Horry County rejects plan to charge developers more to build new homes, businesses
One year after implementing impact fees for developers, the Horry County Council is maintainting its rates, rejecting a proposal to increase what the county charges to build new homes and businesses.
With an 8-3 vote against raising impact fees, council members said they want to send a message that Horry is “the most business-friendly county in the country.”
“We need to incentivize new commercial development, not de-incentivize it,” council member Tyler Servant, of Surfside Beach, said. “More new businesses, job creation, spurs more tax revenue for the county to hire more police officers, to build new roads and improve our stormwater.”
Horry County leaders last year implemented impact fees for the first time after a 2019 ballot referendum showed that more than three-quarters of voters supported additional fees on new construction.
At that time, council members unanimously agreed that Horry had grown so significantly that the county needed additional funds in its coffers to pay for things like fire stations, recreation centers and stormwater infrastructure. The fees ranged from $702 per 1,000 square feet of new office space to $1,797 per 1,000 square feet of new retail space.
The charge on a new single family home was set at $1,236.
But on Tuesday, some council members warned that raising impact fees just a year after they were first implemented was too much, too fast.
Council member Dennis DiSabato, who represents Carolina Forest, one of the fastest-growing areas, called raising impact fees “almost punitive.”
“This is not a measured response,” he said. “We can’t do that to the business community here.”
Additional fees?
The council debated whether to add additional categories to the impact fee, which would have raised their total. State law tightly controls impact fees and requires municipalities to charge the fees for specific uses.
That means the county can’t, for example, raise impact fees on single-family homes while keeping fees flat for new businesses. Each impact fee category is all-or-nothing.
The county currently collects impact fees in the public safety, stormwater and recreation categories.
But the council was considering whether to begin charging the fees for transportation projects, the largest impact fee category.
The current impact fees could generate around $54 million over a 10-year period, and the county is using part of those funds to build two new recreation centers and its new emergency operations center. Adding transportation impact fees to that could have raised the 10-year collection to $208 million.
That amounts to about $9.5 million per year for roads, county planning director David Jordan said.
DiSabato argued that the county should wait to see the economic effects of the current impact fees on business development before raising them. He also argued that funds generated for new roads aren’t significant enough to pursue the county’s top needs, including $500 million in estimated upgrades for S.C. 90.
Fees vs. property taxes
Assistant Administrator Barry Spivey explained that impact fees can make issuing municipal bonds — which are commonly used for large county projects — more difficult.
Carson Bise, president of the firm TischlerBise and an impact fee consultant, explained that his analyses had not shown that other counties or municipalities with impact fees saw their growth slow down as a result.
And some council members, including Chairman Johnny Gardner, argued that impact fees were a more prudent measure than raising property taxes.
Raising property taxes in lieu of impact fees, Gardner said, amounts to a homeowner “basically paying for the impact the other guy is causing.”
But Servant and others disagreed, and pointed out that 75% of the county’s revenue comes from the taxes that businesses pay. That’s due to homeowners paying a 4% property tax rate compared to a 6% rate for businesses, as well as hospitality fees, accommodation taxes and other charges placed on commercial enterprises.
In reality, Servant said, the county services that residents demand — like new roads — are largely paid for by businesses, meaning the county shouldn’t “disincentivize” entrepreneurs from opening new restaurants, offices or other enterprises.
As an example, he cited The Sun News’ former office building on U.S. 17 in Myrtle Beach. Palmetto State Armory, a firearms retailer, purchased the building recently to use as a gun range and store. Under the county’s proposed increase, Palmetto State Armory would have paid more than $400,000 in impact fees than it would now.
Council member Harold Worley, the most senior councilor and a North Myrtle Beach business owner, argued that entrepreneurs account for impact fees in their up-front costs and that higher fees wouldn’t lead to fewer new businesses.
The argument that impact fees slow growth, Worley said, “does not fly.”
Worley, Gardner and Myrtle Beach council member Bill Howard voted to raise impact fees on Tuesday. The eight other council members voted against the plan. Council member Al Allen, of Aynor, was not present.
“Horry County is a business-friendly county,” Servant said. “If we put ourselves in a position where we are taxing our people to a point where business development cannot happen — whether that be a barber shop or a new restaurant — our tax base is going to decline.
“Impact fees aren’t going to solve that.”
