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Improvement District Bill
-- George Edwards
The following
excerpts summarize the Improvement District Bill as downloaded on 11/28/07 -- To
amend the code of laws of South Carolina to allow a county to create an
improvement district comprised of noncontiguous parcels of land and to use
assessments to fund improvements located outside the boundaries of an
improvement district and the construction and improvement of schools.
Scroll down to read the
basic bill verbatim or, to read the excellent article written by Cindi
Scoppe in The State Newspaper on improvement districts as suggested by
Nick Kremydas, CEO of the S.C. Realtors Association, click
Unlikely source proposes new idea for making growth pay for itself
(a link previously published on this Web
site on 11/28/07). Quoting an excerpt from the Cindi Scoppe article:
"[Kremydas] has been working hard to define the Realtors
not just as a trade group with narrow interests, but as
an organization that promotes healthy communities — and
offers alternatives rather than simply saying 'No.'
Moreover, he has reason to worry if he can’t find
common-ground. The near-ban on impact fees is leading to
some creativity he’d rather not see. The Summerville and
Dorchester County councils are debating plans to deny
new building permits unless the infrastructure has the
'capacity' to support new construction — capacity that
builders could demonstrate by putting up the cash to
create it. A sort of make-me-an-offer-I-can’t-refuse
deal that has the whole housing industry in an uproar.
"Mr. Kremydas’ plan would allow a city or a county to
create a “residential improvement district” and charge
an annual fee to property owners to pay for new schools,
roads, fire stations and other infrastructure."
Comment
This could become an outstanding
form of a proportionate share statute and ordinance
depending on how it finally ends up being drafted.
Developers may find it more acceptable than other forms
as it appears to allow putting off payment of fees until
a new development is put in use or sold.
I have no idea what the
rationale is for the following limitation currently
written into the bill "the county is allowed to
collect a special district fee equal to, but not to
exceed, four percent of the amount of the bond." I would
think the only limitation should be to cap any special
district fee to the proportionate share of the public
facilities a development requires.
Extracted Text
The following is extracted verbatim from the bill as it
currently stands:
South Carolina
General Assembly
117th Session, 2007-2008
Indicates Matter Stricken
Indicates New Matter
H. 4260
STATUS INFORMATION
General Bill
Sponsors: Reps. Young, Mulvaney, Chellis and Cotty Introduced in the House on
June 7, 2007
Currently residing in the House Committee on Ways and Means
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
4-35-42 SO AS TO ALLOW A COUNTY TO COLLECT A SPECIAL DISTRICT FEE AND TO
PROVIDE FOR THE METHOD AND USE OF THE FEE; TO AMEND SECTION
4-35-30, AS AMENDED, RELATING TO DEFINITIONS, SO AS TO REVISE CERTAIN
DEFINITIONS AND PROVIDE A DEFINITION FOR "SERVICE AREA" AND "SPECIAL DISTRICT
FEE"; TO AMEND SECTIONS
4-35-50 AND
4-35-80, BOTH AS AMENDED, BOTH RELATING TO THE ESTABLISHMENT OF IMPROVEMENT
DISTRICTS, SO AS TO ALLOW A COUNTY TO CREATE AN IMPROVEMENT DISTRICT COMPRISED
OF NONCONTIGUOUS PARCELS OF LAND AND TO USE ASSESSMENTS TO FUND IMPROVEMENTS
LOCATED OUTSIDE THE BOUNDARIES OF AN IMPROVEMENT DISTRICT AND THE CONSTRUCTION
AND IMPROVEMENT OF SCHOOLS; BY ADDING SECTION
5-37-32 SO AS TO ALLOW A MUNICIPALITY TO COLLECT A SPECIAL DISTRICT FEE AND
TO PROVIDE FOR THE METHOD AND USE OF THE FEE; TO AMEND SECTION
5-37-20, RELATING TO DEFINITIONS, SO AS TO REVISE CERTAIN DEFINITIONS AND
PROVIDE A DEFINITION FOR "SERVICE AREA" AND "SPECIAL DISTRICT FEE"; AND TO AMEND
SECTION
5-37-40, AS AMENDED, RELATING TO THE ESTABLISHMENT OF IMPROVEMENT DISTRICTS,
SO AS TO ALLOW A MUNICIPALITY TO CREATE AN IMPROVEMENT DISTRICT COMPRISED OF
NONCONTIGUOUS PARCELS OF LAND AND TO USE ASSESSMENTS TO FUND IMPROVEMENTS
LOCATED OUTSIDE THE BOUNDARIES OF AN IMPROVEMENT DISTRICT AND THE CONSTRUCTION
AND IMPROVEMENT OF SCHOOLS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 35, Title 4 of the 1976 Code is amended by adding:
"Section
4-35-42. (A) Upon and concurrent with the final issuance of any
special district bonds or revenue bonds authorized pursuant to Section
4-35-40, the county is allowed to collect a special district fee equal to,
but not to exceed, four percent of the amount of the bond.
