA meetings and records. The RDA and the State Ports Authority held confidential lease negotiations during 1998 and 1999. Keeping the negotiations private was technically in compliance with FOIA, but the purpose of the FOIA is to ensure that government activities are conducted in public.