COLUMN: Due diligence needed on North Augusta TIF
Private investment will include a 225 room hotel, 225 apartments, 75 townhouses, 30,000 square feet of commercial space, and 40,000 square feet of office space. Private investment will total $122 million.
Public investment will include a $28 million municipal stadium, a $10 million parking garage with 900 spaces and a $4 million conference center. Including the debt service reserve, capitalized interest payments, and bond issuance costs, the total price tag is $50 million.
This public indebtedness will be financed primarily by a Tax Increment Financing revenue stream. In a TIF district, project costs are paid from the incremental increase in property tax revenues generated from the project itself. Property tax revenues are therefore diverted from the impacted municipalities, counties, and school districts to bondholders.
TIF revenues for the Riverfront Center will be generated by amending the existing TIF District established in 1996. This district runs along the Savannah River, encompassing Hammond’s Ferry and the River Club, continues into the downtown North Augusta, extends down Buena Vista, reaches to Martintown Road, and covers more than 400 acres.
Since the plan only envisions a revision to an existing TIF district, the Aiken County Council and Aiken County School Board don’t need to approve the plan. They simply need not oppose it.
Given the size and nature of the Riverfront Center, comparisons with the 2005 proposed Fine-Deering TIF proposal are unavoidable. In the Fine-Deering proposal, the 5,000 unit residential project was ultimately withdrawn by the applicant after a contentious debate on the County Council.
In comparison, the Riverfront Center better meets the definition of “blight” and “conservation area” as established in South Carolina Code 31-6-30 governing TIF districts. Nevertheless, these definitions are loose and open to interpretation.
Unlike the Fine-Deering plan, the publicly financed portion of the Riverfront Center isn’t in direct competition with the private sector. Whereas the Fine-Deering TIF gave unfair competitive advantages to one set of developers and homebuilders over all other developers and homebuilders in Aiken County, the publicly financed stadium, conference center and parking garage in the Riverfront Center won’t undercut private developers.
Finally, the Riverfront Center won’t place excessive burdens on local government to provide services.
In the Fine-Deering TIF, property taxes paid by the 5,000 households would have been dedicated to the project’s infrastructure and not to the county and school board for services. Services for these new residents would instead have been paid by everyone else in the county.
In the Riverfront Center proposal, on the other hand, county and public school services will be minimal. The proposal may be correct in asserting a positive economic impact from “new development that otherwise would not occur in the County, the creation of new jobs, an increased tax base, and additional revenue from local option sales tax revenues over time.”
It would be nice, however, to see the numbers.
In summary, is this a better TIF? Absolutely. Even so, questions remain.
Parking is an issue. Given a 5,000 capacity stadium, offices, retail, apartments, town houses, a hotel and a conference center crowded into a 26 acre footprint, is the inclusion of a 900 space parking garage adequate? And is the $10.8 million price tag for such a facility realistic?
Is it wise to build a $28 million stadium to house the Augusta GreenJackets? Even with a 20-year agreement with the team, is there a cost-benefit analysis to determine if this is the best use of tax dollars?
Is re-TIFing the original North Augusta TIF District a good idea? The original 1996 TIF helped develop Hammond’s Ferry. Now these incremental tax revenues will be pledged to support the Riverfront Center until 2046. And in 20 more years, will yet more projects be financed with this same real estate?
This isn’t a good precedent. By re-TIFing the same acreage, it’s possible that some properties will never contribute their share of property taxes to the city, county or schools.
If this becomes the pattern for large developments within Aiken County, then the growth of the tax base will stagnate as new projects are financed exclusively through TIFs.
Ultimately, county residents will subsidize growth in the cities.
One solution is to limit the amended TIF district to the 26 acres of the Riverfront Center.
The Aiken County Council and Aiken County School Board should remain open to this project. They must, however, ask questions and exercise due diligence before getting on board or opting-out. As always, the devil is in the details.Gary Bunker is a former member of the Aiken County Council.