Optimists right on Bull Street

By Temple Ligon
July 12, 2013

In the past two weeks Columbia City Council voted its approval of the 20-year agreement with Greenville developer Bob Hughes over his purchase and build-out of the Bull Street property.

The real seller, the state’s mental health department, collects its $15 million sale price from Hughes over a seven-year payout schedule.

The city doesn’t collect. The city is not selling and neither is the city buying. The city is participating for something 20 years later which will pay annually $20 million in new property taxes, contribute $1.2 billion to the area’s annual gross domestic product, and generate 11,000 new jobs, as determined by economist Harry Miley.

The city pays out roughly $70 million over the 20 years, beginning with a four-phase schedule for infrastructure improvements worth about $31.25 million: Phase 1, $5,250,000; Phase 2, $7,965,842; Phase 3, $2,179,342; Phase 4, $15,840,816.

The city is committed to building two parking garages at 800 spaces each in response to expected investment and construction by Hughes. The city estimates about $20 million for the two, which is a little under-priced compared with recent garage construction costs.

There’s another $20 million the city suggests it can contribute to the construction of a minor league baseball stadium. USC’s new baseball stadium was completed for $36 million, and another $5 million in improvements is under way.

All told, then, the city is into this 20-year deal for about $70 million. It appears Hughes will spend a bit more than $80 million to see the first $31.25 million from the city. To see the garages and the baseball stadium bring the city’s total to $70 million, Hughes must put $5 private money into play for every $1 the city spends in Phase 4’s $15,840,816, according to The State.

Also, as part of the requirements for the first garage built by the city, Hughes will have to meet one of three goals: (1) build at least 120,000 square feet of taxable property, (2) rehabilitate the Babcock Building, or (3) build the minor league baseball stadium.  To see the second garage built by the city, Hughes must have bought at least half of the site’s 181 acres or must have produced $75 million in private investment.

So far, Hughes has announced intentions to build something like 3 million square feet of rental housing, 550,000 square feet of owner-occupied homes, 250,000 square feet of townhouses – at one point all identified as 3,558 residential units; 580,000 square feet of retail, 500,000 square feet of office space, 300,000 square feet of medical office space, 200,000 square feet in the historic Babcock Building, and a 70-room hotel. The Andres Duany urban design plan of 2005 has been scrapped, albeit a $390,000 fee paid half by the city and half by the state.

The Duany plan included 17 of the site’s 55 buildings as historically significant and restoration worthy.

Besides restoring the Babcock Building, Hughes has targeted four other buildings for historic preservation: the former dining halls for men and women, the Williams Building, and the Chapel of Hope.

Among the little benefits to the city tied to the deal is the contribution of land by Hughes for a church and for a police substation.

Should Hughes bring an elementary school to the site, Richland 1 holds the right to run it.

So, where is all this money coming from the city? Having recovered from the Coble era, a time when no one knew if the city had any money or not, while few appeared to care, Mayor Benjamin is proud to cite Columbia’s fourth year in a row in the black. As an isolated item, however, the parking garage fund was in a deficit as of this past May.

A possible access to funds was illustrated by the city’s CFO, Jeff Palen:

• $30.2 million, tax-increment financing bond

• $28 million, meal tax bond for baseball stadium

• $24 million, general obligations bonds

Actually, Palen put together the money hunt resulting with a cushion of $4.9 million overage.

Both Mayor Benjamin and former Mayor Coble tout this project as Columbia’s BMW. Hughes, on the other hand, knows better. He’s from Greenville.

BMW is a major manufacturer that pays high wages for skilled labor. BMW exports worldwide, selling cars in just about every country on the globe. The BMW people live and spend and pay taxes in the Greenville area, but the world pays their salaries. That’s wealth creation.

Greater Greenville last year exported goods around the world worth more than $12 billion, and Spartanburg was good for another $1 billion.

Columbia exported less than $2 billion.

If Mr. and Mrs. Newcomer arrive in Columbia looking for a home, they can consider Bull Street along with all the other areas around town. If they don’t buy in Bull Street, they’ll no doubt buy somewhere else in town, or maybe just out of town in greater Columbia. Wherever they locate, greater Columbia sells another house, but the decision to move to Columbia is not made due to housing supply or quality.

If the demand for houses rises, depend on the homebuilders and the developers to respond.

Mr. and Mrs. Columbia, existing residents, can easily choose to sell and move into Bull Street. Someone buys their old house, while they pick out a new house or have one built, either way adding a little acceleration to the local money supply. Mr. and Mrs. Newcomer and Mr. and Mrs. Columbia, typically, are not part of the manufacturing and export few in town, so they likely sell their time and their goods to each other, not exactly wealth creation. The money they spend comes from other Columbians.

If BMW located in Columbia instead of Greenville and if Columbia had more than $13 billion in exports instead of $2 billion, neither the current nor the former mayor would ever confuse a housing development with a world-class manufacturer.

Where, exactly, are Bull Street’s new homeowners and office tenants today? Where are they coming from? Where is the Hughes marketing plan?

Still, the future looks pretty good. The Urban Land Institute recently released its finding that greater Columbia can expect about 450,000 new people over the next three decades, an additional 50%.

Bull Street should do all right.

 

Temple Ligon: [email protected]

 

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