Impact fees in Fort Mill: Recent rate increase has town leaders, businesses worried
Fort Mill officials may rethink recent fee increases that some in the business community say hit at just about the worst possible time.
Leaders with Fort Mill Economic Partners met virtually with Fort Mill Town Council on Monday morning to talk about impact fee increases this summer that coincided with significant strain on the business community from coronavirus.
The York County Regional Chamber of Commerce sent a letter to the town stating its support of the position taken by Fort Mill Economic Partners. Both groups want the town to change its fee structure back to what it was prior to this month. If fees are to increase, they say, it should happen once the coronavirus strain on business has passed.
“COVID does present unique challenges,” said Mayor Guynn Savage.
Savage said she wants the fees reviewed. Savage said, in making the recent change, she didn’t ask enough questions as to how it would impact businesses.
“We cannot continue in this community without those businesses that support the good growth...,” Savage said. “We just can’t. And we need to do everything we can to help them, not harm them.”
For some businesses, impact fee costs could be 300% or more higher than they were just this spring, according to work done for Fort Mill Economic Partners by Winthrop University economics professors.
“We find it incredibly powerful that the town asked us to help with this,” said David Buist with Fort Mill Economic Partners. “These are unprecedented times. This COVID virus, what it’s doing to business and primarily small business is really terrible. That’s not to discount cost of life and the people struggling with illnesses, but it is also very scary what’s going on with business in our community.”
Impact fee increase
Impact fees are a one-time charge on new construction. The money pays for whatever it’s designated, with a variety of options statewide from police to fire service to roads to schools. In 2015, Fort Mill set up four impact fees -- for municipal facilities, fire service, recreation and transportation.
The four fees are separate from the Fort Mill School District impact fee that applies to new residential construction within the school district.
The four town fees came with considerable push-back from the business community. The chamber and other groups feared Fort Mill wouldn’t so easily attract new business. Savage herself voted against impact fees.
In 2015 the town voted to discount the municipal and fire service fees to half of what the state would allow. The recreation fee came at a higher rate, since it applies only to residential construction. The town set up but never charged a transportation fee, since the charge to fund roads would most impact businesses.
“Once we were able to apply the discount rate, it became something that was not only agreeable but has provided the town with resources to increase or at least maintain the services that our community expects from us,” Savage said Monday.
Among a long list of state rules on impact fees is a requirement that towns, cities or counties update their impact fee studies at least every five years. An update went through town staff and planning commission review. It just happened the update coincided with coronavirus.
Fast food, hospital, retail
Winthrop economics professors Louis Pantuosco and Nicholas Moellman joined Fort Mill Economic Partners Monday morning. Moellman shared data that shows a doubling or more for what new businesses would pay to build in Fort Mill, compared to prior impact fee rates.
“We have had one of the largest impact fees in the area,” Buist said.
Growth since 2015 has shown that the demand to do business in Fort Mill has not been slowed by impact fees, he said.
“However, things are changing,” Buist said. “They’re changing fast.”
The average increase for a commercial investment in Fort Mill went up 108% from June to July, according to the Winthrop data. The reason is a change to those discount rates the town charges. Municipal and fire service fees now are closer to the state limit.
A new fast food restaurant could see an almost 350% increase. New car dealerships, furniture stores, supermarkets, tire stores, business hotels and movie theaters all could see impact fee costs up more than 150%, according to the study. The new Piedmont Medical Center hospital plan in Fort Mill would see a 370% increase, the study shows.
A business park, medical/dental office or sit-down restaurant would have a more than 100% increase.
A new 60,000-square-foot supermarket would’ve had an almost $23,000 impact fee in June. This month it would be more than $63,000. A 2,000-square-foot restaurant goes from almost $4,000 to almost $8,000. A 2,000-square-foot fast food restaurant goes from almost $3,500 to more than $15,000.
“These are significant costs,” Buist said.
Two business types actually saw decreases. Motels went down more than 60%. Warehouses went down more than 20%.
Impact fee rate reconsideration
Concern that impact fees would slow or stunt new construction in Fort Mill goes back at least to when the school district set up its fee in 1996. Those concerns continued when the town set up its fees in 2015, and when the school district asked York County to increase the school fee two years ago. That school fee even drew a legal challenge from home builder groups who stated in court the higher fees were a de facto moratorium on building.
The concerns haven’t materialized.
Fort Mill has a population four times today what it was in 1996, U.S. Census Bureau data shows. It’s up almost 9,000 people — 62% — just from 2015. All while York County ranked toward the top of the nation in job growth by county, much of it attributable to Fort Mill hot spots like Kingsley.
Buist said it’s true businesses want to be in Fort Mill and they’ve kept coming. Yet coronavirus is a new challenge.
Moellman said the leisure and hospitality, retail, education and health sectors have seen drastic reductions nationwide.
“These are all sectors that have been hit especially hard by the COVID-19 pandemic, and have seen unprecedented decreases in business activity,” he said. “Some estimates suggest that we may lose up to 100,000 small business over the coming months. Those are some pretty dire numbers.”
Moellman said Fort Mill fees operate similar to a one-time tax increase.
“These fees are best postponed until we have some indication that we’re back on track economically,” Moellman said.
Impact fee changes
Savage and Councilwoman Lisa Cook said Monday that it’s worth revisiting the recent change to see what can be done. Cook said business leaders like those who addressed council Monday morning are the heartbeat of economic growth in Fort Mill.
“We need to lean more on what was presented to us today, and the people and resources that we have available,” ” Cook said.
Economic leaders and elected officials say impact fees are an important way to pay for growth — they’ve funded part of the town hall move, a fire station and recreation sites — but they shouldn’t deter the type of growth that makes financial sense for the town.
“We want to reward good businesses that the town wants here,” Buist said.
