Q&A

School district tosses its hat in economic-development ring with Buckwalter deal

sbowman@beaufortgazette.comApril 18, 2014 

STAFF GRAPHIC

The Beaufort County Board of Education has been enlisted in an expanding, public-sector effort to bring economic development to privately owned property in Bluffton.

The board agreed Tuesday to forgo as much as $1.8 million in tax revenue over the next 10 years -- although the actual contribution will probably be about half that -- to help finance the purchase of property in Buckwalter Place. Its decision was made within 24 hours of first being approached about participating and with few specifics offered about how the money would be spent.

Some board members and district officials think the potential reward -- attracting new, non-residential development and thereby expanding the tax base -- is worth the risk.

Others think the "investment" was made in haste and that, aside from educating public-school students, the district should resist delving into economic development.

Bill Evans, Mary Cordray, Laura Bush, Bill Payne, Paul Roth and Evva Anderson voted to get involved with the venture.

JoAnn Orischak, Earl Campbell, Geri Kinton and Michael Rivers voted against getting involved. Jim Beckert did not attend the meeting.

Below are questions that were posed to various officials

Question. What, exactly, did the Board of Education agree to do?

Answer. The board voted 6-4 -- with Jim Beckert absent -- to become a partner with Beaufort and Jasper counties, the town of Bluffton and the town's economic-development off-shoot, the Bluffton Public Development Corporation, to bring new businesses to the Buckwalter Place commercial park.

The district is joining a special "multi-county industrial park" tax fund to help purchase 34 acres of land at Buckwalter Place, corporation chairman Roberts Vaux said.

The land is owned by developer Tom Zinn and is on the market. Bluffton officials have said they can speed development of the property if its development corporation owns it, presumably by offering incentives not available to a private developer.

It's not clear if an agreement to purchase the property is at hand or, if so, what the price would be. However, town officials have suggested the price is in the $4 million range, with the town and Beaufort County directly committing about $1 million each.

The development corporation would be responsible for the remainder. It is funded in part by the multi-county industrial park tax fund, whereby participating governments agree to give up property tax revenue from properties within the district.

Q. What will that money be used for?

A. The school board agreed to participate in the district with the stipulation that the tax revenue it gives up be used only for the purchase of the acres in question in Buckwalter Place, according to Vaux. The district's contribution cannot be used to fund the corporation's operations or for any other projects they are working on, he added.

The district's tax revenue collected after July 1 will begin going to the fund. Evans, the school board chairman, said the board agreed to participate with the understanding that a purchase would be made quickly.

But if the corporation is not able to purchase the land, the district will receive its contribution back, Evans said. That is not written in the resolution, but was part of the agreement, he said.

Q. How much did the board agree to contribute?

A. Initially, the district figures to kick in about $100,000 a year, superintendent Jeff Moss said. Its contributions cease when the fund total reaches $1.8 million.

Since the school district has the highest millage of governments participating in the multi-county industrial park, it is likely to contribute about half of that $1.8 million total, according to Vaux.

Evans explained that "many times without us, these kinds of districts can't succeed because usually 50 percent of the revenue in one of these special district's belongs to the school district."

Q. What type of business is the corporation attempting to attract to Buckwalter?

A. That's not clear, even to school board members who agreed to participate.

"We are not sure exactly what they are after, but they know the things that we would oppose, things that would not expand our revenue base," Evans said.

Evans said he believes the corporation is in "serious conversations" with one company for a portion of the land, but he does not know the company's name or type. He added that "we didn't press them on that."

Vaux said the businesses being pursued would produce tax revenue for the schools and would not be residential, thereby increasing their number of students.

"They did outline some types of businesses they wanted to attract, like biomedical, and everyone could understand what they are trying to accomplish," said Orischak, who voted against the partnership. "But there still were too many unknowns."

Q. Why is the school board willing to make such an "investment" on such scant knowledge?

A. "I think that's a little bit of trusting in the partnership and understanding these conversations are sensitive," Evans said. He said the

school board also has requested a non-voting seat on the corporation's board to learn what type of businesses coming.

But board members who voted against the measure said they needed more assurances the promised growth would take place.

"The question I asked is, 'How can you guarantee us that you are going to have someone come in there that is going to benefit us?' " Campbell said. "And they could not do that."

In other instances in which the board has agreed to forgo tax revenue to spur economic development, it has acted on more detailed plans, according to Orischak, citing at tax-increment finance district on Hilton Head Island as an example.

Orischak said the board also took more time to make that decision.

"We got the pitch roughly 24 hours before we took the vote. I'm not trying to say they were trying to pull one over on us but it was all fast and furious," Orischak said. "I know economic development is important, but there are lots of questions about whether school districts should participate in those efforts."

Q. What do those who supported the contribution believe the district will gain from this?

A. In the long run, a larger tax base.

School district officials say they are experiencing a tax-revenue shortfall as a result of laws governing property taxes.

Properties classified as part-time or rental residences are taxed at a higher rate than owner-occupied residential property, so many owners are reclassifying their homes, officials say. That's problematic for the school district because taxes collected on second homes and rental properties can be applied to school operations, but taxes collected on owner-occupied homes cannot.

Commercial and industrial properties, like second homes, are taxed at a higher rate, and that revenue can be applied to school operations.

Thus, encouraging business development means a more dependable income stream for the school district, according to Moss, who told board members he thought it was a good investment.

"It makes sense to give up revenue when there is a really strong opportunity to create more revenue, new jobs to diversify the economy and jobs that may well go to our students," Evans added.

Q: But didn't the Board of Education recently decide to build two new schools in Bluffton on the premise that population growth and economic expansion are already on the way?

Evans said the type of growth they are seeing is residential growth and not commercial growth, although he acknowledged they usually go together.

"Sure, I think that's a possibility and that happens (that residential growth brings economic growth)," he said. "But we think the corporation pushing this development will get it done more quickly."

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

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