September 19, 2021

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Beauty Made Perfect

Horry County SC approves impact fee as rapid growth continues

The Horry County Council issued a final and historic vote Tuesday to implement impact fees for the county, a charge on new homes, businesses and other construction — a policy seen by many as long-needed to address the rapid growth of the Independent Republic.

After years of discussing and debating impact fees, County Council members pushed legislation across the finish line Tuesday in what was ultimately a unanimous 11-0 vote. Council member Al Allen was not present at the meeting and didn’t vote.

Despite the county doubling in population from 2000 to the present, the county never had instituted a charge on newcomers — or the new homes, businesses and condos they occupy — before Tuesday.

County leaders say the impact fees will help pay for new infrastructure like fire stations and waste collection centers, but cautioned at the same time that the new fees aren’t an easy solution to ease the county’s growing pains.

But some caution that the impact fees can pay for capital projects like building a new fire station, but can’t pay to hire firefighters to work there. That means the county has to plan carefully how it spends the money once it collects the fee, both attorneys and some council members have said.

Still, the enactment of impact fees came with a significant revision that will determine how large the fees are, and what projects the county can fund with the new revenue. After voting twice to approve the largest-possible impact fees for all possible spending categories — from roads to parks to police — a majority of council members negotiated a deal in recent weeks to reduce the fees and what they can be spent on, a move born out of concerns that too-high fees could hamper small businesses and the regional economy.

Council members Bill Howard, Dennis DiSabato, Gary Loftus, Cam Crawford, Orton Bellamy, Johnny Vaught, Mark Causey and Danny Hardee all voted to amend the legislation to enact lower fees. Council members Harold Worley, Tyler Servant and Council Chairman Johnny Gardner all voted against that amendment, instead favoring the higher fees.

Small businesses opening in the Socastee area, Crawford said Tuesday, are “the backbone” of his district in the unincorporated area of Horry County, adding that the 2018 voter referendum calling for impact fees didn’t give county leaders a blank slate to enact an unreasonable policy.

“I don’t think that was a permission slip to weed out an entire sector of the economy,” Crawford said. “That would really diminish new small businesses in my district so that’s my position on it.”

Details of the impact fee deal and debate

As enacted, the following will take effect Oct. 15. Horry County will charge impact fees on all new building with the money going to three categories of projects: public safety, waste management and parks and recreation.

The total fees will break down as follows:

  • The fee on a new single family home would total $1,236;
  • The fee on a new multi-family home, like an apartment building, would total $1,031;
  • The fee per 1,000 square feet of new retail space would total $1,797;
  • The fee per 1,000 square feet of new office space would total $702;
  • The fee per 1,000 square feet of new industrial space would total $285;
  • The fee per 1,000 square feet of new institutional space, like a college, would total $1,407 and;
  • The fee per new hotel or motel room would total $738.

Over a 10-year period Horry County could collect $54.2 million in new revenue. If the county had enacted the fullest possible impact fees, it could have collected $208.8 million in new revenue over a 10-year period.

County leaders initially proposed charging up to $4,800 for a new single family home and $7,400 for 1,000 square feet of new retail space. Those fees were higher because they would have allowed the county to spend the money in more areas, namely on new roads.

County leaders also eschewed adding additional impact fees for stormwater projects on Tuesday, which would have driven the fee on a new single family home up to more than $10,000, depending on which water shed the home was built in.

Under the deal county leaders approved, Horry County won’t charge impact fees for road-building or stormwater or flooding projects, much to the disappointment of some council members, residents and those who are advocates of managing growth.

“It’s a big disappointment. They should have done the full impact fees,” said Kathy Jellison, the president of the Coalition for Responsible Development in Horry County group, which advocates for smarter development. “We got something but it wasn’t enough.”

Worley, the county council representative for the North Myrtle Beach area, also decried the lower impact fees the council passed.

“We need to pass this impact fee on both transportation and stormwater, because they’re tied together,” Worley said at Tuesday’s meeting. “There’s no sense in us painting ourselves into a corner when we have the opportunity here.”

Worley warned that if the council didn’t enact full impact fees, voters would eventually demand a broad moratorium of new building until the county could catch up on infrastructure needs, a situation he hoped to avoid.

“At some point in time, the voters are going to take control, and it’s going to be taken from who? Big developers. I don’t want to see them stop (building), I want them to continue, orderly,” Worley said.

Still, with the fees collected by the county, it will be to build new police, fire and EMS stations, new waste collection convenience centers and new boat docks along the waterways. State law limits the types of projects impact fees can be spent on and when the money can be spent.

That means that the impact fees Horry County will collect will have to go towards specified projects in the area where the fee was collected within a three-year period. For example, impact fees collected from the building of a new subdivision along Highway 90 could help build a fire station in that area, but that money would have to spent in short order after the county grants a building permit to the developer.

Also on Tuesday, councilors added stipulations to the impact fees that developers could apply for offsets of the fees if they agree to build other infrastructure connected to a project, or contribute to another county project. For example, a developer building a new subdivision of houses who adds turn lanes at neighborhood access points along a main road may pay a lower impact fee.

