Tax Modernization Committee — Columbia, SC
Date: 2022-05-19
Time: 10:00

COLUMBIA TAX MODERNIZATION COMMITTEE MEETING AGENDA
 THURSDAY, MAY 19, 2022

The Columbia Tax Modernization Committee will conduct a City Council Special Committee
Meeting on Thursday, May 19, 2022 at 2:00 pm in Council Chambers at City Hall, 1737 Main
Street, 3rd Floor, Columbia, SC 29201. Members of the public may view the meeting online at
www.columbiasc.gov. For questions regarding the meeting, please contact the City Clerk at
(803)545-3045 or cityclerk@columbiasc.gov.

 The Honorable Daniel J. Rickenmann, Mayor
 The Honorable Howard E. Duvall, Jr., At-Large  The Honorable Edward H. McDowell, Jr., District II
 The Honorable William Brennan, District III  The Honorable Aditi Bussells, At-Large
 The Honorable Tina N. Herbert, District I  The Honorable Joe E. Taylor, Jr., District IV

Prior to entering the meeting please turn all electronic communication devices to the silent, vibrate or off
 position. All presenters are asked to speak directly into the microphone for recording purposes.

CALL TO ORDER
INVOCATION
WELCOME

1. Meeting Overview - The Honorable Joe E. Taylor, Chair

PRESENTATIONS

2. A Vicious or a Victorious Cycle: The Impact of Property Taxes on Communities,
 Schools, and People - Dr. Stephen Walters, Chief Economist at the Maryland Public
 Policy Institute

3. Legislative and Local Action Plan - Mr. Charles Terreni, Esq., Terreni Law Firm, LLC

4. Additional Information Regarding Implementation and Hedges for the Schools, the
 County and the City - Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas
 Economics

COMMITTEE DISCUSSION

5. Recommendation of a Final Draft Plan - Ms. Rebecca Gunnlaugsson, Ph.D., President of
 Acuitas Economics

6. Final Meeting Schedule - The Honorable Joe E. Taylor, Chair


 Page 1 of 2
 COLUMBIA TAX MODERNIZATION COMMITTEE MEETING AGENDA
 THURSDAY, MAY 19, 2022

ADJOURNMENT




 Page 2 of 2

COLUMBIA TAX MODERNIZATION COMMITTEE MEETING AGENDA
 THURSDAY, MAY 19, 2022

The Columbia Tax Modernization Committee will conduct a City Council Special Committee
Meeting on Thursday, May 19, 2022 at 2:00 pm in Council Chambers at City Hall, 1737 Main
Street, 3rd Floor, Columbia, SC 29201. Members of the public may view the meeting online at
www.columbiasc.gov. For questions regarding the meeting, please contact the City Clerk at
(803)545-3045 or cityclerk@columbiasc.gov.

 The Honorable Daniel J. Rickenmann, Mayor
 The Honorable Howard E. Duvall, Jr., At-Large  The Honorable Edward H. McDowell, Jr., District II
 The Honorable William Brennan, District III  The Honorable Aditi Bussells, At-Large
 The Honorable Tina N. Herbert, District I  The Honorable Joe E. Taylor, Jr., District IV

Prior to entering the meeting please turn all electronic communication devices to the silent, vibrate or off
 position. All presenters are asked to speak directly into the microphone for recording purposes.
CALL TO ORDER

INVOCATION

WELCOME

1. Meeting Overview - The Honorable Joe E. Taylor, Chair

PRESENTATIONS

2. A Vicious or a Victorious Cycle: The Impact of Property Taxes on Communities,
 Schools, and People - Dr. Stephen Walters, Chief Economist at the Maryland Public
 Policy Institute

3. Legislative and Local Action Plan - Mr. Charles Terreni, Esq., Terreni Law Firm, LLC

4. Additional Information Regarding Implementation and Hedges for the Schools, the
 County and the City - Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas
 Economics

COMMITTEE DISCUSSION

5. Recommendation of a Final Draft Plan - Ms. Rebecca Gunnlaugsson, Ph.D., President of
 Acuitas Economics

6. Final Meeting Schedule - The Honorable Joe E. Taylor, Chair

 Page 1 of 2
 COLUMBIA TAX MODERNIZATION COMMITTEE MEETING AGENDA
 THURSDAY, MAY 19, 2022

ADJOURNMENT




 Page 2 of 2
 1




MEETING DATE: May 19, 2022

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Meeting Overview - The Honorable Joe E. Taylor, Chair
FUNDING SOURCE &
ORIGINAL BUDGET:




Updated: 5/17/2022 4:25 PM Page 1
 Packet Pg. 3
 2




MEETING DATE: May 19, 2022

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: A Vicious or a Victorious Cycle: The Impact of Property Taxes
 on Communities, Schools, and People - Dr. Stephen Walters,
 Chief Economist at the Maryland Public Policy Institute
FUNDING SOURCE &
ORIGINAL BUDGET:


ATTACHMENTS:
  TMC_Tax_Plan_Part_3_051922 (PDF)




Updated: 5/17/2022 2:50 PM Page 1
 Packet Pg. 4
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
COLUMBIA
COMPETITIVE
PROPERTY TAX
PLAN
FINAL DRAFT
City of Columbia
Tax Modernization Committee

May 19, 2022


 Packet Pg. 5
 2.a




 Columbia’s Tax Modernization Committee




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
 Remarks by
 Steve Walters
 Chief Economist, Maryland Public Policy
 Institute
 Fellow, The Johns Hopkins University,
 Institute for Applied Economics
 Professor Emeritus of Economics, Loyola
 University Maryland
 swalters@loyola.edu
 5/19/2022


Slide / 2
 Packet Pg. 6
 2.a




 We want (and deserve) more




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
  More jobs
  Better schools
  More affordable apartments
  More parks
  More libraries
  More quality of life
  Grocery stores, restaurants,
 shops, galleries


Slide / 3
 Packet Pg. 7
 2.a




 A vicious or virtuous cycle?




