Opinion Extra

‘Let’s Make A Deal’ is not good economic policy for Columbia or Richland County

Columbia, SC skyline
Columbia, SC skyline tglantz@thestate.com

Playing “Let’s Make a Deal” is not good economic development policy. It’s letting developers define the way our city grows rather than determining public goals and setting incentives to meet them. Columbia needs to step back from its current practice of reacting to developers “deals” and work with community stakeholders to fashion an economic development strategy that is measurable and sustainable and does not set up harmful competition with existing businesses.

Today’s popular incentive is for our city to give 50 percent tax breaks to commercial development — hotels, restaurants, apartments, office buildings — through a Multi-County Industrial Park (MCIP) designation for 15 years. This incentive was originally intended to attract industry — manufacturers like BMW or Boeing that require major financial investment and produce new high-paying jobs that attract downstream suppliers and services.

Currently, Columbia is using this tactic to support commercial — nonindustrial — businesses. There are two facets that require close attention in the application of the MCIP tax break. First is the danger of hurting existing businesses. When a new hotel, office building or apartments are built and only pay half the taxes of those already in the market, the economy is actually hurt not helped. Seldom does this unfair competition create new jobs; it either moves existing jobs or kills them.

The second problem is that the public needs are not necessarily met. The developers cloak their own private needs for parking, landscaping or favorable financing as “in the public interest” when there is actually no data or prior plan by the government that supports this so called “public need.”

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Columbia, SC 09-19-06. C. Aluka Berry -The State. USC Business School Dean Joel Smith (cq)will announce his retirement today. Here Dean Smith is seen in front of The Darla Moore School of Business.cq C. ALUKA BERRY

Columbia and Richland County now have under consideration three commercial projects asking to pay only 50 percent of their taxes for 15 years in return for some public parking. This is being done without any prior strategic parameters for tax break qualifications or quantification of the need for these amenities in the proposed locations. And, in 15 years when the tax abatement goes away, so does the so-called public benefit. The parking garages now belong to the developers with no public parking.

This current dealmaking reactive approach used by our city is giving us a bad name. Regional and national developers know that if they come to Columbia and plead high taxes, they can get a deal that will fatten their wallets and enhance their competitive advantage. Columbia is gaining a reputation for “getting played,” and more developers are out there watching how all of these current requests for deals will play out. They are lining up ready to make a pitch and play the game. This action will continue to hurt the tax- paying public.

We all know that taxes are high in Richland County in large part due to copious nontaxable properties. But the way to change this is not to give tax breaks to new market entrants that hurt existing businesses. All the taxing entities — school boards, county and city — should work together to hold the line on taxes and develop a shared, pro-active economic development plan. We should agree on how and where we want to grow, continue to invest in making Columbia a great place to live and work, and use incentives to accomplish the public’s goals — not the developers’. Necessary infrastructure, bonus densities, an efficient regulatory process and local government coordination would go a long way towards spurring responsible development.

So let’s change channels from “Let’s Make a Deal” to formulating and implementing a plan for prosperity.

Joel A. Smith III is dean emeritus of the University of South Carolina Darla Moore School of Business;,former president of Bank of America East; and founding chairman of the Central SC Alliance.
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