It’s a similar case for developers who contribute to a county-funded project elsewhere in the unincorporated area.

Councilors also added a caveat that impact fees can be reduced or waived if a developer is building affordable housing. Vaught also asked county administrators to set up an oversight body to ensure the impact fee money is spent properly.

Howard, who represents part of the Myrtle Beach area, said he supported the county starting out with lower impact fees and adding transportation and stormwater fees down the line.

“Let’s crawl before we walk, before we run, he said. “Let’s get the county acclimated.”

A historic vote

Tuesday’s vote was a long time coming for Horry County, which has discussed implementing impact fees for about 20 years.

“We don’t need to kick this can any further, we’ve kicked it since 1999,” Gardner, the Council Chairman, said as members debated Tuesday night.

As the county began adding new residents rapidly in the 1990s and into the 21st century, leaders proposed charging builders for all the new homes, hotels and businesses they were constructing, but never did, opting instead to use sales and property taxes to pay for infrastructure and other needs associated with the growth.

Between 1980 and 1990, Horry County added about 44,000 new residents, a little more than 50,000 new residents the next decade and more than 156,000 between 2000 and the present, according to data from the U.S. Census Bureau.

The purpose of impact fees, according to the South Carolina Supreme Court in 1999, is to “fairly distribute the capital improvement costs of growth and development among those who are generating the need for the improvements.” The state made impact fees legal in 1999 and a number of cities and counties around the state now use them, including Charleston, Rock Hill, Georgetown County and Beaufort County.

Liz Gilland, a former chair of the county council, said in June that the county should have enacted impact fees to respond to growth when she was on the council years ago.

Council members should have asked: “When we’re approving a 200-home development…how can we make it better?” Gilland said.

Bringing impact fees to a vote

By 2018, debates over impact fees had reached a voter referendum, and nearly three-quarters of Horry County voters that November told county leaders to adopt impact fees. That led to an in-depth study of how to implement the fees, which was presented to the public in December 2019.

Council members then delayed a decision on the fees in 2020 due to the pandemic, but as the county emerged from the pandemic and addressed its budget, county leaders again took up the prospect of passing the measure, with Gardner emerging as a key proponent of getting it passed alongside the county’s 2021-2022 budget.

On Tuesday, Gardner ushered impact fees to approval, despite being one of the members criticizing the reduction in the fees.

“We’ve had three readings…We’ve gutted this thing from $4,800 (for a single-family home) down to nothing. I think we’re ready to go,” he said.

As the council debated passing the measure, members heard from developers that enacting the fees could slow the regional economy, including a slowdown of people moving to the Grand Strand.

“Adding additional impact fees to these current costs could diminish the demand for new homes in our area,” said Jason Repak in June in testimony before the council. Repak is the president of Hudson Homes and the head of the Horry Georgetown Home Builders Association. “Doing so would be extremely detrimental to the long-term revenue of this county,” Repak said.

Those arguments resonated with some council members — including Crawford and Vaught — who then sought to amend the full impact fees to be less of a burden on developers and small businesses. Vaught said earlier this week that he and other council members met with developers and others in the building and real estate industry to hear their concerns about the impact fee proposal, and took those concerns into consideration.

“We are in better budget shape than we have been in a long time,” Vaught said earlier this week. “The (impact fee) study went for the maximum possible fees that we can support legally and that’s not always the right way to go.”

Vaught argued that if the county wasn’t able to pass a fourth iteration of its sales-tax-for-road-building program, RIDE 4, the council could return to impact fees, add the transportation spending portion of the fee, and still be able to build needed infrastructure.

But on Tuesday, as the council members neared a vote, Gardner and Worley warned against the council doing too little after waiting for so long to implement the fees.

However, following Tuesday’s meeting, and the passage of the impact fees, Gardner sounded an elated tone, noting that the council had passed a historic piece of legislation. He added that though he would have preferred the full impact fees to pass, the council could always return to the matter and add to the fees.

“I think we’re going to revisit this entire scheme at least quarterly, this is all new to us…but I’m glad it passed the way it did.” Gardner told reporters. “To be perfectly honest with you I’m glad we have an impact fee now. It’s not perfect but we have one…if it came down to not having one or having a perfect one tonight, I’ll take one and we’ll work towards it. Progress not perfection.”

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J. Dale Shoemaker covers Horry County government with a focus on government transparency, data and how the county government serves residents. A 2016 graduate of the University of Pittsburgh, he previously covered Pittsburgh city government for the nonprofit news outlet PublicSource and worked on the Data & Investigations team at nj.com in New Jersey. A recipient of several local and statewide awards, both the Press Club of Western Pennsylvania and the Society of Professional Journalists, Keystone State chapter, recognized him in 2019 for his investigation into a problematic Pittsburgh Police technology contractor, a series that lead the Pittsburgh City Council to enact a new transparency law for city contracting. You can share tips with Dale at [email protected]