Officials may have to consider deferring some public works projects if the city is unable to raise impact fee revenue in a timely fashion, says deputy city manager Jimmy Bagley.
Bagley and a host of local developers are hoping to come to a mutually beneficial compromise over impact fees during a meeting Monday that will include a modified fee structure from the one originally proposed in June.
Developers have expressed concern over what they see as a considerable rate hike levied on new development in the city, while the city argues its proposed hikes are necessary to help fund renovations and expansions to Rock Hill’s water and wastewater operations.
Otherwise, the city’s water customers could potentially see rate hikes in their future.
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“We have to do heart surgery while the heart is still beating,” said Bagley earlier this week. “It takes time to build what we need.”
The city enacted impact fees in 2003 and has not increased them since. However, Bagley says the city needs to raise revenue to make improvements in the city’s water treatment systems.
Improvements include expanding the building and adding additional filters in order to improve service and keep up with increasing demand. The plant, which currently services 36 million gallons of water per day, would be expanded to maintain 48 million gallons per day.
But developers balked at the idea of a dramatic hike: Under the current model, the combined water/wastewater impact fees for a structure with a 1-inch meter would total $2,218. With the proposed rates, a similar structure would face a $7,950 fee.
Rock Hill City Councilman John Black said developers told him the plan was “a little shocking and concerning.” Some, he said, believed they weren’t fully informed ahead of time. Black and the City Council decided to delay a final vote this June to allow for further study.
While Black recognized the hikes may be tough for developers to swallow, he said he felt the city was looking out for its assets “three, five, 10 years down the road.”
“I do think it’s inevitable to raise impact fees, because I think it’s not fair to the entire resident population to absorb growth on the backs of rate increases,” he said. “But at the same time, if you want to grow and provide jobs to improve the lives of citizens, you’ve got to balance with not making it cost-prohibitive.”
So Bagley is proposing a revised option he sees as a fair compromise.
Rather than introduce the increases all at once, the city would implement no increases in fiscal 2017, 50 percent of the initially proposed increases starting July 1, 2017, and 100 percent of the hikes effective July 1, 2018.
The three-year phase-in would allow developers to tell financiers what they need to expect from a certain budget, says Bagley, and keep Rock Hill competitive across several other cities in the Carolinas.
Using the baseline 1-inch meter, developers would pay the existing one-time combined fee of $10,492 on new development until next July before paying $15,339 in fiscal year 18 and $20,174 by fiscal year 19. The full hike by mid-2018 would see Rock Hill move closer to the median, when compared to areas around the Carolinas, including Greenville County ($17,523), Tega Cay ($19,040) and Charlotte ($28,726).
Chad Simpson, project manager at Apple Tree Contractors on East Black St., said the latest suggestion was a “gracious proposal,” but he would prefer to see it become a four- or five-year project that would phase in the increases around 20-25 percent each year.
Simpson said he didn’t feel convinced the city could accurately compare its fees with other municipalities like Mt. Pleasant, which he says experiences less commercial development when compared to Rock Hill.
Simpson said he reached out to several council members, and they told him they are considering all sides of the issue.
“That’s the balancing act that the city is faced with,” said Simpson. “How to balance fees to collect what they need to collect and not raise them so much that they stymy development.”
Bagley said the City Council will hold another workshop on Sept. 8 to discuss the proposed hikes before voting on Sept. 12.
The issue with postponing impact fee hikes or rejecting them altogether is the city may have to pay for renovations out of money originally earmarked for other projects around the community, Bagley said.
City officials, he said, would be less likely to replace smaller, older pipes with more modern versions in certain neighborhoods. Taking care of sagging pipes or completing small sewer replacements might also be delayed projects down the line.
The city could still complete those projects, but that would likely mean raising customer rates to make up for it, Bagley said.
“We’re conscientious of the burden we’re putting on people,” Bagley said. “We recognize that we want commercial business to come here, but we don’t want that cost to be back on the citizens.”
What does this mean for me?
Are you a developer? If the City Council decides to vote for the impact fee hikes, that means you’ll likely have to pay more for your new development. If the council decides to reject the hikes, the existing impact fee rates will stay.