TIFs need more scrutiny
The Charleston County School Board will revisit plans on Monday for a special taxing district to boost an upscale resort development on Johns Island — a plan that would divert $63 million in taxes from the school district. It’s hard to imagine that the board will stick to its 2009 vote in favor of the tax increment financing (TIF) district for Kiawah River Plantation.
Developers contend that the resort won’t be built as planned without the TIF, which would allow tax dollars to be used for infrastructure that the developer would normally pay.
But The Beach Company has a long record of successful development in the region. And according to company President John Darby, the company plans to pay for the infrastructure improvements up front — and would be reimbursed only if additional tax revenue is generated. That suggests that the company has the wherewithal to undertake the project on its own. It would include 1,200 dwellings, a hotel and a golf course on the Kiawah River.
Typically, a TIF requires a bond issue to pay for infrastructure improvements needed for new development, with new tax revenues later derived from that development used to pay off the bonds. TIFs initially were approved by the Legislature to encourage the redevelopment of blighted property. They are best used for that purpose.
Mr. Darby outlined the company’s plan in a lengthy, critical letter to Charleston County Councilman Joe Qualey, who unsuccessfully sought to have council kill the TIF proposal last week. Council instead decided to await a study being made on the proposal.
In his letter, Mr. Darby insisted that Kiawah River Plantation is being unfairly singled out among other TIF projects that have been approved. No question, KRP has received far more attention that any of the other 11 TIFs he cites as getting County Council approval.
That underscores the necessity of taking a closer look at TIFs in general, and the policy of diverting tax money to promote large-scale private development.
Mr. Darby wrote: “To the best of my knowledge, the county has participated in 11 municipal TIFs to include four in North Charleston, one in Mount Pleasant and six in the city of Charleston. The total amount of the county tax increment that flows to these TIFs exceeds $150 million.
“Charleston County most recently participated in the $120 million Ingleside Plantation TIF offering 100 percent of its tax revenue over the next 25 years and committing over $20 million of its share of property taxes. Ingleside is a former rice plantation, zoned agriculture and located in North Charleston with prime frontage on U.S. Highway 78 and Interstate 26.”
And: “The master plan includes over 5,000 residential and hotel units ... I am not aware of any public incentives offered to the community. I was pleased to know that you and your council members voted to unanimously approve the Ingleside Plantation TIF which will hopefully become a prime asset for Charleston County.”
Actually, County Council records show that Councilman Elliott Summey abstained from voting, citing a conflict of interest. Mr. Summey is senior vice president for the developer, Weber USA, “where he leads the sustainable master planning effort for the Ingleside Plantation,” according to his web page.
In the other instances cited by Mr. Darby, the county was signing onto TIFs approved by other jurisdictions. For example, the Ingleside TIF was endorsed by North Charleston City Council.
The TIF for Kiawah River Plantation is the first that the county would undertake as primary sponsor, and as part of the plan, the county would get into the sewage treatment business for the first time.
And The Beach Company project would further impact traffic on Johns Island, already the subject of intense debate. So all the attention is warranted for a variety of reasons.
Whether to forgo school taxes for the development is the primary issue before the school board. It ought to be clear that the proposal backed by district trustees in 2009 offers little reason to reaffirm that vote.
The district would give up $63 million in taxes under the TIF. In return, it would receive $350,000 for playground equipment and a guarantee by the developer to pay the expense of attending public school for any student who lives at Kiawah River Plantation. That is not expected to be a large number at a resort development mainly designed for empty nesters.
Ultimately, the school district and other jurisdictions should address the broader issue of subsidizing private development through tax increment financing, absent a compelling public benefit, such as eradicating blight.
The list of local TIFs cited by Mr. Darby should be reason enough for all local jurisdictions to re-examine the wisdom, and propriety, of giving this special subsidy to developers.