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
  How not to get more Columbia’s tax base
  Columbia’s vicious cycle:
  Property taxes are supposed to
 fund key gov’t services like
 schools, parks, etc.
  But over 2012-21, Columbia’s
 property tax base has been
 shrinking, so that real per capita
 property tax revenues have
 fallen 9.1%

Slide / 4
 Packet Pg. 8
 2.a




 Review: How did this happen?




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
  Columbia’s (RSD1 & RSD2)  Investment in rental & business
 property tax burden is simply property flows where it is treated
 not competitive with rivals: more kindly:
  E.g., put your new apartment
 $250,000 property in: Tax Discount
 complex in Greenville and pay
 Columbia RSD2 $8,886 0.00%
 40% less annual property tax; in
 Columbia RSD1 $7,288 -17.98%
 Charleston pay 57% less
 West Columbia $6,186 -30.38%
  Our competitors are in a Rock Hill $5,859 -34.06%
 virtuous cycle, we’re in a vicious Greenville $5,339 -39.92%
 one Charleston $3,810 -57.12%

Slide / 5
 Packet Pg. 9
 2.a




 Review: Consequences of inaction




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
 “Decaying cities, declining economies,
 Capital flight
 and mounting social troubles travel
 Lower productivity/wages
 together. The combination is not
 Poverty
 coincidental.”
 Population flight
 Jane Jacobs
 Social dysfunction Demographic change




 Failed neighborhood


Slide / 6
 Packet Pg. 10
 Slide / 7




 


 But: A virtuous cycle can start fast




Packet Pg. 11 2.a
 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 2.a




 And: A virtuous cycle can get us more




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Real Total Revenue in San Francisco, 1975-87
 (less State Surplus Revenue Distributions)


 $3,250.0




 Real Revenue in Millions of 2000 $
 $2,750.0



 $2,250.0
 Recovery by
 4th fiscal year
 $1,750.0



 $1,250.0



 $750.0
 5 6 7 8 9 0 1 2 3 4 5 6 7
 197 197 197 197 197 198 198 198 198 198 198 198 198
Slide / 8
 Packet Pg. 12
 2.a




 Our complicated situation




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
  Before Prop 13, SF’s property tax  SC has Act 388
 rate was ~3% of assessed value --  An added “vicious cycle” of
 actually a little less than RSD2’s excessive dependence on rental
 current 3.55%, and about the and commercial property for
 same as RSD1’s 2.92% school funding
  But all Cali had to do was cap the  Columbia has jurisdictional
 property tax rate at a competitive issues; multiple school districts
 level all across the state, and the  But, unlike SF, Columbia has the
 playing field was leveled for all foresight and ability to control
 its destiny
Slide / 9
 Packet Pg. 13
 2.a




 The path to virtue




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
 1. Recognize: Tax competitiveness is a necessary condition if a city is to
 have a sound economy that provides opportunities for all its citizens to
 flourish, and generates the resources for local gov’t to do more
 2. Legislate: At the state level, need legislation to allow localities to opt-
 in to an exemption for rental & commercial property so that the
 effective assessment rate on such property falls from 6% to 4%, on par
 with residential real estate
 3. Transition: To “build a bridge before you have to cross the financial
 river,” delay phase-in of necessary rate cut for 2 years (in order to build
 an “escrow fund”), and then reduce the effective assessment rate
 gradually over as many as 8 successive years
Slide / 10
 Packet Pg. 14
 2.a




 The path to virtue (cont.)




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 
  After phase-in, the effective tax rate on rental and commercial property
 in, e.g., RSD1 will fall from 2.92% of value to 1.82%, below Rock Hill’s
 2.34% and Greenville’s 2.14%, and competitive with Charleston’s 1.52%




Slide / 11
 Packet Pg. 15
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Roadmap for
 Tax Reform
 CITY OF COLUMBIA TAX MODERNIZATION
 COMMIT TEE
 MAY 19, 2022


Slide / 12 Packet Pg. 16
 2.a



 S.C. Const. Art. X, Section 1. Taxation and
 assessment.




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 (5) All other real property not herein provided for
 shall be taxed on an assessment equal to six percent
 of the fair market value of such property.




Slide / 13 Packet Pg. 17
 13
 2.a



 S.C. Const. Art X, Section 3. Property
 exempt from ad valorem taxation.




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 In addition to the exemptions listed in this section, the
 General Assembly may provide for exemptions from the
 property tax, by general laws applicable uniformly to
 property throughout the State and in all political
 subdivisions, but only with the approval of two-thirds of the
 members of each House.
 S.C. Const. Ann. Art. X, § 3


Slide / 14 Packet Pg. 18
 14
 2.a




 § 12-37-220. General exemption from taxes.




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 (B) In addition to the exemptions provided in subsection (A), the following classes of
 property are exempt from ad valorem taxation subject to the provisions of Section 12-4-
 720:


 (52) 14.2857 percent of the property tax value of manufacturing property assessed for
 property tax purposes pursuant to Section 12-43-220(a)(1). For purposes of this item, if
 the exemption is applied to real property, then it must be applied to the property tax
 value as it may be adjusted downward to reflect the limit imposed pursuant to Section
 6, Article X of the South Carolina Constitution, 1895;
 The exemption is designed to reduce the default assessment ratio on manufacturing
 property from 10.5% to 9%.


Slide / 15 Packet Pg. 19
 15
 2.a




 Phase in of S.C. Code § 12-37-220(b)(52)




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 B. Notwithstanding the exemption amount allowed pursuant to item (52) added
 pursuant to subsection A of this SECTION, the percentage exemption amount is
 phased-in in six equal and cumulative percentage installments, applicable for
 property tax years beginning after 2017.
 Section 19.B. Act 40 of 2017; 2017 S.C. ALS 40, 2017 S.C. Acts 40, 2017 S.C. H.B.
 3516, 2017 S.C. R. 51
 The full exemption will be available in 2023.




