Hilton Head PSD favors tax-district extension

tbarton@islandpacket.comFebruary 25, 2014 

  • WHAT THE DISTRICT DOES



    Tax-increment finance districts allow municipalities to collect taxes to spur revitalization in blighted areas with public works projects that stimulate development.

    When revenue collected from taxes within the district increases because property values rise, the extra money is used to pay for development projects within the district.

    Supporters call it a fail-safe financing tool to hasten needed improvements without a tax increase. Opponents say the districts expose taxpayers to unnecessary debt risk, shift the tax burden to properties outside the district, and drain money from the county and local schools to pay for projects that could disproportionately help private developers.

The Town of Hilton Head Island has likely convinced another partner to forgo tax revenue to pay for more public works projects on the island's south end.

Hilton Head Public Service District commissioners on Tuesday said they would be willing to extend a special tax district for another decade, after a presentation by town officials. They have yet to formally agree, but commissioners praised the current tax increment finance district for its success in raising property values, and extending sewer and water service to residents.

"This has been a great partnership, and our customers have been the big winners," water district general manager Richard Cyr said. "And these are underserved areas that would not have gotten sewer service on their own."

Town officials want a 10-year extension to a special tax district, set to expire in December, to build a University of South Carolina Beaufort hospitality campus and Osher Lifelong Learning Institute on Office Park Road. The extension would generate $50 million for the USCB campus and other projects, including a 1.5-mile park trail linking the redeveloped Shelter Cove Towne Centre with the beach and a new park; a children's museum; beach parking; and road improvements along Pope Avenue, according to town projections.

While property values have increased and public improvements have made the commercial areas safer and more attractive, pockets of blight remain, with vacant office buildings in disrepair. Revitalizing Coligny also remains a work in progress, town officials say.

To pay for the projects, the town has to persuade its partners, the water district and Beaufort County to forgo revenue from increased property values within the special tax district for 10 years. The Beaufort County Board of Education has already agreed to the extension.

Since creating the district in 1999, the town has spent nearly $52 million to build parks and paths, improve roads, extend sewer service, purchase land for future and existing development and other uses. Another $12.5 million has been earmarked for further road, landscaping and path improvements, as well as parks and a rowing-and-sailing site along Skull Creek.

About $2.4 million was spent extending sewer service to more than 600 acres, providing direct access to 212 north- and mid-island properties, according to town and water district figures.

As a result, assessed property values across the tax district have increased 122 percent, compared to an overall 99 percent increase for all other properties on Hilton Head, the town says.

North-end properties covered by the water district fared even better, with assessed values climbing 260 percent.

Beaufort County Council has not scheduled a date yet to consider its continued participation, but county administrator Gary Kubic has said he planned to recommend that council agree to the extension.

Town manager Steve Riley said he hopes to make a similar presentation to County Council in March, with formal adoption of the extension by the end of August.

"The town hit a home run building the Coligny Beach park," water district commissioner John Geisler said. "It's friendly, accessible and comfortable. Extending that concept out beyond the (Coligny traffic) circle makes a lot of sense."

Follow reporter Tom Barton at twitter.com/IPBG_Tom.

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