I and R Proportionate Share Ordinance Presentation

6/6/08 Update: I have just learned from the S.C. Ways and Means committee that the Residential Improvement District Act has passed the S.C. General Assembly. As long as the governor goes along, this removes (in my mind) any excuse for county council not to insist that Carolina Station and subsequent large developments agree to put their development into such a special tax district agreeing that the development pay for the school facilities that it requires. (The subsequently added Getting Developments to Pay for their Public School Needs, accessible by clicking the item in the left-hand menu goes into greater detail.) The Residential Improvement Act specifically calls out public school facilities as public facilities that it can be used to cover. Click the Residential Improvement District Bill item in the menu on the left for more information.

"Why can other counties control development and have it pay for itself while Horry County can not?"

There are many development management tools available for Horry County to control its growth and development. Foremost among these are an adequate public facilities ordinance and a proportionate share ordinance. The first requires public facilities to be adequate in an area, at least after development, for a development to be approved in that area. The second offers developers the option to develop in that area if they, at least, agree to contribute their proportionate share of the additional taxes required to pay for the public facilities their development requires.

A proportionate share ordinance is a newer approach to supplementing an adequate public facilities ordinance that has apparent advantages over other ways to get development to pay for itself. First, may be its name, because it most clearly states its purpose. Second, may be that it asks for contributions such as dedication of land or structures rather than requires a fee before development is approved. Third, it provides flexibility in the details of exactly how the contributions are to be apportioned as long as the total proportionate share is contributed. Fourth, as outlined in presentation to Horry County Council committees and the board of education, it standardizes* the methods county-wide for determining a fair total proportionate share contribution.

The presentation given to the Horry County Council I and R committee and a more evolved one given to the board of education follows with a report on the discussion that followed during the I and R committee answer period (including discussing tools used in other counties) and then comments clarifying one of the discussion points. Finally, links are provided to previously prepared sections on this Web site concerning an Adequate Public Facilities Ordinance and an As Adequate Public Facilities Ordinance. The latter includes some ideas incorporated into the Proportionate Share Ordinance that supersedes it, primarily because it is evident that it is not really possible for a developer to make all public facilities as adequate after development as prior to development -- only the development’s negative fiscal impact on the county government and on the taxes paid by previous residents can be mitigated.

Clicking the final link in this section would take you to information on the new Horry County comprehensive plan Land Use Element steering committee actions that led to their recommendations. It includes the official minutes of their meetings and other information not included on the county Web site.

Despite what ended up as a preponderance of big landowner and development interests represented on the committee, the comprehensive plan includes lofty worthwhile goals including the following implementation strategy: “Develop an Adequate Public Facilities Plan that identifies base levels of service as well as funding mechanisms for maintaining current levels of service and infrastructure capacity in the future.”

The quote is from a pdf file dated July 5, 2007 that was downloaded from the Horry County Web, www.horrycounty.org. The final plan may still be amended by the Planning Commission and Horry County Council. Allegedly development interests intend to oppose an adequate public facilities ordinance. A Sun News editorial said as much – in my memory, explicitly naming Steven Neeves of the Coastal Carolina Association of Realtors.

Horry County staff and Horry County schools have not, so far, gotten together to determine the appropriate proportionate share for schools although there is a few-years-old analysis detailed under the Impact Fees section of this Web site that led to an average of more than $24,000 per student cost for new school facility construction or, based on the then county-wide average of approximately one-fourth student per household, this would approximate $6,000 per household. A separate analysis of the then non-recurring costs of Horry County schools (e.g. bond and bond servicing expenses) yielded more than $16,000 per student costs.

Horry County government says that this determination is outside its purview because the Horry County school system is a separate and autonomous taxing authority. This is true as the school system sets its own taxes; Horry County government just includes them in the overall tax bills we receive. As both bodies are elected to serve Horry County taxpayers they should jointly or separately determine appropriate school system proportionate shares per student/housing unit.

The S.C. impact fee statute, specifically, does not deal with public schools at all. Proportionate share is one of the bedrocks of any statute or ordinance such as impact fees or proportionate shares. Click Improvement District Bill to see a potentially valuable approach to addressing this inequity. A Residential Improvement Act bill has since superseded that bill and is still in development. Information on that is still to be added to this site.