Slide / 16 Packet Pg. 20
 16
 2.a




 Next Steps




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 DISCUSSIONS

 Bond
 City Attorney
 Counsel

 Local and
 Community
 State
 Stakeholders
 Officials


 Government Business
 Relations Community
Slide / 17 Packet Pg. 21
 17
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 IMPLEMENTATION
 SCENARIOS

 REBECCA GUNNLAUGSSON, PH.D.

 MAY 19, 2022




Slide / 18 Packet Pg. 22
 2.a

CONTINUOUS
LOOP High




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
The City of Columbia finds itself caught
in a continuous loop of high property tax
 Tax
 Rates
rates that lead to slower growth and
poor property valuations. In turn, these
result in smaller tax revenues, prompting
leaders to increase tax rates, which
further deters growth and depresses
valuations.




 Lower Slow
 Tax Growth &
 Revenues Valuations
 Packet Pg. 23
 2.a



COMMERCIAL/RENTAL
COMPETITIVE TAX PLAN




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Announce an 8-year Build escrow account Use escrowed funds Enact “triggers” that
 1 schedule of 2 from new investment 3 and growth in other 4 adjust the tax rate
 incremental tax rate (and by slowing revenues to satisfy reductions faster/
 reductions to begin in spending) during first spending while new slower, based on
 two years. two years. investment grows, availability of new
 and tax reductions revenues each year.
 are phased in.




Slide / 20 www.yourwebsite.com
 Packet Pg. 24
 RSD ONE
 2.a



 DEBT SERVICE FUND Historic Projected
 Compounded Annual Compounded Annual




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Growth Rate Growth Rate

MILLAGE RATE




REVENUES




STUDENTS




 Packet Pg. 25
 Author's calculations based on (1) SC Department of Revenue’s School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020; (2) April 2022 Parcel Dataset, Assessor’s Office of Richland County; (3) Comprehensive Annual Financial Reports, FYs 2011-2021, Richland School Districts 1 and 2.. (1) Owner-Occupied and
 Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020.
 RSD ONE
 2.a



 GENERAL FUND Historic Projected
 Compounded Annual Compounded Annual




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Growth Rate Growth Rate

MILLAGE RATE




REVENUES




 } Total
 Property
 Tax




 Author's calculations based on (1) SC Department of Revenue’s School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020; (2) April 2022 Parcel Dataset, Assessor’s Office of Richland County; (3) Comprehensive Annual Financial Reports, FYs 2011-2021, Richland School Districts 1 and 2.. (1) Owner-Occupied and
 Packet Pg. 26
 Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020. *Other revenues include Federal, Interest, other local, and intergovernmental.
 RSD TWO
 2.a



 DEBT SERVICE FUND Historic Projected
 Compounded Annual Compounded Annual




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Growth Rate Growth Rate

MILLAGE RATE




REVENUES




STUDENTS




 Packet Pg. 27
 Author's calculations based on (1) SC Department of Revenue’s School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020; (2) April 2022 Parcel Dataset, Assessor’s Office of Richland County; (3) Comprehensive Annual Financial Reports, FYs 2011-2021, Richland School Districts 1 and 2.. (1) Owner-Occupied and
 Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020.
 RSD TWO
 2.a



 GENERAL FUND Historic Projected
 Compounded Annual Compounded Annual




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 Growth Rate Growth Rate

MILLAGE RATE




REVENUES




 } Total
 Property
 Tax




 Author's calculations based on (1) SC Department of Revenue’s School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020; (2) April 2022 Parcel Dataset, Assessor’s Office of Richland County; (3) Comprehensive Annual Financial Reports, FYs 2011-2021, Richland School Districts 1 and 2.. (1) Owner-Occupied and
 Packet Pg. 28
 Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020. *Other revenues include Federal, Interest, other local, and intergovernmental.
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 SOURCES
 TEAM
 “Revenue Per Pupil Report by School District for 2021-22 Excluding Bond Revenue.” South Carolina Revenue and Fiscal Affairs Office (RFA). Revised
 11/15/21.

 “School District Detailed Index of Taxpaying Ability” dataset, Tax Years 2010 - 2020. South Carolina Department of Revenue.

 Comprehensive Annual Financial Reports, FY 2021 (FY 2020 where 2021 not available). Cities of Greenville, Charleston, Rock Hill, and Columbia; Town of
 Lexington; Counties of Greenville, Charleston, York, Lexington, and Richland; School Districts of Richland 1 and Richland 2.

 Richland County Assessor Property Tax Dataset, Tax Year 2021.

 US Census Population Estimates, 2000 – 2021 (through 2020 for cities and towns).

 “Membership Report 135 Day, School Year 2020-21.” South Carolina Department of Education - Office of Finance.

 SC Constitution Article X, §1(5) (https://www.scstatehouse.gov/scconstitution/A10.pdf)

 SC Act 40 of 2017 (https://www.scstatehouse.gov/sess122_2017-2018/bills/3516.htm).

 U.S. Census Bureau, 2016-2020 American Community Survey 5-Year Estimates.

 "Fiscal Year 2020 - 2021 135-day Financial Requirements Report," Office of Finance, SC Department of Education”


Slide / 25
 Packet Pg. 29
 APPENDIX

 SUPPLEMENTAL

 MATERIAL




Packet Pg. 30 2.a
 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 SOUTH CAROLINA
 PROPERTY TAX FORMULA




Slide / 27 www.yourwebsite.com
 Packet Pg. 31
 Slide / 28




 EXAMPLE




 PROPERTY TAX CALCULATION




Packet Pg. 32 2.a
 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 2.a




 1 2




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 KEY Commercial, rental, and
 second home properties
 “All other real properties”
 have an assessment rate
 POINTS are all classified as “all
 other real property” under
 of 6%, 1.5 times higher
 than owner-occupied
 South Carolina law. properties.




