Charleston wants the county and school district to extend tax incentives for two development plans
Charleston Mayor Joe Riley is asking the county and the school district to add a decade to a pair of tax incentives meant to help finance two large urban redevelopment projects, in the downtown hospital district and in the Neck Area.
The Horizon plan
The master plan for the Horizon District redevelopment will be laid out Wednesday afternoon in a presentation to Charleston’s Board of Architectural Review.
The BAR is not being asked to review or approve the plan but rather will see the presentation to learn more about the project.
The meeting starts at 4:30 p.m. in the BAR meeting room on the third floor of 75 Calhoun St.
One plan is the Horizon Redevelopment Project, aimed at creating new housing and a biotechnology research hub on 20 downtown Charleston acres, between Lockwood Drive and Hagood Avenue, from Spring Street to Fishburne Street.
The other project involves the potential redevelopment of land along the Ashley River in the Neck Area, on property that was home to heavy industry and includes a Superfund environmental cleanup site.
In each case, an extension of incentives known as tax increment financing districts would mean that the city, county and school district would forgo property tax revenues created by the developments for an additional 10 years. Instead, the money would be used to finance work in the development areas, such as new roads, sidewalks and parks.
The Horizon and Neck Area TIFs currently expire in 2033 and 2029, respectively.
Charleston County and the Charleston County School District have the option of not participating in the extension, and have until mid-June to decide.
A tax increment financing district, or TIF, lasts for a set amount of time, and at the end of that time, all of the new property taxes produced by development in the specified area (that’s the “tax increment”) start flowing to the city, county and school budgets.
“We have to make the case that if they give something up they’ll get more later,” said Steve Bedard, Charleston’s chief financial officer.
The county and the school district have participated in TIFs in Charleston, North Charleston and Mount Pleasant, but lately have been looking at them with a more critical eye.
“What we have to watch with these TIFs is, what are they bringing to the community?” County Council Chairman Teddie Pryor said.
In 2010 the county went along, forgoing an estimated $12 million in property tax, when Charleston sought to extend the King Street Gateway TIF to help finance the Gaillard Center. The school district, however, declined to participate, and is collecting about $4 million more in yearly property tax as a result.
In December the district agreed to extend a North Charleston TIF district, with the condition that the district keep 12.5 percent of the new tax revenues, rather than giving up all the new revenue.
“We understand why municipalities need TIFs, but the school district needs revenue,” said Cindy Bohn Coats, chair of the school board.
The city and Medical University of South Carolina Foundation are jointly pursuing the Horizon redevelopment plan, in an area where much of the property was once a landfill.
“It’s a very challenged site,” Bedard said. “Everything from the sidewalks to the streets will have to be put on pilings.”
Coats said the school board has formed a committee and will be evaluating both TIF extension requests. The city’s position is that the extensions would make up for the years lost because of the real estate market downturn, and help meet the original goals for which both TIFs were created.
The second TIF district covers a large expanse of Charleston’s Neck Area, where 10 years ago a development plan called Magnolia envisioned building up to 4,400 new homes and millions of square feet of commercial space. Before the Great Recession intervened, Charleston used the existing TIF for the area to build a nearly $8 million bridge to the property across the Ashley River marsh.
Now, a new team headed by MeadWestvaco is considering redevelopment of the still-vacant site, but there’s little infrastructure and much of the property requires extensive environmental cleanup.
“With the Neck TIF, I don’t think anything will happen if we don’t get it (extended), while with the Horizon TIF, I think it would be less than it could be,” Bedard said.
The way TIFs work is, cities borrow money to finance public improvements, then use new property tax revenues created by development to pay off the debt. Extending a TIF means there are more years of revenues, and therefore more money can be borrowed.
Pryor said he’s not sure the developments need tax incentives.
“Do I think these projects would go on without at TIF? Yes, I do,” he said. “We’re going to have to take a look at this closely.”
Pryor also suggested that if the county goes along with the Neck Area TIF, he may want assurances two nearby communities, Silver Hill and Rosemont, would see concrete benefits.
“If they are going to be impacted (by development), then they should benefit from the TIF,” Pryor said. “I know Rosemont needs a new community center.”
Reach David Slade at 937-5552.