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Impact fees focus of debate
Taxes could ease growth, some say
By Aaron Gould Sheinin
Knight Ridder
Changing state law to make it easier for local governments to charge fees to new developments is an idea that could gain traction with lawmakers this year.
In his State of the State address last week, Gov. Mark Sanford said he was open to the idea of giving local governments more flexibility in levying impact fees.
In Horry and Georgetown counties, legislators and other elected officials were pleased to hear it.
Horry County Council Chairwoman Liz Gilland, however, does not think it is enough.
"Unfortunately, I don't have any confidence that Sanford's idea will change legislation," Gilland said. "I think a lot of council [members] have given up on getting that legislation."
The county was defeated on impact fees by 58 percent of voters during the November 2004 general election.
"The current law, we cannot use it," County Councilman Mark Lazarus said. "We've got to have some flexibility. It needs to be more reasonable and allow impact fees to be used for more county services."
Carol Winans, a member of the Georgetown County League of Women Voters, agrees.
"Taxpayers here now shouldn't have to pay for that new growth," she said.
Real estate and homebuilder groups, on the other hand, disagree.
"We do believe new development pays for itself," said Berkley White, president of the Horry-Georgetown Home Builders Association. "We would like to see current laws imposed. People paying the fees are the ones that should directly benefit by it."
The use of impact fees - which help pay for wider roads, new schools, and expanded water and sewer service required by growth - has been limited in South Carolina.
The state's current impact fee law is complex and produces little revenue, critics say.
Some key lawmakers are lukewarm to changing the law, seeing a change as essentially authorizing a new tax.
Other legislators from high-growth areas, frustrated with growth-choked roads and schools, are open to new revenue sources.
"They need to be considered," said Rep. Ted Pitts, R-Lexington. "In Lexington County, we've seen the very problems [Sanford] is talking about. We're dealing with this tremendous growth."
In his speech, Sanford said lawmakers should "be open to giving more tools to local governments as one option in solving this problem."
The problem is finding ways for communities to pay the cost of growth without taxing longtime residents out of their homes.
Sanford said growth doesn't pay for itself despite the additional taxes that come from new homes, for example. That means when people move here from out of state, "the people who have been living in this state for years or generations have to pay for the new school for the new folks' moving into town."
State law already allows impact fees, which can be used for some local projects related to the growth. But local governments say the law is costly and difficult to use.
For example, Lexington County considered using impact fees in 2005 to pay for two new fire stations and four new libraries.
However, a study by the county's planning department found state law would have allowed Lexington to collect a total of only $1.25 million over 20 years, about $62,000 a year.
Because state law requires annual reporting and analyses of the fees collected and spent plus new administrative costs, the county decided the added revenue would not be worth the effort.
Others say impact fees are not needed.
Sanford's premise that growth doesn't pay for itself is wrong, said John Cone, executive director of the Home Builders Association of South Carolina.
Cone said his group has commissioned a study that evaluated six developments in three parts of the state: Greenville, Lexington and Charleston.
It examined the costs associated with people who move to those areas and subtracted the tax revenue generated by the newcomers.
Cone said the study, which will be released this week, found "the people who moved in there contributed more than enough to pay for all the infrastructure that was required."
Others, however, think counties should have the option of charging the fees.
"Impact fees allow additional requirements for capital expenditures be borne at least in part by those causing the need for new capital expenditures," said Robert Croom, assistant director of the S.C. Association of Counties.
What changes could be made this session are not clear. Sanford did not offer specific plans.
Croom said impact fees should be allowed to pay for new schools, something existing law does not allow.
Sen. Scott Richardson, R-
Beaufort, and Sen. Bill Mescher, R-Berkeley -
who represent high-growth areas of the state - agree.
Mescher said that in his native Chicago, "a developer who builds, say, a 500-house subdivision, they also build a new school.
"Then the people living in the area pay for their school. It works."
Some lawmakers think the fees are a bad idea.
"It can force new homeowners to come up with more money at closing and makes it tougher for people to get into their own homes," said Rep. Dan Cooper, R-Anderson, chairman of the state House Ways and Means Committee.
Robert Croom | Assistant director of the S.C. Association of Counties
The Sun News staff writer Janelle Frost contributed to this report.
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