Editorial: Hold off on imposing impact fees
For months now, the Fort Mill Town Council has discussed the possibility of imposing impact fees on new construction – both commercial and residential – to help pay for the demand on services and infrastructure that comes with continued growth. No decisions have been made, but the council is likely to vote soon on adopting some form of impact fees.
It’s undeniable that the town, which has more than doubled in size through annexations and probably will grow even more, needs additional revenue to keep up with a surge in development. While most of the growth is residential, putting greater demand on the parks and recreation department as well as public works, commercial development – coveted for the tax dollars and other positive economic benefits that represents – nonetheless requires services ranging from fire and police protection to water/sewer and navigable roads. The town can always raise its tax rate and increase existing fees, but even though “impact fees” are really a tax by any other name, it’s rare for elected officials these days to willingly be linked to a tax hike.
That leaves three evident options:
▪ Impose impact fees;
▪ Raise taxes;
▪ Ignore the demand for increased service and new infrastructure.
The chances of the last two being the final answer are slim and none, and last we heard, slim left town. Council members can defer a vote until next year, or indefinitely really, while further studying the issue, but after spending so much time on it this year and holding several well-attended public hearings, it seems probable they want to make a decision sooner rather than later.
According to state and local officials, the fees have to be all-encompassing. For instance, the town can’t charge commercial developers only, or just impose fees on residential builders. What the town can do is raise and lower the fees by percentage from zero to 100 at will. For example, it can charge homebuilders 100 percent and businesses zero, effectively exempting one or the other.
And one huge monkey wrench in the concept is an opinion from the state attorney general’s office that if a town or city imposes an impact fee, it’s obligated to charge fees on new construction done by nonprofit entities such as school districts and religious organizations. Otherwise, the AG’s office says, that town or city could be vulnerable to a lawsuit from an aggrieved businesses owner on the grounds of unequal treatment.
At the most recent hearing last week, residents, business people and others, including State Rep. Ralph Norman, also a Rock Hill-based developer, mostly pleaded with the council to abandon the idea of commercial impact fees. It would create the opposite climate the town wants to project to prospective businesses and blunt any chance of trying to balance growth now tipped heavily toward the more service-draining residential side. The week prior, Fort Mill school officials, greatly invested in commercial over residential growth, emphatically went on record as opposed to making it too expensive to do business in Fort Mill.
We have to agree that, tempting as it is to tap that revenue source, adding costs to opening a business in Fort Mill doesn’t seem to be in the town’s best interests right now. When most commercial space is filled and lots or storefronts are at a premium, that would be a better time to revisit the idea. Residential developers will simply pass the cost along to homeowners, and in the current climate, there’s no indication that would impede new home growth – though most current residents or the school district wouldn’t mind if it did.
The town should charge residential developers a per-rooftop fee similar to what the Fort Mill School District receives. The way town officials explain it, the fee on homes would mostly go to parks and recreation needs and though the projected windfall of an estimated $1.5 million over the first five years won’t meet all the needs if residential growth continues on-track, it certainly helps.
Ideally, we’d like to see the town table any action for now and concentrate on lobbying for a change in state law that will insulate nonprofits from impact fees. If and when that occurs, the town can revisit a comprehensive impact fee system that includes commercial development that could be phased in over time under the right conditions.
In the meantime, if the council is intent on passing something now, then targeting homebuilders only is the way to go.
This story was originally published August 3, 2015 at 8:27 PM with the headline "Editorial: Hold off on imposing impact fees."