Crunch Time for County Council and Impact Fees

By Paul Gable

Tuesday night Horry County Council will vote on third reading of an ordinance to impose impact fees on new construction in the unincorporated areas of the county.

Two and one-half years ago, nearly 75% of the voters said yes to an advisory referendum question asking whether county council should establish impact fees in the county.

Despite passing the first two readings unanimously, third reading passage of the ordinance is not assured.

On the table at third reading of the ordinance is imposition of an impact fee of approximately $6,600 for new single-family homes and varying impact fees for other types of new construction depending on the type.

Numerous sources have told me over the past two weeks the pressure on council members from the development lobby to water down the bill or kill it completely has been intense.

That lobby, composed of large landowners, builders and their associated sub-contractors and the real estate sales industry is pushing the message that impact fees will cause a significant slowdown in construction costing jobs and seriously impacting the local economy as well as making it more difficult in recruiting new businesses to the area.

The real reason for the opposition to impact fees is the builders do not want to pay $6.600 more out of their pockets each time they receive a new building permit. Developers will recover that money when the house is sold because the cost of impact fees will be passed on to the new homeowner, but they don’t want to float that sum for the few months between start of construction and sale in today’s market.

The impact fee will add approximately 2.5% to the cost of the average new home in Horry County. Prices on new homes have risen considerably more than that in the past year simply through market forces of supply and demand and sales of new homes have not slowed down because of the increasing price.

Impact fees in Horry County are not a new concept. Grand Strand Water and Sewer Authority has been collecting impact fees for a number of years. The statement in the county’s Imagine 2040 master plan explaining those fees is simple, “GSWSA collects water and wastewater capacity fees (impact fees) from new customers so that the current customer base does not bear the burden of new growth for both water and wastewater improvements.”

The development lobby used its same arguments when GSWSA imposed impact fees. Those arguments were totally false then and remain totally false now. One only has to drive around the county and view all the new construction projects in various stages of completion to see how false the argument is. GSWSA impact fees have not impacted new construction one iota.

Why shouldn’t new homeowners contribute immediately to the increased cost of county services – new roads, new stormwater infrastructure, new fire stations, new parks, libraries and recreation centers – required to support those homeowners moving to the county?

The same county council who will vote on impact fees Tuesday night hardly blinked when the members voted 8-3 to pass the largest tax increase in county history last month. Much of that increase in taxes can be tied to costs of increased demand for goods and services to the citizens caused by the county’s explosive growth in population.

What Tuesday’s vote really comes down to is who each county council member really represents. According to numerous sources I have spoken to over the past two weeks, there appears to be a three-group breakdown within council of where their respective loyalties lie.

Council Chairman Johnny Gardner and members Harold Worley and Al Allen are listening to the voters by supporting the full implementation of the recommendations of the TischlerBise Inc. study ($6,600 for single family homes) currently included in the ordinance.

Council members Dennis DiSabato and Cam Crawford are listening to the development lobby and would like to kill the entire ordinance.

Council members Johnny Vaught, Danny Hardee and Mark Causey are leaning toward the development lobby by supporting proposed amendments that would significantly reduce impact fees to as low at $1,700 from the $6,600 currently in the ordinance.

According to experts on impact fees, attempting to reduce the fees from the amounts recommended in the TischlerBise Inc. study could cause conflicts with the state enabling legislation for impact fees and effectively kill the ordinance.

How the four remaining members, Orton Bellamy, Tyler Servant, Gary Loftus and Bill Howard, break down will likely decide the issue either for the voters or for the developers. Bellamy, Servant, Howard and Vaught will all be up for re-election next year.

As a matter of reference, Gardner, Worley and Allen were the three votes against the historic tax increase. Servant was absent from the vote. Vaught, DiSabato, Crawford, Bellamy, Howard, Loftus, Hardee and Causey all voted to raise taxes.

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