 3 4
 Owner-occupied SC has one of the lowest
 properties are further tax rates for owner-
 exempted from school occupied properties in the
 operations millage rates. US, yet one of the highest
 for commercial and rental
Slide / 29
 properties.
 www.yourwebsite.com
 Packet Pg. 33
 2.a




 COMMERCIAL/RENTAL




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 TOP PICTURE
 COMPETITIVE TAX PLAN


 1 2 3
 TARGET DEVELOP CALCULATE
 COMMERCIAL/RENTAL LEGISLATION PHASE-IN FORMULA
 Offer a credit to “all other real Draft legislation at: Property tax rate reduction plan
 property” that would have the State level to enable counties for Columbia/Richland County
 effect of reducing the the opportunity to implement a would be based on the template
 assessment rate from 6% to 4%. rate credit for “all other real outlined by Dr. Stephen Walters,
 Model after Act 40 of 2017, property,” and to be phased in over 10 years.
 which did the same for County level to opt into the
 manufacturing property state-legislated rate exemption
 statewide. opportunity.
Slide / 30
 Packet Pg. 34
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 PEER CITIES CHARLESTON GREENVILLE LEXINGTON



 Commercial/rental
 $3,810 $5,339 $8,125
 property tax rates
 are more severe in
 Richland County
 than peer locations,
 not due to Act 388,
 but due to high WEST COLUMBIA ROCK HILL COLUMBIA
 combined city,
 county and school $6,186 $5,859 $7,288 RSD1
 millage rates.
 $8,886 RSD2

Slide / 31
 Packet Pg. 35
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 $9,000
 $8,869 $8,869

 RENTAL $8,000


 PROPERTY $7,000
 $7,288 $7,288



 TAX $6,000



 DISPARITY $5,000



 $4,000

 Rental properties, pay 3.9
  times more property tax than $3,000

 owner-occupied properties. $2,273
 $2,000
 $1,873 $1,818
 $1,498
 Residents aged 65 or older
  do not receive the state’s $1,000

 Homestead reduction if
 they rent. $0

 Richland School District 1 Richland School District 2
 Owner-Occupied 65+ Owner-Occupied Rental 65+ Rental
Slide / 01
 Packet Pg. 36
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
 RENTER-
 Rock Hill 48.2%
 OCCUPIED
 HOUSING Lexington 33.9%
 RATE
 Greenville 56.9%

 Columbia 53.0%

 Charleston 44.6%
 0% 10% 20% 30% 40% 50% 60%



Slide / 33 Source: U.S. Census Bureau, 2016-2020 American Community Survey 5-Year Estimates.
 Packet Pg. 37
 2.a

 POPULATION
 GROWTH TRENDS




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 34 US Census Population Estimates, 2000 – 2021 (through 2020 for cities and towns).
 “Revenue Per Pupil Report by School District for 2021-22 Excluding Bond Revenue.” South Carolina Revenue and Fiscal Affairs Office (RFA). RevisedPacket
 11/15/21.Pg. 38
 2.a

 OWNER-OCCUPIED
 PROPERTY GROWTH




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 35 “School District Detailed Index of Taxpaying Ability” dataset, Tax Years 2010 - 2020. South Carolina Department of Revenue.
 Packet Pg. 39
 2.a

 COMMERCIAL/RENTAL
 PROPERTY GROWTH




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 36 “School District Detailed Index of Taxpaying Ability” dataset, Tax Years 2010 - 2020. South Carolina Department of Revenue.
 Packet Pg. 40
 2.a

 CITY OF COLUMBIA
 SELECTED REVENUES




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 37 Comprehensive Annual Financial Report, FY 2021, City of Columbia.
 Packet Pg. 41
 2.a

 CITY OF COLUMBIA
 GENERAL FUND REVENUES




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 38 Comprehensive Annual Financial Report, FY 2021, City of Columbia.
 Packet Pg. 42
 2.a

 RICHLAND COUNTY
 SELECTED REVENUES




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 39 Comprehensive Annual Financial Report, FY 2021, Richland County.
 *Includes Intergovernmental not restricted to specific program; Sale of capital assets; Investment income; Miscellaneous;Packet
 TransfersPg. 43
 2.a

 RICHLAND DISTRICT 1
 REVENUES




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 40 Comprehensive Annual Financial Report, FY 2021, Richland School District 1.
 Packet Pg. 44
 2.a

 RICHLAND DISTRICT 2
 REVENUES




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 41 Comprehensive Annual Financial Report, FY 2021, Richland School District 2.
 Packet Pg. 45
 SCHOOLD DISTRICT
 2.a



 EXPENDITURES BY SOURCE




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)




Slide / 42 Comprehensive Annual Financial Reports, FYs 2011 - 2021, Richland School Districts 1 and 2.
 Packet Pg. 46
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
EXAMPLE
CITY OF
COLUMBIA

REVENUES DURING
TAX REDUCTION
PHASE-IN
Assuming
Continuation of AVERAGE
Historical Growth ANNUAL
 GROWTH
Rates



 Author's calculations based on School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020 and April 2022 Parcel Dataset, Assessor’s Office of Richland
Slide / 43 County. (1) Owner-Occupied and Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020. (3) City of Columbia values not
 Packet Pg. 47
 available from DOR ITA and uses Richland County’s Annual Historic Property Growth from 2010 to 2020.
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
EXAMPLE
RICHLAND
COUNTY

REVENUES DURING
TAX REDUCTION
PHASE-IN
Assuming
Continuation of AVERAGE
 ANNUAL
Historical Growth GROWTH
Rates


 Author's calculations based on School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020 and April 2022 Parcel Dataset, Assessor’s Office of Richland
Slide / 44 County. (1) Owner-Occupied and Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020. Annual Historic Growth from 2010
 to 2020. (3) Includes Richland County General and Nonmajor Governmental Funds receiving property tax. (4) Does not include Transportation Sales Tax Revenues. (5) RichlandPg. 48
 Packet
 County annual compounded growth rate based on 2012-2020
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
EXAMPLE
RICHLAND
SCHOOL
DISTRICT 1

REVENUES DURING
TAX REDUCTION
PHASE-IN
Assuming COMPOUNDED
Continuation of AVERAGE
 ANNUAL
Historical Growth GROWTH
Rates

