Carolina Station June 28 Announcement, Plea and Progress Report

 

Announcement and Plea

 

There will be several Horry County PRIDE associated speakers at the Tuesday, July 1, Horry County Council third reading on Carolina Station development approval and its development agreement approval. Julie Harbin, Pam Creech and Dick Leavitt will be speaking at the very start of this regular meeting seeking deferral of the development agreement for further negotiation.  The meeting begins at 6 p.m. Jim Paulin of Horry County PRIDE is going to be allowed to speak in response to a later presentation of a CCU associated economic model on Carolina Station that I understand was funded by International Paper.

 

Your attendance in support of these speakers efforts would be helpful as well as your alerting others in your e-mail list suggesting their attendance. A big turn-out before county council in support of a position always helps.

 

Progress Report

  -- George Edwards 

 

 GIAC has focused on the big ticket item: new developments paying for the public school facilities they require. Although technically they are not the direct concern of  county council, only county council can pass the ordinances necessary to shift new school taxes from the rest of us to the new developments that require them.

 

During public input on the June 17 second reading for Carolina Station development agreement approval, Jim Paulin did an excellent  job discussing the shortages in the Carolina Station development agreement as to the expenses, and so the additional increased taxes to the rest of us due to the public facilities other than schools that Carolina Station will incur.

 

At the same time, Pam Creech did a great job discussing other shortfalls in the Carolina Station development agreement.

 

And a PowerPoint presentation was given focusing on the the additional increased taxes to the rest of us due to the public school facilities that Carolina Station will incur

 

We all seek deferral of the Carolina Station development agreement for further negotiation. In my case, at least, for the school system which now has the Residential Improvement Act to use as a negotiating tool.

 

The only council people that voted against Carolina Station development agreement approval at second reading were Gilland, Worley, Barnard and Schwartzkopf. Schulz recused himself.

 

I believe International Paper will negotiate further if County Council does not roll over and approve everything at third reading this Tuesday, July 1. International Paper will not make any place close to as much money selling the Carolina Station land in pieces as it can selling it to sub-developers as an entire development.

 

I have cleared with the House, Ways and Means attorney that we can legally do two important things in a Residential Improvement District  development agreement -- have the county hold the bond proceeds and allocate them to the developer and the school district as required (despite the fact that the bond in a Residential Improvement District  is based on the developer's resources rather than the full faith and credit of the county), and delay issuing the bonds on the several schools until triggered by such as a certain number of homes having been sold in each case. This would take a big load off International Paper and further sweeten the pot for them. Otherwise it would be saddled with all the special district taxes for years. The Residential Improvement District Act is already attractive to developers because it allows facilities that developers currently provide to be included in the special district taxes, so the developer is not stuck with all those up-front costs except in its share of the special district taxes.

 

Similar PowerPoint presentations were made to all the County Council standing committees: Administration, Public Safety and Infrastructure and Regulations (I&R) to complement the PowerPoint presentation made to the entire council at its June 17 second reading on Carolina Station. If you want to view that presentation, click here, 

 

Will Garland, Horry County board of education chairman and Eddie Rodelsperger, chief construction management officer of Horry County schools, attended and spoke at the latest of these -- the June 26 I&R meeting. They gave the same final dollars for the public school facilities that Carolina Station will require as I have been -- $100M, not counting land. These are in today's dollars so one and a half to twice as much could realistically be expected for a development not to be completed for decades.

 

The immediately following is copied and pasted from the PowerPoint presentation slides used in the I&R meeting. This is followed by coverage including the discussions with county council members after the meeting and further comments.

 

____________________________

 

Carolina Station Development Agreement

 

Legalities

•         Referred to Tom Cone as the legal guru by both attorneys Mark Aquina of the House Ways and Means committee and Rick Fulmer of the House Public Works Committee

•         Tom Cone assured me that the Residential Improvement District Act was totally legal in including school facilities among those for which the costs could be included in residential improvement districts

 

E-mail from Joe Burch, Coordinator of Planning, Horry County Schools

•          “I think calling your figures ‘bare minimum’ costs is right on the money. It will likely cost more than what we estimate due to inflation and other economic factors.”

•         This refers to the $7,600 for public school facilities per Carolina Station home built for which the rest of us must pay the bulk as things are now

•         Derived from $99.7M for the facilities and bonding costs plus $5.5M for the 110 acres of land they require = $105.2M divided by 13,800 homes = $7,600 without developer contributions

 

Carolina Station Fiscal Impact Analysis Computer Model Output

•         “FISCAL IMPACTS WITHOUT DEVELOPER CONTRIBUTIONS”

•         “NET TOTAL CAPITAL FUND IMPACT ($22,167) ($21,640) ($20,019)”

•         The $20,019 is for the highest assumed assessed value in thousands of dollars.

