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Initial
Impact Fee Task Force Meeting
-- George Edwards
Impact Fee Task Force meetings are open to the public and held in the
second floor Horry County Council conference room of the Administration
Building of the Horry County Government and Justice Center at 1301 Second
Avenue -- directly behind the old courthouse.
This is an unofficial report on the initial December 1, 2003 meeting.
Pat Hartley, Clerk to the Council, will prepare official minutes that will
be available after they are approved at the next meeting at 3 p.m. on
January 12, 2004.
If you want to view a particular
portion of this meeting, click the appropriate selection in the table below:
Initial Positions of
Task Force Members
Pro
- Harold Worley (but unclear if would favor under current state law)
- League of Cities ("Shep" Guyton),
- School Board (Will Garland),
- Coastal Carolina University (Ronald Ingles),
- Horry-Georgetown Technical College (Neyle Wilson),
- "Print Media" (Debbie Harwell)
= 6
- plus John Boyd (County Council Ex Officio Member)
= 7
Con
- Homebuilders Association (Harry Dill),
- Board of Realtors (Larry Bratcher, local) -- also at the table, a
South Carolina Association of Realtors representative, but
according to Mr.Worley, he will not have a vote),
- Chamber of Commerce (Robert "Shep" Guyton)
= 3
- plus Terry Cooper, (County Council Ex Officio Member)
- James Frazier, (County Council Ex Officio Member)
- Paul Prince (County Council Ex Officio Member)
- Mark Lazarus (County Council Ex Officio Member),
not under current state law and
- Kevin Hardee, (County Council Ex Officio Member),
although he would "support some."
= 8
??
- "Real Estate Developer" (Doug Wendel -- not present, but represented
by Planning Commission vice chairman Tony Cox "taking notes")
- "Television Media" (Billie Huggins) was not present. I understand that
Mr. Huggins was a key Cooper supporter in a previous campaign (Cooper
voted against the earlier impact fee proposal)
- Thad Viers Horry County Legislative Delegation) recognized that he
must run for re-election every two years and will support what the people
want on impact fees.
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Attorney
Overview of Impact Fee Situation and Comments
County Council Attorney (John Weaver) was requested provided a cursory
run-down of the current impact fee statute. He said the task force needed to
be careful of the effect of impact fees on affordable housing, and that
unexpended impact fees have to be refunded 3 years after they are imposed.
Strictly speaking, the statute specifically exempts* impact fees for
affordable housing (as defined in statute section 6-1-920 -- affordable to
families with less than 80% of the median income in a service area ) in
section 6-1-970 7a and says that they have to be refunded within 3 years
after they are scheduled to be expended (section 6-1-1920(1)).
*Janet Carter, head
of the Horry County Planning Department and legal counsel to the
Infrastructure and Regulations committee points out that state law makes the
exemption optional to Horry County unless a benefactor such as the state or
nation pays for the affordable housing’s impact fees. Horry County can
choose to be such a benefactor by effectively paying them or a portion of
them out of its general fund, thereby making the affordable housing
development exempt for all or that portion that Horry County pays. However,
Horry County can not impose impact fees on someone else to pay the
affordable housing development's proportionate share.
Click
here for quotes from selected portions of
the "South Carolina Development Impact Fee Act." If you wish or prefer to
view the entire act click
here and
scroll down to section 6-1-910 of the statute.
As I recall, Mr. Weaver primarily addressed administrative issues. One
other thing he said, of which I was not aware and so caught my attention,
was that impact fees could be imposed as late as a closing on the sale of a
particular property.
The key issues in my mind are that impact fees can not be imposed for
newly required school facilities because of population growth under the
current state law, or for anything but capital improvements over $100,000 --
therefore, not for newly required police cars or ambulances. As to a
decision on whether to impose impact fees based on the current law, any
burdensome administrative costs, although not necessarily a negligible
concern, in my mind, should be netted with respect to the additional revenue
that impact fees could remove from the backs of current homeowners.
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Task Force Chairman Selection and Round Robin Position Statements and
Comments
After Mr. Worley was nominated and elected chairman, each appointed
participant gave their positions with regard to impact fees.
Among the pros, Chairman Worley is an unknown as to whether he would
support impact fees under the current law -- although strongly and
repeatedly making the point that it was either impact fees or doubled
property taxes within 10 years. Mr. Dawsey of the League of Cities and Mr.
