Officials say proposal would fund public waterfront projects; School board members question impact on district revenues
By Delayna Earley
The Island News
Officials with the Town of Port Royal say they are attempting to revive a long-planned funding mechanism tied to the redevelopment of the former State Ports Authority property, but the proposal is now facing pushback from members of the Beaufort County Board of Education who argue the move could divert millions of dollars away from public schools.
The discussion centers around a proposed multi-county industrial park agreement, commonly referred to as an MCIP, connected to the ongoing redevelopment of the Port of Port Royal property now owned by Safe Harbor Marinas.
Town leaders have long described the former port property as one of the largest remaining waterfront redevelopment opportunities in northern Beaufort County.
Town leaders presented the proposal during the Beaufort County Finance, Administration and Economic Development Committee meeting on May 18, describing it as a continuation of redevelopment agreements and financing structures that date back more than a decade.
“This is not discussing standing up something new,” Port Royal Mayor Kevin Phillips told county leaders during the meeting. “We’re literally just talking about turning on the funding mechanism that, again, has been in place since 2009.”
At this point, however, no formal action has been taken by Beaufort County Council. The May 18 agenda item before the finance committee was always intended as a presentation and discussion only, with no vote or action requested from council members at this stage.
Committee Chairman Mark Lawson also moved the item ahead of public comment so attendees could first hear the presentation and receive “factual information” about the proposal before speaking publicly on it.
TIF expiration leads town back to original MCIP structure
According to documents presented to County Council members, the original MCIP associated with the former port property was approved in 2009, while a tax increment financing district, or TIF, was later established in 2012 to help fund public infrastructure tied to the redevelopment project.
According to the town’s presentation, the original TIF district included participation from both Beaufort County and the Beaufort County School District, with the school district agreeing to contribute up to $300,000 annually toward debt service connected to redevelopment infrastructure projects.
That TIF arrangement, however, effectively expired after no bonds were issued within the statutory time frame required under South Carolina law. During the finance committee presentation, bond attorney Lawrence Flynn explained that because the project experienced years of delays and ownership changes, the original TIF structure was never fully utilized.
The property remained under state ownership until 2017 before eventually being sold to Grey Ghost Properties and later to Safe Harbor Marinas in 2021.
What’s the difference between a TIF and an MCIP?
Town officials say the current proposal only exists because the original TIF funding mechanism connected to the redevelopment project expired before it could fully be used.
Under the original TIF arrangement approved in 2012, increases in property tax revenues generated by the redevelopment area would have been reinvested back into public infrastructure projects tied to the port property.
Flynn explained during the finance committee presentation that the TIF structure eventually became unusable because state law requires bonds connected to the district to be issued within a specific time frame. Because the redevelopment stalled for years while the property changed ownership, those bonds were never issued.
The proposed MCIP structure works differently.
Under South Carolina law, property inside a multi-county industrial park is converted from traditional property taxes into fee-in-lieu-of-tax payments, commonly referred to as FILOT revenues. Those revenues can then be redistributed differently than standard tax dollars and used to support economic development or public infrastructure projects.
Flynn said Safe Harbor is not seeking a tax abatement and would continue paying the full amount owed, though under the MCIP structure those payments would legally be treated as fees instead of traditional property taxes.
Because state law requires at least two counties to participate in an MCIP agreement, Jasper County is included as a partner county in the arrangement even though the actual redevelopment property is located entirely within Beaufort County.
Phillips described Jasper County’s role as largely procedural under state law.
“Every MCIP that’s in Beaufort County, all of them have Jasper County tied into them at some proportion,” Phillips said. “That’s just the legislation.”
Board member Richard Geier, the board’s former chair, said he views the proposed MCIP structure differently than the previous TIF arrangement because, in his opinion, the MCIP gives county government broader authority to redirect revenues that would otherwise flow to public schools.
“The county has to approve it. And the school district has no vote, has no say,” Geier said in an interview with The Island News. “It’s entirely up to the County Council.”
