COLUMBIA, SC — Early conversations by Columbia City Council about the public money it might use to pay for the city’s commitment to the Bull Street neighborhood project already are burdened with doubt.
Council’s early considerations reflect perhaps the single loudest complaint from taxpayers Tuesday as City Council voted to spend between $31 million and $70 million to install utilities and amenities in the privately built neighborhood on 181 acres near downtown.
“How are you going to pay for it?” resident after resident rose to ask during a six-hour public hearing and council meeting.
They got a first glimpse into that complex and controversial subject moments after council sealed the deal with Greenville developer Bob Hughes.
Columbia’s chief financial officer, Jeff Palen, released what he said later he had intended to be internal documents that he stamped “PRELIMINARY – SUBJECT TO CHANGE” in capital letters.
He suggested using a combination of a meal tax bond, a general obligation bond, water and stormwater revenues as well as taxes coming in from new construction on the property itself.
But he worries that the release of his initial numbers, compiled about a month ago, might cause some people to lock on to them, triggering more confusion or misunderstanding.
“It really is just a starting point,” Palen said Wednesday. “People (council members) will change their minds on how they are going to fund this.”
Still, he said, “I’m comfortable with everything that’s on there. It gets people starting to talk about it, (and) to thinking how it’s going to be done.”
Council’s most outspoken skeptic is Councilwoman Leona Plaugh. She complains that the agreement with Hughes is too vague on many fronts, including precisely when the city’s first payment is due. “It’s still very open. I couldn’t tie down the beginning of the contract even,” she said Wednesday.
Though Plaugh questioned some of Palen’s numbers and recommendations, she agreed this is merely a starting point. “I think it’s the staff’s first blush at possibilities. It is the beginning of the discussion.”
Efforts Wednesday to reach Mayor Steve Benjamin, who led the push on council to pass the deal, were unsuccessful.
But on Tuesday he said, “The city has a very, very healthy balance sheet. The city is in the black again ... for the fourth year in a row.”
Benjamin also disclosed for the first time Tuesday that public money likely would not be spent before the first quarter of next year. He did not elaborate.
Palen said he’s waiting to hear from Hughes’ development team for construction details and timetables that would then allow the city to refine its spending plan and decide with certainty how it will pay at each stage of the process.
“I would love to get in there so I can begin working on a plan to get to council,” he said. “The sooner that I can get the information, the sooner I can have a plan.”
What taxpayers are bound to
In the documents, Palen broke down the city’s financial commitments to the project based on Hughes Development Corp.’s plan for four phases of construction.
The city’s dollars-and-cents commitments are spelled out in the disputed development agreement, which, with Tuesday’s vote, binds taxpayers to a construction timetable that is expected to last 20 years.
In Phase 1, the city agrees to spend $5,250,000 for a range of public projects that include but are not limited to water and sewage service, roads, site improvements and landscaping and stormwater improvements, including initial efforts to open Smith Branch, a creek that runs through the property in underground pipes.
The successive phases carry specific price tags of $7,965,842 for Phase 2, $2,179,342 for Phase 3 and $15,840,816 for Phase 4, in public money. The total is $31.25 million for a range of projects as the phases come together.
Hughes must meet benchmarks in private investment to get the full sum from the city, culminating with his agreement to get $5 in economic development for every $1 invested by the city.
Critics say he’s not risking as much as taxpayers and that the benchmarks don’t demand enough of Hughes.
Prospects for ways to pay
Palen’s preliminary plan is based on the section of the agreement that addresses the city’s commitments phase by phase.
Those commitments are listed with cost ranges – not specific dollars – for various public projects.
Palen said he chose mid-range figures for his estimates. But even with estimates in the middle of each range, his figures exceed the commitments in the agreement in each of the four phases. Altogether, the overage amounts to $4.9 million.
Palen also calculated spending $8 million to build each of two parking garages. That figure is based on Hughes’ estimate that he can have them built at $10,000 per space – significantly less than the city spent on its most recently opened garages.
Further, the price tag adds in $20 million for a minor league baseball park. The agreement states only that the city will “consider financing methodologies” for about $20 million.
The grand total of Palen’s early estimates in taxpayer money? $67.2 million.
Where might money come from?
Palen suggests two funding options.
The larger of the two options would include:
• A tax-increment finance (or TIF) bond of $30.2 million (that’s money borrowed against future property tax revenues from the site)
• A $28 million meal-tax (or H-tax) bond
A $9 million taken from water, sewer and stormwater revenues.
That adds up to $67.2 million and would include the garages and a ballpark.
Palen said he chose the $30.2 million TIF figure simply by adding $28 million and $9 million, then seeing what would raise the total to $67.2 million.
To be able to use $30 million from a TIF would require a bond of $41 million because of interest, debt payments and other costs associated with issuing bonds, Palen said.
The smaller option would total at least $24 million and could be accomplished largely by issuing that much in general obligation bonds over four years. Other sources of income could be the use of revenue from the first parking garage and $1 million in federal Community Development Block Grant money. CDBG money can be applied to improve blighted areas. The Bull Street site, while largely undeveloped, has many dilapidated buildings.
General obligation bonds must be repaid with taxpayer money and could be issued starting next year in increments of $7 million, $5 million, and two $6 million installments by 2016 and 2017, Palen said.
The city also might turn to bond anticipation notes, which are cheaper to issue than general obligation bonds, he said.
As Palen told the restive audience at the packed public hearing Tuesday, “The goal is not to eat the whole apple (but) ... to take a bite at a time.”
BY THE NUMBERS
$30.2 million - Possible tax-increment financing bond
$28 million - Possible meal tax bond for baseball stadium
$24 million - Possible series of general obligation bonds
$4.9 million - Amount projected costs exceed city’s commitment in deal
All numbers are preliminary, from the city’s early estimates. City Council has yet to vote on ways to pay for the commitments to the Bull Street neighborhood.
Reach LeBlanc at (803) 771-8664.