By Warwick Jones
At issue at the June 10 Charleston County Council meeting was a request from the city of Charleston for an extension of the King Street Gateway Tax Increment Financing District for 10 years, to 2023.
The city needs money from the TIF to help fund the proposed new Gaillard Auditorium. Agreeing to the request effectively means the county gives up revenues of about $1.5 million a year for eight years, beginning in 2015.
The recommendation of staff was no. The finance committee and later council eventually voted yes, with conditions that were hardly onerous.
The agreement on council did not come easily. This partly reflected unhappiness about the request, the little time that council had to consider it, but foremost, the legal complications about a decision.
Council member A. Victor Rawl voted against the request, commenting he did not know what he was voting for. Council members Dickie Schweers and Paul Thurmond were also opposed while Henry Darby and Curtis Inabinett were absent.
According to legal counsel, the finance committee had to vote “up or down” on the issue. If it did not act, the city could assume agreement. A request for a deferral of the issue would be considered acquiescence by the county.
Council member Colleen Condon proposed some amendments and there were counter proposals.
Some members questioned how in these difficult times the county could give up so much revenue. County Administrator Allen O’Neal noted that Boeing’s Fee-in-Lieu of Tax (FILOT) agreement would kick in $1 million a year, beginning in 2014, and offset the loss to a large extent.
The request from Charleston Mayor Joe Riley had come at the end of April. Why hadn’t the request come to the finance committee until just before the meeting? Council member Joe McKeown, who wasn’t sure he could support the request, asked whether the new auditorium would stimulate more activities and add to the local economy.
Charlton De Saussure, attorney for the city of Charleston, answered that the new Gaillard would have “the greatest performance venue in the whole world.”
Why the urgency, he was asked by Thurmond, who was looking for 30 days to better consider the request. A delay of 30 days would add $400,000 to the cost, De Saussure said.
Amid confusion, Council member J. Elliott Summey called for an executive session.
After the session, the finance committee voted on the request with the following conditions: That if the project did not proceed, the TIF funds would be returned to the county and that the council’s agreement would be sought should the city plan construction beyond that mentioned in the request.
For the record, the city plans to spend about $140 million to upgrade the Gaillard Auditorium. There will be a new concert and other halls.
The city also plans to move most of its staff to the site and is planning new offices. A donation of $20 million has already been made and the city expects others. It also plans a bond issue and is also looking for assistance from the county and other involved entities by extending the King Street Gateway TIF District.
The King Street Gateway TIF District was created in 1993 with a life of 20 years. As with all TIF districts, the tax revenues over the base level (in this case 1993) are used to finance infrastructure within the district.
The theory is that the large infrastructure development will lead to private sector construction and more taxable property.
Typically, a bond is issued to raise most of the money for infrastructure development. The incremental tax revenue from the TIF is then used to pay interest and to provide amortization.