Constitutional – Use of Public Funds – Waterways

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Plaintiff presented sufficient evidence that the use of public funds may primarily benefit private interests in violation of constitutional public-purpose limits.

We reversed dismissal of a challenge to a town’s dredging subsidy.

An action arose after the Town of Hilton Head Island contributed $600,000 in public funds to support a $5 million dredging project organized by the South Island Dredging Association (SIDA), a private group composed of property owners and marina stakeholders within the Sea Pines Plantation area. The dredging targeted the Harbour Town Yacht Basin, Braddock Cove Creek, and related channels, which the Town asserted were used by the public and were important for tourism and navigation.

Plaintiff filed suit seeking declaratory and injunctive relief, arguing that the Town’s funding violated article X, sections 5 and 11 of the South Carolina Constitution, which require public funds to be used for a public purpose and prohibit the use of public credit for private benefit. At trial, Plaintiff introduced evidence suggesting that the dredging primarily benefited private marina owners and residents of a gated community, rather than the public at large. Testimony indicated that access to parts of the dredged waterways was restricted or controlled, with signage requiring boaters to obtain permission before entering certain areas, and that the dredging’s principal purpose was to maintain navigability for private boat slip owners.

After Plaintiff presented his case, the circuit court granted the Town’s motion to dismiss under Rule 41(b), concluding that the waterways were public and that the plaintiff failed to establish a right to relief. The court held that members of the public could access the waterways and that the presence of private structures did not alter their public character.

We disagreed, finding that the circuit court applied the wrong legal framework. Rather than focusing solely on whether the waterways were publicly owned, the proper inquiry was whether the expenditure served a genuine public purpose and primarily benefited the public, as required by the state constitution. Even if some public benefit exists, an expenditure may still be unconstitutional if its primary effect is to aid private parties.

We held Plaintiff presented sufficient evidence to survive dismissal, including testimony and photographs suggesting limited public access and evidence that the dredging disproportionately benefited private interests within a gated community. Further, the constitutional provisions reflect a strong policy against the use of public funds for private advantage, and that determining whether this expenditure satisfied the public-purpose requirement required a full evaluation of the evidence, not dismissal at the close of Plaintiff’s case.

Reversed and remanded.

McAvoy v. The Town of Hilton Head Island, South Carolina (Lawyers Weekly No. 012-018-26, 7 pp.) (Per Curiam) Appealed from Beaufort County Circuit Court (Jocelyn Newman, J.) James G. Carpenter and Jennifer J. Miller, both of Carpenter Law Firm, PC, of Greenville, for Appellant. Curtis Lee Coltrane, of Coltrane & Wilkins, LLC, of Hilton Head Island, for Respondent. South Carolina Court of Appeals Unpublished