Slide / 45 Author's calculations based on School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020 and April 2022 Parcel Dataset, Assessor’s Office of Richland County.
 (1) Owner-Occupied and Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020. Annual Historic Growth from 2010 Packet
 to 2020.Pg. 49
 2.a




 Attachment: TMC_Tax_Plan_Part_3_051922 (7573 : The Impact of Property taxes)
EXAMPLE
RICHLAND
SCHOOL
DISTRICT 2

REVENUES DURING
TAX REDUCTION
PHASE-IN
Assuming COMPOUNDED
 AVERAGE
Continuation of
 ANNUAL
Historical Growth GROWTH
Rates

Slide / 46 Author's calculations based on School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 – 2020 and April 2022 Parcel Dataset, Assessor’s Office of Richland County.
 (1) Owner-Occupied and Commercial/Rental values from Richland County Assessor. All other values from DOR ITA for tax year 2020. Annual Historic Growth from 2010 Packet
 to 2020.Pg. 50
 3




MEETING DATE: May 19, 2022

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Legislative and Local Action Plan - Mr. Charles Terreni, Esq.,
 Terreni Law Firm, LLC
FUNDING SOURCE &
ORIGINAL BUDGET:




Updated: 5/17/2022 2:51 PM Page 1
 Packet Pg. 51
 4




MEETING DATE: May 19, 2022

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Additional Information Regarding Implementation and
 Hedges for the Schools, the County and the City - Ms. Rebecca
 Gunnlaugsson, Ph.D., President of Acuitas Economics
FUNDING SOURCE &
ORIGINAL BUDGET:




Updated: 5/17/2022 2:47 PM Page 1
 Packet Pg. 52
 5




MEETING DATE: May 19, 2022

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Recommendation of a Final Draft Plan - Ms. Rebecca
 Gunnlaugsson, Ph.D., President of Acuitas Economics
FUNDING SOURCE &
ORIGINAL BUDGET:




Updated: 5/17/2022 2:48 PM Page 1
 Packet Pg. 53
 6




MEETING DATE: May 19, 2022

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Final Meeting Schedule - The Honorable Joe E. Taylor, Chair
FUNDING SOURCE &
ORIGINAL BUDGET:




Updated: 5/17/2022 4:26 PM Page 1
 Packet Pg. 54

COLUMBIA TAX MODERNIZATION COMMITTEE MEETING MINUTES
 THURSDAY, MAY 19, 2022


The Columbia Tax Modernization Committee met on Thursday, May 19, 2022 in Council
Chambers at City Hall, 1737 Main Street, Columbia, SC. The Honorable Joe E. Taylor, Jr.,
Chairman called the meeting to order at 2:00 p.m.

Attendee Name Title Status
Daniel J. Rickenmann Mayor Remote
Joe E. Taylor Chairman Present
Edward H. McDowell District II Present
James Bennett Member Present
Billy Cantey Member Present
Scottie Hughes Member Present
Steve Taylor Member Present

INVOCATION
The Honorable Edward H. McDowell, Jr. offered the invocation.

WELCOME

1. Meeting Overview - The Honorable Joe E. Taylor, Chair

The Honorable Joe E. Taylor, Chairman announced that the final draft of the Columbia
Competitive Tax Plan will be presented today. Mr. Bennett suggested that our mayor and others
gain as much community input as we can during June, July, and August. The committee will
come back in September to receive the final plan and recommendations from the mayor for an
implementation committee. The legislative process will begin in January 2023.

PRESENTATIONS

2. A Vicious or a Victorious Cycle: The Impact of Property Taxes on Communities,
 Schools, and People - Dr. Stephen Walters, Chief Economist at the Maryland Public
 Policy Institute

Mr. Stephen Walters, Ph.D., Chief Economist at the Maryland Public Policy Institute said when
you talk about tax modernization you will invariably run across a sense that you are endangering
very important and very valuable public services. I have been working on tax reform in a lot of
jurisdictions and the first question is what you are going to cut if you engage in tax
modernization, tax competitiveness, or tax reform. There is a false perception about how we get


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more. We need to have a healthy local economy in order to have healthy government finances
that can provide what we all want from government. We want more. The perception is that high
tax rates will get us that and if we talk about tax cuts we are endangering government finances
and we will get less services. That is a dangerous misconception at the local level because we
have human mobility (people move) and capital mobility (investment flows are directed to where
they are treated best). The best evidence we have of that comes from Columbia. The real per
capita property tax revenues in Columbia have fallen by 9.1% over the past decade. That
bespeaks a shrinking inflation-adjusted property tax base in the City of Columbia. You simply
cannot finance more if the tax base is shrinking. The tax base is shrinking because the investment
that is the crucial lifeblood of a healthy economy is being directed elsewhere: that is the
competitiveness problem that this tax modernization is trying to solve. The danger is that if we
don’t do this, then cuts are inevitable. Then a shrinking tax base and a limping economy will not
provide more jobs and opportunities or better parks and schools that we all want. A non-
competitive tax rate at a local level violates this necessary condition for a healthy local economy.
We talked about how non-competitive Richland One and Richland Two are relative to some of
the cities that are competing for investment dollars, population, location decisions, and so forth.
If you locate elsewhere, you get a steep annual discount on your property tax bill and your return
on investment is more attractive. If we do nothing, things get worse but in slow motion.
Investment flows don’t happen over years and then slowly we start to perceive that there is flight
of population and capital investment. With lower productivity we get lower wages. With lower
wages we get relative poverty and then we get all of the ill social consequences of that vicious
cycle. Columbia city’s data on its real per capita property tax revenues is an indication that we
are starting this vicious cycle and unless something is done, the future is very much in danger. If
you get a competitive property tax and a policy in place, things can turn around rapidly and
dramatically. San Francisco used to be an economic basket case. The state imposed a property
tax rate cap, Proposition 13 kicked in and the playing field was leveled at 1% for every
jurisdiction in the state of California. Once San Francisco’s property tax rate was competitive,
people started investing there. It was a tidal wave of new investment and the population started
growing. These days, San Francisco’s population and municipal finances are incredibly rich in
resources. It turned the city around. They didn’t think anybody would be so foolish as to vote for
Prop 13 and vote to reduce their property tax rate from 3% to 1%. They campaigned against it
and voters imposed it on them. After Prop 13 with a two-thirds reduction in the property tax rate
and a roll back in assessments, San Francisco had to tighten their belt for three years. During this
time, investments started to flow in and new populations flooded in. People started paying
property taxes, wage taxes, hotel taxes and other kinds of ancillary revenue started to
accumulate. San Francisco was out of the fiscal woods and was growing rapidly by the fourth
year after Prop 13. Their spending was 60% higher than it had been before tax reform. That is the
virtuous cycle in action. The dynamic here is very favorable to the production of more. You can