*In a subsequent conversation with Janet Carter, she seemed to prefer the words "applied equally across the county" over "standardized."

Click here to skip to the discussion after the I and R presentation that includes considerable information on what is being done elsewhere to counteract the fiscal impacts of development on local governments

"Right now the citizens are the bankers for the developers. We pay for the original roads. After the developers develop the area and make tons of money, the citizens pay to widen the very same roads AND we pay for new roads, the new schools, the new libraries, the police and fire stations. The citizens of Horry County are paying for everything., and the developers are walking away with fortunes. Why are we putting up with this?" -- Mike Ryan, Horry County District 4 councilman

The Horry County Council Infrastructure and Regulation Committee Chairman suggested that Marion Foxworth, Horry County Councilman and committee member lead any questions on the presentation as he had just attended a S.C. League of Counties conference on the general subject.

Foxworth said that the whole conference concerned the fiscal impacts of development on local governments. He asked Edwards if this would apply to all zoning classifications -- straight zoning, PDDs?

Edwards said that the presentation concerned itself primarily with residential uses, that residential uses were what largely caused the fiscal problem.

Foxworth asked if it would apply proportionately to a quarter acre lot or fifty acres?

Edwards: "In the sense that it would be proportional, in one way or another, to the number of residences. . . "

Foxworth: "Wouldn't it almost require a development agreement for every rezoning?"

Edwards said: "This is the expert on that [referring to attorney Janet Carter and Planning Department Director who was sitting on his right]. But he spoke for her as having said that a proportionate share was fine as long as it is standardized throughout the county and it is applicable to the needs of that particular development. He said: "Then it is constitutionally okay. Then we get into the question that the state hasn't given us a proportionate share ordinance." He misspoke in that legislation by the state is a "statute" not an "ordinance."

Edwards continued to say that the state had given us an impact fee statute that ideally would have resulted in a similar effect as the proposed PSO [but did not] except that that the proposed PSO would ask for contributions rather than require fees. He said that if a PSO were passed, it would become a law that would give a basis for "you guys to do exactly some of the things that you've been doing already."

Foxworth said that one of the sessions last week that was two hours in length concerned how to do end runs around the (onerously framed) S.C. Impact Fee statute.

Foxworth continued: "One of the things I learned was that Horry County is yards behind other counties. Dorcester County adopted at second reading last week an adequate public facilities ordinance. Lancaster County is looking at revisiting already approved PDDs to assess additional impact fees, specifically for schools. Jasper County was probably held up as the model for counties throughout the state and they have passed an ordinance that requires all developments of 25 acres or more to be PDDs and all PDDs to require development agreements that allows them to assess development fees. The development fees in Jasper county are $6700 per house. In Dorcester County, they have determined that the cost to local government for new development is about $28,000 per house. And juxtapose that against where we are in Horry County, we're just tipping our toes into voluntary impact fees."

Foxworth said: "I agree with you Mr. Edwards. I don't know whether we can get there. I'm not sure this would hold up, but I agree with you. I think we are going backwards instead of forwards right now."

Edwards said: "Ms. Carter has said that, constitutionally, this is okay and that we don't have a state law. We do have an impact fee statute and we all know how that is. Maybe it is a good thing that we don't have a state law. Lawyers can argue anything and she [Mrs. Carter] said it could be argued on the grounds of home rule. Mt. Pleasant did have impact fees before we had a state law. In fact that is one of the reasons [laughs] we have the statute" [in order to regulate what localities would be allowed to do with impact fees].

Foxworth interjected something that my tape did not reproduce well about Beaufort county - perhaps that it had originally had impact fees.. He said: "Mt. Pleasant has a hard and fast 3% growth cap. If they get building permit applications that exceed 3%, the applications go into a hat and are pulled out lottery fashion. Charleston County has a unified development ordinance -- in certain parts of the county, it restricts density to one house per 25 acres."

Edwards: "Along these lines in other areas -- needless to say, I looked up on the Internet if there are other proportionate share ordinances out there. There are, not a lot of them, largely in Florida. Their biggest thing is on the roads -- something, at least, is developing on schools. I can get you more information if you care, but there is some background for it.

