The ups and downs of the Myrtle Beach area multicounty business park

May 24, 2010 — The Sun News

Lorena Anderson

May 24, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- A decade ago, Tony Cox couldn't eat lunch at the cafe near his farm without people sidling up to him and criticizing his company's pitch to develop Horry County land without paying property taxes for 20 years.

It was an innovative idea that angered many because it took commercial property tax money away from the already underfunded Horry County Schools. It was heavily criticized and debated, with the controversy prompting a lawsuit brought by the school system that made its way to the state Supreme Court.

Ten years after the multicounty business park was implemented, some leaders still aren't satisfied with the results.

"I think B&C came out very favorably, the city came out very favorably, and the county just came out," Horry County Council Chairwoman Liz Gilland said.

Now, Cox, the chief real estate officer for Burroughs and Chapin Co. Inc., doesn't hear much about the multi-county business park.

Neither do most people.

Over the years, some plans have changed, some have been completed, and some are on hold because of the economy. But there's still a lot going on.

"First and foremost," he said, "this is illustrative of what a good public-private partnership can be."

Upsides, downsides

The name "business park" is misleading, because it isn't a single place, such as an office park or industrial park. Rather, it's the conceptual joining of several pieces of property under one development umbrella.

It works like this: B&C, a private company, enlisted Horry, Georgetown and Marion counties, plus the city of Myrtle Beach, to agree to be part of the multicounty business park, a rarely used state development tool. B&C owned several parcels totaling about 4,000 acres, and had a variety of development plans for each parcel.

Instead of paying commercial property taxes to Horry County, Myrtle Beach and Horry County Schools for 20 years, the company uses that money to build the public portions of the developments -- roads, water, sewer, stormwater conduits, and other improvements that go along with developments.

In exchange, the city, counties and school system wait 20 years for their reward -- the increased property tax they will receive because of the increased value of the now-developed land.

Because the park's properties' borders are not contiguous, many people don't realize the park is all around them -- Coastal Grand mall, Grande Dunes and Marina Parkway, the extension of 62nd Avenue North near the new YMCA in Myrtle Beach, Plantation Pointe Plaza, the Lowe's (NYSE:LOW) shopping center on S.C. 544 at the U.S. 17 Bypass.

Myrtle Beach City Manager Tom Leath said the park is a 30- to 35-year investment in the future for the city, and that most big development projects require development tools -- a multicounty business park or tax-increment finance districts, municipal improvement districts, public utility districts, or developer incentives.

The upsides for Myrtle Beach and its residents? Assistant City Manager Ron Andrews offered a list:

New development

More business-license revenue

More activity and attractions for the area

New roads and improvements

More housing

Residential growth that also generates economic activity

Growth spurred by B&Cs development

Growing borders through annexation

And, in the end, far increased property tax revenue than would have been generated without the development

"We're willing to forgo 20 years of taxes because if the development didn't go on, we wouldn't get the money anyway," Andrews said.

But the city, the county and the school district aren't giving up all their tax revenue even now.

Since the development began in 2000, the park has generated $34.5 million in commercial property tax revenue, and every year since, the government agencies involved have received some share of that money, in addition to what B&C has used to pay down its bond debt.

For example, in 2008, the last year for which county figures were available, the park's developments generated $8.9 million in commercial property tax. Horry County received $1.9 million; Myrtle Beach received $358,000; the schools received $4.5 million and $2.1 million went to pay down bond debt. Marion and Georgetown counties' participation is only financial, Cox said, and they also receive money each year. In 2008, they each got $44,830.

For some, the benefits go beyond just the B&C tax revenue. Cox cited Coastal Grand mall as an example.

"Normally a city would have to catch up with a developer, installing roads, utilities and other improvements around an already finished development. But here, the access, the traffic control, the water, wastewater and stormwater improvements were all in before the mall was even built, and all the neighbors benefited," Cox said. "The mall serves as a centerpiece of the community. It has 2,200 employees, and other development has sprung up because of it."

There are downsides, too. The school system can't rely on tax revenue that could have really helped amid today's tough budget times, some county officials aren't pleased with the Cool Spring Business Park that was part of the deal and there's the risk that if the development fails, the payoff might never come.

School controversy

If the project fails, that could mean students suffer for development, according to a research article called "Education and Economic Development in South Carolina," written by University of South Carolina professor Douglas P. Woodward and others.

The article, published in 2000, examines the unintended consequences of development incentives on education, and it specifically cites the Horry County multicounty business park as an example of the conflict between education finance and economic development. It says $2 billion in property tax revenue would be removed from the schools' tax base over the life of the park agreement.

Multicounty industrial parks, tax-increment-financing districts and other similar development tools emerged in the 1980s as South Carolina's manufacturing base in textiles and apparel began to fail as a source of secure employment, the article says. Such incentives were part of an aggressive push to rebuild the state's industrial base.

But, the article points out, the Horry County-B&C agreement wasn't made to bring literal industry, the centerpiece being a shopping mall and huge housing development, and the Myrtle Beach area wasn't economically distressed when the proposal was made.

"Tourism is our industry," Cox said, and he would argue that the amenities the park developed have contributed to that.

Horry County Schools spokeswoman Teal Britton remembers when the park was proposed.

"The mammoth size of it was so unprecedented," she said. "And it's not the only tax-increment-finance district development in the county." While schools can opt out of TIFs, they cannot opt out of multicounty industrial parks.

Horry County Schools didn't want to join the park proposal, which sparked "very emotional" debate, Britton said.

