[August 19, 2008]

Financing infrastructure for Greenlawn project takes a new tack

(The Beaufort Gazette, S.C. Via Acquire Media NewsEdge) Aug. 19--BLUFFTON -- If redeveloping Beaufort's Greenlawn Drive hinges on $1.5 million in street improvements and the city has $750,000 for the project, why are officials arguing over how to come up with $1.8 million instead of $750,000?

That was the burning question Beaufort County Board of Education member Reid Eikner had Tuesday, and one that could reshape how officials tackle the project.

"To me, this is a $750,000 problem," Eikner said at a meeting between four school board members and three city of Beaufort representatives.

Eikner and fellow board member Jim Bequette said they would be willing to split the difference with the county upfront, instead of going with the complex infrastructure credit

arrangement that the Beaufort County Council approved on the first of three readings last week over school board objections.

Eikner's proposal would cost less overall, but would have an immediate out-of-pocket expense. The county's deal would cost more overall, but would be spread over several years with no upfront costs.

That county deal calls for the county, city and school district to forgo $1.8 million in future property taxes on Greenlawn Drive as infrastructure credits to 303 Associates for significant streetscaping, road widening and improving stormwater drainage -- public infrastructure estimated to cost $1.5 million to $1.6 million. The parties liken the credits to loan payments and the extra money to interest.

303 Associates wants to build 119 live-work units on Greenlawn Drive with commercial space on the ground floor and single-family homes above. The project fits with the city's master plan of desirable, mixed-use infill development.

Without the new infrastructure, 303 Associates principal Dick Stewart said the street would be developed as single-family homes. Policy studies out of Clemson's Strom Thurmond Institute have shown that traditional residential development creates a greater tax burden than tax boon for local governments in South Carolina.

The dense development proposed would dramatically increase tax revenue. At build out, the school board has estimated the properties would generate about 39 times the revenue that the properties yield now, about $7.8 million per year versus $20,000.

The infrastructure credits would accrue from forgone county, city and school district property taxes, pro-rated according to their respective tax rates. As 303 Associates builds, property values will rise and the credits will accrue faster.

City manager Scott Dadson estimated Monday the accrual period will take four to seven years, after which the county, city and school board would reap the full revenue benefits of increased property values.

Eikner pushed for an alternative that would eliminate the need to tie up another school revenue stream in a development unrelated to the district's education mission, noting that some $8 million already is diverted from schools to other non-education projects in the county.

"We're not in the development business. ... The cost of participating in these tax incentive programs is getting too large," Eikner said.

Dadson said the city would be happy to make the infrastructure improvements as a straightforward city-financed project -- if the city had the money. That comment led Eikner to suggest splitting the difference with the county and paying upfront. The other two school board members at the meeting, George Wilson and chairman Fred Washington Jr., didn't say where they stood on that idea.

City officials and school board members are expected to continue negotiations next week.

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Copyright (c) 2008, The Beaufort Gazette, S.C.
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