By Paul Gable
Horry County Council is one step closer to imposing impact fees on new construction in the unincorporated areas of the county after unanimously passing second reading of an ordinance establishing those fees Tuesday night.
This is at least the fourth time in the past two decades that impact fees have been discussed by council. In the past, the development lobby has been successful in shutting down impact fees discussions before the issue got too far along in the legislative process.
Circumstances are different this time. Construction, especially of single-family homes, is red hot in the county and gives no signs of slowing down in the immediate future. Similar homes in similar type developments that were being advertised at mid-100s to high-100s last year are now being advertised in the mid-200s. That is approximately $250,000 for the average single-family home being constructed presently in a subdivision.
Some of that increase is due to the cost of building materials which have gone up by as much as four times in the case of lumber over the last 12 months. But profits for the developers have also been rising as the demand for new housing in the county continues to outpace the supply.
During past discussions, developers have been successful with the argument that impact fees would significantly increase the cost of a new home, driving down demand thereby causing high unemployment among the construction industry workers.
That argument does not hold water at this time even though it is being tried again and appears to have a sympathetic ear from a few council members.
Council member Dennis DiSabato attempted unsuccessfully to delay second reading of the ordinance by calling for a new committee to study the issue further. Council member Harold Worley, the most vocal supporter of impact fees during the discussion, said a vote to delay was a “kill pill” and the time had come to vote the ordinance up or down.
Council member Cam Crawford was more vocal and animated during the impact fee discussion than he has been in total in all the other council meetings and discussions over his nearly six years on council. Crawford’s voice and facial expressions clearly demonstrated his distaste for impact fees (or at least the distaste of those who have his ear).
In the end, however, neither DiSabato nor Crawford nor any other member of council voted against the ordinance.
During discussion, Worley reminded council members that they are elected to represent the people and over 70% of the people voted to support impact fees in an advisory referendum two years ago. Worley called for an ‘up or down’ vote on the ordinance as presented and said any council member voting no could explain their opposition to impact fees to the voters at their next election cycle.
The ordinance as passed at second reading imposes the maximum allowable impact fee based on state law and county factors for different categories such as fire, police, transportation and parks and recreation.
As currently included in the ordinance, this gives an impact fee of $6,600 on a new single-family home. The final amount will be determined according to which categories of infrastructure council decides to include in the ordinance at third reading.
Third reading will also include public input which could bring lively comments again from the development industry. However, the argument is weaker this time as the county is facing the need for increased revenue to pay for the cost of development. Many studies have concluded that increases of more than one and one-half to two percent per year in new homes and permanent residents exceeds the ability of the new property taxes generated by this development to pay for increased county services. It is projected the rate of growth in Horry County this year was approximately five percent.
Impact fees will not solve the entire problem of finding revenue to pay for increased goods and services. The revenue from the fees must be used on capital improvements only. But the money raised by the fees can result in the cost of these improvements not needing to be funded from property tax revenue.
And Tuesday night also saw council pass third and final reading on a budget that imposes a 7.6 mils tax increase on property in the unincorporated areas of the county next year. The budget did not pass unanimously, however. Worley, Chairman Johnny Gardner and member Al Allen voted against the tax increase. Council member Tyler Servant was absent from the meeting.