WHILE COLUMBIA City Council's effort to spark development in USC's Innovista and North Columbia is admirable, now simply is not the time to establish multiple special tax districts that would siphon away dollars needed to dig the city out of its considerable financial hole.
Finally convinced that a district that stretches from North Columbia to the riverfront is far too large, members of council now want to split the proposed district in two. That might eliminate some infighting over how money is distributed between the two distinct areas, but how it solves the main problem - that the city can't afford to divert tax dollars to special projects - is beyond us.
Instead of a special tax district that takes in nearly a quarter of the city, the plan now calls for one district that would encompass Innovista and another that would encompass North Columbia and some areas in the eastern part of the city. The council is considering borrowing $150 million for development in the Innovista district, primarily a waterfont park, and $40 million for projects in North Columbia, which haven't been revealed. The idea is to prime the pump with public money to lure private investors to the areas.
How money from a tax increment financing district would be spent is only part of the problem. More importantly, the question is whether the city - as well as Richland County and Richland District 1 - can afford to give up incremental tax dollars. This comes at a time when the city is not only trying to survive a bad economy but also recovering from fiscal woes brought on by poor bookkeeping and fiscal mismanagement.
Never miss a local story.
Tax increment financing districts allow the city to capture any new tax revenues from commercial development and use them for improvements and projects within the districts. TIFs can be powerful tools for transforming struggling areas. The Vista is the vibrant district it is today because of a TIF. But the special tax districts take money away from local government services, shifting the burden for paying for city, county and school services to property owners outside the district.
The incremental tax dollars from the two new districts would be used to repay tens of millions of dollars that would be borrowed to spur development. The city has asked the county and school district to join the tax district, because there likely won't be enough to get the projects done without the additional revenue. The city might have to use its water and sewer fund to help secure the TIF loan, which could potentially trigger an increase in water and sewer fees.
We certainly understand the need to support Innovista and to help turn around the fortunes of long-neglected North Columbia, which has waited as other areas have received aid. But it would be a challenge to give up these dollars in good times, let alone bad times.
Columbia leaders are well aware of how grave and fragile the city's fiscal situation is. So why extract incremental property tax dollars from the revenue stream when the city needs every new dime and dollar it gets to recover? Columbia ended the last fiscal year on July 1 with a $9 million deficit, and it's struggling to avoid another deficit this year. The council has cut holiday pay for employees in an effort to balance this year's budget. Reserves dropped $25 million since 2007 to nearly nothing.
Is this the picture of a city that can afford to give up new tax dollars for years to come? Not even close.