Questions mount with the cost of a multimillion-dollar theater in Myrtle Beach | Opinion

One way to look at it is that building a theater in Myrtle Beach could inject visitors and capital into a dormant part of downtown to benefit a nearby college that’s known nationally for its arts programs as well as lots of locals and tourists in one of South Carolina’s most visited cities.

But questions are mounting about the exceedingly rare and numbingly complex way Myrtle Beach is financing the construction of the new 300-seat downtown theater. It’s hard to trust any plan that isn’t widely understood when taxpayer money is involved.

In all, the city bought three Main Street parcels for the theater redevelopment in 2018 for $1 million when the project was pegged at $5.6 million. A year and a half ago, the estimate had become $12 million. Now it’s $22.3 million.

The general idea is that Coastal Carolina University would pay for operating costs but not construction costs and lease the space while using it at least 150 nights a year, renting it out 100 nights a year and letting the city use it 30 days a year.

Here’s where it gets complicated: City officials set up a tangled web of taxable limited liability corporations to structure their deal, to provide it with at least $4.9 million in state and federal tax credits and to sublease the building back to Myrtle Beach, which of course doesn’t pay taxes.

You’d think the tax breaks would have been written differently if they were meant to benefit government agencies, but that’s beside the point. As reported by Elizabeth Brewer of the Myrtle Beach Sun News, the city isn’t just working with the nonprofit behind the deal, the city created the nonprofit. Its board of directors is mostly city employees — the city manager, the assistant city manager and the CFO — and it relies on “volunteer” city workers without any paid staff. The board members are advised by city lawyers and media requests are also handled by the city.

The city’s CFO told Brewer earlier this month that the nonprofit is too small to have to file the paperwork the federal government requires of nonprofits whose gross receipts exceed $50,000 a year. This, of course, makes it harder to track or trust the city’s funding representations, especially because nonprofits are subject to different sunshine laws and requirements than the more transparent rules that apply to governments in South Carolina.

Worth noting, the nonprofit, formed as the Myrtle Beach Downtown Redevelopment Corp. in 1998, has a history of spending over $50,000 a year on lobbying, when it had its own staff and got revenue from parking fees. From 2004-20014, it spent $40,000 to $120,000 annually.

No public official should be surprised that members of the public or members of the media that work to safeguard taxpayer money would wonder about the way Myrtle Beach has set up this deal to get tax breaks designed for the private sector. The deal will exceed $30 million with interest yet despite its complexities the nonprofit board approved it in moments, right after appointing two new members to join the five-member board at an eight-minute meeting in June.

That’s not a lot of time for new members to ask any questions like has a city ever done this before? And that’s unclear. City officials first said they didn’t think so. Now they refuse to say where.

Perhaps this rare, if not unprecedented, case of a public entity using tax credits in the state just means others didn’t think of it first. Perhaps everything is above board. Perhaps it’s merely a coincidence that the mayor owns property next to this planned redevelopment. Perhaps it’s a boon that staff time and city resources are being used to assist the nonprofit — and not a violation of the Fair Labor Standards Act. Perhaps it’s irrelevant that tax credits are being used to spur redevelopment of a property that will revert back to the city and be off the city’s tax rolls

For now, let’s leave debate over the finance structure to experts and investigators. Instead, let’s consider some other ways that Myrtle Beach might use this mechanism to address pressing issues like affordable housing, homelessness and food deserts.

Housing costs are going through the roof yet interest rates are poised to start coming down. Maybe the City Council could set up multiple LLCs to build more and cheaper housing.

Homelessness is also an intractable problem downtown. Maybe the City Council could arrange to create multiple LLCs to more cheaply build a shelter for all the people we see without homes or a center that offers services to get them off the streets and into support programs.

It’s also hard to stay healthy when grocery stores with local produce or low-cost options aren’t as commonplace as they could be. The high cost of groceries is on everyone’s mind with the spike in inflation. Maybe the council could redevelop rundown buildings into supermarkets, too.

If Myrtle Beach is really going to get innovative in the way it might spur redevelopment, and if city officials are certain the way they want to build this theater is legal, it should explore how to help even more residents. Or maybe there’s a limit to how much city officials can skirt the law.

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