The Price of Liberty is Eternal Vigilance
County Council, November 10
Finance Committee rejects West Ashley TIF
But extends funding for North Charleston Convention Center projectWarwick Jones
The redevelopment of West Ashley has been an important goal of Mayor Tecklenberg and some members of City Council. But so far it has not been an easy path. Despite the wide approval of its goals, the creation of the Commission overseeing the redevelopment took some time, and it began working only a month or so ago. But progress may be at a slower pace than the Mayor and City Council expected.
The City planned to create a Tax Increment Financing (TIF) District to help finance public works in the area. The County’s Finance Committee considered the plan at Thursday night’s meeting and voted it down. It was a narrow vote, 5 to 4. The question is will the vote be reaffirmed at the Council meeting on Tuesday? Mayor Tecklenberg is expected to address Council at the meeting but it is questionable as to whether he will be able to change the vote.
The area that falls under the TIF district is broadly along Sam Rittenberg Boulevard from it junction with Old Towne Road to the junction with Highway 17. It also extends north to include the Citadel Mall area. About 20% of the properties in the TIF are in the unincorporated area of the County and the balance in the City of Charleston.
The assessed value of all these properties is $18.2 million. They generate property tax revenue of $536,000 for the County. In common with TIF districts, the property tax revenue that would go to the General Fund would be frozen at the pre TIF level. Any increase in ensuing years would be directed to infrastructure spending in the district. Typically this comes about by a bond issue which is used to finance this spending with the TIF funds directed to interest and amortization of the bonds. The proposed TIF has a 25 year life. The City is proposing a $69.3 million bond issue, the proceeds of which would partly fund the projected $131 million infrastructure spending.
In broad terms, the expectation of the City is that spending of the TIF funds will improve the value of the properties in the district and lead to greater private sector investment. At the end of the period, the City is projecting the assessed value of the properties at $56 million and thereby much stronger tax revenue for the City and County when the TIF expires. Effectively, the City and County would forgo increased tax revenue over the next 25 years in anticipation of substantially higher tax revenue at the end of the 25 year period.
It all sounds great so why was there opposition by the County? Those Council members who opposed it (Schweers, Qualey, Pryor, Darby and Johnson) thought it was unnecessary or /and inappropriate. The economy of Charleston was booming and the redevelopment of the area should be left to the private sector which seemed not to need any incentive. Besides, TIF districts were typically confined to blighted areas and the West Ashley TIF district was certainly not blighted. And what about the recent half-cent sales tax revenue, couldn’t this be used to help build infrastructure? And couldn’t the City act on its own use in raising funds through General Obligation bonds? Council member Rawl voted for the district but he was unhappy about the lack of specific information relating to the City’s spending plans.
Proponents of the plan noted that the definition of “blight” was not literal. It was defined in SC law and according to City Counsel, the specified TIF district met the statutory definition i.e. it met at least 5 out of the 20 requirements. City staff and City Counsel provided a number of examples where the TIF district had been used and worked well – Gaillard Auditorium, Waterfront Park, Parking garages, Charleston Place.
The request by the City of North Charleston for funding a new parking garage had similarities to that of the City of Charleston. But there was only on vote in dissent, Council member Schweers.
The City of North Charleston has been receiving about $1.4 million a year from Accommodation Fee revenue. The 25 year agreement will end in 2020 and the City is asking that the funding be extended for another 25 years. It wants to use the funding to help finance a bond issue, the proceeds of which will used to fund a new parking garage. The original funding related to financing the Convention Center.
The parking garage will be at the Convention Center. As Mayor Summey said at the meeting, the success of the Convention Center has been great and parking needs have grown. Indeed, it is likely that another parking garage will be needed beyond that planned.
Mayor Summey was persuasive when he noted the development that occurred in the area and the tax revenue it had generated, not only for the City but for the County as well. He noted the large number of hotels built and their high occupancy rates.