Earlier this month, two downtown projects applied for a never-before-used tax break to help pay for multimillion-dollar development projects.
One project would return the Tiger Hotel to its former glory as a boutique hotel. The application says it needs $1.7 million to renovate seven of its 10 floors into hotel rooms. The other project proposes a new eight-story building on the northeast corner of Tenth and Locust streets that will include 58 rental units, office space and enough retail space on the bottom floor for an establishment such as a grocery store. Its application is asking for $3.2 million of public investment.
Tax-increment financing — the incentive tax break applied for by both projects — has never been used in Columbia. The city created the Tax Increment Financing Commission in September 2008, which will look at the two applications and determine if they meet the three requirements: the project must qualify the public investment by creating significant public benefit such as creating jobs or stimulating the downtown economy, the project must be in an area of blight or in need of conservation and the project must not be feasible without the investment.
One striking difference between the two applications is the type of tax-increment financing requested.
The Tiger Hotel wants a bond, where the difference between the owner's property taxes now and the predicted after-construction property taxes are invested into the project from the get-go. Trittenbach Development, the Tenth and Locust streets project's developer, wants pay-as-you-go financing, where a percentage of the actual property taxes is invested back into the project every year for 23 years. Trittenbach argues this poses less of a risk for the city, with which Assistant City Manager Tony St. Romaine agreed.
When it comes to tax-increment financing, should one type be given more consideration than another? Why?