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afford to invest more in schools, parks and recreation, libraries, zoos, and so forth. The virtuous
cycle contributes to further reductions in tax rates. Boston was rejuvenated by Proposition 2.5
and has since had successive property tax reductions simply because the greater flows of
investment brought people to that economy. As the tax base grew, more services could be
provided at lower effective tax rates. It happens organically. Here, our job is more complicated
because we have Act 388 and we have an odd situation for schools. This is important for school
boards because the tax base is much narrower in South Carolina. It is important for rental and
commercial property and the investment climate to be healthy or that is going to endanger school
finance. The children are in danger if we don’t take care of the cornerstone of municipal school
finance. The schools operating budgets are highly dependent on the health of that commercial
and rental property sector. You have to pay attention to how competitive you are at the local
level. You also have complications having to do with multiple jurisdictions. Lobbying,
convincing and educating at multiple levels is going to be a much more complicated job than it
was in Massachusetts or California. To get the virtuous cycle going, there has to be an education
effort. Everybody has to understand that this is a necessary condition. I have been studying cities
for forty years as an urban economist and I have never found a healthy city economy in a place
where there was an unhealthy investment climate and a bad tax climate. I am setting the stage for
the legislative strategy. The strategy has to involve equity on the assessment rate. Commercial
and rental property has a 6% assessment rate and primary residences have a 4% assessment rate.
The goal is to go from 6% to 4% assessment rates on commercial and rental properties over a
transition period. The major advantage is having the time to do this in an orderly fashion. We can
delay the phase-in and have a step wise reduction in the assessment rate so that we can build
towards a competitive property tax rate in a way that doesn’t do any violence to any municipal
services in the short run and allows those municipal services to grow in the long run. There are
people taking a pass on Columbia because of its non-competitive property tax rate. Projects are
put on the board immediately during this phase-in period and we start to build an escrow account
we can use when the assessment rate reduction starts to come in over the succeeding years, that’s
when we draw on the escrow account to make sure the services we are accustomed to can be
financed. As the tax base starts to grow, all the evidence points to the fact that the municipal
services can be enhanced at a rapid rate. That is the path to virtue.

The Honorable Edward H. McDowell, Jr. said you have given us a pathway, but how do we do
that? We talked about the escrow account and how long that will take to lock itself into place.
Talk to me more about the shrinking tax base.

Mr. Stephen Walters, Ph.D., Chief Economist at the Maryland Public Policy Institute said the
hard thing about this is the slow pace at which these consequences become clear to people. A
shrinking tax base is invisible on a weekly, monthly and annual basis. In Baltimore, we reassess

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 THURSDAY, MAY 19, 2022

property every three years. Here, it is done every five years. There is a lot of inertia built into
valuations and that can hide some of the bad consequences of a bad investment climate. Property
values may be falling due to high property taxes and reduced amenity levels sometimes and in
certain areas but you may be stuck with your property tax bill for five years during which we are
pretending that property values are where they used to be. That data shows the shrinking amount
of investment relative to changes in the ordinary price level and changes in population. Over a
decade things become obvious that aren't obvious annually or monthly. When people don't invest
in your town, they don't usually tell you why; they just move on. The perception that things aren't
changing is an illusion because of the slow motion nature of the problem. There is a wealth effect
here. Every dollar you invest in a high tax environment has a lower return than it would in a
more favorable environment. This is a great impediment to wealth creation. It is hidden because
the reduced rate of property values and the reduced rate of wealth creation happens slowly over
years or decades. You are talking about things that happen in a way that is very difficult to
perceive but is very tangible and it is very important. How many businesses are starting? How
many jobs are those businesses creating? How are your property values improving over time? All
of these things are related to the investment climate and the investment climate is crucially
influenced by the property tax rate.

Mr. James Bennett, First Citizens Bank agreed that the danger is doing nothing. It is important to
understand how we got here, the predicament we are in, and how we bring others with us
towards action. If we don’t, that could be worse than no action. In 2006, Act 388 took the burden
of school operations off owner-occupied homes. That’s a tremendous burden for every entity to
bear. In the city of Columbia, we have talked about all of the entities (Fort Jackson, state, city,
and county governments, school districts, religious organizations, and non-profits) that are off
the tax records. It comes down to non-owner occupied, investors, and things of that nature.
Councilman Taylor mentioned that the school boards’ budgets tend to be higher than the growth
in the area. Matching that sounds reasonable but it is hard for us to move forward without
engaging our stakeholders whether it is the assessors, auditors, treasurers, the three school
districts, and the superintendents. Part of the economic progression is the idea that a rising tide
lifts all boats. We have to trust that but we also have to create confidence within our community.
That's why collaboration is so important. The city of Columbia is a tale of two cities. The
confidence for those at the bottom may not be as high as the middle and upper. We must
continue to cast the net wider. The pie isn’t but so big and it is an obligation that we all have.
People are hesitant when we tell them that we are taking a piece of the pie. It is a whole lot better
if they decide to give you a piece of what they have. I trust the process and I hope we achieve
dividends from the process.

