Developers say they understand why Rock Hill needs to levy its first impact fee increase in 13 years, but they’re not excited about having to pay it.
About 25 to 30 builders and contractors expressed their concerns over growth, renovations and projects at risk during a 75-minute lunch meeting Monday at the Rock Hill Operations Center.
Most developers said they recognize the need for the city to raise money, which will fund improvements in Rock Hill’s water treatment systems. However, the city’s proposed increases on water and wastewater impact fees for new development are hard to swallow for some in the community, according to Rock Hill developer Warren Norman.
“Can I shoulder some of these fees? Probably,” Norman said. “Will I like it? No. But we understand the water capacity has to be improved, otherwise we can’t have the growth we want.”
The city, which enacted impact fees in 2003, has not increased fees since. However, Deputy City Manager Jimmy Bagley says the time has come to up the ante as the city prepares for a series of significant improvements at the water filter plant and wastewater treatment plant over the next few years.
Improvements include expanding the water filter building and adding additional filters in order to improve service and keep up with demand. The plant, which services 36 million gallons of water per day, would be expanded to maintain 48 million gallons per day.
Officials are considering building a system of 24-inch water lines below several roads throughout the city. Potential upgrades may change prior to another upcoming workshop with developers, Bagley said.
Under the current model, the combined water/wastewater impact fees for a new structure with a 1-inch meter would total $2,218. With the proposed rates, a similar structure would face a $7,950 fee.
But developers are concerned that the hikes – some at 200 percent or 300 percent more than their current rates – are going to dissuade small businesses or builders from new developments.
“A lot of businesses might say that they want to create something here, see that they have to pay these rates and then say ‘I pass,’” said Chad Simpson, project manager at Apple Tree Contractors in Rock Hill. “We’ll lose those types of people.”
The City Council last month asked city staff to look into more options to work with the developers. Bagley and his staff designed a more gradual three-year phase-in that would better allow developers to tell financiers what they need to expect.
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 2018 and $20,174 by fiscal year 2019. The full increase by mid-2018 would see Rock Hill move closer to the median, when compared to areas such as Greenville County ($17,523), Tega Cay ($19,040) and Charlotte ($28,726).
Simpson and his colleagues, while welcoming the latest proposal, have been pushing for a delayed plan that spread the increases over four or five years.
Rock Hill provides water to about 100,000 customers, according to Bagley, including around 30,000 in Fort Mill, Tega Cay, the Catawba Indian Nation and other small private water suppliers.
York County is one of the fastest-growing counties in the state, said Bagley. If the Rock Hill City Council decides to reject the proposed rate hikes and stick with the current rates, Bagley said, customers might see rate increases.
“When we look and compare ourselves against places like Charleston or Greenville, they’re growing,” said City Manager David Vehaun. “From a competitive standpoint, we’re still going to be in the game here.”
Without the proposed impact fee increases, the city might have to pay for renovations out of money originally earmarked for other projects around the community, Bagley said.
City crews, he said, would be less likely to replace smaller, older, sagging pipes with more modern versions.
The city could still complete those projects, but that would likely mean raising customer rates to make up for it, Bagley said.
Mayor Doug Echols said the hikes were significant, but still allowed the city to stay either in the median or slightly below average when compared to other areas in the Carolinas.
Bagley told developers that it’s probable that other surrounding cities would also raise their rates over the next few years.
“All of us on the council,” Echols said, “understands the valuable contribution that the development community makes on growth and the well-being of the city. When you spend millions of dollars and become an economic driver of Rock Hill, we want to be able to be as reasonable as possible.”
The City Council will hold another workshop on Sept. 8 to discuss the proposed hikes before voting on Sept. 12.
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.
Are you a citizen? If the City Council decides to reject the hikes or adopt a plan to collect the fees at a slower rate than proposed, the city may be forced to delay community projects, like replacing old or sagging pipes in certain neighborhoods.