Boyd are strong supporters of impact fees, period. Those in education
support them, and, with the League of Cities, agreed to see if they could
lend financial support in hiring Tischler for his expertise on what has been
done elsewhere that might be used to better the current South Carolina
statute -- although Mr. Garland said he would do so only if the school
district attorney approved. Debbie Harwell, listed in the agenda as
representing the print media (although the Myrtle Beach Herald has been sold
-- she should be valuable as she is a Columbia lobbyist) said that York
county (as I understood it, one of the four SC counties that have
implemented impact fees under the current law) is doing "pretty good" with
them.
None of the cons indicated that they would support impact fees in
accordance with the current law with the possible exception of Mr. Hardee,
among the ex officio County Council participants, who said he would support
"some impact fees," and I do not get anything clearly legible in my notes
regarding Mr. Cooper as to any possible support he might give under current
law (he voted against the nominal $750 for single family homes proposed to
an earlier council). Among the other ex officio County Council participants,
Prince and Frazier expressed no support, although, they, Frazier probably
the more likely of the two, might go for very limited impact fees under the
current law; they both adamantly complained about development costs already
-- neither recognizing that current state law allows
the county to exempt impact fees on affordable housing.
Harry Dill of the Home Builders Association said he was "totally against"
impact fees, saying there were several studies that showed that growth paid
for itself, he bragged that his organization was largely responsible for the
state law intentionally being drawn to make the imposition of impact fees
difficult, and expressed his opinion that if they had hired Mr. Tischler,
there would have been a different answer on his determination of appropriate
impact fees. (Mr. Tischler's earlier study showed that the taxes on most
classes of development in Horry County did not pay for the infrastructure
required to support them. The book Better not Bigger by Eben Fodor,
copyrighted in 1999, provides information on numerous studies and statistics
showing that population growth is not an economic benefit for an area,
excepting certain segments, notably the construction industry.)
Larry Bratcher of the Board of Realtors, opposed impact fees saying that
the five year rollback when a usage changed was already effectively an
impact fee* Sitting next to Mr. Bratcher, a representative of the South
Carolina Association of Realtors (not listed on the agenda as a committee
member and so, Mr. Worley told me later, would not get a separate vote)
echoed Mr. Bratcher's sentiments.
Mr. Lazarus, ex officio County Council participant, said he could not
support impact fees as written in South Carolina law today; he said he was
against anything that had to be paid up front (Mr. Weaver had said that
impact fees could be required to paid at the time of building permit or on a
property closing -- not addressing the question of how development for one's
own use or rental to others would be handled), He said he liked the idea of
fees based on a percentage of property value with a cap (unfortunately,
revenue based on a percentage of a property's value is, at least arguably,
legally considered ad valorem taxation rather than a fee), and he thought
that the task force should be investigating a comprehensive tax plan not
just impact fees.
Mr. Boyd, the remaining ex officio County Council participant, observed
that, although an increasing tax base might be sufficient to pay for the
cost of the increased services needed because of growth, it would not pay
for the needed increased infrastructure. He said Horry County was apt to
grow from around 190,000 to 290,000 by 2010. There was no way that the
increased tax base would pay for the newly required infrastructure without
significant tax increases or drastic reductions in service.
After the round-robin, Mr. Worley offered Mr. Smith -- who was observing
-- the opportunity to become co-chairman of the impact fee task force. Mr.
Smith said that he was already chairman of the ad hoc impact fee committee.
He would support the task force efforts, the results of which he understood
would be submitted to the ad hoc committee. But he did not feel it
appropriate for him to also co-chair the task force.
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Other Task Force Comments
The remaining task force comments were largely made by ex officio County
Council participants and Mr. Weaver, County Council Attorney:
Mr. Worley said the votes were not on the council to pass an impact fee
ordinance under the current law. He inquired of Mr. Weaver as to the cost
of hiring Mr. Tischler as a consultant again.
Mr. Weaver repeated an earlier estimate of $40,000 to update Tischler's
previous recommendations, but had no idea what the additional cost would be
as to advising for changes in state law. He would have to inquire from Mr.
Tischler.
Mr. Worley said that it sounded as if $50,000 was a reasonable ball park
figure. He repeated: if the committee failed in its efforts, the only
alternative was large increases in property taxes.
If I understood him correctly, Mr. Garland said that only ten school
districts in the state imposed less taxes than Horry County, despite our
already explosive growth.
Mr. Worley suggested that it would encourage the council if other
entities chipped in in hiring Mr. Tischler. Mr. Ingles of Coastal Carolina
University said he would try to obtain some money, as did others
representing educational institutions and the League of Cities.