Mr. Stephen Walters, Ph.D., Chief Economist at the Maryland Public Policy Institute said we

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tend to think the pie is fixed and it is a question of slicing it up the way we like. We say we want
more and we get it now by raising the tax rate. Investors do the math and they say no. We want
more so we go back, slice the pie, and it shrinks. The goal is to transform it from a shrinking pie
to a growing pie. We have to price ourselves competitively. All of the stakeholders have to
understand in the long run that the fate of our children is crucially tied to a healthy economy. At
a local level, you can't be healthy unless you are competitive.

Mr. Steve Taylor, Wolfe & Taylor Realtors said in the conversations going forward, we need to
include examples of people who haven't invested in recent times. We had examples of that at the
last meeting. Maybe we can come up with more examples for the conversations with others.

The Honorable Edward H. McDowell, Jr. said we have to make it collaborative and the
stakeholders have to become a part of the pie. Do we want to section it off or collaboratively
allow the stakeholders to decide how to divide the pie?

Mr. Stephen Walters, Ph.D., Chief Economist at the Maryland Public Policy Institute said the
growth of the pie is in everybody’s interest. We just need to talk about this more broadly. All of
their individual interests should be united behind a competitive tax climate.

The Honorable Joe E. Taylor, Jr., Chairman said we all need to acknowledge that Act 388 is
universal across the state; every county deals with that. When we look at our competitive
disadvantage, we have to understand that all of those counties are also dealing with Act 388.
That has not necessarily driven us here. I think it took a couple of decades for us to get in this
situation. There is governmental inflation like we are seeing in the consumer economy now.
Historically, government inflation ran slightly higher than consumer inflation. If you don't attract
enough new tax base every year to cover the inflationary cost of government, you either have to
cut government or raise taxes. No one gets to point the finger. We have not recruited enough
investment annually to overcome that inflation, so we raise the millage rates. We have been
fortunate enough to look into the issue. Two weeks ago, I saw hands go up when Mayor
Rickenmann asked who is going to do additional deals if we fix this. I feel extraordinarily
confident in the San Francisco model of what we will see here in Richland County when we fix
this. The message we need to get comfortable with is if we get our soil conditions right and bring
the investment in, the pie gets bigger and everybody's slices will get bigger. I am stunned by the
amount of annual new taxes we've missed. We talk about new investments and growing our
small businesses, but we have to talk about the impact this has on housing affordability,
affordable rents, and the least among us. This past week, Ryan Coleman reported that the city
center of Charleston has 9,000 residents. We have 3,000 here. We need to get this right where we
can build apartments, houses, and new things that are affordable in our city center where people

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 THURSDAY, MAY 19, 2022

are coming back and spending more money. We forget that the state gets all of the income tax.
We have to survive on local options sales taxes, hospitality taxes, accommodations taxes, and
property taxes. The things that we need to do to make those things grow will make the pie bigger
and the slices bigger. I want to acknowledge Mr. Bennet’s advice; it was very good. I am proud
of Mayor Rickenmann and each of you because somebody had to start the conversation.

Mr. Stephen Walters, Ph.D., Chief Economist at the Maryland Public Policy Institute said this is
a huge opportunity waiting to happen.

The Honorable Joe E. Taylor, Jr., Chairman said your contribution to this discussion has been
immeasurable since we began three years ago. I thank you because you had done most of that on
a volunteer basis.

The Honorable Edward H. McDowell, Jr. said thank you. You have given me a new concept in
terms of the pie structure. It is great to fix a pie. What goes into that pie indicates how deep and
how wide you are going to cut that pie. Investment opportunities and investment values are
critical and part of putting the ingredients into that pie shell has a lot to do with those
components.

Mr. Stephen Walters, Ph.D., Chief Economist at the Maryland Public Policy Institute said the
ingredients are great here.

3. Legislative and Local Action Plan - Mr. Charles Terreni, Esq., Terreni Law Firm, LLC

Mr. Charles Terreni, Esq., Terreni Law Firm, LLC said I have lived in the City of Columbia for
47 years. I am a homeowner and a business owner. I have a vested interest in this town's success.
This is a roadmap, not a GPS. We don’t have all of the answers, but we have a solid foundation.
The 6% assessment rate is enshrined in the South Carolina Constitution. All property other than
residential then agricultural and manufacturing is assessed at 6%. This includes commercial
property and non-owner occupied housing, which is about 39% of Richland County. Renters are
paying three times the taxes. Article 10, Section 3 of the South Carolina Constitution allows the
General Assembly to exempt some property from taxation. It takes a two-thirds vote of each
house but the General Assembly has been willing to pass exemptions over the years. We want to
model our solution after Act 40 of 2017, the Gas Tax Bill that included a tax exemption of
14.2857% of the property tax value for manufactured property. The significance of this
percentage is that when you apply it to the 10.5% rate on industrial it reduces the effect of the
assessment to 9%. What happens if we do the same thing for non-owner occupied property? The
concept is to phase in an exemption. The General Assembly phased this exemption in over six

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 THURSDAY, MAY 19, 2022

installments. The tax exemption will be fully phased in by 2023. We can do the same thing. We
can include revenue safeguards. North Carolina indexed their income tax cuts to revenue growth.
We should develop this concept by setting stakeholder meetings and by vetting this with other
lawyers, the city attorney, city fiscal staff, bond counsel, local and state officials, the business
community, government relations staff and other members of the community. This is a road map,
not GPS. I am confident that we can come up with a plan by the end of the summer.

The Honorable Joe E. Taylor, Jr., Chairman said we would spend some time this summer with
the Senate Finance Committee and the House Ways & Means Committees. We are fortunate to
have two local members of the House Ways & Means Committee: Representative Kirkman
Finlay and Representative Micah Caskey. The key today is knowing that it can be done and other
places have used triggers to effectively lower taxes in the least risk-adjusted way. We can protect
our entities and safeguard against anything negative.

Mr. James Bennett, First Citizens Bank said we will approach our local delegation first.

The Honorable Joe E. Taylor, Jr., Chairman agreed to meet with every delegation over the course
of the summer. We have to decide if this will be local legislation or offered statewide.

