By Lindsay Street
Staff Writer

Both sides in the Adequate Public Facilities Ordinance debate in Dorchester County have the same concern: the cost to the homeowner.

The proposed county ordinance would require developers to determine if county services can support new residential communities and, if the current county-provided services are inadequate, the developer must invest in public services including schools, water, sewer and roads to accommodate incoming families. A similar decree is on the table in the town of Summerville.

At two public hearings held in September and October in Dorchester County, proponents of the ordinance said if residential development continues unchecked, the county would have to raise taxes to pay for expansion of public facilities as more residents strain the system.

Opponents of the ordinance say its passage would increase initial home-buying costs because the developer would have to invest more money into the community and that outlay would be passed along as an expense to future home buyers. Increasing home costs would affect current residents looking to buy and incoming residents moving to the area, opponents have argued.

Those who have provided impartial counsel to the County Council members on the ordinance have said both sides are partly right.

Charleston-based Applied Technology & Management Inc. Vice President Tony Maglione and Dorchester County Administrator Jason Ward said taxes will probably rise in the county regardless if the Adequate Public Facilities Ordinance is passed and that, though the ordinance might raise initial home-purchase costs, it wouldn’t be by much.

Taxes will rise

Taxes and service fees on the county level will rise in the coming years—but it isn’t necessarily in response to out-of-control growth, Ward said.

“Yes, (taxes are) still going to go up,” Ward said. Each year, the cost of municipal operations and personnel rises by at least 3% thanks to inflation, he said.

Under recent legislation, local governments can raise millage rates, or town or county tax rates, by 15% every five years if a piece of property does not change ownership.

Property taxes are calculated by multiplying millage rates by the assessed value of a residential property. Each county determines the number of mills required to raise money it needs to operate for the next year.

The bottom line, Maglione said, is that taxes will rise whether the Adequate Public Facilities Ordinance is passed or not, and the millage cap ensures that property taxes will never become too high for low-income or fixed-income residents in the county, Maglione said.

Taxes rise in response to rising cost of maintaining a level of service without increased revenue from residential or industrial growth, he said.

Besides, it isn’t property taxes that residents should be concerned about, it is the county-imposed usage fees, Ward said.

Debt incurred by only part of the county cannot be paid by property taxes and must be paid through fee-based rates. For debt incurred by the entire county, taxes can be collected for capital improvements.

Paying off debt

Over the years, Dorchester County has incurred less than $70 million of debt for water and sewer system improvements. This debt is paid by a percentage of fees paid by residents for water and sewer usage. Since not all of Dorchester County residents receive water and sewer, the county cannot tax citizens to cover the debt.

“There is a perception out there that we aren’t going to have any more costs (if there are no new residents),” Maglione said. “If all development stopped, you’re still deficient.”

Each year, the county is obligated to raise 120% of funds needed to operate the sewer and water system to pay off that debt, Ward said. In order to pay for the increasing interest on debt, the county must grow residentially and industrially, he said.

Without residential and industrial growth, the county may be forced to raise rates and “there is no class difference in sewer and water,” Maglione said.

Aside from residential and industrial growth, “I don’t know any other way than increasing revenue to cover the costs of (county-provided) services,” Ward said.

Increased new housing costs

Conversely, the Adequate Public Facilities Ordinance opponents’ claim that it will increase initial home-purchase costs is also partially true, Maglione said.

The argument is based on the ordinance’s requirement for developers to either invest in public facilities and services to help them support incoming residents or wait until the public facilities and services can accommodate more residents.

Currently, the county imposes impact fees on developers to help pay for future water and sewer expansions and upgrades. Although impact fees can be used to garner revenue for many public facilities with the exception of schools, Dorchester County uses the fees only to cover water and sewer, Maglione said.

The effect of the Adequate Public Facilities Ordinance on initial home costs may be similar to the effect of impact fees. However, at this stage, it is uncertain how much the initial home purchase price would be raised in response to the ordinance, Maglione said.

Per house, initial home prices might rise by $5,000, he speculated. The cost per house could vary greatly depending on where the development is in the county. For example, in Dorchester County School District 2, where county-provided services are already strained, new residents may pay more for their houses, but, in Dorchester County School District 4, where county-provided services are not strained, new residents may pay less.

Although $5,000 might not seem like much, Tammie Hoy, executive director of Lowcountry Housing Trust, argued that every $1,000 added to initial housing prices can drive away more and more potential buyers.

“Every dollar that’s added to the cost of the house puts somebody out of reach,” Hoy said.

In addition to the developer’s passing the costs on, home buyers might also face a supply and demand issue where prices appreciate at a greater rate, Hoy said.

“Anytime there’s a growth management tool, like the Adequate Public Facilities Ordinance, there’s a shrink in what’s newly being built and what happens is the sheer cost of living goes up,” she said. “It’s just a matter of economics when you cut off your supply line.”

Asking the right questions

At this stage of the Adequate Public Facilities Ordinance, arguments over what it might do are just guesses, Ward said.

Instead of focusing on what might happen, Ward and Maglione would like to see residents and council members determine what level of service they expect from public facilities and services.

Ward said appropriate questions to determine the level of service would include: How quickly should emergency services arrive at a house? What is an acceptable water pressure? What determines a school’s adequacy?

“I do not know what the level of service (should be),” Ward said. “We first have to define

what an acceptable level of service is.”

Lindsay Street is an editorial assistant with the Business Journal. E-mail her at lstreet@setcommedia.com.

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