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Should Fort Mill school fees be legal? A York court’s decision could reach statewide.

State and York Co. argue in court to uphold rules allowing fees in Fort Mill school district

South Carolina and York County attorneys argued to uphold rules allowing for impact fee charges in the Fort Mill school district. State and county home builder group attorneys argues the fees should be illegal.
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South Carolina and York County attorneys argued to uphold rules allowing for impact fee charges in the Fort Mill school district. State and county home builder group attorneys argues the fees should be illegal.

Arguments in a York courtroom on Tuesday could have an impact well beyond its walls, into the fastest-growing areas of South Carolina.

Attorneys for state and York County home builder associations argued there are fundamental flaws with the way South Carolina allows and municipalities enact the charging of impact fees.

Attorneys for the state of South Carolina and York County countered saying the general assembly set up reasonable and legal ways to go about it which, in the case at hand, were followed.

Judge Brian Gibbons didn’t rule on state and county motions to dismiss the case prompted by impact fee increases in the Fort Mill school district. He gave both sides 10 days to submit further documents.

“It’s an important case for the people of York County,” said plaintiff attorney Keith Babcock, representing the home builder groups. “It’s also an important case for the people of South Carolina.”

York County Council last year voted to increase fees on new residential construction in the Fort Mill school district. The fees had been $2,500 per residence since 1996. In July, Council voted to increase the fee to more than $18,000 per home and $12,000 per apartment. The school district will use the money to pay costs related to more student demand. The district isn’t spending the increased amount because of the litigation.

The school district isn’t alone.

The municipalities of Rock Hill, Fort Mill and Tega Cay all have impact fees. Lancaster and Chester counties performed studies or brought in experts to look at them. Lancaster County schools are in the early stages of discussing them. Attorneys on Tuesday also cited several cases from the lower part of the state where fast-growing communities enacted fees.

The plaintiffs in the Fort Mill case say not only does the fee change cause hardship, but the statewide rule allowing impact fees is too broad, vague, arbitrary and limitless as to violate due process.

Babcock said the state is included in the lawsuit because it had a hand in the county being allowed to increase the impact fees.

“It created the mechanism for York County to implement its ordinance,” he told the judge.

State attorney Emory Smith Jr. said in court that taxes and user fees are well established by law. There is nothing arbitrary about the way impact fees work, he said.

“It is not without a cap,” Smith said. “It is not without limits.”

State law requires municipalities to work out the math. Municipalities must show charges for impact fees only would go high enough to pay for services needed as a result of the incoming growth. The maximum amount varies by area because of existing services, growth and need, Smith said.

Babcock argues municipalities can make the math work the way they want and have too much leeway in determining how much to charge. He points to a county planning commission recommendation far lower than the fees York County Council ultimately passed.

“It doesn’t give you a cap,” he said. “It doesn’t give you a limit. It’s just a formula.”

He said the Fort Mill fees are “likely to constrain” building and can price some builders out of the market. He also argued the fees are a pretext for a moratorium the county actually wants on building in the area.

Attorney Sarah Spruill, representing the county, said the impact fee threshold in the Fort Mill case was high but not without limit. The amount charged as of last summer is considerably higher compared to what the county set up in 1996 shouldn’t be a surprise, she told the judge.

“It’s a different world,” she said.

Smith told the judge multiple times there is a difference in having a fee higher than the plaintiffs might want it to be, and having an illegal one.

“It sets up a structure that necessarily limits the amount of the fee,” he said of the state act. “They may not like the fee that resulted from that, but they cannot say that the statute did not set a maximum limit.”

Plaintiffs, which in addition to home builder associations include Shea Homes and Soni Construction, filed their complaint in York County civil court in September after the state supreme court decided not to hear it in its original jurisdiction. The state filed a motion to dismiss the case in January.

The state and county filed a memo Monday detailing reasons why the case shouldn’t continue. The plaintiffs filed one arguing the opposite view Tuesday morning, just ahead of the court hearing at the historic York County Courthouse in York. There isn’t a date listed for the next hearing or a decision from the judge.

From August through December last year, hundreds of new residences received building permits under the new impact fee structure. Those homes and apartments added up to $6 million in impact fees.

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