Taxes from most York County homes don’t cover service costs. Who gets the tab?

Most homes in York County are costing taxpayers more than the taxes those homes give back.
Most homes in York County are costing taxpayers more than the taxes those homes give back. tkimball@heraldonline.com

Most homes in York County don’t bring in enough taxes to pay for the services the homeowner receives.

It’s math county leaders can’t afford to overlook as they make land use decisions. Those decisions affect home prices, and that could dictate who in the future can afford to live in York County.

Twice during recent York County Council meetings, at least one member referenced a break-even figure for homes, or how much a home has to be worth for its assessed taxes to pay for normal county services.

Councilwoman Christi Cox brought it up April 15 as part of the months-long debate on road frontage requirements and their impact on new development.

“Our county finance director has told us for every house that doesn’t value at $250,000 that we’re — all of us, all of us in this room — subsidizing that house because it falls below the amount that’s necessary to pay for just the county services,” Cox said.

She cited the home value threshold as an important factor in which side she’d take on the issue.

“There’s a reason why we as taxpayers should care about this issue,” Cox said then. “This isn’t about a taking. This is about making sure that whatever we approve makes sense to every taxpayer.”

The idea of home value affecting county decisions isn’t new.

“When I first got on Council we talked about how much it costs in county services for a house price point to pay for those services,” Councilman William “Bump” Roddey said during an hour-long debate May 6 on a proposed Lake Wylie zoning change that would allow more new homes. “And I think we were somewhere around $150,000 (to) $160,000 back in 2011.”

Roddey spoke repeatedly of the $600,000 or more price point of those proposed homes as a positive for the county. A positive that along with developer contributions to water and sewer infrastructure earned Roddey’s approval, despite repeated protests from Lake Wylie neighbors concerned about heavy traffic on inadequate roads.

That decision was put off by Council until at least May 20.

“I look at it as a trade-off,” Roddey said. “Do you want a good quality build, good price point? And I think the answer’s probably yes. Do you want more traffic? The answer’s probably no.”

How it works

Kevin Madden, assistant county manager, came to York County in mid-2016 as its new finance director and treasurer. He had worked as partner at one accounting firm and auditor at others. In those roles, Madden audited local governments including York County, Fort Mill and Clover school district.

Not long after Madden arrived, he crunched tax data to develop a cost-to-serve analysis for homes.

“There’s a cost-to-serve model,” Madden said. “You’re dealing with a calculation that’s very complicated, and it’s not very precise.”

The idea is to take county general fund expenses and allocate them across homes and commercial properties, he said.

The owner-occupied home tax rate is 4% of its value. Rental and commercial properties see a 6% rate, while manufacturing comes in at 10.5%.

The calculation compares how much money properties yield in taxes with how much it costs to provide law enforcement, fire safety, courts, planning and other county services. Madden also credited each home with a vehicle, figuring most pay that separate tax at least once.

“There’s a lot of estimates used,” Madden said.

It gets complicated. County services vary and are measured differently. The sheriff’s office tracks calls by type and location, while the tax and treasurer offices serve all taxpayers in a relatively uniform way. There are large manufacturers that pay different tax rates because of fee-in-lieu, or tax incentive, agreements.

Millage rates — $1 per $1,000 of valuation — vary by area of the county and whether the home is in a municipality.

The 2018 millage rate for homes in Tega Cay was 47% higher than for homes in Sharon. Fire tax rates vary, and some areas have special tax districts.

An example on the county assessor’s office website shows a $150,000 second or rental home in Rock Hill would pay about $3,850 in property tax. The same value but primary residence home in Newport would come in at about $1,050.

Also, property tax isn’t the county’s only revenue source. Council’s first of three readings for the coming year budget on its May 6 agenda estimates more than $116.4 million in general fund revenue. Of that, a little more than $81 million — 70 percent — comes from property tax.

“(Home cost analysis is) an estimate done off a lot of assumptions,” Madden said. “It’s not an exact science.”

Still, county council members find the figures useful enough to cite publicly.

Madden said the price is about $250,000, and edging toward $275,000, before the county breaks even for services provided vs. taxes collected. Madden said he sees the number, which he calls an educated guess, as helpful to Council but hardly the only determining factor in whether home projects are approved.

“It’s just another piece of data that’s used in making a decision,” he said.

Pricing out workers?

Council Chairman Michael Johnson serves one of the highest growth areas in the county.

His district includes Tega Cay and unincorporated Fort Mill. Johnson said several years ago council members asked the county planning, finance and economic development directors to come up with a break-even amount.

“This is not new,” Johnson said.

The number is important in making a wide range of decisions impacting what gets built where, he said.

“This is one piece of the puzzle that I use when determining whether to support a rezoning or growth plan,” Johnson said. “I support growth paying for growth whenever possible and use that number along with the (traffic analysis), existing infrastructure factors and feedback from the public when determining whether to move forward.”

What the number shouldn’t be, he said, is the lone factor in approving projects.

“I am not aware of anyone on Council pushing for homes to be above that number,” Johnson said. “It is important to have a wide range of home prices that fit the demographics of our county. Everyone can’t afford a $275,000 house.”

On Feb. 15, county manager Bill Shanahan gathered 16 county department heads for a workshop spanning almost every county service. Less than a minute into the meeting he stressed the importance of his first topic — workforce housing.

“We’re not talking about low-income housing,” Shanahan said. “We’re talking about housing for your police, for your fire(fighters), for your teachers.

“We’ve got to think about tomorrow,” he told department leaders. “We don’t want in 10 years, people that have lived in York County for generations having to leave York County because they can’t afford to live there.”

He acknowledged there are other forces driving up home prices.

“One of the things that’s happening in York County, that’s happening throughout the United States, is where these businesses go as they fill up, the cost of the houses skyrockets,” Shanahan said.

Where we are now

Even if county leaders approve homes only above the break-even point, it wouldn’t soon mean a run on lower-valued housing. U.S. Census Bureau data from 2017 shows more than half the homes in York County valued at less than $200,000.

Lower-value homes have dipped slightly the past decade as have a percentage of all county homes, according to census bureau data.

While still less common than homes costing less than $200,000, there are upward trends in the number of homes from $200,000 to $1 million in the three years up to and including 2017. The census will release 2018 housing unit data to the county level this month.

While countywide home values show plenty of lower end affordability, it isn’t the same everywhere. In 2017, 57 percent of owner-occupied homes in Fort Mill valued at $200,000 or more. In 2010 that number was 38 percent. In Tega Cay, more than half the homes value $300,000 or more.

A variety of factors impact home value, such as school district, market conditions and timing. A home valued at less than $200,000 in 2010 could be worth more now because of appreciation.

County leaders know there is a cost of having too many homes too far below the break-even point. But there are also are costs to blindly using the break-even point.

“I would never want to see the county have a minimum home price set by Council,” Johnson said. “The market sets home prices, not the government.”

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