Counties in South Carolina experiencing population growth are grappling with affordable housing development issues. To encourage the construction of more affordable housing units, several counties have started redirecting tax incentives that are traditionally employed to attract manufacturing businesses. Charleston County is currently considering this approach, following in the footsteps of Greenville, Spartanburg, and Richland counties, which have already adopted this strategy.

In essence, the concept revolves around granting property tax incentives to for-profit businesses when they incorporate housing options within their new developments that cater to individuals with moderate to low incomes. The underlying notion is that a prolonged reduction in property taxes would compensate for the potential decrease in rental or sale prices for select housing units.

Governments use varied tactics to encourage such efforts. Charleston employs zoning rules and incentives to facilitate the creation of “workforce housing” apartments, catering to employed individuals unable to afford market-rate rents. Greenville and Spartanburg counties utilize complex property tax exemptions by integrating proposed developments into “multi-county industrial parks” and offering a “special source revenue credit.”

Charleston County, facing a staggering 30% rent surge in two years, is exploring this option. Councilman Kylon Middleton views it as a positive step forward in addressing the crisis. In this approach, a “multi-county industrial park” is a designation for properties, uniting wealthier counties with their less affluent neighbors to share benefits.

Designations of multi-county industrial parks often come hand in hand with the special source revenue credit. This strategy involves reducing the property’s taxable value and replacing property tax bills with fixed fees. These fees can then be offset using a tax credit, effectively reducing the financial burden.

Corine Altenhein, Charleston County’s finance director, explains, “Imagine they pay $1.5 million in taxes, and we reimburse them with half a million dollars. The specifics are worked out on a case-by-case basis.”

Different counties adopt varying approaches to negotiate tax credit deals. Some engage in individual negotiations, while others establish conditional rules. For instance, Greenville utilizes a system of affordable housing tax credit rules. Their ordinance outlines differing levels of tax relief based on factors such as the percentage of affordable housing units, project costs, and the range of income levels served by these units.

However, not all members of the Charleston County Council share the same perspective on providing tax breaks for affordable housing. Councilman Larry Kobrovsky, a former chair of the county Republican Party, raises concerns about fairness and questions whether it’s their responsibility to guarantee profits for contractors and developers who benefit from tax breaks. He voted against Charleston County’s “Housing Our Future” plan in May, highlighting ongoing debates about funding for affordable housing initiatives.

Spartanburg County adopts a similar approach of negotiated case-by-case tax credits, mirroring Charleston’s dealings with manufacturers. While the approval of multi-county industrial park and special source revenue credit arrangements lies at the county level, Spartanburg City has been the primary driver of such arrangements within Spartanburg County.

In its simplest essence, this credit acts as a reduction in the overall tax payment, clarifies Alverson Cole, Spartanburg County administrator. Spartanburg City Manager Chris Story emphasizes the success of this strategy in fostering several affordable housing agreements. He believes it aligns well with the community’s current stage of development and addresses concerns about escalating rents due to increased demand.

With an eye on the future, Charleston County Council recently instructed its staff to explore potential tax incentives to support affordable housing development. This endeavor would entail establishing a fresh multi-county industrial park framework tailored to affordable housing goals.