Circuit Judge Casey Manning said Tuesday he will issue a decision in “in the next couple of weeks” in a lawsuit that alleges the city’s and county’s taxes breaks given to private student dorms are illegal.
At stake is millions of dollars in tax breaks – money that might have flowed into the coffers of city and county government and been spent on numerous local projects, according to plaintiffs in the case.
The four privately funded dorms built downtown near the University of South Carolina are receiving a 50 percent reduction in property taxes for 10 years.
Whoever loses likely will appeal.
Lawyers for the city and county argued Tuesday that Manning should dismiss the case because it had no merit. Jim Carpenter, the attorney for the government-watchdog plaintiffs, argued the tax breaks were unlawful.
At issue is whether the privately funded student dormitories were eligible for tax breaks in a tax district supposedly designated for industrial and business tax breaks. To be eligible for the tax break, the dorms had to be built at a cost of $40 million and provide parking for 400 cars.
“A $40 million facility built by a commercial developer is considered a business for commercial use,” city of Columbia’s privately retained lawyer Bernie Maybank, a former director of the S.C. Department of Revenue, told Manning.
But Carpenter told Manning the dormitories were clearly residential and, as such, were not eligible for the breaks.
“These student projects don’t belong in an industrial park,” Carpenter said. He represents Columbia resident and taxpayer Rusty DePass and the S.C. Public Interest Foundation, a government watchdog group that has filed, and often won, lawsuits over questionable government actions.
Unlike industries, student dormitories don’t manufacture anything, and unlike businesses, student dormitories don’t sell any products, Carpenter told the judge. And the dorms are not big creators of jobs.
Private attorney Ray Stevens, representing Richland and Fairfield counties, told Manning that Carpenter’s definitions were too narrow, and for one thing, the dormitories are not the legal residences of those who live there.
In any event, Stevens said, whether to grant such tax breaks should not be a decision for the courts but a policy decision better left to local government boards.
The four student dorms in question, which Stevens said have a total of some 2,700 rooms, have created a situation that “enhances the economic life of the city,” he said. And publicly built and owned dorms at USC, Allen, Benedict and Columbia College aren’t on the tax rolls at all.
WHO GOT THE TAX BREAKS?
Four student housing developers who were approved to get half off their property taxes for a decade. Their tax breaks, applied for before December 2015, are being challenged in court.
▪ Manhattan-based Park 7 Group’s Park Place, a 640-bed complex at Blossom and Huger streets. The contract amount of the project is about $31 million based upon information in permits issued by the city. But other expenses would be required to qualify for the tax break.
▪ Edward Communities, based in Ohio, built Greene Crossing, a 727-bed complex on Pulaski Street. Its cost is about $43.4 million, based on permits.
▪ Park 7 also is developing a 684-bed complex at Assembly and Pendleton streets near USC’s School of Music. Its cost is about $42.3 million, based on permits.
▪ Atlanta-based Peak Campus Development’s Station at Five Points, a 660-bed complex at Gervais and Harden streets. Its cost is about $41.5 million, based upon permits.