"As I say, this is a contribution, not a fee. In a sense, yes, it is the same as an impact fee. In another sense, the thing is if you want your development approved . . . . The problem with an adequate public facilities ordinance, as I indicated [in the presentation] is it [alone] just raises the taxes on everybody, which I am not for, to get facilities adequate. That is not a good thing. I think you and I are on the same page 1000 percent."

Foxworth: "I don't want to get into something that can be construed, even if mandatory, as extortion by public officials."

Edwards: "I can't tell you the names [on the Internet]. They are doing it some places in Florida right now. There are various counties that have enacted it. Florida actually has a statute."

[My tape recorder cut off here. I have to report everything from here on as recorded in my notes prepared when I was listening to the county tape. ].

The general said that the fairness doctrine was very important to be in there and that some time it will come up in court -- with the fairness doctrine in there, we are way ahead of the game.

Foxworth: "That's the part that kind of strikes me. We can pass something like this . . . applies to all zoning classifications equally. I'm not sure [pause]. That's something I would look at closely."

Carter: "Something like this, you really shouldn't and if you did something like this [not clear, but those are my notes here]. Mr. Edwards and I have had many many conversations and e-mails exchanged. I'm not saying I support Mr. Edwards concepts. But you would never collect fees like this at the rezoning stage. The proper time is at the development stage, because zoning means nothing. It can change and does change three to four times, sometimes before a property is actually developed. That is true for impact fees or anything else of this type."

Carter continued: "But there are problems with what Mr. Edwards is saying. We don't have any state enabling legislation. We're basically sticking our necks out there if you adopt anything of that type. All we have to rely on is this kind of nebulous home rule that gives us, you know, broad general powers. People could challenge this as a back door impact fee.

"What you said about development agreements is [pause] the only tools we have in state law are: PDD zoning, development agreements and impact fees. That's all they have clearly given us to work with, and development agreements, while they can be used for 25 acres, I don't think they were ever meant to be used for every rezoning. Problems with that, but -- could be done."

Edwards: " . . . maybe not zoning, but uses. For instance, if doing on schools, in a senior community seniors should not be charged for schools." [This is covered in the proportionate share ordinance presentation and the handouts at the meeting but the slides on schools and commercial property were skipped completely in the oral presentation. And the other slides after the slide "Road Example" were only perfunctorily covered orally.]

Carter: "Actually, there have been discussions on this with the comprehensive plan steering committee which Mr. Edwards, Ms. Creech were on and, at one point, Pat Lebiedz. [Pam Creech and Pat Lebiedz were among the attendees at this I and R meeting] -- discussed in connection with the Land Use element. Their discussions on this and other issues will be presented to the Planning Commission within the next 30 days. This was an issue that was discussed vigorously [but not adequately -- see the comments following this discussion write-up]. And I don't think Mr. Edwards necessarily liked the way it came out [laugh]."

Gen. Vaught: "What we are doing in Horry County is as uneven as a pile of rocks."

Gen. Vaught: "I'm talking about development fees, ordinances, rezoning -- the whole thing. When I came back here ten years ago, we had three categories. How many now, Janet?

Gen. Vaught: "We've tried to accommodate, tried to be fair. It's better, maybe, but we aint there yet. It's uneven as a pile of rocks."

[The general had come over to my chair earlier while someone else was speaking and quietly opined that if I just said that doing what I proposed would mean there would be no more millage increases, everyone would be for it. I asked if he meant the county council or the public. He said:" both."]

After the meeting broke up, I related the general's aside to me to Schwartzkopf and asked him if it would be true that no more millage increases would be required if a proportionate share ordinance was passed. He told me how he thought it should be said. I said I could not remember his words adequately and opined that it would work better if he said them in public.

In response to the discussion comment by Ms. Carter: “This was an issue [Proportionate Share Ordinance] that was discussed vigorously. And I don't think Mr. Edwards necessarily liked the way it came out [laugh]," this potential ordinance was discussed vigorously, although far from thoroughly, in the next to last Envision 2025 Comprehensive Plan Steering Committee Meeting. It is not mentioned by name in the official minutes, only: “George Edwards proposed an Adequate Public Facilities strategy.” It was defeated and so would not be expected to be a portion of the official comprehensive plan reports to the public, the Planning Commission or to Horry County Council.

