COLUMBIA SC — Columbia City Council might decide Tuesday to authorize borrowing between $10 million and $20 million this year through a second meal-tax-backed bond.
It will be the first public conversation by council of an idea that members have been kicking around for a while. Two votes are required before a second hospitality-tax bond can be issued.
Known as “H-tax” bonds, the amount borrowed would be repaid from revenue generated by the 2 percent tax paid by patrons who buy prepared meals or beverages inside city limits.
The city owes $13.8 million of an H-tax bond it authorized in 2004.
H-taxes — a coveted source of funding for a range of city projects related to tourism, the arts or historic preservation — have been mentioned as ways of buying the Palmetto Compress warehouse, a new $450,000 splash pad in Finlay Park and a range of other projects.
The agenda for today’s meeting, released by the city just under the minimum, legal, 24-hour notice requirement set out in state law, contains a proposed city law that would set how large a bond to authorize and which projects would be paid for with that new money.
The nearly century-old former cotton warehouse is facing demolition and has become the object of a fierce fight between preservationists and business leaders. An Ohio-based developer wants to raze the 320,000-square-foot structure that represents the last major historic building in once African-American Ward 1 to make way for a student housing complex near the University of South Carolina.
“I don’t have all the exact figures,” Councilman Brian DeQuincey Newman, who is chairman of council’s budget committee, said Monday of the size of a new bond issue. “I am comfortable with a bond as low as $10 million or up to $20 million.”
Cameron Runyan said the figure might be in the $15 million range.
Councilwoman Tameika Isaac Devine said she has not settled on a sum she would support, either for the warehouse or the bond. The city’s chief financial officer, Jeff Palen, “is running numbers,” Devine said.
Palen has told council that because interest rates are so low, payments on another 20-year bond would be about $67,000 per each $1 million issued.
Mayor Steve Benjamin could not be reached Monday.
The city is not quite halfway toward paying off its $19.4 million bond from 2004. It is making $1.3 million in yearly payments to retire that 20-year debt.
City leaders renegotiated the interest rate on that bond, cutting it almost in half from about 5 percent to about 2.6 percent, Palen said late last summer. The reduction is expected to save $2.7 million over the remaining 13 years, he said.
A second bond would be stacked on top of the current one. But it would not increase the amount of tax that patrons pay, just delay when the city would repay both loans.
Reach LeBlanc at (803) 771-8664.