Mr. Prince questioned whether it was possible to change the existing law
at all.
Mr. Worley said the state statute has to be amended, otherwise the
"fiscal train is fixing to wreck." He felt a favorable referendum would put
a lot of pressure on the state legislature to make changes.
Mr. Prince noted the failure of the citizens to vote in a local option
sales tax in two tries.
Mr. Lazarus noted that Tischler and Associates did a lot more than advise
on impact fees and gave a number of examples.
Mr. Hardee asked Mr. Weaver to have Mr. Tischler price his services on
advising specifically on state law changes..
Mr. Viers said that Horry County was leading the charge as to taxation
changes, and alerted everyone to a bill that would require properties to be
reassessed immediately rather than wait till the next tax year.
Mr. Lazarus said our local senator opposes this as he doesn't think it is
legal.
Mr. Viers said he liked the referendum idea.
Mr. Prince made some objection.
Mr. Worley said we need help with finances.
Mr. Lazarus suggested that Tischler be called in to listen to the various
stands within the task force before he is asked to estimate his overall
counseling services.
Mr. Weaver said he would get in touch with Mr. Tischler on that approach.
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Subsequent Meeting Dates, Times and Closing Comments by the Chairman
After some discussion, including that, once the legislature was back in
session, Mr. Viers could only be available on Mondays and Fridays -- it had
earlier been suggested that he could serve as a useful go-between with
members of the legislature as the task force progressed -- the second
Mondays of every month were set for future meeting times in the county
council conference room. The next meeting would be at 3 p.m. on January 12,
2004.
Mr. Prince asked why we were going through with this.
Mr. Worley replied again that it was either impact fees or large property
tax increases. He named Pat Hartley, clerk of the county council, as the
central contact point for communication.
The meeting then adjourned.
Pat Hartley, Clerk to the Council, will prepare official minutes that
will be available after they are approved in successive meetings. The above
reflects my personal understanding of the proceedings.
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Note on Roll Back Taxes
and Comments
*Roll back taxes are the payback of the difference between relief given
the property owner from paying the usual fair market value taxes minus the
last five years of what may have been decades of considerably reduced
property taxes on farm or timber land.
Telephone conversations with Rendell Mincey, Horry County Assessor, were
the primary sources of the following more detailed information on the topic:
Other than millage, the state sets the tax rates and assesses
manufacturing and industrial uses. Tax rates are based on usage not zoning.
Section 12-43-220 of the state code goes into the five year rollback
rules --
- They apply only to agricultural and timberland property that has had
a special assessment. This could range from as low as $8 per acre
(e.g. marshland) to $378 per acre on property that could otherwise be
assessed at, say, $24,000 per acre without the special assessment
(agricultural property is normally taxed at 4% of its value unless owned
by 10 or more stockholders, in which case it would be taxed at 6%).
- If such a property is converted to another use, the owner will have to
pay roll back taxes -- the taxes between those actually paid to what would
otherwise have been imposed over the previous five years.
- Roll back taxes are imposed on whomever owns the property at the end
of the year that bull-dozing starts.
- The taxes are the same regardless of the class of the owner then --
homeowner or otherwise.
- A rough average per acre per year for the western part of the county
is $20, for the eastern part, $1200 (for five years, that would be $6,000
divided by 4 = $1500 for a quarter acre, say residential, lot. [Without
the special assessment the land would be valued for tax purposes at the
fair market value of raw land in a particular area.])
- If someone owned, say 40 acres, in the country on property with the
special assessment, roll back taxes would be imposed only on that part
used for residential purposes -- typically an acre for building one home
-- unless the owner had a mammoth yard.
- Open spaces, in general, on property subject to roll back taxes are
included in the roll back -- for instance, the open green spaces at
Broadway at the beach.
- There is a section of the code that says if 50% of a property
qualifies for roll back, the utilized portion is rolled back.
The special assessment helps preclude farmlands from being forcibly
supplanted by development. If state law were changed to not be so
restrictive as to disallow impact fees for new or expanded school
construction or newly required police cars, ambulances or other capital
assets below $100,000, removing the rollback provision could be an option.
Now, it is just a repayment of forgiven taxes that incidentally is
one small step towards paying for the increased infrastructure that
population growth requires, and current law does not adequately address in
permitted impact fees.
In a nutshell, a special assessment may have provided relief from being
taxed on the fair market value of a property for decades, and the roll back
provision will pay the county a portion of what it would otherwise
have received. This is not the same as an impact fee.
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