|
George's Information and Comments Growth Impact Action Committee ________________________________________________________________________________________________________________________________________________________ |
|
|
Carolina Station April 2008 Recommendations
Click the section title you want to read in the following table:
Essay Submitted to The Sun News Click here to see the backup for the dollar estimates.
The proposed approximately 6,260 acre Carolina Station development will conservatively require $125.4M of public facilities, most of which will currently be paid by the other Horry County taxpayers -- who, without the development, would have no need for the public facilities that the development will require. Visit the Growth Impact Action Committee Web site, www.giac2002.org, to see the detailed calculations for the $125.4M estimate as well as those for the $9,086.96 each Carolina Station residential property buyer should pay to cover this.
If Horry County Council does not require the Carolina Station property buyers to pay this, the other Horry County property owners will have to pay the bulk of the $9086.96 for every Carolina Station residence constructed. Don’t let anyone tell you differently, County Council has the power to require new developments to pay a substantial part of the public facilities they require.
International Paper has suggested each residential property buyer should pay a fee to the county of a bit more than $900 to repay it for the public facilities that it has agreed to contribute. This would be an up-front fee rather than included in the residential sales price as an impact fee would be. A developer would include its impact fee costs as part of the purchase price that could be spread over 30 years with a typical buyer's mortgage.
But S.C. law does not allow schools, among other things, to be included in impact fees. The Horry County fiscal impact software model shows a net public facility cost for Carolina Station, not including schools, of a little more than $20M. Dividing this by the 13,800 homes estimated to be built in Carolina Station shows about $1,449 – approximately $7,638 short of the development’s per residence public facility costs including schools. That is, the estimated cost of Carolina Station’s required public facilities not including schools, that perhaps could be reimbursed with impact fees is little more than the “tip of an iceberg” compared to the costs to Horry County taxpayers including schools.
The way to have Carolina Station pay any appreciable part of its own way in a way that would allow spreading its per residence $9,086.96 estimated public facilities costs, including schools, to its buyers over time is to put Carolina Station in a special tax district – specifically, under current S.C. statutes, in a Public Works Improvement District.
Any special tax district requires the developing property owner’s agreement. International Paper currently says it will not agree to have Carolina Station become a Public Works Improvement District.
County Council should not agree to allow International Paper, or any other property owners proposing development on their properties above the 25 acres allowed for development agreements under S.C. law, to develop their properties unless the developing owners agree to arrange for the development to pay for the public facilities the developments require..
The school system has no power to enact the ordinances required to shift taxes to pay for the additional school facilities that new developments require from other homeowners. Only the County Council has the power to make county law. And county taxpayers elect Council members to represent their interests to the extent they can within Council’s legislative power, not to just balance the county budget.
The chairman of the Planning Commission says that it does not have the responsibility to ensure that developments pay their own way
This is all on the shoulders of the County Council to do. And it can do it. County taxpayers should vote only for County Council members who have the will to ensure that developments do pay their own way.
Click here to return to the top.
Planning staff has worked diligently for several months trying to negotiate the fiscal as well as the other aspects of the Carolina Station development agreement. But it can only go so far as it can reasonably expect support from the majority of the County Council members.
The dollar estimates in The Sun News essay are strictly based on information obtained from the county and the school system staffs without including any of the International Paper/DDC Engineering estimated “contributions” that, as of this writing, they are asking to be paid back to International Paper with fees collected by Horry County from the Carolina Station property buyers.
The dollar estimates are based on today’s dollars using slightly less than the lowest land values among the varied estimates for different types of facilities assumed in the Horry County fiscal impact software model and using the least net fiscal impact computed output for the facilities among the various assessed property values (that is, they use the highest assumed assessed property values and so the greatest revenue and the least net fiscal impact) considered in the model.
The estimates assume that the required school facilities will be financed with bonds, as is apparently customary. Debt service for the school system is based on 20 year bonds at March 15, 2008 rates rather than longer life bonds which would accumulate to more costs. No debt service is assumed for the county public facilities required, as it is unknown what facilities will bonded or what will be paid from the general fund.
The school system costs, although in today’s dollars, are based on the school facilities required when Carolina Station is completely built while the county costs are based on only 84% of build-out (20 years into complete development), because that all we have available – that computed by the Horry County fiscal impact model.
The bottom line is that it is believed that the estimated total county plus school system required public facility net fiscal impact for Carolina Station is so conservative that any reasonable person would accept it as an absolute minimum.
The net operating expenses fund fiscal impact of the Carolina Station development is not considered here although that will also be significant. Ideally such would be covered by ongoing taxes to Carolina Station and prior existing taxpayers. Actually the share that Carolina Station will carry under the current tax system will be inadequate although it is higher than for properties of lower assessed value. (For the county alone [not including the school system], its computer model projects more than a $42 million operating fund fiscal impact over 20 years for Carolina Station homes assessed over an estimated range of $285,000 to $375,000 per housing unit or almost $68M over 20 years for Carolina Station homes assessed over an estimated range of $225,000 to $290,000 per housing unit).
Click here to return to the top.
Based on the Horry County school system estimates of the public schools and percentage of their usage that will be required at build-out by the Carolina Station development, the cumulative costs in today’s dollars at current construction costs will be $68M. As of the 3/15/08 bond market the cumulative cost including debt service of a 20 year bond to cover those costs would approximate $99.7M. This figure does not include the cost of the 114 acres of land originally donated and set aside in the development agreement for schools.