(B) The proceeds generated by a special district fee must be maintained by
the county in a separate and distinct account in the county treasury. However,
the county may deposit one or more special district fees in that account.
(C) Special district fees must be used by the county for capital
improvements that benefit those improvement districts that generated the special
district fees or that benefit both the districts and the entire county
collectively.
SECTION 2. Section
4-35-30 of the 1976 Code, as last amended by Act 389 of 1998, is further
amended to read:
"Section
4-35-30. As used in this chapter:
(1) 'Assessment' means an assessment voluntarily agreed upon by a majority
of the owners of real property within an improvement district and representing
at least sixty-six percent of the assessed value of all real property within the
improvement district. The assessment must be made upon all real property located
within the district, other than property constituting improvements within the
meaning of this section, and based upon assessed value, front footage, area, per
parcel basis, the value of improvements to be constructed within the district,
or a combination of them, as the basis is determined by the governing body of
the county. An assessment imposed upon real property with the consent of the
owner remains valid and enforceable in accordance with the provisions of this
chapter even if there is a later subdivision and transfer of the property or a
part of it. An improvement plan may provide for a change in the basis of
assessment upon the subdivision and transfer of real property.
(2) 'Improvements' means recreational facilities, pedestrian facilities,
sidewalks, storm drains, or water course facilities or improvements, the
relocation, construction, widening, and paving of roads and streets, any
building or other facilities for public use, any public works eligible for
financing pursuant to Section
6-21-50, and may include the acquisition of necessary easements and land and
all things incidental to the provision of the above. Improvements also
include the construction of new schools and the renovation and expansion of
existing schools. These improvements may be designated by the governing body
as public works eligible for revenue bond financing pursuant to Section
6-21-50, and the improvements, taken in the aggregate, may be designated by
the governing body as a 'system' of related projects within the meaning of
Section
6-21-15. The governing body, after investigation and study, may determine
that improvements located outside the boundaries of an improvement district
confer a benefit upon property inside an improvement district or are necessary
to make improvements within the district for the benefit of property inside the
district.
(3) 'Improvement district' means an area within the county designated by
the governing body pursuant to the provisions of this chapter and within which
an improvement plan is to be accomplished. An improvement district may be
comprised of noncontiguous parcels of land within a county if the county
determines that the parcels are located within the same service area.
(4) 'Improvement plan' means the overall plan by which the governing body
proposes to effect improvements within an improvement district to
preserve property values, prevent deterioration, and preserve the tax base.
(5) 'Owner' means a person twenty-one years of age or older, or the proper
legal representative for a person younger than twenty-one years of age, and a
firm or corporation, who or which owns legal title to a present possessory
interest in real estate equal to a life estate or greater (expressly excluding
leaseholds, easements, equitable interests, inchoate rights, and future
interest) and who owns, at the date of the petition or written consent, at least
an undivided one-tenth interest in a single tract and whose name appears on the
county tax records as an owner of real estate, and a duly organized group whose
tax interest is at least equal to a one-tenth interest in a single tract. If a
firm or person has a leasehold interest requiring it or him to pay all county
taxes, the agreement is not applicable to charges of the assessment of the
district as only the owner has the right to petition on the assessment charge
for the improvement district.
(6) 'Governing body' means the governing body of a county.
(7) 'Service area' means the physical area within the county
which the county determines will be served by the improvements.
(8) 'Special district fee' means the amount the county is
entitled to collect pursuant to Section
4-35-42."