The school district sued to be able to opt out, but lost after the bitter arguments went all the way to the S.C. Supreme Court.

Some say those days contributed to some people's perception of B&C as a bully with politicians in its already deep pockets.

In years such as these, when Horry County Schools is struggling with less state funding and the idea of cutting jobs and programs, the lawsuit's loss looms even larger.

Had the school district been able to avoid being part of the business park agreement, it would have had double the amount of tax money it has received on the park's commercial development -- money it desperately needs.

The district is talking about the coming year's budget, and those discussions could include losing up to 52 teaching positions, Britton said. Programs could take a hit, too, such as the early child development, summer courses for special and gifted students, fine arts, athletics, and even the number of bus stops and library books could be reduced, she said.

"What could we do with $3 or $4 million? It would equate to a 2 mill tax increase. It wasn't that we already had a revenue stream and they took it from us, it was the fact that under normal circumstances, we would be due a resource, but the park limited how much we would receive," Britton said. "If we had been receiving a greater portion of the revenue, it would make some of the discussions about budget cuts less painful."

She said the controversy has died down since the lawsuit wrapped up, and even some fences have been mended.

"I think all of us have moved past the feelings at that time -- we don't have the same board chairman or superintendent, and they don't have the same president. B&C has been a big partner in the starting of Early College, and we've worked together on several projects," she said. "But anytime revenue streams that support education are compromised or threatened, those who work in education have a moral obligation to try and defend their resources."

What's in a park?

Cox said if there's one thing B&C could have improved through the process, it would be how the park was promoted.

"You can always improve communication," he said. "It's a big deal, and it's complex. The complexity is probably what generated the controversy -- the fear of the unknown."

He said some of the arguments against the park contained misinformation, either on purpose or because "by the time you get to the 13th person, it's like a game of telephone. But sometimes people don't let the facts get in the way of their arguments."

Because this project involves public money, every aspect of it is public, including the bids and books. Anyone can request to see any or all of the thousands of documents related to the projects, and Andrews, the assistant city manager, said intensely detailed project notebooks are maintained for each.

The list of projects offered back in 1999, when the park was approved, cannot be added to without going back through the same approval process B&C went through the first time, with public hearings and governmental approval. But projects on the list can be reworked, or the company can decide not to complete them at all.

So far, B&C has issued $22 million in bonds to pay for the public portions of the developments, Cox said. Once those bonds are paid off through the deferred property taxes, the municipalities and schools, in theory, get a lot more than they would have had the land not been developed.

Leath said these developments all help create value for the area, as do projects like The Market Common and Broadway at the Beach.

And the public gets amenities that likely wouldn't have happened, or at least not so quickly, without the business park, Cox said.

"Maybe that's true and maybe it isn't," Gilland. "I think they still would have been built, it just wouldn't have been so profitable for the shareholders of B&C."

'A very painful time'

Cox wasn't the only one who took heat over the business park.

Gilland said she was "absolutely opposed to the park, and fought it tooth and nail, because it was not fair for the county." She said she got a lot of grief from fellow council members and remembers the discussions as "a very painful time."

Myrtle Beach would get the mall, Grande Dunes, and more than a dozen other developments B&C had planned, while the county would get Cool Spring Industrial Park near Aynor.

"Cool Springs park isn't worthless, but it's the next thing to it. I know that someday it will be right next to I-73," she said, not without a touch of irony over the proposed interstate between the Michigan and Horry County that has not been funded yet, "but that's the only thing the county really got out of it. We built the building on spec out there, and it has yet to be leased out."

Several of the park's developments are in the county, such as the Lowe's hardware shopping center at S.C. 544 and U.S. 17, Arcadian Shores, the planned Carolina Bays shopping center and Pine Ridge, a planned commercial and residential development on 1,221 acres near Surfside Beach, south of S.C. 544 along both sides of U.S. 17.

Gilland said other large developments in the area, such as the housing developments in the Barefoot Landing area, have been completed without such incentives.

"Everyone else had to pay for their own infrastructure, and some really fine things have been built in the same period of time," she said. "We could have done a lot with that [property tax] money, and they got the infrastructure around those developments for free."

Horry County has seen the multicounty business park tool several times since the controversial B&C deal.

The county approved two, one for Coca-Cola Bottling Co. and another for Metglas, and participated with Georgetown County for another involving International Paper (OTCBB:INPAP) (NYSE:IP) , county spokeswoman Lisa Bourcier said.

Making the best of it

Some would say none of the arguments matter now, because the deal has been a success.

In 2005, when B&C applied to include a 10-acre marina and hotel project in the park, then-County Councilman Mark Lazarus said the park agreement had meant many improvements in his district, District 2, (the Grande Dunes area south to around Plantation Pointe) and that the county should help B&C.

"It is here and at this point I think we have to make the best of it," Lazarus said at the time, trying to get fellow council members who weren't supportive of the park to go along.

Today, he said, his opinion of the park hasn't changed.

"We've got great bike paths, new roads, the new YMCA went in," he said. "Originally, the biggest issue was how much money the school district was going to get. Once that was settled, everyone was pretty happy with it."

The park development has allowed B&C to make donations, too, such as the land for the Arcadian Shores fire station, the Scipio Lane government complex, the Ramsey Acres and Aynor recreation areas and the land for the Cool Spring Industrial Park.

Cox said even though the economy has slowed the development for now, he's still proud of the park and the work that has been done.

"I think, if the right situation arose," he said, "we would do it again. I think it has been a great economic development tool."

Contact LORENA ANDERSON at 444-1722.

Newstex ID: KRTB-0119-45342273