COLUMBIA — Student housing is now one of Columbia's main property tax generators, though the city won't see the full financial impact of the college apartment boom for at least another decade.
The Hub, YOUnion and Empire student housing sites are among the top 10 taxpayers in a city that is home to state's largest university, as well as Midlands Technical College, Columbia College, Columbia International University and two historically Black colleges — Allen and Benedict, according to the city's most recent annual financial report.
Among the city's principal payers, those three student-housing complexes alone account for $10.5 million, or 22 percent, of the top 10 group's $47 million in taxable value. Telecommunications companies have $9 million and office towers have $6.3 million.
Only Dominion Energy, with its whopping $18.9 million in taxable property value, brings in more tax dollars to the Capital City than student housing.
A decade ago, the city had not commercialized the growth of the University of South Carolina, Columbia Mayor Steve Benjamin said. So in 2014, the city passed a 10-year, 50-percent tax cut for new student apartments.
"The student housing tax break was intentionally designed to do just that, and as a result we’re seeing over the next decade or two hundreds of millions of dollars going to our public schools, going to support police and fire — all the things that make a city a city," Benjamin said.
Jeff Palen, the city’s chief financial officer, said the state tax code plays a role. Assessment increases on existing properties, unless they change ownership, are capped at 15 percent every five years. So new construction comes in at its present-day taxable value while older buildings lag behind the market rate.
The Hub, which repurposed the former S.C. Electric & Gas headquarters on Main Street, and YOUnion, one of the city's first student complexes that opened in 2008 on Assembly Street near Williams-Brice Stadium, have been on the list of top taxpayers for some time. Empire, which opened three years ago, just rose in the ranks during the city's last financial year, even as it's only paying on half of its value.
Columbia has at least 10 large student-housing complexes, with three more on the way.
And as Providence Hospital, with its $3 million in taxable value, falls off the tax rolls again under the state ownership of Medical University of South Carolina, student housing could move even higher in the city's economic ranks.
By contrast, privately developed student apartments actually add value to the tax rolls, rather than relying on tax-free housing built by the university.
"It's actually great news in some ways," said Carl Blackstone, president of Columbia's Chamber of Commerce.
That will be especially true when tax credits begin expiring in 2027 and the returns increase.
In 2020, YOUnion and The Hub generated nearly $600,000 in tax revenue. Empire and the four other projects that received the 50 percent tax break paid nearly $444,000, according to tax reports generated by the Richland County Assessor's Office, a number that will eventually double.
That does not take into account another round of student housing projects that have started coming to the market in the last two years, including a new 15-story tower that's broken ground next door to the downtown branch of the Richland County Library.
Blackstone and the Chamber also want to see other forms of commercial development.
"Residential living for students shouldn't be the driver," he said. "You can't rely on one industry to sustain yourself. We need to think of others to bring to town."