4. Additional Information Regarding Implementation and Hedges for the Schools, the
 County and the City - Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas
 Economics

Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas Economics presented implementation
scenarios for the Columbia Competitive Property Tax Plan. Essentially, we have high property
tax rates that leads to slow tax growth and poor property valuations. In turn, these result in
smaller tax revenues, prompting leaders to raise tax rates, which further deters growth and
depresses valuations. We are stuck in this negative continuous loop. We want to flip that so we
have low tax rates that lead to high growth and higher valuations that lead to higher tax revenues
that prompt leaders to reduce the tax rate even further without sacrificing revenues. We want to
phase this out over a ten-year period starting with two years of escrows. We want to use triggers.
We can shorten the ten-year period if we start seeing the revenue. I was asked to talk more about
the school districts over this ten-year cycle. The schools levy two millages: one to fund school
operations and owner-occupied housing does not pay that and the other is to repay bonded debt
and all properties pay that. The historic debt millage for Richland School District One was 53 in
2011. On a compounded annual growth rate, it has grown at 1.9%. The revenues into the debt
service fund followed the actual property rates and has grown at 3.38%. Increases in tax rates
have provided new revenues for schools. The students have had a relatively steady decline. If we

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 THURSDAY, MAY 19, 2022

slowly implement this phased in tax plan the millage will stay the same. The revenues grow at a
steady rate at 0.63% compounded annually. Under a worst-case scenario, we will see a decline in
revenues from commercial and rental properties, but we also see growth in all other properties to
make up for the decline. We do not see a decline in revenues. Richland One has been seeing a
decline in students. It is difficult to project out the impact per pupil. School districts have other
funds, but property taxes flow into the general fund. Historically, the millage rate increased from
2.36 in 2011 and it has gone up 1.25% compounded annually. Property taxes have grown at
2.95% compounded annually and state revenues have grown at 4.02%. If we implement the tax
plan, the property tax will grow at 0.6% compounded annually. Under this worst-case scenario,
we do see a decline in commercial, but it is made up by growth in other properties. For Richland
School District Two, they have a much higher debt service millage rate. The revenues have
mostly grown because of increases in the property tax rate. They have seen growth in students. A
lot of people are building houses in Richland School District Two, but they are working in
Richland School District One. All of the new houses help with debt tax base to build new
schools, but not with the operations. The revenues will grow at the historic rate. The student rate
has historically grown at 0.68% compounded annually but we might see something different
going forward.

Mr. James Bennett, First Citizens Bank said the higher the property value, the lower the millage
rate. Should we expect the millage to go down?

Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas Economics said if we get in more
revenues than the school district, county or city needs to spend then that is the opportunity to
lower millage rates. During this phase in period, we are trying to get all of the excess revenues to
fill in the gap left by lowering the tax rates. We are trying to hold one constant while lowering
the other. If we flip the continuous loop, we can hold the assessment rate constant and start
lowering the millage rate. You can use one of those two levers. The general fund revenue for
Richland School District Two is significantly higher and it has grown significantly faster. In the
past year, there was a decline in property tax revenues and the millage rate didn’t change. We
start seeing depressed values, slower growth and slower revenue. This is the slowest case
implementation scenario over ten years. Projecting is difficult. We assume that state revenues
and property growth occurs at the same rate as they have for the past ten years. Total property
tax still grows at 1.07% compounded annually. Property taxes overall make up a lesser portion of
the general fund for Richland Two than it does for Richland One.

The Honorable Joe E. Taylor, Jr., Chairman said in your original tax study you compared the
non-property tax paying real estate between our peer cities and us. If I remember correctly, it was
not a consequential impact that drove our taxes.

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 THURSDAY, MAY 19, 2022


Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas Economics said we had data from
Greenville and Rock Hill. We had slightly more exempt acreage and exempt parcels but it wasn't
enough to drive the discrepancy in rates.

The Honorable Joe E. Taylor, Jr., Chairman said while an entity like the University of South
Carolina doesn’t pay taxes, it has driven a huge amount of 6% assessed properties in and around
the university.

Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas Economics said yes, USC and state
government are two of the biggest entities that generate consulting services, business, and other
properties.

The Honorable Joe E. Taylor, Jr., Chairman inquired about the percentage of people that rent in
the Columbia.

Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas Economics said 54% rent in the city and
there is a greater proportion of homeowners to renters in the county.

The Honorable Joe E. Taylor, Jr., Chairman said we are talking about investment, opportunity
and job growth. We are talking about affordability and attainability for over half the population
in the city and the county. When we talk about tax modernization, the assumption is that it is to
benefit the rich. What we are talking about today has a disproportionate positive impact on
working people in our community.

The Honorable Edward H. McDowell, Jr. asked how the non-owner occupied homes compare in
each school district.

Ms. Rebecca Gunnlaugsson, Ph.D., President of Acuitas Economics agreed to look into that.

COMMITTEE DISCUSSION

5. Recommendation of a Final Draft Plan - Ms. Rebecca Gunnlaugsson, Ph.D., President of
 Acuitas Economics

The Honorable Joe E. Taylor, Jr., Chairman said the people of Richland County and the City of
Columbia are indebted to you for your service. We see what our final draft is. Are you
comfortable with this as the draft to take to the community and begin the discussions?

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Mr. James Bennett, First Citizens Bank said yes.

Mr. Billy Cantey, Cantey & Co. said absolutely.

Mr. Steve Taylor, Wolfe & Taylor Realtors said I absolutely agree.

The Honorable Edward H. McDowell, Jr. said yes. There is still concern about diving deeper into
the substance of most of these issues. It paves the way for continued conversation.

6. Final Meeting Schedule - The Honorable Joe E. Taylor, Chair

The Honorable Joe E. Taylor, Jr., Chairman said we will begin discussions in the community
over the course of the next two to three months. We will come together during early September
to finalize and create an implementation committee that the Mayor will put together. We will
invite email feedback, suggestions and thoughts over the summer.

ADJOURNMENT

The meeting was adjourned at 3:29 p.m.

Respectfully submitted:


Erika D. Moore Hammond, CMC
City Clerk




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