The city of Charleston has asked the county and the school district to forgo millions of tax dollars that could be used for things like police protection and schools, and instead let the city use the money for renovations to the Gaillard Auditorium and other projects.
Charleston County Council has already signed off on the plan, agreeing Thursday to give up at least $12 million in anticipated property taxes.
The Charleston County School District is being asked to forgo an even larger amount of money, over an eight-year period starting in 2014, but the school board has not yet acted.
County Council narrowly approved the city's request on a 4-3 vote Thursday, after several council members complained they were caught off guard by the issue, which Council Chairman Teddie Pryor had been informed about at the end of April.
"I'm surprised we're being asked to do this with so little notice," said Councilwoman Colleen Condon, who voted to approve the request nonetheless, along with Pryor, Councilman Elliott Summey, and Councilman Joe McKeown.
"We need tax dollars too," said Councilman Dickie Schweers, who voted against the city's plan, along with Councilmen Vic Rawl and Paul Thurmond. Curtis Inabinett and Henry Darby were absent from the meeting.
While no new taxes are involved, the city's plan would divert money that would have gone into the general funds of the county, city and school district.
The city plans to use public money to finance half the renovation of the performance hall and exhibition center, and to build new city offices around part of the building. The rest of the project is to be financed with private donations, $20 million of which has been pledged by a single individual.
Of the property tax revenue that the city asked the county and school district to forgo, the city proposes that some could be used to build gymnasiums as part of a plan to renovate the Charleston School District's Buist and Memminger schools, and additional funding could eventually go toward addressing downtown drainage problems.
Neither Charleston School District Chief Financial Officer Mike Bobby nor Charleston Mayor Joe Riley were able to estimate late Thursday how much tax revenue the school district is being asked to give up. Charleston schools face dire budgetary struggles related to state funding cuts.
City Council is scheduled to take up the renovation funding issue at a meeting Tuesday, and Riley staunchly defended the plan.
"This is not unusual, when there are special opportunities for public investments of long-range value," he said. "The Gaillard is a long-range investment that will benefit the region, and we felt it was an appropriate project to request an extension of the TIF."
Extending the TIF -- tax increment financing district -- is what diverts money to the Gaillard project, rather than to the budgets of the city, county and school district. A TIF is a public financing arrangement in which local governments agree to use part of the anticipated property tax revenue from a specific area to fund improvements within that area.
A TIF typically targets a blighted area, where a government might borrow money to pave streets or build parks in order to spur redevelopment, with the idea that new property taxes generated by the resulting development will pay back the borrowed money.
The key is, a TIF district lasts for a set amount of time, and at the end of that time, all of the new property taxes produced by redevelopment (that's the "tax increment") are supposed to start flowing to the city, county and school budgets.
In this case the city of Charleston wants to extend the life of the King Street Gateway TIF, created in 1993, until 2023. For the county, that would mean that instead of getting about $1.5 million yearly in taxes starting in 2014, when the current TIF bonds are paid off, that money would stay with the city to be spent on the Gaillard and other projects.
Bobby, with the school district, said he didn't know whether the district's leadership would recommend that the board support the plan. Charleston County Council approved the plan against the recommendation of the county's financial staff.
Bobby said he hoped the city and school district could come up with a mutually agreeable solution.
"It's a work in progress," he said.