How not to pay for a Finlay Park fix-up

A TAX-INCREMENT financing district isn’t a magic wand to pay for projects that officials can’t figure out any other way to pay for. Or at least it’s not supposed to be.

It’s an economic-development tool — one that probably can be used responsibly in some cases but too often is proposed as a way to make it look like the government is paying for new amenities without any cost. That is, it’s usually a deception, because of course you can’t pay for new amenities without either collecting more tax money or providing fewer services than you otherwise would.

Mayor proposes tax district to pay for pricey Finlay Park rehab

Private companies might build, operate Columbia parking garages

And now Columbia Mayor Steve Benjamin wants to create one — a small one, he’s quick to note — to pay for maintenance and upgrades to Finlay Park. Oh, and maybe another one, or several more, to pay for parking garages.

Let’s set aside the fact that the sort of maintenance Finlay Park needs — restoring eroding topography, replacing water lines, repairing a leaky (now emptied) fish pond — is something that ought to be built into the city’s annual budget, just like car owners ought to build oil changes and other routine maintenance into their budgets. Let’s set aside also that the city already collects a special sales tax on restaurant meals that state law says may be used only to fund frivolities — and that the city has manufactured so many frivolities it can’t afford to use that money on basic frivolities.

Instead, let’s just focus on why a tax-increment financing district, or TIF, is wholly inappropriate to pay for repairs to a city park, and why this particular TIF would be wholly inappropriate to pay even for expansion of a city park.

The idea behind a TIF is that by spending money on infrastructure and amenities, a government can spur private development in an area — usually an area that needs revitalization. Once a TIF district is created, all the property taxes generated by new construction are plowed back into the district, either for a set number of years or until a pre-determined amount of money is generated.

But while government spending inside a TIF district can spur economic development that generates more tax money, simply creating a district does not create money. What a TIF district does is divert money. It strips elected officials of the ability — and duty — to make spending decisions. It says that everything inside the TIF district will be paid for no matter what, while everything else — including schools and police and fire service and ... everything else — has to fight for funding. So the next time the economy dips and there’s not enough money to keep paying for police and fire and other services at their current levels, they get cut, while TIF projects continue to be paid for.

The theory behind TIF districts is that the government will benefit once the district expires and it can use the tax revenues from a much larger tax base. That’s the theory. And it probably worked, at least initially, in the Vista, which was a largely abandoned warehouse district in 1986 when Columbia, Richland School District 1 and Richland County agreed to create a TIF. That district collected more than $115 million for infrastructure and amenities. While that spending spurred a tremendous amount of private investment, the city ended up spending far more than expected, wasn’t always transparent, spent money it shouldn’t have and had to repay Richland County.

But Columbia’s misspending in the Vista TIF isn’t what makes a Finlay Park TIF, or a parking garage TIF, particularly inappropriate. What makes these tax districts inappropriate is the absence of that underlying economic-growth plan. Although Mayor Benjamin argues that upgrading the park and building parking garages will encourage more private investment, the fundamental idea here isn’t that spending money inside the district will create private-sector growth that will pay for the spending. The fundamental idea is that the city needs a way to pay for some things it needs to do.

What the mayor proposes is not to pump money into a struggling area to encourage private development and then use tax revenue from that new development to pay for the city’s investment. Rather, he wants to draw a district around an already-developed area and harvest tax revenue from an already-planned development — specifically a $70 million apartment complex called The Edge that is proposed near the park.

The fact is that the city and the county already have the option of using property taxes from the apartment complex to pay for the park, without creating a TIF — although I can’t imagine why the county would want to do that. The school district couldn’t use its property tax revenue to pay for park upgrades, but it has no business diverting money for that anyway.

The way for Columbia to pay to fix up its signature park is not by creating a TIF district. It’s … by paying to fix up its signature park. Through its regular budgeting process, every year, rather than locking that in as an unalterable priority for the next 20 years.

This story was originally published July 30, 2016 at 5:00 PM with the headline "How not to pay for a Finlay Park fix-up."