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City officials and council members met with Beaufort's bond counsel Paul Trouche Tuesday night and discussed creating a tax increment financing district that would provide funding for improvements in the Boundary Street Redevelopment District over the next 30 years.
A TIF would allow the city to use future increases in property tax revenues in the area to fund and encourage redevelopment there. It would not create any new taxes.
"Nobody pays one dime more or less in taxes because they are in a TIF district," Trouche said.
The new district would include portions of Beaufort's existing Gateway TIF. Having the two overlap is allowed under the state law, Trouche said.
Beaufort is about $5 million short for the first phase of improvements -- including a median, bike lanes, a pedestrian walkway and other streetscape improvements -- estimated to cost about $25 million, city manager Scott Dadson said.
The entire project, including major changes to the corridor, rose from an estimated $38 million to about $55 million based on preliminary engineering reports, Dadson recently told council members.
"There's always been a vision for improving that corridor in the city," Dadson said. "You have to set the new rules somehow."
Council member Mike McFee and Mike Sutton both said they supported the new TIF.
"It's well designed to put more tools in our toolbox and gives us the benefit of being able to leverage those funds," McFee said.
Mayor Billy Keyserling, on the other hand, said he has yet to decide if he supports the new TIF.
"It's challenge is that it's not going to happen fast, and I don't want to compromise the other things we need to work on," Keyserling said.
"We want to make sure we don't create a party to which nobody comes," he said. "We just can't go out and willy nilly borrow unless we have partners in the private sector who are going to develop in that area."
Creating the TIF district would not obligate council to issue bonds immediately. The initial debt must be issued within 10 years or the TIF district becomes void, city officials said.
After a TIF district is created, property taxes are separated into two groups: the base and the increment.
The base is the value of properties within that district when the TIF is created and cannot change.
The increment includes any increase in property tax revenues either from a rise in value or new construction. Project funding is taken from the increment portion.
City staff members stressed the importance of creating the new TIF district before Jan. 1 if council wants to capture the value of property improvements completed this year but not yet on the tax roll.
Council members approved the new TIF on first reading last week -- acknowledging more discussion was needed -- to make sure they have enough time for a public hearing and second reading before the end of the year.
"I don't like that pressure to do it so fast, but there's a dollar and cents consequence if we don't," Keyserling said.
A public hearing is scheduled for Dec. 8, and a second reading would likely come soon after that.
Dadson recommended the city solidify its position first before reaching out to Beaufort County and the school district to see if they would participate in the new TIF district.
