COLUMBIA — Five months in, a new tax break in South Carolina's capital city has garnered four housing projects, all of which have been previously discussed, many of them for years.
Though more could come before governing bodies in Columbia and Richland County between now and 2022, when the program sunsets, to date, the incentives aimed at encouraging new offices, housing, stores, hotels have managed to push forward existing proposals rather than bring about new ones.
At the end of July, the city and county councils approved a 10-year, up to 50 percent joint property tax break for large commercial and residential projects that exceed $30 million in investment. The incentive is capped at the cost of public infrastructure required to be included as part of each proposal with the idea that money saved would be spent on improvements such green space or a parking garage.
Matt Kennell of Columbia's downtown Main Street District predicted when the most recent incentive program was announced that it would push forward projects that had been stalled. One such project is the redevelopment of the former Kline Steel site at Huger and Gervais streets that has been discussed for years but not completed.
The $34 million mixed-use development on a busy corner of Columbia's Vista entertainment district would be a combination of market rate housing and retail, according to the project application. The application also cites commercial space, which could mean offices.
For public assets, the Kline project would include a roughly 400-stall parking deck, with about 100 of those open to public parking. This is in addition to sidewalks, green space, utility lines and lighting. The application did not provide a cost estimate for these improvements.
The other three projects in various stages of tax break approval necessary from both the city and county councils include previously announced apartments at the BullStreet District with ground-floor retail mixed in; redevelopment of Columbia's Old Capital City Stadium ballpark into a six-building apartment complex with retail; and a housing project at the corner of Blossom and Huger streets, a couple blocks from University of South Carolina's Founders Park baseball stadium.
Proponents say aiding large development around Columbia is necessary because the region's high property taxes send projects to other Southeast cities. Two-thirds of Columbia goes untaxed because of large swaths of government-owned property, such as the University of South Carolina and the Fort Jackson Army training base.
"We have punitive taxes," said Tom Prioreschi, a historic building redeveloper in downtown Columbia. "That is the reason incentives are so important."
Prioreschi said if it hadn't been for historic building tax incentives, he never would have been able to put 476,000 square feet of historic structures in Columbia back into use as apartments and retail. For his projects, Prioreschi was able to apply for tax breaks on his capital expenses, as well as 20-year tax abatements courtesy of South Carolina's Bailey Bill.
"Very often, the numbers just don't work," said Columbia-based tax and economic development attorney Burnie Maybank.
Capped at the cost of public infrastructure, Maybank said he thinks the tax break that puts the expense of public infrastructure on developers and then reimburses them is a good use of tax policy.
"Obviously, some of these projects would have happen without it," he said, but in the minds of the old ballpark developers, who Maybank represents, it was necessary.
In exchange for $7.38 million in tax breaks, the city will get a $53 million 310-unit housing and retail project. The bulk of the tax break will go to mitigating flooding of Rocky Branch Creek, which often breaches its banks. Other public assets include utility and street improvements, like a pedestrian bridge connection to Assembly Street.
The $50 million apartments in BullStreet could receive $7.78 million in tax incentives to recover the cost of building a 345-stall parking deck with 74 spaces for the public, sidewalks, plazas, lighting and some surface parking. The $58 million Huger Street housing project could get $10 million in breaks in exchange for a 400-stall parking deck.
Prioreschi said the average downtown rental rate in Columbia, $1,100 for a one-bedroom, has "edged up now where we can make it work," when it comes to small apartment developments.
"But Columbia is still a long way from high rises downtown," he said. "We're not a buzz city yet."
Growth in Columbia has trailed that of Charleston and Greenville, where demand is enough that Prioreschi said developers can ask rental rates high enough to overcome tax disadvantages.