Essentially, a TIF allows a municipality to trap any new property revenues generated from improvements within a designated zone. Rather than flow into city, county and schools’ general funds like other property taxes, TIF gains are deposited into a bank account controlled by the city to pay for public projects like roads, sewers or parks within or near that district, and to repay the debt the city incurs as a result.
“It’s a way of getting the economic engine revving,” said City Councilman Ross Appel, who represents part of West Ashley.
In this case, the city plans to borrow the $73 million by issuing bonds backed by future tax revenues expected from four separate TIF districts. The debt will be paid back over 25- to 35-year terms, depending on the TIF, using the increment, or the increased revenues collected as a result of those development efforts.
State law stipulates that TIF funds can only be used for the “public good,” which is stricter than other TIF laws across the county, Tarczynska said.
While the city’s reimbursements help defray costs to developers, they also benefit the public, she added.
In West Ashley, the city is borrowing $5.5 million to fund stormwater improvements intended to relieve flooding in neighborhoods downstream of Ashley Landing shopping center, which is undergoing a major redevelopment.
That TIF district, which covers more than 500 acres along Sam Rittenberg Boulevard, will expire next year if the city doesn’t issue bonds.
City officials hope their investment will help jump-start or pave the way for additional development along the busy commercial corridor.
“This gets us ahead,” said Councilman William Dudley Gregorie. “If not now, the cost will go up.”
The risk comes if further development fails to follow, which would leave taxpayers on the hook. Such a failure is rare, and hasn’t happened in Charleston — though, at times, development has been slow.
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