The SC Supreme Court has made its decision on new-home fees to help Fort Mill schools
The state supreme court has ruled in favor of York County and the Fort Mill School District impact fee charged on new homes and apartments.
Local and state home-builder groups challenged a 2018 fee increase from $2,500 per new residence within the school district to more than $18,000 per home and $12,000 per apartment. The Home Builders Association of South Carolina and others argued the fee, and state law that allowed it, were arbitrary and harmed builders.
A lower court ruled in favor of York County, which approved the school district fee, and South Carolina. The Supreme Court heard an appeal in January. The court opinion on Wednesday affirmed the earlier decision.
“We are pleased with this outcome and the positive impact it will have on the taxpayers,” Fort Mill School District Superintendent Chuck Epps said in a release Wednesday. “While the legal process allows 15 days for the other party to file a petition for re-hearing, we are hopeful the district can move forward with assessing how best to use these funds to offset the burden placed on our taxpayers by the rapid growth in our area.”
The case had implications well beyond Fort Mill.
High-growth municipalities and school districts statewide have impact fees based on the state law. The fees go to support schools. Had the court ruled that law unconstitutional or invalid, many communities may have been impacted.
Fort Mill, Rock Hill and Tega Cay all have municipal impact fees. The Clover School District recently started one and fees have been studied in Indian Land and Chester County.
According to the opinion, the court found impact fees are increasingly common across the country “with a great number of states utilizing them in one form or another.” The court notes the state act permits, but doesn’t require, a municipality to set impact fees as a way to charge new development a proportionate share for new school construction.
“Local governments unquestionably have a legitimate interest in providing for the education of our youth,” reads the court decision. “The act gives localities the choice of whether to fund via impact fee a proportionate share of any new school construction necessitated by new development in the area. In no manner can such a choice be deemed (arbitrary).”
The court cited a previous case from more than a decade ago in Summerville to uphold the court decision in the Fort Mill case, where the municipality setting the impact fee met state thresholds to do so and the developer challenging it didn’t show why the fee should be different.
When the supreme court met earlier this year to hear the Fort Mill case, judges noted the high population increase in the more than two decades since Fort Mill first charged its $2,500 fee. Judges said it seemed sensible to reevaluate the fee structure, and asked the home builders’ attorney Keith Babcock if there would have been a legal challenge had the fee simply doubled.
“As a practical matter,” Babcock told the court, “we probably would not.”
The decision frees Fort Mill to spend millions of dollars collected in impact fees since the 2018 increase (some they’ve already spent). In March, York County Council reviewed an annual impact fee summary that showed the district collected almost $15.9 million from 611 homes and 183 apartments in 2020.
That number is up from $14.5 million in 2019. The last six months of 2018, when the new fees began, saw almost $6.6 million in collections.
York County also approved a fee for the Clover School District that began collection in January. That district charges $4,000 per new home, $1,976 per apartment and $2,618 per mobile home.
Impact fees are charged only on new construction. They’re typically paid when construction permits are applied for or received, so new home or property (for non-school impact fees) owners don’t see them separate from whatever cost is passed on to them from a builder.
This story was originally published March 10, 2021 at 1:33 PM.