SECTION 3. Section
4-35-50 of the 1976 Code, as last amended by Act 389 of 1998, is further
amended to read:
"Section
4-35-50. (A) If the governing body finds that (1) improvements may be
beneficial within a designated improvement district, (2) the improvements may
preserve property values within the district, (3) in the absence of the
improvements, property values within the area would likely depreciate, (4) it
would be fair and equitable to finance all or part of the cost of the
improvements by an assessment upon the real property located within the
district, and (5) written consent for the creation of the improvement
district from a majority of the owners of real property within the district and
having an aggregate assessed value in excess of sixty-six percent of the
assessed value of all real property within the improvement district has been
obtained all parcels that makeup the improvement district are located
within the same service area, the governing body may establish the area as
an improvement district and implement and finance, in whole or in part, an
improvement plan in for the district in accordance with the
provisions of this chapter.
(B) If an assessment is imposed for the purpose of funding improvements
involving the construction of new schools or the renovation and expansion of
existing schools, the governing body must determine that the improvements
provide a greater benefit to the improvement district paying the assessment than
the general benefit provided to the public.
(C) Instead of items (A)(2) and (A)(3), the governing body may find
that the improvements are likely significantly to improve property values within
the district by promoting the development of the property."
SECTION 4. Section
4-35-80 of the 1976 Code, as last amended by Act 389 of 1998, is further
amended to read:
"Section
4-35-80. The governing body may provide by the resolution for the payment
of the cost of the improvements and facilities to be constructed within the
improvement district pursuant to the improvement plan by assessments
on the property as defined in Section
4-35-30, by the issuance of special district bonds, revenue bonds, or
general obligation bonds of the county, from general revenues from a source not
restricted from that use by law, or from a combination of the financing sources
as may be provided in the improvement plan. The governing body may use the
provisions of Chapter 21, Title 6 to issue revenue bonds, and any assessments
authorized by this chapter are revenues of the system for that purpose."
SECTION 5. Chapter 37, Title 5 of the 1976 Code is amended by adding:
"Section
5-37-32. (A) Upon and concurrent with the final issuance of any
special district bonds or revenue bonds authorized pursuant to Section
5-37-30, the municipality is allowed to collect a special district fee equal
to, but not to exceed, four percent of the amount of the bond.
(B) The proceeds generated by a special district fee must be maintained by
the municipality in a separate and distinct account in the municipal treasury.
However, the municipality may deposit one or more special district fees in that
account.
(C) Special district fees must be used by the municipality for capital
improvements that benefit those improvement districts that generated the special
district fees or that benefit both the districts and the entire municipality
collectively."
SECTION 6. Section
5-37-20 of the 1976 Code is amended to read:
"Section
5-37-20. As used in this chapter, the following terms have the following
meanings:
(1) 'Assessment' means a charge against the real property of an owner
within an improvement district created pursuant to this chapter which may be
based on assessed value, front footage, area, per parcel basis, the value of
improvements to be constructed within the district, or any combination of them,
as the basis is determined by the governing body of the municipality. In the
event the governing body of a municipality determines that another basis for
assessment is appropriate or a more equitable allocation of costs among property
owners is appropriate, it may substitute such method for any of the foregoing.
An assessment imposed upon real property under this chapter remains valid and
enforceable in accordance with the provisions of this chapter even if there is a
later subdivision and transfer of the property or a part of it. An improvement
plan may provide for a change in the basis of assessment upon the subdivision
and transfer of real property or upon such other event as the governing body of
a municipality considers appropriate.
(2) 'Improvements' include open or covered malls, parkways, parks and
playgrounds, recreation facilities, athletic facilities, pedestrian facilities,
parking facilities, parking garages, and underground parking facilities, and
facade redevelopment, the widening and dredging of existing channels, canals,
and waterways used specifically for recreational or other purposes, the
relocation, construction, widening, and paving of streets, roads, and bridges,
including demolition of them, underground utilities, all activities authorized
by Chapter 1 of Title 31 (State Housing Law), any building or other facilities
for public use, any public works eligible for financing under the provisions of
Section
6-21-50, services or functions which a municipality in accordance with state
law may by law provide, and all things incidental to the improvements, including
planning, engineering, administration, managing, promotion, marketing, and
acquisition of necessary easements and land, and may include facilities for
lease or use by a private person, firm, or corporation. Improvements also
include the construction of new schools and the renovation and expansion of
existing schools. However, improvements as defined in this chapter must
comply with all applicable state and federal laws and regulations governing
these activities. Any such improvements may be designated by the governing body
as public works eligible for revenue bond financing pursuant to Section
6-21-50, and such these improvements, taken in the aggregate,
may be designated by the governing body as a 'system' of related projects within
the meaning of Section
6-21-40. The governing body of a municipality, after due investigation and
study, may determine that improvements located outside the boundaries of an
improvement district confer a benefit upon property inside an improvement
district or are necessary to make improvements within the improvement district
effective for the benefit of property inside the improvement district.
