New Fort Mill homes and businesses will cost more starting July 1. Here’s why.
It soon will cost more to build a new home or business in Fort Mill.
Fort Mill Town Council voted unanimously Monday night to increase impact fees. The amount of the increases varies, but the change relates to a higher percentage charge on new construction that will help pay for fire service and municipal facilities.
A new home that pays a $1,822 town impact fee now, for instance, would pay $2,825 after the change. The difference for businesses could be more.
Fort Mill leaders started its municipal impact fee update months before COVID-19 coronavirus and social distancing impacted so many businesses and workers. Council gave the first of two needed approvals on the change a week before coronavirus closings began.
“We had a different view of the future in March,” Mayor Guynn Savage said just after final approval Monday night. “We’re going to stick with it, while of course allowing ourselves the flexibility to change if needed.”
The change to new fees starts July 1. Here’s what anyone building or buying new in Fort Mill needs to know:
What’s an impact fee?
Impact fees are costs paid by developers or builders of new construction. Money from the fees goes to whatever the governing body sets it up to fund — from schools to roads, utilities, recreation and a host more public categories. The idea is that incoming growth pays for community resources needed as that community grows.
Fees typically are charged when a builder pulls a building permit. In the case of new homes, the impact fee cost likely rolls into whatever final price tag the homebuyer sees. The builder pays it, but the end user could thus pay for it without seeing it.
Is this the school impact fee?
No. York County set up a separate impact fee for the The Fort Mill School District in 1996. The county increased that fee amount two years ago which led to legal challenge from area and state home builder associations. The school impact fee charges only new residential construction. It applies throughout the school district, which includes Fort Mill and Tega Cay along with unincorporated York County.
Fort Mill and Tega Cay have their own separate municipal impact fees. So a home built in the town or city would mean both a school and municipal fee. The town and city also charge the fee for more than just residential development. Any new construction, apart from schools and volunteer fire stations (Fort Mill paid an impact fee for its own new fire station), require an impact fee charge.
What does Fort Mill charge?
Fort Mill set up four impact fees in 2015. Three fund fire protection, municipal facilities and recreation. Council put the fourth fee on the books, for transportation, but decided not to charge anything since it upped costs considerably and put the highest charges on the commercial growth town leaders wanted to encourage.
Now, town impact fees combine for $1,822 per new home. Charges for business vary by business type, size, number of rooms or other factors.
From when fees began in August 2015 through the end of the 2018-19 fiscal year, Fort Mill collected more than $6 million in impact fees. Almost $3.8 million came for recreation, with almost $1.4 million for municipal facilities and $842,000 for fire.
How are impact fee amounts set?
South Carolina law brings in plenty of factors to find a maximum amount communities can charge. Fort Mill has to take its current service levels for municipal, fire and recreation compared to population, and use them to estimate the impact new growth will have based on town needs to serve them. Chris Pettit, assistant town manager, explained the process at the first vote to update the fees on March 9.
“We basically try and determine what the per capita or per employee impact a new business or any new development would have in the town,” he said. “Every five years we make those calculations.”
State law requires that five-year update. Council can change the percentage it charges at any time. Likewise, council can update or change the capital needs list of eligible projects for impact fee revenue to fund. Addition of parks, a fire station, a new town hall and other assets along with the continued increase in population mean the new figures don’t reflect their 2015 version.
The February study done to update impact fees found the maximum amount for a new home could be a combined $3,139. That number accounts for the fire, municipal and recreation fees. It doesn’t account for any percentage discount.
The max fee for an apartment would be $2,397 per unit. It’s $2,461 per 1,000 square feet of office building, $1,939 per 1,000 square feet of shopping center and $1,350 per 1,000 square feet of light industrial space.
What do the town impact fees pay for?
If a project isn’t listed on the town capital improvement plan, impact fees can’t fund it. Council can update the list as often as they want. Town staff brings it up for consideration in annual budgeting.
As of February when the fee study was done, the town list had the just completed fire station on Fort Mill Parkway and two future ones, plus a fire engine. Banks Athletic Park, an amphitheater at Elisha Park, land for future parks and a gymnasium were on the list.
Town hall relocation and expansion were the big municipal items. Also included were three police substations, downtown parking, a public works operations center, garbage trucks and knuckle boom trucks.
Impact fees aren’t designed or able to cover all growth-related capital costs. The projects in the capital improvement plan combine for an estimated $38.4 million cost.
Projects already funded in part through impact fees include the town hall move, the Fort Mill Parway fire station and former residential properties beside Dobys Bridge Park to expand park space there.
What does the council vote Monday mean?
On Monday, council upped the percentage of the max amount it will now charge from 50% to 90% for municipal and fire. The town already charges 90% of what it can charge for recreation, which will stay the same. There won’t be anything charged for transportation.
Council also voted to update its capital improvement plan to make it in line with what was presented in February. It runs through the 2023-24 fiscal year.
“It hasn’t been in the too distant past that we didn’t have a list,” Savage said, noting one only came as required with the 2015 impact fees. “This is new. I’m glad we’re finally beginning to catch up a little bit.”
Pettit said the only notable change since initial approval in March is the July 1 rather than an immediate start date. Pettit said the almost month more gives staff time to notify builders and the public, and to adjust. Since fees still will be assessed when building permits are obtained, anything already issued or issued prior to July 1 will pay the current fee.
“Anything that’s paid up and received a permit prior than the effective date of this would be paying the old fees,” Pettit told council Monday night. “Anything that hasn’t received a permit would be required to pay the new fee.”
The move to start impact fees in 2015 was controversial. Many then worried it would harm incoming business. The fees only passed by a 4-3 vote. When change came, there was somewhat of a rush by developers and builders to get their permits in weeks leading up to the change.
Pettit said the town hasn’t seen any such rush since initial approval of the fee updates in March.
“No significant uptick like there was the first go-round,” he said.
The 10-year buildout projection included in the new capital improvement plan anticipates, on the residential side alone, almost 5,400 new homes in town by 2028.
