Amending the State Impact Fee Law Would be Real Government Effectiveness

By Paul Gable

Earlier this month, Rep. William Bailey (R-104) posted the following on his Facebook page to his constituents in Horry County:

“As the federal and state governments start to review and reform their financial responsibilities to our taxpayers, I strongly encourage local governments to begin a process of enhancing infrastructure projects, limiting governmental expansion, and encouraging and assisting small businesses as they struggle with related inflation that negatively impacts us all. Every dollar should be a wise investment for our future but more importantly, they should be dollars that improve our economic stability.”

Bailey has generally done a good job representing his constituents in the North Myrtle Beach area. One thing he could do to further help all the citizens in Horry County would be to sponsor a bill to amend the state’s current impact fee law to help local governments correctly apportion the costs of infrastructure improvements and additions caused by new construction.

In 1999, the General Assembly passed legislation governing the imposition of impact fees by local governments. The law contains enough restrictions and obstacles to make the impact fee law virtually unworkable for local government use. The development industry used a huge lobbying effort against the law, which was generally successful in making the law extremely difficult for local governments to use effectively.

The legislation dictates how the local governments must use the money and in what time frame it must be used. It also requires commercial structures to be treated the same as homes with respect to taxing, something that makes impact fees on commercial structures an excessive burden.

Two amendments, allowing homes to be addressed by the local government without the requirement to include commercial structures and allowing local governments to use the money in any way they decide best meets their needs for infrastructure and service improvements to offset the demands of development, would solve the problems in the current law.

Horry County council has periodically asked its local legislative delegation to amend the impact fee law with no effect. Local governments have had to raise property taxes on all citizens and resort to things like local option sales tax RIDE programs, again hitting all citizens, to raise money to help meet the local infrastructure needs caused by an increasing population.

In a 2018 advisory referendum, Horry County voters resoundingly supported the concept of having new construction pay for the improvements in county goods and services required by increasing population in the county. Asked whether they supported imposing impact fees on new development, 74,904 voters out of the 103,186 answering the question, said YES. That result shows 73 percent of voters in Horry County support imposing real impact fees on new development.

To date, there has been no help from the state legislature to fix this problem. New construction creates increased costs to provide local government infrastructure and services. Impact fees theoretically have those costs initially paid for by the new residents. Without sensible impact fees, those costs are spread among all residents throughout the county effectively increasing the taxes of current, many lifelong, residents.