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County and school district officials said it's too early to tell if they will participate in the proposed tax increment financing, or TIF, district, which would require them to forgo some property tax revenue from the Boundary Street redevelopment area over the next 30 years.
A TIF allows governments to use future increases in property tax revenues in an area to fund and encourage redevelopment there. It would not create any new taxes.
Beaufort officials consider the case for county participation strongest because improvements in the city also benefit the county, according to council members and city staff.
The more development inside Beaufort city limits -- the county seat -- the more money the county will save in the long run, Mayor Billy Keyserling said last month.
For instance, he said, every new home built inside the TIF district represents taxpayers who won't build in unincorporated Beaufort County and drive up the cost of county-provided services.
County administrator Gary Kubic said county finance director David Starkey is running calculations to better understand the area, how much property tax revenue it generates and how a TIF district there might affect future tax rates.
County officials also want to know what impact the TIF district would have with and without county participation before they meet with city representatives later this month, Kubic said.
City Council member Mike Sutton has suggested the city create incentives to win county and school district participation, such as funding improvements to county and school buildings in the area or even constructing new buildings.
School district superintendent Valerie Truesdale said the school board has not discussed the issue and has not met or scheduled a meeting with the city yet.
Enticing the school district to participate in the TIF might be more difficult given the harsh economic climate. The district's current $171.4 million budget has a shortfall of about $2.4 million. Based on early estimates, the district anticipates it will have a budget shortfall of $2.4 million to $5 million for the next school year -- when it will open three new schools -- if it does not cut costs, officials recently said.
"We are definitely in a budget shortfall situation," Truesdale said. "We have to be really cautious and fiscally responsible."
Kubic said the county would wait to make its decision after it knows the school district's stance.
City staff members have stressed the importance of creating the new financing district before Jan. 1 if the City Council wants to capture the value of property improvements completed this year but not yet on the tax roll.
Beaufort is about $5 million short for the $25 million first phase of proposed streetscape improvements to the Boundary Street area, city manager Scott Dadson said.
The entire project, including major changes to the corridor, has increased from an estimated $38 million to about $55 million, Dadson recently told City Council members.
A new TIF district would help give the city leverage to issue debt and fund the project, Dadson has said.
The county and school district can join the TIF district at any time after it is created, city officials have said.
City Council members approved the new TIF district on first reading last month -- 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.
A public hearing is scheduled for Dec. 8, and a second reading likely would come soon after that.
