School district asked to help with program to rehabilitate historic Beaufort buildings

sbowman@beaufortgazette.comJune 21, 2014 

The Beaufort County School District is in the business of educating students, its officials say.

But in recent months it has added economic development to its repertoire, increasing its financial participation in projects around the county aimed at sparking growth or renewal. The latest proposal is participation in a city of Beaufort program that provides property owners incentives to redevelop dilapidated buildings.

Several school board members think participating in this program, known as the Bailey Bill, has the potential to grow the district's tax base because the renovated properties will become more valuable.

But it also will require the district to forgo gains in property tax revenue for a while.

"I think it is worth the investment to try to rehabilitate these properties," board vice chairwoman Mary Cordray said. "And we may get economic development as a result, with a business or a rental property coming in that would bring us more revenue in the long run."

The board's Finance Committee, of which Cordray is a co-chairwoman, voted 3-1 Tuesday to recommend that the full board participate in the Bailey Bill. Co-chairman Paul Roth and committee member Bill Payne joined Cordray in favor. Michael Rivers was absent, and Jim Beckert opposed the measure.

"I think when we, as the school district, start getting involved in economic development that involves forgoing tax revenue for the development of residential areas, I don't think that is a wise move," Beckert said.

Already, the board has agreed to participate in the extension of a special Town of Hilton Head Island tax district and to help finance the purchase of property at Buckwalter Place that a town of Bluffton-backed group would use for economic development.

THE BILL

The Bailey Bill provides a tax incentive for owners to rehabilitate dilapidated historic buildings, both residential and commercial, around Beaufort, according to city planner Lauren Kelly.

If an owner agrees to put at least half of the property's assessed value into renovations, the program freezes for 10 years the property's assessed value on which taxes are paid. This keeps the owner's tax bill from spiking as a result of the property's increased value.

If the school district participates, it will not lose revenue it currently receives, Cordray said. It simply will be 10 years before it can get the increase in revenue that property improvement brings.

"Because we are not giving up anything, I believe we need to be good partners for the economic development of our community," she said.

THE RISKS

However, there is some risk entailed for the district, Roth concedes.

Only properties of a certain age and a certain degree of disrepair qualify for the tax break. As many as 300 properties could realistically qualify, Kelly said.

Of those, 50 are vacant or abandoned -- the target of the legislation.

Currently, about 45 of those 50 properties are not occupied by their owners, meaning the property tax revenue derived from them could be applied to school district operations.

Should owners decide to move in after fixing their properties, the property tax revenue derived from them, by state law, cannot be used for school operations. In other words, the district would lose revenue from those buildings as soon as the owners make it their primary residence.

Nonetheless, Roth thinks that's a risk worth taking because the rehabilitations stand to increase the value of properties around it, not just the properties in the program. That could be a boon to local governments, including the school district.

The full board plans to discuss the committee's recommendation July 1.

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

Related content:

School district tosses its hat in economic-development ring with Buckwalter deal, April 18, 2014

Faulty projections put Beaufort County schools in $4 million hole, April 5, 2014 School board extends participation in special Hilton Head tax district, February 18, 2014

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