It was presented as a motion: "Require a developer to contribute in kind or financially the development's proportionate share of the public facilities the development requires that will be unavailable after development," with an additional discussion of how it could be implemented, but not any place close to the detail shown in the I and R meeting PowerPoint presentation. Most of the objections were not, in my mind, germane. But it clearly would have been defeated by the committee as constituted, at this point, in any event, as you can see below.

The motion introduced at the final meeting was worded, as suggested between meetings by the committee chairman, as follows: Establish ways for growth to pay for itself so that the tax burden on existing residents is not increased to pay for the additional facilities required to support new developments. Even that was defeated, including the negative vote of the chairman, by all but five attendees. If this, to me, innocuous motion, could not be approved, the specific Proportionate Share Ordinance would not have had a chance with this committee regardless of how thoroughly it was discussed.

One could explain the defeat of this final-meeting motion as because attendees saw any such motion as nothing but calling for additional taxes, although it is evident, and was clearly explained at the meeting, that it would not result in additional taxes but a shift of taxes from the general population to the development that would require additional public facilities. These, of course, would be passed on to new residents buying into the development.

Perhaps some individual members in opposition had land upon which they thought they might develop and so would be additionally taxed by such a measure. But the bulk of the opposition was clearly by those representing big landowners or allied with the development community. In addition to those representing such organizations and given appointment authority by the just preceding county council, there were three county council appointees clearly allied with development interests. although that council, in the ordinance establishing the clearing committee, excluded county council members from appointing individuals from their district “affiliated with the real estate and land development industries.”

Click Steering Committee Membership Criteria and scroll down to Appendix A to see a copy of the pertinent wording in the initiating ordinance. A fourth county council appointment, “Doctor’s Care” made late in the land use element comprehensive plan discussions also consistently voted with development interests. Click Updated Envision 2025 Horry County Comprehensive Plan Steering Committee Members to see the final composition of the steering committee. Note that Horry County engineering (civil engineering) firms’ livelihood is dependent on the development industry.

County Council appointees from District 3, 7 and 9 who may have voted for the “development to pay for itself” motion were absent from the final meeting. District 7 and 9 appointees, perhaps after the originally planned two years, were absent from the steering committee after April 19 as was the Coastal Carolina Association of Realtors representative. The second Horry County Planning Commission appointee, Holly Kauffman, who was also absent in the final meeting although a regular attendee during the land use element discussions, would have likely voted against that motion as she consistently championed development interests. Representatives from the Horry-Georgetown Technical College and the Myrtle Beach Hospitality and Tourism Association never attended any land use element meeting and Horry County Schools had a representative attending only one – the February meeting.

The same proportionate share ordinance presentation as that given to the I and R committee was given at 9 a.m. in the public input portion of the September 20 administration committee meeting . There was no discussion of the presentation after Edwards asked if there were any questions.

In both meetings, after the portion of the presentation up to the slide "Questions," only the "Road Example," "Planning's Software Program Evaluation" and "Reserve Account" were actually presented. A presentation outline print-out as shown in the I and R meeting account above was passed out to all county council members present immediately after each presentation.

In this meeting, chairman Frazier quickly moved on to the agenda items after the presentation. Other council persons present included another administration committee member, Brent Schultz who left early at 10:45. Committee member, Howard Barnard, was not present. Council chairman, Liz Gilland was not present at the very start of the meeting but she attended as well as councilmen Carl Schwartzkopf, Al Allen and Paul Prince. Other than staff, there were about fourteen in the audience including the five who presented the current planned design of the one-runway-side airport terminal before leaving.

The bulk of the regular agenda concerned financial matters and the new airport terminal design.

There was a discussion on the state statute providing a county option that would accelerate when a newly built property could be put on the tax rolls. Currently there can be a delay of as much as many as 21 months after a certificate of occupancy. County attorney, John Weaver, had advised against exercising the county option because of what he saw as state constitutional problems. Charleston had relied on an earlier county option statute that had been struck down by the courts and required a million dollar return of taxes to citizens.

Rather than reconstituting the periods of service of county appointed board and commission members to coincide with county council person terms, the committee voted to recommend to the overall county council that an individual councilman be allowed to terminate a member appointed for his district. Currently a member can be terminated only upon a two-thirds vote of the members of the committee to which the member belongs.