Geier said one of his primary concerns is that MCIP revenues are no longer treated as traditional property taxes once converted into fee-in-lieu-of-tax payments, allowing counties greater discretion in how the money is distributed.
Port Royal officials, however, argue the MCIP is simply replacing the expired TIF mechanism and continuing redevelopment commitments that previous governing bodies had already agreed to support.
“We’re not trying to stand up an MCIP,” Phillips said. “One’s already in place. Now the discussion is let’s turn it on, let’s start raising some capital, and let’s get to work.”
Shrimp dock among first projects town hopes to fund
Under the proposed MCIP structure, revenues generated through fee-in-lieu-of-tax payments could be used to help fund public infrastructure projects tied to the redevelopment area, including parks, promenades, shoreline improvements, trails, stormwater systems, marina-related infrastructure, public parking and a planned shrimp dock.
Right now, town leaders say one of the primary projects they are hoping to move forward with is the construction of a new public shrimp dock on the former port property.
Phillips said the shrimp dock project is already designed and waiting on permitting approvals from both the U.S. Army Corps of Engineers and the South Carolina Department of Environmental Services.
“That’s probably priority one,” Phillips said. “We’ve already got that designed. We’ve taken ownership of Lot G, the publicly owned parcel between Fishcamp and Shellring Ale Works. We’re just waiting on our permit from the Corps of Engineers and the Department of Environmental Services.”
Phillips said town officials are also evaluating which additional infrastructure projects should move forward first, including waterfront promenades, parks and other public access improvements tied to the redevelopment area.
Town officials say the projects are intended to preserve and expand public access to the waterfront.
“When we got the port property, one of the things that we heard through the charrette process with our own citizens and with Gov. Sanford is that this cannot be a privately held property, that it needs to be accessible to the public,” Port Royal Town Manager Van Willis said. “We need to have a certain amount of open space, and we really want to re-knit this property with the town.”
Willis said the public project list has existed in some form since the original redevelopment discussions and was designed specifically to ensure portions of the waterfront remain publicly accessible regardless of who owns the surrounding property.
Willis also noted during discussions that residential development is excluded from the MCIP structure, meaning residential properties within the redevelopment would continue paying standard school taxes.
The town is seeking approval for up to $10 million in redevelopment-related funding over a period lasting up to 20 years, with annual disbursements capped at $1 million. Based on current millage allocations, approximately 55.25% of that funding would otherwise be associated with school district tax revenues.
School board members raise concerns over precedent and transparency
That potential impact on school funding quickly became the central issue for several Board of Education members.
The debate also comes as both Beaufort County and the Beaufort County School District continue dealing with budget pressures tied in part to reduced tax revenues connected to The Preserve at Port Royal apartment complex, which received a controversial affordable housing tax exemption that significantly lowered the property’s taxable value. Both county and school district officials have repeatedly referenced the issue during recent budget discussions.
Phillips also attended part of the Beaufort County Board of Education’s executive session discussion regarding the proposal before board members later voted publicly to state their non-support of the MCIP.
During a Beaufort County Board of Education meeting held May 19, board members voted to formally state their “non-support” of the proposed MCIP following the executive session discussion.
Geier said his concerns center on both financial precedent and transparency.
“My concern, and I stated to the County Council, is this sets a precedent,” Geier said. “Port Royal followed it. And if it passes, I can see the City of Beaufort coming to us to say, well, we need an MCIP to help fund the Waterfront Park project … and the Town of Hilton Head Island will come to us because they want us to help develop the area around the airport.”
Geier also argued the arrangement effectively functions as a “stealth tax” because school district millage could be redirected toward non-education projects without appearing separately on taxpayers’ bills.
“It says school district, which to the taxpayer says that’s for students,” Geier said. “This isn’t for students.”
Geier also argued the amount of revenue potentially redirected through the MCIP could instead fund classroom positions and other educational needs at a time when both the county and school district are facing financial pressure.
