Bolton: Columbia, SC taxpayers should benefit from coming boom
08/18/2014 12:05 PM
08/18/2014 12:07 PM
IF A CITY explodes with growth and taxpayers don’t see a direct benefit, is the boom real?
From where I sit, it would be a travesty if Columbia indeed explodes — I noted in a recent column that the city is well-positioned to do just that — and everyone benefits except taxpayers, who are taking as much risk as anyone. Columbia is playing a significant role in priming the pump by participating in mammoth public investment projects (think water and sewer upgrades and the county’s transportation sales tax program) and by steering public dollars toward a number of private developments.
Whether it’s hospitality tax dollars pledged toward a $35 million minor league baseball park or property tax breaks for student housing projects or facade grants to spruce up businesses, Columbia is contributing quite a bit of public money in an effort to spur development. And let’s not forget the tens of millions pledged to help develop the Bull Street project; we still don’t know where that money will come from.
I don’t agree with all those decisions. Columbia shouldn’t be the major backer of the ballpark, has committed too much to the Bull Street development and shouldn’t be giving tax breaks for student housing that’s going to be built anyway. If these are great investments with great promise, why aren’t the developers willing to take more risk?
Well, one big reason is because the city so freely doles out the cash. And I understand the city providing a modest incentive to help spur development, especially when it helps improve blighted areas and get them onto the tax roll or increase the taxes they’re paying.
But what’s the big payback? I’m not talking about profits to developers and private investors. I’m not even talking about the local folks who will land jobs or see their small businesses benefit. All of those things are imperative. We need our economy to thrive.
But what about the big payback for taxpayers? If more taxable property is added to the rolls, that should generate more tax dollars, right? Well, shouldn’t that mean that taxpayers should see some benefit — either through lower property taxes or improved or expanded services?
I know. I know. Projections suggest Bull Street would generate $19.9 million in property taxes annually by the 20th year for the city of Columbia, Richland County and Richland District 1. The Richland County transportation penny was projected to spur new businesses that would generate more than $28 million annually in new property taxes within the first decade. And as more private investors are lured into the city, they too would generate new property taxes.
That’s all good. But, again, I ask: Will taxpayers get a direct benefit?
It’s not enough just to assume that because more development takes place and more taxes are generated there will be an automatic benefit for taxpayers. How local officials handle that money and the public business dictates that.
Take, for example, the amazing transformation in the Vista. The once-blighted warehouse district was turned into a bustling restaurant and entertainment venue thanks to tens of millions in city, county and school taxes steered to it via a tax increment financing, or TIF, district created in 1986. A TIF allows all taxes raised by increased property values and new businesses in a designated area to be spent on further improvement of that area.
Over its life, the TIF paid for all sorts of projects, including Finlay Park, EdVenture, the Three Rivers Greenway, the land for Colonial Life Arena and street beautification.
The TIF — which the city extended a few years with the blessing of Richland County and Richland District 1 — was shut down in 2007, after the county claimed Columbia had mismanaged some money; the dispute ended in a settlement that required the city to end the TIF and pay the county and school district $5 million. Going into 2008, it was projected that a combined $5 million in taxes would begin to flow into city, county and school district coffers from the TIF district.
So, here’s a question to Columbia taxpayers: Did you notice a difference?
I’m sure you didn’t. And it wasn’t just because of the Great Recession. If you recall, that’s when Columbia was struggling to get its financial house in order after encountering three multimillion-dollar budget deficits and spending $25 million in emergency reserves between 2005 and 2009, even while some of the city’s highest-paid employees saw raises of a combined … $5 million.
Maybe I should take that back. Maybe taxpayers did benefit. I mean, things could have been worse. For instance, in 2009, the city’s tax revenue increased about $2.5 million more than anticipated. Was it from the Vista? I can’t say that. But wherever it came from, it’s timing was very fortuitous in that Columbia needed every dime of it to help cover a more than $4 million deficit. Without that money, the city would have had deeper cuts and could have been forced to raise taxes.
Fortunately, Columbia has gotten its books in order and — here’s hoping — left its deficit-laden ways behind forever. So there’s no reason that when this anticipated boom hits and the tax dollars start rolling in, taxpayers shouldn’t get to enjoy some of the bounty.
Reach Mr. Bolton at (803) 771-8631 or email@example.com.
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