Richland County calls student housing lawsuit ‘baseless,’ will defend tax breaks

In a break from its practices, Richland County has issued a detailed response to the lawsuit that challenges the legality of tax breaks extended to developers of student housing complexes and said the companies that got the incentives will pay to fight the suit.

The county, in a written statement issued Thursday, calls the suit against it and the city of Columbia “baseless” and a “myopic” view of economic development. The county usually does not respond to pending litigation.

The suit by the S.C. Public Interest Foundation and Columbia resident Rusty DePass calls the half-off property tax incentive for private student housing developers illegal because the incentive uses a state law designed to attract industry and jobs – not residential properties.

Columbia and Richland County joined in 2014 to create the 50 percent tax reduction for 10 years. It prompted the announcement of five, large downtown complexes that represent more than $200 million in investments.

“(W)e considered the incentives vital to smart planning and necessary to attract developers to build here,” the county said. “But it is also smart planning to recognize measures must be put in place to control growth.”

The county said that it will vigorously defend its position and that the cost of fighting the suit it will be paid by the companies that received the tax break.

In a three-point rebuttal, the county said:

▪  The suit is myopic in its view of economic development and discounts any private investment that is not a manufacturer.

▪  The tax breaks caused a broadening of the commercial tax base of the county, not a loss as the suit contends. “Without the incentives, the county was faced with the potential loss of these parcels from the tax rolls to the University of South Carolina, which is a property-tax-exempt entity.”

▪  The suit “misinterprets the nature of the assessment of student housing by the county as a business venture and incorrectly casts the taxation of these developments by the county as the same as the county’s assessment of owner-occupied residences.”

The tax breaks expired Dec. 31, and the county said in its statement that the incentive will not be offered again.

“To continue to offer incentives will lead to an oversaturation of the market – and that would not be good for the local economy. Council discussed issuing a moratorium, but realized it was unnecessary after the City of Columbia had already done so because the projects were all within the City of Columbia. We support the Columbia officials’ decision.”

In calling the suit “baseless,” the county said, “It is our hope that county residents and the business community will support us in this matter.”

This story was originally published February 11, 2016 at 10:34 AM with the headline "Richland County calls student housing lawsuit ‘baseless,’ will defend tax breaks."