This is why costs to build new Fort Mill homes and businesses may drop, and how far.
Fort Mill may lower the entry fees for the town’s new homes and businesses, at least through the end of the COVID-19 pandemic.
Fort Mill Town Council voted Aug. 10 for town staff to bring back a plan that will lower impact fees to what they were earlier this summer — the same rates since 2015. The council decision comes at the request of Fort Mill Economic Partners and the York County Regional Chamber of Commerce after a summer rate increase for businesses.
Mayor Guynn Savage said the impact fee changes this summer were focused more on residential costs.
“It was based on new homes coming into Fort Mill and what might be charged there,” she said. “Unfortunately some collateral issues arose in what might occur on the business front.”
Late last month, Fort Mill Economic Partners leaders met with the council to outline their concerns. Some businesses saw impact fee costs jump 300% or more. The average increase for a commercial investment went up 108% from June to July, the group said. Businesses like fast food restaurants jumped almost 350%.
“I do not want to do anything to inhibit business growth in our community,” Savage said. “I expect businesses to want to serve here and be part of our community, and actually be part of the Fort Mill family.”
Coronavirus and costs
Impact fees are one-time costs on new construction. Fort Mill charges them for fire service, recreation, and municipal facilities.
“It is to address the cost or impact of new growth in an area,” Savage said. “So new growth causes us to need additional fire, additional police services. And the impact fee is to help remove some of the burden on the existing population for bringing on new growth.”
Fort Mill started town fees in 2015. South Carolina law requires an update every five years. The update includes a host of variables to determine limits on how much the town can charge. There’s a total evaluation of all town assets, population, and the number of employees who work in the town.
Once all those variables are considered, the town can set the rate.
“A discount rate is one variable of the equation that determines what the fees are,” said Chris Pettit, assistant town manager.
In 2015 the town chose to charge 90% of the state’s allowed maximum for recreation because those fees come solely from new residences. The town chose to charge half the maximum for fire and municipal, since those fees involved businesses.
When the town updated its fee structure this year, council enacted new rates. The town now charges 90% of what is allowed for all three fees.
“The basis of any of our commercial fees is the number of employees that are generated per square foot, for a business,” Pettit said.
After the business community balked at the higher fees, the town asked the staff to create a plan that would lower rates back to what they were in June.
However, the calculation to determine how much the town can charge has changed.
“You’ll never get it back to exactly the fees that it was in 2015,” Pettit said. “If the goal is to get close, you may be looking at discount rates higher than 50% for fire and municipal facilities.”
Impact fee fix
A new home in Fort Mill today would mean more than $2,800 in impact fees to the town.
(Note: That amount is separate from the more than $18,000 for the Fort Mill School District impact fee, which isn’t part of the town discussion).
Relying on data from the 2020 updated study, reverting to the 2015 rates, would put the fee at about $2,150.
Since the earliest debate on impact fees back in 2014 the town has had two hurdles. Both involve business. A top town need is money for roads, but the town doesn’t charge a fee since it would mean far higher costs to new businesses.
The other issue is the balance between residential and business costs.
With a population surge now dating back decades, council members don’t have a problem increasing fees for homes and apartments. Yet, the town can’t charge fees on residential without impacting businesses. The thought is, a new business increases the need for services — like fire protection.
A supermarket, based on the 2015 rates, would cost about $23,000 in impact fees. Councilwoman Lisa Cook said the updated impact fee calculation, even with the 2015 lower rates, today would put that supermarket at about $36,000.
“So even if we revert back to the discount structure we had, there is still a $13,000 increase for a grocery store,” she said.
If the town wants to get close to 2015 fees, it could mean significant discount rates. To get fast food restaurants to 2015 levels, it would drop the fee amount for smaller shops and other businesses.
“You can’t win across the board,” Cook said.
Savage said she believes there needs to be change given the still dire economic situation from COVID-19.
“I don’t think we’ve seen the last of the economic ripples that will occur from having a pandemic,” she said.
Yet when the pandemic ends, the town is likely to slowly come back to what rates are now.
“Things are different today than they were five years ago,” Savage said. “Costs are different. And we need to begin to embrace that as a community. .....Things don’t cost the same today as they did 20 years ago. But we’re expected to provide the same services and level of service that we all enjoy.... They don’t cost the same, and with a lot more people.”
Business leaders who addressed council asked them to scale back fees to what they were earlier this summer, and if needed scale them back up incrementally when the coronavirus pandemic is past.
Business leaders told council there is value in doing business here, as all the business growth since 2015 attests.
For Savage, the feeling is mutual.
“I do not want to do anything to hinder business growth,” she said.
