As part of the Beach Co.’s now-stalled effort to secure $82 million in public assistance for a luxury home community on the Kiawah River, the company said local governments set a precedent by approving even larger subsidies for a North Charleston development.
Charleston County’s staff appeared to agree, citing the North Charleston development Ingleside Plantation in a presentation last month. They said it’s untrue the Beach Co.’s Kiawah River Plantation plan could set a precedent for rural developments.
Ingleside was approved for $120 million in public assistance around the end of 2011 when Charleston County, North Charleston, and the Charleston School District agreed to create a tax increment financing district for the development.
The Beach Co.’s request for a TIF district for Kiawah River Plantation has been around since 2008, and on Thursday a County Council committee voted against it.
“They did it (approving Ingleside) while we were in discussions,” said Beach Co. President John Darby.
The Kiawah River and Ingleside developments both involve several thousand acres of undeveloped rural land with significant amounts of wetlands or marsh.
In both cases, developers pursued a type of taxpayer assistance known as a tax increment financing district, which essentially allows them to use property taxes their projects will generate to pay for development costs such as roads.
County Council Vice Chairman Elliott Summey, who is also a company vice president heading up the Weber USA company’s Ingleside development, said comparing the two projects is “absolutely not” fair.
“He should not hitch his wagon to our star,” said Summey, referring to Darby, in an interview prior to County Council’s committee vote rejecting the Beach Co.’s TIF request. “Each project has to stand on its own.”
Darby cited Ingleside in a full-page April 28 letter to Charleston County residents that was published as an advertisement in The Post and Courier, and said South Carolina had a successful track record of using TIF districts to create “opportunities that may otherwise have never occurred.”
“Our request for TIF financing allows The Beach Company to deliver the development densities and low impact uses our neighbors encouraged us to pursue,” said the letter signed by Darby.
Sewage and roads
The Beach Co. wanted a TIF district primarily to finance a sewage treatment system for what would be the largest development on Johns Island, consisting of a hotel, golf course, shops and 1,285 homes with an average price of around $1 million.
Critics said the taxpayer assistance sought by the Beach Co. wouldn’t benefit the general public.
Summey, who voted against the Beach Co.’s TIF plan Thursday and recused himself from the Ingleside TIF vote in 2011, said Ingleside is different because that plan will reduce sprawl and improve the road network in a way that will benefit the public at large.
He said he would support the Beach Co.’s TIF if there were clear public benefit, such as providing sewage treatment to current Johns Island residents who rely upon failing septic systems.
“A TIF has to have public benefit,” Summey said. “This (Ingleside) stops urban sprawl and creates urban density.”
Most of the Ingleside TIF area is a former rice plantation located on the west side of Interstate 26 between Ashley Phosphate Road and U.S. Highway 78. The proposed development aims to create a retail center larger than Tanger Outlets, along with industrial space and several thousand apartments.
An eye on traffic
A new interchange on I-26 is part of the Ingleside plan, with a road that would run west, connecting to Palmetto Commerce Parkway and Patriot Boulevard.
“Of course it adds value to our property, but it’s a game-changer for traffic,” Summey said. “What you’re seeing us plan to do could not be done without a TIF.”
Additional roads, including an extension of Northside Drive funded by the county’s half-percent sales tax, would provide a new connection through the property from Ashley Phosphate Road to U.S. Highway 78.
“The part that is appealing is that we can accelerate highway improvements, which are very important in my district,” said North Charleston Councilman Ron Brinson, who voted to approve the Ingleside TIF at the same meeting where he was sworn in as a councilman in January 2012. “For folks in the Dorchester Road corridor, another way to access I-26 would be very helpful.”
He said comparing the Ingleside and Kiawah River projects is not an apples-to-apples comparison.
“The TIF in North Charleston has more to do with regional commercial and industrial construction,” Brinson said. “We have 1,700 people report to work every day on Palmetto Commerce Parkway.”
The Ingleside TIF was approved unanimously and without controversy at the city, county and school district level, providing what the TIF ordinance described as “substantial public assistance” in the best interest of the area’s citizens.
It was the first and only time a TIF district has been approved in Charleston County for development of an agricultural property — something state law first allowed in 2005. Previously, TIF financing was reserved for urban redevelopment.
Lots of TIFs
Several parts of the Charleston peninsula, most of the Neck Area, and parts of North Charleston including the former Navy Base, Oak Terrace Preserve, and the area including Tanger Outlets are TIF districts. Mount Pleasant also has a large TIF district that includes swaths of U.S. Highway 17 and Coleman Boulevard, and the Mount Pleasant Towne Centre shopping center.
The idea behind a TIF is to kick-start beneficial development using funds that the development itself will generate, as taxes rise on the property. The question for local governments often comes down to whether the development is desirable, and whether it would likely happen without assistance, in which case the governments would keep all the additional tax revenue.
The Beach Co. has pointed out that developing Kiawah River would create jobs, and said that as a second-home community it would create little demand for public services.
Ray Anderson, special assistant to North Charleston Mayor Keith Summey (Elliott Summey’s father), said the area that includes Tanger Outlets is a great example of how a TIF can work. The time period for that TIF ends in 2016, which means all the new development that’s happened there will start generating about $5 million in new annual property tax revenues for the city, county and school district.
“It’s kind of a chicken-and-egg thing,” Anderson said. “Would you get the value without the TIF?”
“When you look at (Ingleside), it’s really just a big donut hole in the city that hadn’t been developed.”
Anderson said proposed new roads, including one that would need a bridge over existing railroad tracks, and the proposed highway interchange are the type of infrastructure improvements a developer would be unlikely to tackle on their own.
The Post and Courier’s Diane Knich contributed to this report.