New homes in Horry County will become more expensive this fall when county officials begin charging impact fees, but the county will also receive additional funding to help pay for the infrastructure needed to address the demands of a growing population.
County council on Tuesday voted to start charging impact fees of $1,236 per home on Oct. 15. The fees will also affect other types of new construction, including new retail projects, which will be charged a fee of $1,797 per 1,000 square feet. The final vote comes after years of discussions about whether to charge impact fees and how high those rates should be.
“This is a historic moment,” Horry County Council Chairman Johnny Gardner said. “This really is, and I’m excited to be on council. … I’m glad we have an impact fee now. It’s not perfect, but we have one. And hopefully we can monitor it and work on it and adjust it and make it better for everybody in Horry County.”
County officials had previously voted for higher impact fees — at least $4,838 per home and nearly $7,500 per 1,000 square feet of retail space, excluding stormwater fees — but at their third and final vote they opted to approve lower ones for a few specific service areas (public safety, waste management and recreation) rather than the maximum fees legally allowed. Those would have provided funding for roads, stormwater infrastructure and EMS service.
“Let’s crawl before we walk and before we run,” councilman Bill Howard said. “I’m all for the highest fee we can get, but let’s start out easy and get the county acclimated.”
Council members also said they plan to regularly revisit the fees and will consider adding the other components in the future. Some leaders wanted to approve the full slate of fees rather than the smaller package Tuesday.
“This is not the first time we’ve taken a look at this,” said councilman Harold Worley, the most vocal proponent of the maximum fees. However, he voted for the impact fee ordinance, saying “something is better than nothing.”
The fee proposal that ultimately received council’s blessing includes some key differences from the original plan, which was based on a consultant’s study and looked at the highest rates the county could charge. Some council members objected to how steep those figures were, particularly the fees for retail space.
In recent weeks, county staff prepared a revised plan and some council members met with developers, builders and real estate industry representatives to get their input. Some of those individuals spoke in favor of the reduced fees Tuesday, though they did ask for additional time to prepare for the levies and make budget adjustments.
Josh Beyer, a senior vice president with The Sembler Company, the Florida-based developer building a new Publix-anchored shopping center in Carolina Forest, called in to ask county officials to phase in the fees. Beyer pointed out that his company has long been in talks with small businesses about becoming tenants in the Carolina Forest center and those business owners had planned their budgets and lined up financing without factoring in the fees. The developer also has not pulled building permits, which is when impact fees will be charged.
“Adding this impact fee immediately and having all these businesses be subject to that by switching the light switch tonight is impactful to those small businesses,” he said, adding that charging the fees now would be “really unfair” to the business owners.
Madison Cooper, vice president of government affairs for the Coastal Carolinas Association of Realtors, encouraged county leaders to pursue the lower fees. She said that would protect the local economy and not price first-time homebuyers out of the market.
“Implementing a limited impact fee will not only help improve the quality of life for new and existing residents, but also preserve the dreams of current Horry County citizens,” she said.
Here are the four changes to the fees that council approved Tuesday:
• Removing the road fee component from the proposal trimmed the residential fee by $3,113 and the retail rate by $5,034 per 1,000 square feet. County officials said there are already other sources paying for county road projects, such as the nearly $600 million RIDE III program, and they expect to see a RIDE IV as well. And that doesn’t include the $15 million that U.S. Sen. Lindsey Graham, R-S.C., requested this month for I-73, the proposed interstate that would link the Grand Strand with I-95. If the money Graham requested is allocated, that would pay for right-of-way acquisition along the proposed route. Graham initially said he would request $12 million to go with a $3 million local match, but his office noted in a news release last week that the local contribution isn’t necessary for this funding. Now the senator is seeking the full amount.
• Along with the impact fees for roads, county officials also opted not to approve stormwater impact fees, which would vary depending on the watersheds where structures are located in the county. Those could have added anywhere from $128 to about $1,800 to the cost of a new home, depending on its location. However, county leaders noted that the budget they approved last month includes a $45-per-home increase in the county’s annual stormwater fee. That hike will pay for new staffing, equipment and projects. Ultimately, the council decided to wait to see if that fee increase is sufficient address the department’s needs.
• The impact fees for EMS services also didn’t pass. Those programs are already funded by countywide taxes and service charges, and county staff were concerned about the possibility of doubly taxing the residents of the unincorporated areas by tacking on impact fees. By not approving the EMS impact fee, that reduced the residential impact fee by $154 per home and the retail one by $762 per 1,000 square feet.
• County officials also removed recreation centers from their list of impact fee-funded projects. They are looking at paying for those facilities with hospitality fee revenues and other sources. State law also requires local governments to construct the projects funded by impact fees in a specific amount of time. This means that if the county didn’t build a recreation center with impact fee month on that fixed schedule, the county would have to refund that money. The county will collect impact fees for boat landings, parks and trails. Not charging the recreation center impact fees trims $335 off the residential rate. There is no change to the retail rate because it’s not affected by that component.
During a debate about the fee rates, councilman Danny Hardee said he’d received calls from residents demanding that developers pay the maximum fees. He emphasized that the cost will ultimately fall on the homebuyer, not the developer or the builder.
“Developers don’t pay anything,” he said. “It’s no more than buying a two-by-four to them. … You pay it. The consumer pays for it.”
Some leaders wanted to delay collecting the fees until Jan. 1 while others pushed for them to start collections immediately.
“Why wait?” Worley asked. “It’s going to be the same problem in January.”
“We don’t need to kick the can down [the road] any further,” he said.
But councilmen Orton Bellamy and Johnny Vaught encouraged a compromise of about 90 days (Oct. 15). Vaught said that would allow those in the business and development world to adjust to the changes. That proposal passed.
“To say, ‘OK, tomorrow we’re going to throw this on you’ I think is absolutely wrong,” Vaught said. “They need a little bit of preparation time. I think we need a little bit of preparation time. I think it’s unfair to just go out there and say, ‘Tomorrow, if you pull a permit, we’re going to throw an impact fee on you.’”
Impact fees are intended to help pay for the infrastructure needed to accommodate the county’s growing population, which is projected to reach nearly a half-million people by the end of the decade.
But state law severely limits how the fees can be used. For example, impact fees can pay for new roads, police stations and firehouses, yet they can’t be spent on recurring expenses such as police officer and firefighter salaries or maintaining existing roads.
For proponents, impact fees are a way to force newcomers to shoulder some of the cost of the infrastructure needed to serve new homes and businesses, taking pressure off the taxpayers who already live here.
Impact fees of some type have seemed inevitable since a 2018 referendum showed that more than 72% of the county’s voters support the levies.
Some residents who spoke in favor of the maximum fees Tuesday night were not pleased with the council’s decision, which they felt gutted the ordinance.
“I’m with councilman Worley. I really am,” said Kathy Jellison, a retired widow who lives on the South Strand and is part of the group The Coalition for Responsible Development in Horry County. “What he said tonight kind of resonated with all of us. There’s going to be a point where the taxpayers just stand up and say, ‘That’s enough.’ It’s already started. People are starting to speak out more as they should.”