Editorial: Columbia City Council should reject tax break for existing apartments

THE STATE SUPREME Court has given Columbia leaders one more reason to say no to the owners of a six-year-old student-housing complex who want their building’s property taxes cut in half.

A unanimous ruling on Wednesday raises the possibility that the city may no longer be able to rely on water customers to help pay for non-utility projects. If that happens, city leaders will likely be looking for money anywhere they can get it.

Now isn’t the time for the city to extend an unfair and unnecessary property tax break to a complex that’s been open for years. Nor is it the time for the city to walk away from half of its share of the more than $1 million the complex pays annually in property taxes.

The tax break is being sought by the owners of Aspyre, a 400-unit complex near Olympia. Aspyre was the first of the multiple large student housing complexes to be developed near the University of South Carolina campus.

Last year, in an attempt to lure more of those complexes to the USC area, Columbia began granting a 50 percent property tax break to developers. Columbia officials offered the tax break because they believed the city had lost out on several student complexes that were built just outside the city limits.

Aspyre is the only complex built before the tax break that would have qualified for it, according to the city. To qualify, developers must invest at least $40 million and have a parking garage of at least 400 spaces.

Now, Aspyre’s developers want in on the break. They also want the tax break to last for 10 years, the same period granted to the other complexes. The city council was scheduled to consider initial approval of the request on Sept. 1 but delayed the vote.

We have raised questions before about the tax break. First, we think it is unnecessary. With USC’s enrollment growing, development in and around campus was sure to follow.

The break also is unfair to nearly all other Columbia businesses. Why should these developers get such a large break when other companies that have paid their full share of taxes for decades don’t get one? Why should the new student-housing developers get a break when other companies looking to rent to USC students don’t?

Former Richland County Tax Assessor John Cloyd told The State last year that he advised against the student-housing tax break because once “you enter into the arena of giving somebody an advantage over somebody else, somebody’s going to squeal and want the same break.”

Some may argue that if Aspyre is the only eligible student-housing complex near USCthat doesn’t receive the tax break, it’s only fair for the complex to receive it too. But tax breaks are offered as incentives for businesses to build or expand and to create jobs. A tax break is an economic development tool, one that clearly was not needed by Aspyre’s developers.

Why offer an economic development incentive to an existing business that’s not expanding? Especially when the incentive may not be needed anyway?

As much as some people dislike taxes, they serve a purpose. Taxes pay for services people believe are vital. Adding 6,000 student beds near the USC campus creates a need for more police and fire protection, more ambulance service and more garbage collection.

The developers of those complexes need to pay their fair share.

This week, we were reminded again that the city doesn’t collect enough property taxes to pay for all it needs and wants. Since 1993, city leaders have transferred revenue from water and sewer customers to other items. During the past three years, $12 million has been transferred from utility customers to pay for non-utility projects, according to a lawsuit.

On Wednesday, the state Supreme Court questioned whether it was legal to spend water revenues on non-utility needs.

While the justices didn’t answer that question, they voted unanimously to send the case back to a lower court for review. City officials may soon be scrambling to make up the loss of millions of dollars each year for non-utility efforts.

Columbia’s student housing tax break was a bad idea from the start. To continue the break is questionable. To expand it to an existing company in the face of a potential budget crisis is irresponsible.

This story was originally published September 10, 2015 at 5:00 PM.