Port Royal officials dispute that characterization and argue the proposal simply redirects revenues previously committed to redevelopment infrastructure projects.
Geier additionally pointed to concerns raised by the South Carolina School Boards Association regarding similar MCIP arrangements elsewhere in the state, saying many school districts ultimately lost revenue instead of benefiting from the developments.
Debate emerges over how waterfront projects should be funded
Geier also questioned why public school tax revenues should be used for projects tied to a waterfront redevelopment that he believes could potentially be funded through other mechanisms.
Geier said private entities associated with the project could pursue alternative funding options instead of relying on MCIP revenue tied to school district taxes, including installment purchase loans, bonds or referendum-backed funding.
Similar concerns were raised during the May 18 finance committee meeting by Board of Education Chairman Carlton Dallas, who suggested some of the amenities connected to the redevelopment could potentially operate under user-supported or membership-based models rather than public funding mechanisms tied to school tax revenues.
Despite the Beaufort County Board of Education’s vote of non-support, the board itself does not have formal authority to approve or block the proposed MCIP agreement. Under South Carolina law, the agreement would ultimately require approval from Beaufort County Council, Jasper County and the Town of Port Royal.
Phillips acknowledged the Town of Port Royal had hoped to move forward with support from all parties involved, but said town officials still intend to continue discussions with county leaders.
“It doesn’t affect us,” Phillips said when asked how the school board’s opposition changes the project moving forward. “I mean, I’m sure the county council probably in a perfect world would have liked everybody to be kumbaya and on the same page and everything.”
“But again, the county council can still move forward and do the right thing and honor the decisions that were made,” Phillips added.
Phillips disputed Geier’s argument that the money could be better spent elsewhere, arguing the redevelopment itself is expected to generate long-term revenue that would not otherwise exist without continued investment in the project area.
“If this project never happened, none of that money exists anyway,” Phillips said.
Phillips also argued the public infrastructure projects tied to the redevelopment are intended to improve overall quality of life for Beaufort County residents by creating publicly accessible waterfront spaces and amenities.
“These are quality-of-life projects,” Phillips said, arguing the investments are designed to benefit people who live, work and raise families in the area.
Phillips pushed back strongly on both the transparency concerns and the argument that the proposal would create a new precedent.
“The county voted with the town of Port Royal to put this property into an MCIP in 2009,” Phillips said. “And then in 2012, the county and the school board and the town of Port Royal did a TIF district for the same property.”
Phillips said town leaders view the current proposal not as the creation of a new funding concept, but as a continuation of redevelopment commitments that previous governing bodies had already supported.
“We have got to be able to trust each other as governing bodies that when promises are made and commitments are made, that that’s going to be there through different councils,” Phillips said. “If not, how can we really do any long-term planning if every two years when new people are elected, they could just go, ‘Well, I didn’t vote for that’?”
Phillips also rejected the idea that public access amenities should operate as private or membership-only spaces.
“When you hear people say leadership at the Beaufort County Board of Education suggesting that we sell memberships, what he did is very concerning,” Phillips said. “The thought is out there that public places should only be accessible to people who can afford memberships, and that’s not what this project was ever supposed to be.”
“The entire idea behind this project ever since it was sold from the state into private hands … was to open this back up to the public and to integrate it back into the town,” Phillips added. “And so if things are going to be public, it makes sense that public dollars are used for it.”
Proposal still requires additional approvals
According to the town’s presentation, the redevelopment area currently generates more than $400,000 annually in tax revenues based on the property’s present assessed value.
The proposal would still require future approvals from Beaufort County Council, Jasper County and the Town of Port Royal before any final agreements could move forward.
Delayna Earley, who joined The Island News in 2022, formerly worked as a photojournalist for The Island Packet/The Beaufort Gazette, as well as newspapers in Indiana and Virginia. She can be reached at delayna.theislandnews@gmail.com.