When asked this week to forgo years of additional property tax revenue to support new development on Laurel Island, the Charleston County School Board pushed back.
While the board technically approved the city of Charleston’s request to carve out a special tax district that would fund development projects on the former landfill, the board did not approve two important aspects of the proposal that board members say would have diverted millions of dollars of future revenue away from schools.
The city’s request for Laurel Island is what’s known as a tax increment funding district, also known as a TIF district.
These districts are created when a city asks another government to forgo rising property tax revenue it would normally receive for a certain amount of time. That money flows to the city instead, and the city uses it to pay for infrastructure such as parks, roads and landscaping — without having to raise taxes.
In 2004, the school board agreed to participate in the city's Charleston Neck TIF, which is set to expire in 2039.
Laurel Island, a chunk of undeveloped land near Romney Street just off the fast-growing Morrison Drive corridor, is already a part of this district.
In August, City Council voted to remove Laurel Island from its original district to create a new, separate district known as the Morrison Drive TIF.
"We wanted to free this development site, so to speak, free them from the confines of those prior agreements," said Mayor John Tecklenburg.
Since Laurel Island was already a part of the existing Charleston Neck TIF area, school board member Todd Garrett said the establishment of the Morrison Drive TIF won’t impact the school district.
“If we would have said no to allowing them to create a separate one, it would have shut down what they were doing,” Garrett said. “So essentially, we're saying yes, go form your own, but even though we technically are participating … we're effectively not because the money wouldn't have been ours either way."
While board members approved the creation of a separate TIF district carved out of an existing one, they did so with important caveats.
The city asked the School District to add about 15 land parcels near Morrison Drive, but the board said no.
"Just take the state ports one, because, I mean, that was gonna be nearly a million in revenue in by year two that we would have given up," Garrett said, referring to the parcel of land near Laurel Island owned by the State Ports Authority.
Tecklenburg said the city originally asked to include the other properties to help pay for drainage-related infrastructure work, "but it was clear to us that the school board was not supportive of expanding the former footprint."
Instead, the city presented the school board with a revised plan that didn't include the additional parcels, which the board approved.
However, the board decided to shave 10 years off of the proposed time frame for the new TIF district.
The city originally requested a 30-year TIF that would expire in 2049. On Thursday, Tecklenburg asked the board to consider a 25-year district.
Instead, the board voted to approve a 20-year district — set to expire at the time as the original district Laurel Island was already a part of.
"We just feel like to make everything work, that that additional time is very important," Tecklenburg said.
Garrett said the board's decision was not an easy one. After consulting with other board members, he said they agreed to participate in the Morrison Drive TIF through the end of its original lifespan, but the board was "not willing to do it in a way that would further obligate the district to take revenues off the table."
City Planning Director Jacob Lindsey said the redevelopment on Laurel Island "is going to be extremely expensive, and it’s going to need its own funding sources if it’s going to happen.”
One reason why development on Laurel Island will be so expensive is that underneath the grass is a decomposing pile of household garbage, leftover from the site's previous life as a landfill. That will require extensive work to make the land suitable for building.
"This is a landfill. And so it's really a different animal," Tecklenburg said.
The purpose of the Morrison Drive TIF is to assist with the development of Laurel Island and adjacent properties, Lindsey said, which could include improvements to roadways and bridges, stabilizing the former landfill, drainage facilities and a new fire station.
Garrett, who chairs the board's Audit and Finance Committee, explained the reasoning behind the board’s decision against expanding the district mainly stems from Act 388, a 13-year-old law that lessens homeowners’ public school tax burden.
The law exempts owner-occupied homes from most school taxes and instead shifts that burden to businesses, rental properties and vehicles. In exchange, the Legislature increased the state sales tax by a penny and send money back to school districts.
But Act 388 significantly reduced the district's available tax revenues. "We get something like $50 million less a year now, versus what we would get, because of the change," Garrett said.
As a result, the district is less likely to agree to TIF districts. “In general, a growing consensus on the board has been that given our fiscal situation, we should not participate in (TIFs) moving forward,” Garrett said.
“People shouldn't think that we're in dire straits,” he added. "We've got $90 million in reserves right now. But because of the restrictions of Act 388, we can't simply take commercial properties off the table as a revenue stream.”
Last year, the school board denied the city's request to participate in a Church Creek TIF district. In 2016, the board decided to participate in a West Ashley TIF, but would only concede 45 percent of future property tax revenue from the specific properties in the district.
The district already is participating in five total TIF districts, three of which are in the city of Charleston. Most were approved before Act 388 took effect.