City Council should drop TIFs; explore mayor’s plan

August 30, 2012 

COLUMBIA City Council’s revised proposals to establish special tax districts to fund projects in north Columbia and USC’s research campus are certainly improvements over the originals: They wouldn’t last as long, wouldn’t require as much money, wouldn’t consume 100 percent of all new revenue and would be closely monitored.

But it’s still a bad idea to set up special districts that siphon tens of millions of dollars away from basic services to pay for speculative projects.

Nonetheless, City Council tentatively voted 5-2 recently to spend up to $110 million — $40 million in North Columbia and $70 million in USC’s Innovista — captured from two separate tax increment financing districts. Instead of siphoning new tax dollars away from the city, county and Richland District 1 for 25 years, as proposed in 2010, the new plans would cut that to 15 years while reducing the amount to be generated by $80 million. Also, only 75 percent of the revenue would be used for projects, with the remainder going to Columbia, Richland County and Richland 1 for operations.

Tax increment financing districts, or TIFs, allow governments to use new taxes generated by new development and increased property values to pay for parks, roads and other infrastructure within the district. The goal is to transform struggling areas, which is what happened in the case of the now-vibrant Vista, a former warehouse district. Columbia, Richland County and Richland 1 poured more than $115 million into public projects in the Vista, luring private investment.

Some City Council members believe something similar could happen in Innovista and north Columbia. But Richland County and Richland 1 officials, who wisely rejected the 2010 plan, should rebuff this latest proposal as well.

Although TIFs don’t cause general tax increases, they unfairly shift the burden for paying for city, county and school services to property owners outside the districts. And they unfairly obligate — handcuff, really — future elected officials by tying up new tax dollars for years to come.

As Mayor Steve Benjamin aptly noted, tax collections are limited as it is because 60 percent or more of the property in Columbia belongs to governments or organizations that do not pay property taxes.

It would be particularly imprudent for Richland 1 to give away future tax revenue; schools already are hampered by a lack of funding. Besides, it’s not the district’s job to build or fund water and sewer lines, roads or other amenities to spur development. Its focus must be on educating students.

Does long-neglected north Columbia need help turning its fortunes around? Yes. Would providing Innovista with a boost make it much more likely to become the economic engine people predict? Yes. But TIFs aren’t the answer.

Mayor Benjamin, who joined Councilwoman Leona Plaugh in opposing the TIFs, said he’s working on an alternative financing plan to lure private investors to Innovista and north Columbia, including the development proposed for the old State Hospital property on Bull Street. The mayor, working with city manager Steve Gantt, is trying to determine whether the city’s $180 million in reserve accounts can be used to install water and sewer lines, streets and other amenities on a project-by-project basis at the Bull Street development. Property taxes would reimburse the city’s reserves, Mr. Benjamin said.

While it’s hard to assess Mr. Benjamin’s idea without more details, it appears to be in keeping with what we’ve encouraged the city to do: Instead of locking up future revenue for 15 years and having no flexibility in its use, set aside new taxes annually to use for Bull Street and other areas.

Some city officials have said they are open to other funding options, and Mr. Benjamin seems to be on to something. The council should nix the TIFs and explore the mayor’s intriguing — and likely more palatable — plan.

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