•         Add this $20M to $105.2M for public school facilities а $125.2 M total for all public facilities а $9,072 total per home

 

Developer Contribution Effects on Carolina Station Net Costs

•         As to school facilities alone

•         International Paper has agree to donate 50 acres, period

•         At the less than minimum value per acre used in the computer model of $50,000, this comes to a $2.5M overall reduction or $181per home or for school facilities alone the cost per home approximates $7,420 with International Paper’s contribution

 

Carolina Station Fiscal Impact Analysis Computer Model Output

•         As to public facilities other than schools

•         $20M divided by 13,800 homes = $1,449 per home without developer contributions

•         Assuming International Paper contributions at its claimed value in the computer model that works out to $1130 per home is born out, subtracting this from $1449 yields a cost for public facilities other than schools per home considering the developer contributions of $319 -- not including increased operating expenses.

•         Note: At $50,000 per acre this would be $664 per home not including operating expenses.

 

Carolina Station Total Cost Per Home with Developer Contributions

•         The overall cost per home with the developer contributions including all public facilities including schools is then the sum of $7,420 for school facilities alone and $319 for other public facilities а

•         $7,739, again, with International Paper’s currently agreed contributions as shown in the computer model ($8,084 at $50K/acre)

 

Most Pertinent Residential Improvement District Features

•         Definitely can include public schools as well as other public facilities

•         Can also include facilities that developers usually provide

•         Bond to cover all agreed to is an obligation of the residential improvement district property owners, not the full faith and credit of the county

 

Most Pertinent Residential Improvement District Features

•         Main realization: the fact that some bonded facilities that a developer usually requires will be paid by Residential Improvement District special taxes is not a practical concern of the county or the homebuyers, because

•         The homebuyers always must pay everything, whether in the home prices or special taxes for a developer to stay in business.

•         Main concern is non-performance – public facilities or those specifically provided for the development’s owners through bankruptcy or otherwise.

 

Developer Agreement

•         Residential Improvement District requires development agreement

•         Development agreement statute requires more than 24 acres for a development agreement

•         Development industry loves the residential improvement district concept because developers up-front costs can go into bond to be paid by special taxes

•         Can phase taxes so most are paid by sub-developers and home buyers not International Paper (e.g. bond for particular school triggered when an agreed number of homes are built)

 

Steps

•         Defer Carolina Station to amend development agreement to establish facilities to be covered and their values, phasing of taxes, other residential improvement district details

•         Establish safeguards such as performance bonds with reliable insurance companies or letters of credit

•         Pass an ordinance so all developments greater than 24 acres must enter into development agreements so developments will pay the estimated costs of the public facilities they require

 

 

Carolina Station Development Agreement

                                                QUESTIONS?

 

                                                CONCERNS?

 

                                                OBJECTIONS?

 

                                                COMMENTS?

 

Carolina Station Fiscal Impact Analysis Computer Model Output

•         “FISCAL IMPACTS WITHOUT DEVELOPER CONTRIBUTIONS”

•         “NET OPERATING FUND IMPACT ($67,958) ($61,599) ($42,011)”

•         The $42,011 is for the highest assumed assessed value in thousands of dollars.

•         Add the $125.2M total for all public facilities to arrive at $167.2Mа $12,116 total per home cost including operating expenses without developer contributions

 

____________________________

 

Comments on and after the Committee Presentations

 

During the actual presentation to the I and R committee, I slid over the slides discussing the developer contributions for public facilities other than schools because those agreed contributions are largely land, and the per acre land value that should be ascribed to International Paper's agreed-to contributions for Carolina Station is controversial. (In the case for the school system, the value of the donated land for schools is insignificant compared to the total cost of the required public school facilities, I used a little less than the least per acre value ascribed to the land in the county's computer model -- $50,000 per acre.)

 

I also did not show the last slide having to do with the $42M of additional operating expenses that the county will incur over 20 years because of Carolina Station. That was a back up slide in case that subject came up. Operating expenses can only be included with a Public Works Improvement Act special tax district, but some attorneys argue that that act can not cover schools. The Residential Improvement District Act is the only S. C. legislation that inarguably includes schools.

 

There was no discussion after the I and R committee presentation. The pertinent discussion after the Public Safety committee meeting was questioning what this had to do with public safety. I quoted the Impact Fee statute that I, at least, read as saying that impact fees can not be charged in addition to a development agreement. If this is true, the only public facility relief that public safety could get out of Carolina Station was what International Paper was willing to explicitly contribute.  Maybe that is considered enough by some.

 

The major discussion item after the Administrative Meeting was the observation that if development agreements were required by only those developments of 25 acres or more, it was likely that many development approvals sought would be just less than 25 acres. It turns out that the term "development agreement" as used in the Development Agreement Act, may apply only to other planning considerations than finances. If that is true, its restriction of only developments greater than 25 acres being allowed to be covered by development agreements may not apply to strictly financial agreements having to do with developments. I have not yet got an attorney's opinion on this.

 

I will see if I can get an opinion or opinions on this Monday June 30.

 

If the 25 acres or more requirement does apply, perhaps the county could successfully petition the General Assembly to specifically separate out financial agreements to only being restricted so as not to be allowed for construction of a permanent residence for a property owner or his family. We could try.