## Facts

- WDW Properties owned “Liberty Square,” a shopping center outside a designated federal empowerment zone, and competed with downtown retail properties.
- The City of Sumter designated its downtown as a slum and blight area and a redevelopment project area within an empowerment zone.
- Uptown Synergy, LLC proposed the “Hampton at Main Project,” renovating three adjoining historic downtown buildings for office and retail uses.
- The project cost was approximately $4.3 million and was projected to create about twenty full-time jobs, with efforts aimed at employing low- and moderate-income persons.
- The South Carolina Jobs-Economic Development Authority (JEDA) approved a financing structure involving approximately $2.5 million in tax-exempt economic development revenue bonds, with proceeds loaned to Uptown Synergy (about 58% of project costs).
- Uptown Synergy was to repay the loan from project revenues; no tax revenues or general public funds were pledged.
- WDW filed a declaratory judgment action alleging the bond-financed loan unlawfully aided a private developer and conferred an unfair competitive advantage, violating state constitutional limits tied to public purpose, lending of credit, and exclusive privileges.
- A master-in-equity rejected WDW’s claims after a bench trial on stipulated facts; WDW appealed directly to the South Carolina Supreme Court, which reviewed the bond-related challenge.

## Issues

1. Whether JEDA’s issuance of tax-exempt revenue bonds and loan of the proceeds to a private developer for downtown redevelopment satisfied the South Carolina Constitution’s public purpose requirement and related limits on governmental aid to private enterprise.
2. Whether the financing amounted to an unconstitutional lending of the credit of the State or its political subdivisions for a private purpose.
3. Whether the program unlawfully granted an exclusive privilege or emolument to Uptown Synergy.

## Decision

- The Supreme Court of South Carolina affirmed the master-in-equity.
- The court held the redevelopment financing served a valid public purpose, including job creation and revitalization of a blighted downtown area.
- The court concluded any private benefit to Uptown Synergy from lower borrowing costs was incidental to the predominant public objectives.
- The court rejected claims of unconstitutional lending of credit because repayment was limited to project revenues and no tax monies were pledged.
- The court found no unconstitutional exclusive privilege because the financing was part of a generally available statutory economic development program, not a special grant to a single favored private party.

## Legal Principles

- Legislative determinations that an economic development program serves a public purpose receive substantial judicial deference and are treated as presumptively valid unless shown to be manifestly arbitrary or lacking any public end.
- Public purpose is construed broadly in evaluating redevelopment and economic development measures, and private profit does not defeat constitutionality when the public is the primary beneficiary.
- In assessing public purpose, courts consider factors including the nature of the public benefit, who primarily benefits, whether the benefits are too speculative, and the extent to which the project addresses legitimate public concerns.
- Revenue-bond financing repaid solely from project revenues, without pledging tax funds or general governmental credit, reduces constitutional concerns associated with public financial aid to private entities.
- A generally applicable economic development program does not create an unconstitutional exclusive privilege merely because a particular private participant receives financing under its terms.

## Conclusion

The court upheld the empowerment-zone redevelopment bond financing because the program primarily advanced public ends—downtown revitalization and job creation—and did not improperly pledge public credit or confer an unconstitutional exclusive privilege, even though the private developer received incidental economic advantages.


WDW Props. v. City of Sumter, 342 S.C. 6, 535 S.E.2d 631 (S.C. 2000)