North Charleston is asking the county and school district to expand a special tax district that finances redevelopment in parts of the city.
If Charleston County and the Charleston County School District agree, more of their future property tax revenues would be diverted into such things as street beautification in North Charleston, and for a longer period of time.
The focus of the city’s “tax increment financing” district, or TIF, is improvements near Park Circle and along Rivers Avenue, and the development of the Oak Terrace Preserve subdivision.
It’s one of the many TIFs in Charleston County, where new property tax revenues generated by development in the specified area are used to finance development-related public amenities in the same area, such as new roads in a subdivision or a drainage improvement project.
Typically, a government will borrow money for projects by issuing bonds and repay the debt with tax revenue from the related development.
For example, in North Charleston’s existing TIF, property taxes generated by new homes in Oak Terrace Preserve can be used to pay debt that financed public infrastructure for that development, and other initiatives nearby, such as streetscaping on East Montague Avenue. The TIF funds also can be used to repay developers for infrastructure costs.
Without a TIF district, the new property tax revenues would have gone into the budgets of the city, county and school district.
North Charleston now wants to extend the life of that 629-acre TIF district, from 2018 to 2028, and increase its size by 64 acres. Adding properties that are likely to be redeveloped would increase the amount of money flowing into the TIF.
“We’re not yet covering the debt service we have, so we don’t have funds available for future reimbursement without extending and expanding the TIF,” said North Charleston Finance Director Warren Newton.
Currently, the city owes about $900,000 yearly in debt payments on TIF-related projects, but the TIF district known as the Noisette off-base TIF is only generating about $700,000 a year. The city has been making up the difference with the proceeds from selling building lots in the Oak Terrace Preserve development near Academic Magnet High School.
The city’s TIF expansion plan would add part of the GARCO mill site, which The Beach Co. is developing near East Montague Avenue, as well as the former Naval hospital and former Shipwatch Square shopping center site that are city-owned but under contract to be sold for development.
When the GARCO site is developed, and if the hospital and shopping center site become privately owned, both would generate new property tax revenue that would flow into the TIF account until 2028 under the city’s plan.
“Obviously an extension is to allow for development to occur in certain areas and provide an opportunity for reimbursement for the public infrastructure,” Newton said.
For the school district, participating in a TIF district means giving up revenue for 15 years or more — 10 years more under the city’s plan — with the expectation that related development will improve the tax base in the long run. To ease the revenue implications from extending the TIF, North Charleston has proposed that the school district keep 10 percent of the revenue it would receive if there were no TIF district.
“Yes, people are essentially asking us to forgo revenue with the belief that the revenue we would get in the future would exceed that,” said Cindy Bohn Coats, chairwoman of the school board. “We have to look at how it affects our ability to educate children.”
If the school district and the county were to decline to participate in expanding and extending the TIF district, North Charleston could do so on its own, but only the property tax revenue that the city would have received anyway could be dedicated to the TIF district.
Charleston County Council Chairman Teddie Pryor, who is employed by North Charleston, said TIF districts have been a successful economic development tool. He cites the Tanger Outlet area, which is in another TIF district, and will start paying property taxes to the local governments and school district in 2015 when that TIF district expires.
County Council is scheduled to discuss the city’s TIF expansion plan Thursday night.
“I’m going to support it because it’s the right thing to do,” Pryor said. “You’re asking people to come in and do economic development, and if you’re going to revitalize that area, you’re going to have to have some incentives to do that.”
He notes the county previously agree to extend a TIF district for the city of Charleston.
Coats said the school district has formed a committee to study the issue.
“Out job is to educate children, and that requires tax money,” she said. “The question that comes to the table is, how does not having that money affect the district, versus how does that money help create a better tax base.”
Reach David Slade at 937-5552