(3) 'Improvement district' means any area within the municipality
designated by the governing body pursuant to the provisions of this chapter and
within which an improvement plan is to be accomplished. No special improvement
district may include the grounds of the State House in the City of Columbia.
An improvement district may be comprised of noncontiguous parcels of land within
a municipality if the municipality determines that the parcels are located
within the same service area.
(4) 'Improvement plan' means an overall plan by which the governing body
proposes to effect improvements within an improvement district to
preserve property values, prevent deterioration of urban areas, and preserve the
tax base of the municipality, and includes an overall plan by which the
governing body proposes to effect improvements within an improvement district
in order to encourage and promote private or public development within the
improvement district.
(5) 'Governing body' means the municipal council or other governing body
in which the general governing powers of the municipality are vested.
(6)(a) 'Owner' means any person twenty-one years of age, or older,
or the proper legal representative for any person younger than twenty-one years
of age, and any firm or corporation, who or which owns legal title to a present
possessory interest in real estate equal to a life estate or greater (expressly
excluding leaseholds, easements, equitable interests, inchoate rights, dower
rights, and future interest) and who owns, at the date of the petition or
written consent, at least an undivided one-tenth interest in a single tract and
whose name appears on the county tax records as an owner of real estate, and any
duly organized group whose total interest is at least equal to a one-tenth
interest in a single tract.
(b) It is provided, however, that, if any firm or person has a
leasehold interest requiring it or him to pay all municipal taxes, such
the agreement shall not be applicable to charges of the assessment of the
district as only the owner has the right to petition on the assessment charge
for the improvement district.
(7) 'Service area' means the physical area within the
municipality which the municipality determines will be served by the
improvements.
(8) 'Special district fee' means the amount the municipality is
entitled to collect pursuant to Section
5-37-32."
SECTION 7. Section
5-37-40 of the 1976 Code, as last amended by Act 109 of 2005, is further
amended to read:
"Section
5-37-40. (A) If the governing body finds that:
(1) improvements would be beneficial within to a designated
improvement district;
(2) the improvements would preserve or increase property values within the
district;
(3) in the absence of the improvements, property values within the area
would be likely to depreciate, or that the proposed improvements would be likely
to encourage development in the improvement district;
(4) the general welfare and tax base of the city would be maintained or
likely improved by creation of an improvement district in the city; and
(5) it would be fair and equitable to finance all or part of the cost of
the improvements by an assessment upon the real property within the district,
the governing body may establish the area as an improvement district and
implement and finance, in whole or in part, an improvement plan in the district
in accordance with the provisions of this chapter. However, owner- occupied
residential property which is taxed or will be taxed under Section
12-43-220(c) must not be included within an improvement district unless the
owner at the time the improvement district is created gives the governing body
written permission to include the property within the improvement district.;
and
(6) all parcels that make up the improvement district are
located within the same service area.
(B) If an assessment is imposed for the purpose of funding improvements
involving the construction of new schools or the renovation and expansion of
existing schools, the governing body must determine that the improvements
provide a greater benefit to the improvement district paying the assessment than
the general benefit provided to the public."
(C) If an improvement district is located in a redevelopment
project area created under Title 31, Chapter 6, the improvement district being
created under the provisions of this chapter must be considered to satisfy items
(1) through (5) of subsection (A). The ordinance creating an improvement
district may be adopted by a majority of council after a public hearing at which
the plan is presented, including the proposed basis and amount of assessment, or
upon written petition signed by a majority in number of the owners of real
property within the district which is not exempt from ad valorem taxation as
provided by law. However, owner-occupied residential property which is taxed
or will be taxed under Section
12-43-220(c) must not be included within an improvement district unless the
owner at the time the improvement district is created gives the governing body
written permission to include the property within the improvement district."
SECTION 8. This act takes effect upon approval by the Governor.
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