In addition to
schools, the Horry County Tischler fiscal software shows a net Carolina Station
public facility expenditure to the county of $20M, not counting developer
contributions, again not including the value of the approximately 106 acres of
land on which the public facilities other than schools will be built according
to the Carolina Station development agreement (approximately 98.1 acres for two
public parks, 4 acres for police, fire and EMS and 3.9 acres for a recycling
center). The approximate $20M net capital fund impact computer model output was,
more precisely, $22.167M, $21.64M or $20.019M (depending on
The sum of the costs of the schools and other public facilities ($99.7M for schools plus $20M for other required public facilities) thus approximates $119.7M not including the necessary land.
The Carolina Station development agreement discusses contributions and set-asides of 220 acres (114 acres for schools plus 106 acres for other public facilities). The county fiscal model software uses land prices from a bit more than $50,000 per acre to a something less than $90,000 per acre. Using a $50,000 per acre land value results in a minimum $5.7M total for the 220 acres of land, not considering bonding costs should bonds be used.
This all leads to a minimum estimated total cost of land for the public and school facilities plus the facilities themselves of $125.4M or a minimum public facility cost per home of $9,086.96 (dividing $125.4 by the13,800 homes projected for the development.
Click here to return to the top.
The Horry County school system estimates that Carolina Station will require at build out:
· Two elementary schools costing, in today’s dollars at current construction costs of $ 30M that it will fill to 100% capacity or a total cost for its elementary school students
· A middle school costing, in today’s dollars at current construction costs of $ 24M that it will fill to 75% capacity or a total cost for its middle school students of $18M
· A high school costing, in today’s dollars at current construction costs $ 40M that it will fill to 50% capacity or a total cost for its high school students of $ 20 M
Adding these together yields estimated cumulative costs in today’s dollars at current construction costs of the public schools and percentage of their usage that will be required at build-out by the Carolina Station development of $ 68M not including the land or the debt service on the required bonding.
There is no state funding, federal funding or other revenue streams for Horry County school facility construction to offset these costs; therefore, these estimated expenditures represent an estimate of the net capital fund impact to the school system.
According to Howard Barnard on 3/15/08, a $12M bond then was available at a rate of 3.94% and that, amortized over 20 years approximated $880,000 per year. Taking 20 times the $880,000 yeilds a total cost of $17.6M for a $12M 20 year bond then. A similar $64M bond would ratio upwards to $68M/$12M X $17.6 = $99.733M or rounding downwards, an approximate $99.7M new school facility costs, not including the cost of 114 acres of land for schools discussed in the development agreement. The school and other facility land costs are included in the earlier derived grand total for facilities and land of $119.5M
The school facility estimates above are based on the following e-mail estimates from Horry County school system planning coordinator Joe Burch:
3/6/2008
At Ocean Bay Elementary, the total construction cost, without land purchase, was right at $15 million. At Black Water Middle, the total construction cost, without land purchase, was around $24 million. At St. James High, the total construction costs, without land purchase, was right at $28 million. That school was built 5 years ago. These numbers do not include land, as I mentioned above, but they do include the cost of the site work for the land.
Based on recent southeast average construction prices for schools in School Planning and Management Magazine, a new high school similar to that one would probably run around $40 million in 2007 dollars. This would not include land.
I should stress that these are estimates and the construction costs can and will change.
Based on the estimated housing at Carolina Station we are estimating approximately 2,600 K-12 students will come out of the development at build out. Based on current percentages, 1,300 of these will be elementary age, 650 middle school age, and 650 high school age. We expect to need 2 new elementary schools, and potentially a new middle and part of a high school. I need to stress again that these are estimates based on the available data we currently have. Predicting school impacts out 25 years is extremely difficult and I would expect that our estimates will change once we start getting actual data from the development.
3/7/8
George, I can give you this information based on your reply – the percentage of students from Carolina Station that would be elementary age would require 2 elementary schools at build out, 75% of a middle school and about 50% of a high school. Currently there is some room at Daisy Elementary to absorb students in the short term but that is not a long term option. There is also some room at Loris Middle and Loris High to do the same. Eventually however those schools cannot absorb the students without major additions or additional schools being built. The growth in the Loris area, not related to Carolina Station, will fill those schools up within 5-7 years, based on our estimates.
Click here to return to the top.
Thank you, Horry County PRIDE members, especially Jim Paulin, for reviewing an advance copy of this, catching an arithmetic error and making valuable suggestions.
Click here to return to the top.
Note on the Public Works Improvement District Approach
For more information on the Public Works Improvement District approach referenced in the essay and its comparison to other fiscal growth management tools, click Growth Management Tools to access the “Growth Management Tools” page, and then on the page that appears, click “Putting it all together (Overview: Impact Fees, Residential Improvement and Public Works Districts).”
The Public Works Improvement District (PWID) approach relies on the existing Public Works Improvement Act statute linked to in that section. It is most desirable and applicable to Carolina Station for the reasons given in the essay: it currently exists while the Residential Improvement District (RID) approach, as far as is known at this writing, is still only covered in a bill under discussion in the General Assembly and impact fees do not cover schools. The land to be set aside for the middle and high schools in Carolina Carolina Station is adjacent to Carolina Station so they can be covered with a PWID. An RID that allows public facility coverage elsewhere in the county may be the better approach for other developments. A statute combining desirable features of the PWID and RID could be a better approach yet, but that is unusable “vaporware” at this time.
Click here to return to the top.
|