Beaufort County schools considers extension of tax district

sbowman@beaufortgazette.comFebruary 11, 2014 

Town of Hilton Head Island officials would like to extend a special property-tax district that might help bring a University of South Carolina Beaufort branch campus to the island.

But public schools officials aren't sure they can still afford to play along when two new schools planned for the Bluffton area open for the 2015-16 school year.

The school board's finance and operations committee met with Hilton Head officials Tuesday to hear a proposal that would extend a tax-increment finance district for the island's Coligny area another 10 years. It is set to end in December.

The town's proposal would keep the Beaufort County School District as a partner in the tax district, but would decrease its contribution.

Even that is proving to be a tough sell, however.

"At what point does good citizenship and partnership have to come to an end, especially when the district is straining in some of its funds and will be bringing two new schools online?" asked board member Jim Beckert, who serves on the Beaufort County Board of Education finance committee.

"The school board is going to have to make a tough decision on what our mission and priorities are going forward," he said.

Tax increment finance districts are designed to revitalize areas with public works projects that stimulate development, which raises property values. When other governments -- such as the county or a school district -- participate in the "TIF," they agree to forgo the additional property tax revenue that results from rising property values within the district. The municipality keeps this "increment" to pay for the public works projects it hopes will lure developers.

The school district has participated in the Coligny special tax district since it started in 1999, forgoing about $33 million, or more than half of the additional revenue raised during that time, according to town manager Steve Riley.

The town wants to extend the tax district's life span so it can complete several big projects on the island, including construction of a USCB hospitality campus, according to town director of finance Susan Simmons.

Beaufort County and the Hilton Head Public Service District also are being asked to continue their participation. If all agree, about $50 million could be raised for more improvements to the Coligny area in the next decade, Simmons said.

Some of projects completed over the past 15 years with tax-increment financing money include putting a sewer line in along Squire Pope Road to provide service to more than 200 properties, creating almost 5 miles of pathways and creating some connector roads along Mathews Drive.

Under the town's proposal, Beaufort County schools would continue to contribute $1 million annually -- about $3.1 million less than the district's current contribution -- with a cap of total contributions set at $13 million, Riley said.

That amount should help the district cover additional operational expenses expected after the two new Bluffton schools open for the 2015-16 school year, Riley said.

Those schools -- a pre-kindergarten through eighth grade elementary school and nine through twelve high school -- are being built to ease overcrowding. The elementary school will be on Davis Road and the high school in the New Riverside area.

Annual operating costs for those schools are expected to be about $3 million, Beaufort County School District superintendent Jeffrey Moss has said. Ending the district's participation in the tax district "will go a long way to offset increases in operational costs" and prevent a tax hike, he added.

Beckert said he would not want the district to participate in the tax district if that means a tax increase for all residents in Beaufort County.

Riley said the town believes it would be mutually beneficial for the school district to participate in the extension because students could take advantage of some of the projects that would be completed, such as the USCB campus and improved parks.

However, Beckert said the board must consider whether the district would benefit more from expanding its own programs.

"We are in the business of educating students, so we have to put that first," he said. "Is it more important for us to help build a USCB campus, or is it more important for us to build a greater early childhood education program that will help all get on grade level?"

If Beaufort schools chooses not to participate, the town would prioritize its USCB project and others planned would likely be dropped, Riley said.

The school board will discuss its participation again at Tuesday's board meeting. Chairman Bill Evans said he expects the board to decide by March so all involved can begin to plan their budgets accordingly.

Follow reporter Sarah Bowman on Twitter at twitter.com/IPBG_Sarah.

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