How can Columbia afford special projects? Trio of tax districts could be an answer

A better Finlay Park, 700 downtown parking spaces, infrastructure to lure businesses to north Columbia and projects to fulfill commitments at BullStreet.

The city of Columbia needs to come up with tens of millions of dollars if it is going to pay for these projects. Some city leaders think a trio of special tax districts could be the answer for some, or all, of them.

Tax increment financing districts, or TIFs, take all or part of the property taxes generated by new development in an area and funnel that money back into the district for specified public projects. The city, Richland County and the Richland 1 school district each would have to sign off on the districts because they would be giving up any other use of those taxes for the life of the districts.

Of the three possible tax districts on the drawing board:

▪  One could pay for a $20 million pair of public parking garages and other public amenities at the forthcoming Kline development on Huger Street in the Vista

▪  One could renovate downtown’s tattered Finlay Park

▪  One could use expected taxes from future development at BullStreet to pay for north Columbia infrastructure hoped to entice businesses to underdeveloped areas beyond Bull Street.

But some residents don’t think these special tax districts are necessarily the way to go for all the projects.

“The TIF is not a panacea for all the problems in Columbia,” said Ned Pendarvis, a former chairman of the Columbia Development Corp., which guides downtown investment and growth.

Wouldn’t it develop anyway?

Pendarvis said he and others have concerns about TIFs being used to stimulate development in areas where development already is certain to happen, such as the hotel-apartment-retail complex planned for the Kline property at the corner of Gervais and Huger streets.

“There are a lot of areas that don’t need incentives” to bring development, Pendarvis said. At Kline, “I believe that the development will take place without the city building a ... garage, and most of us (who are concerned) believe that that’s unnecessary.”

The city’s plans for parking garages at the Kline site would benefit not only customers of future businesses there, but also at another planned development on Huger Street as well as the S.C. State Museum, EdVenture Children’s Museum and Congaree River-goers, said City Councilman Howard Duvall, a supporter of the TIF. The garages also would pump an estimated $500,000 back into the city’s parking system each year, he said.

“This is a legitimate and clean way to get this project on the tax rolls, a taxpayer that will generate hundreds of jobs in the hotel and apartments and retail area there,” Duvall said. “It is a needed project.”

Meanwhile, the city has been searching for a way to pay for fixing up the dilapidated Finlay Park, once considered the jewel of downtown.

The Finlay Park TIF, proposed by Mayor Steve Benjamin last year, could take advantage of tax revenues from a $70 million student apartment complex planned on Assembly Street to pay for a multimillion-dollar upgrade to the park that was built by money from the city’s first TIF 25 years ago in the Vista.

The area being considered for the Finlay Park district looks ripe for more development – producing more tax revenue – in the near future, said Fred Delk, director of the Columbia Development Corp.

Delk said he wouldn’t be surprised to see “several more hotels” spring up in the Assembly Street corridor near the park.

Spreading BullStreet’s boom?

Some say the special tax districts could be the key that unlocks needed development for some areas.

“It’s not going to solve everything, but it also is something that can be very beneficial not just to the area the TIF is drawn in, but it can be beneficial to the entire city if it’s drawn right,” Councilwoman Tameika Isaac Devine said.

The wide-sweeping BullStreet/north Columbia district, dubbed the Renaissance Redevelopment Plan, could spread the wealth of the expected private investments at BullStreet to underdeveloped areas such as the Farrow Road corridor – where the city has been trying to nab a developer for a city-owned property.

“We’re going to have to be creative on how we do fund development so we don’t just kind of stay stagnant for the next several years,” Devine said.

There is a chance the district also could help pay for infrastructure the city has promised to build at BullStreet, Devine said.

It is more of an unusual plan, as far as TIFs go, given its wide boundaries and the fact that areas outside of the main revenue-producing site would benefit from the taxes. The idea for this district goes back the furthest of the three TIFs, but its likelihood appears to be the most tenuous.

The Renaissance district was drawn years ago and has sat on the back burner after Richland County and the Richland 1 school district said they would not contribute their portion of the district’s property taxes to the TIF projects. The city’s portion alone couldn’t pay for the projects it wanted done.

But now, the plan possibly could move forward with different projects and a request to use only three-fourths, as opposed to all, of the district’s new tax revenue from the city, county and school district portions.

The Renaissance Plan, like the other two possible TIFs, has not yet been brought to the county and school district for negotiation, Devine said, much less discussed in public. That is because there are still a lot of details that remain to be considered, she said.

Everything is just talk among city leaders for now.

But if these projects are going to come to fruition, the funding options beyond TIFs seem slim.

The city doesn’t have enough bonding capacity to borrow all the money through general obligation bonds, Duvall said.

One of its other options is to save up money and pay cash for projects, he said.

“The tools in the toolbox for municipal governments are pretty restricted,” Duvall said, “and we have to use the tools that are there when these type of projects come along that, I think, will benefit the city.”

This story was originally published January 16, 2017 at 1:17 PM with the headline "How can Columbia afford special projects? Trio of tax districts could be an answer."