Thursday, Jun. 19, 2008

Proposal forms to get Atlantic Beach on track

Sunday, May 18, 2008

ATLANTIC BEACH| To get back on its feet, Atlantic Beach will require outside help.

Despite its debt and repeated financial woes, the town should have the revenue to operate smoothly, its interim town manager has said. But Atlantic Beach leaders may lack the skills needed to properly develop the town - so it requires outside help to regain any credibility with investors, Town Manager Charles Williams told Horry County Council members last week.

The town needs to create special tax incentives to lure developers, Williams said, but it also needs the county to manage such a program.

"I think it would best be handled outside the town. I don't know any public institution willing to work with the town of Atlantic Beach," Williams told county officials. "I think we can muddle through and manage our finances. What they need to do is develop, and the skills to do that aren't there."

In his presentation and in separate interviews with The Sun News, Williams has proposed three broad strategies to encourage building: partnering with developers to use their projected property taxes to improve the city; piggybacking on a county loan to get an infusion of cash to jump-start city projects; and using existing federal tax credits to lure developers to the town in the first place.

All strategies are based on the notion that Atlantic Beach has more than enough revenue sources to run on its own - a fact supported by its tax collections, Williams said, but masked by years of mismanagement.

The bottom line

Town Council members have received no financial statements - no audits, not even monthly income and spending reports - since 2005, Williams said.

A private accounting firm is now working to "close the books" on each year, providing a starting and ending balance for the town, as well as a picture of income and spending during each year. Once those reports are complete, Williams said the town's finances can receive a full audit, a process that will take until the fall.

But based on his initial examination of the books, Williams has compiled estimates of the town's financial health and it should be good, he said. From beachfront property taxes, highwayside business licenses, festival fees and other sources, the town generates about $800,000 a year in tax money, he said - far more than most of the 15 other, larger towns that he has also stepped in to help in his role with the Municipal Association.

After years of misspending and questionable decisions, however, the town now owes more than $600,000 in unpaid bills and pending legal judgments. With lean enough spending and aggressive debt repayment, Williams said the town could pay off those debts by the year's end.

"They will be sound and they will meet their obligations, but they will have to make some very hard decisions going forward," Williams said.

In his two months as town manager, Williams noted, all current bills have been paid, and the town has begun paying toward its debt.

Tax financing

The bulk of Williams' presentation last week - with Town Councilwoman Retha Pierce sitting at his side - concentrated on a partnership with the county to create a tax-increment financing district, a mechanism used to improve infrastructure in advance of large developments.

Under the program, the increase in tax money any development project generates would directly pay for public improvements around the project - typically upgrades to roads, beautification and utilities.

Participation from both the county and the school district usually is required because their tax collections are affected.

Williams proposed going a step further by turning administration of the money generated over to the county instead of the town.

"The Horry County Council is Atlantic Beach's last and best hope," Williams said.

Though it is used for large projects across the country, tax-increment financing has been used sparingly along the Grand Strand, said Buddy Styers, senior project manager for The Market Common. His project and Broadway at the Beach used increment financing, Styers said.

It's a gamble for city governments, he noted, to put tax money into clearing the way for developments that could fall through. It could be exactly what Atlantic Beach needs, he said, if the town builds enough other safeguards.

"It's a win-win, but it's all predicated on a private developer putting money on the site," Styers said. "It's in the best interest of the whole county. If you enhance the value of Atlantic Beach, you enhance the value of the whole county."

The county's seal

Williams also asked the county to borrow money on the town's behalf.

When governments borrow money, they rarely offer collateral as one would in a commercial loan. Instead, they offer the good faith that tax collections will generate the repayment.

With its recent financial history, Atlantic Beach has little hope of getting that type of loan, Williams said.

If a bond-rating agency were to grade the town, "they would be all flunking grades," said county attorney John Weaver after the meeting.

Aging roads and sewers, along with dilapidated buildings, are obstacles to development. The town is days away from losing a state Commerce Department demolition grant because it's unable to pay the it's $21,000 share.

When the county borrows money next for its own improvements, Williams is asking that a portion for Atlantic Beach be included.

"What they want to do is tag along," Weaver said, comparing it to a parent co-signing for a child's first car loan.

Council members asked Williams to meet with county staff and work out some details. They also sounded him a note of encouragement.

"I feel we need to extend whatever help we can," said Horry County Chairwoman Liz Gilland. "The future is incredibly bright for Atlantic Beach.

"The smartest thing they could do is come to the county and ask us for our resources."

Tax credits

In addition to the town's own troubles, potential developers face an unfriendly economy.

Williams said he hopes to attract them with federal tax credits granted to developers who build in areas needing job creation.

The idea originated between local developer Loyd Daniel of Strand Capital and Mike Kelly, part of the Kelly family that owns property in Atlantic Beach.

Several years ago, as parts of Myrtle Beach were being designated redevelopment areas by the federal government, Strand Capital petitioned to have Atlantic Beach included, with the company as its agent.

The particular development being planned at the time fell through, but the tax credits remain, Daniel said. Now Strand Capital is eligible for them, or it can secure them from another, larger banking institution. Any developer could get involved in a partnership to use them, Daniel said.

The tax credits are lucrative, he said. For every $1 million a developer spends in Atlantic Beach, itis eligible for nearly $400,000 off its taxes, over the course of seven years. But is it enough to secure development, given the town's history and the economy?

"There's no doubt it could be a spoke in the wheel,'' Daniel said. "The politics have got to be right. The community has got to open itself up to development."

Contact ROBERT MORRIS at 626-0294.