Horry County leaders say the time is finally right for them to move forward on adopting impact fees on new development in the county, and that they could begin taking action on such legislation as soon as next week.
“I’m going to start talking about it at our next meeting, the next time we get together, and get staff to tell us where we are and what needs to be done and what can be done,” County Council Chairman Johnny Gardner said after the body’s Tuesday meeting this week. “Whatever it takes to get it done, we’ll push for it. I think it’s a really good idea.”
At least half of the council members voiced support for adopting impact fees on Tuesday, and other council members have previously voiced their support, paving the way for legislation to pass once leaders hammer out details.
“At some point in time we’re going to have to expand roads, water and sewer, I could go on and on, but at some point in time we’re going to have to get this impact fee put in place so we have some money to build these roads,” Council member Harold Worley, who represents North Myrtle Beach, said at Tuesday’s meeting. “They’re not going to fall out of the sky.”
Horry County voters have previously voiced support for impact fees. During the 2018 general election, voters were asked to respond to a nonbinding resolution, asking if the county should adopt impact fees, and around 70% said yes.
A number of large housing developments came before council this week — the types of project an impact fee would apply to — prompting complaints of increased traffic and flooding from some nearby residents. Council ultimately approved a 144-home development near Highway 90, a 200-home development along Highway 905 and a 277-unit home and town house development at the intersection of Highway 501 and Highway 31. But those votes, and comments from the public, sparked renewed discussion of impact fees.
“We let this impact fee thing fall by the wayside and I think we need to address some of these concerns through an impact fee, and I think we need to start revisiting that conversation in very short order,” Council member Dennis DiSabatto, who represents part of Myrtle Beach and part of Carolina Forest, said Tuesday.
An impact fee in Horry County would be a one-time fee charged to homebuilders and developers who construct new homes, hotels and other businesses. The county would set a fee amount per home, or per hotel room or per square foot of retail space and the developers would be responsible for paying the additional charge. In late 2019, county leaders considered adopting an impact fee of $4,500 per new home build, for example.
Horry County would then use the impact fee money for infrastructure, per state law. State law restricts what a county can spend impact fee funds on, but the money can generally pay for “public facilities” including roads, bridges, stormwater infrastructure, parks and new fire stations, to name a few examples.
But the law contains several caveats, including that the county must outline in a plan what infrastructure it needs and that the funding be used in a three-year time period; otherwise the county has to repay the money. That would mean, for example, that impact fees paid by developers constructing new subdivisions along Highway 90 could pay for widening that road, or even a full-time fire station in the area, but likely not construction on Interstate 73, because that project may not break ground within the time frame. County leaders in Horry and elsewhere across the state have previously asked the legislature to revisit the time-frame part of the impact fee law, though no action has been taken. According to a 2019 study commissioned by the county about its potential impact fee, Horry County could collect $14 million in a single year for roads. The amount the county collects per year would depend on how much building occurs.
The money can also not be spent on recurring costs, like paychecks for new county employees, because the amount of money collected can fluctuate year to year. Several council members have quipped recently that impact fees can be tricky to spend because they could use the money to build a new fire station but couldn’t use it to hire firefighters or buy equipment for the station.
Time to ‘pick this back up’
Still, council members have said that now is the time to move forward on impact fees. Previously, in late 2019 and early 2020, the council came the closest it had in years to adopting impact fees, but put those efforts on pause when the COVID-19 pandemic struck. Council members worried that adding an impact fee on top of a pandemic would cripple the local economy.
“It would have been expected that the building and construction would have been slowed down by COVID-19. We expected it to take somewhat of a nosedive or at least flatten out,” said Council member Johnny Vaught. “But instead it did the opposite. That caught us by surprise.”
Council members have been watching the county’s recovery from the pandemic closely, and have made policy decisions in response. In early February, as South Carolina’s vaccine rollout was in its early stages and the region’s recovery seemed more sluggish, Vaught told The Post and Courier newspaper that Council was likely to wait a year before revisiting the impact fee debate. But he said Thursday that the pace of recovery had sped up faster than expected, meaning Council could revisit the issue this year instead.
“We’ve about come out from under this COVID-19 crisis,” Vaught said. “It’s time to have those discussions and pick this back up.”
Council members will have a number of details to work out as they continue to debate impact fees, including how much to charge and when to charge the fee — whether when a developer first seeks county permits or after a project is built and sold. The county’s 2019 study found that Horry could charge as much as $4,565 per new home, $7,439 per 1,000 square feet of retail space and $2,587 per room of new hotels. Developers prefer the county charge the fee later, when they sell a project, because it will reduce their up-front costs. When the fees would take affect — meaning which in-the-works projects would face the charge and which wouldn’t — is also an open question.
Vaught added that the county would also have to work out a formula for the impact fees based on the size and location of projects — he said the county wouldn’t want to charge a small business owner in a rural area the same fee that it charges a developer building a major subdivision in Carolina Forest, for example.
“That area is going to require a good bit of study, and I think the impact fees need to be tied to the infrastructure that’s going to be required,” Vaught said.
Developers voice concerns
As expected, developers aren’t thrilled by the prospect of impact fees, and told The Sun News that they’d likely pass on the fee to the landowners they buy from or the home buyers they sell to, thereby driving down land prices or driving up home prices.
“Everything about it concerns me,” said Chris Manning, a developer who’s currently building several large subdivisions near Highway 90. “Why would you want to devalue landowners’ land and why would you want to force higher fees on home buyers?”
Jason Repak, a builder with Hudson Homes, said instead of an impact fee he’d like to see the county study its millage rates for property taxes and figure out if they’re higher or lower than similar areas. If Horry County’s property taxes are lower than comparable counties, Repak said, he’d support an increase to pay for infrastructure, rather than an impact fee. Repak also serves as president of the Horry Georgetown Home Builders Association’s board of directors, but said he was speaking from his perspective as a builder.
“As residents of the county we all benefit from the new infrastructure the impact fees will build,” Repak said. “If you’re pushing for impact fees that the new residents will pay, but everyone benefits from … that’s just not the proper way to fund that in my opinion.”
Marlane White, a spokesperson for the Myrtle Beach Area Chamber of Commerce, said the organization is not currently taking a position on impact fees.
Horry County has already completed much of the legwork needed to implement impact fees, council members said, so action could come in short order, especially as the county continues to grow at a rapid pace. By 2040, leaders expect 500,000 or more people to call Horry County home. Council member Danny Hardee, who represents a large rural area between Conway and Loris, said the fees were one way that all the newcomers could contribute to local infrastructure needs.
“You’ve paid taxes all your life, I’ve paid taxes all my life,” he said. “That man moving from New Jersey — or up North, not necessarily from New Jersey — I think he needs some skin in the game.”