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Impact fees represent financial payments made by a builder or developer to a unit of local government for the purpose of funding certain off-site capital improvements needed to accommodate new growth. Fees may be collected for a variety of public facilities and services, including: transportation, water, sewer, municipal facilities (such as public works, planning, building and permitting, engineering and general administration), storm water, police and fire protection, and parks. In the state of South Carolina, municipal and county governments may adopt impact fees pursuant to the South Carolina Development Impact Fee Act (S.C. Code of Laws, Sec. 6-1-910 et seq).
As communities grow, the demands placed on surrounding infrastructure continue to rise. Eventually, these demands will necessitate additional capacity improvements to maintain adequate levels of public service. Impact fees provide a means for orderly development by mitigating the negative impacts of new growth, while passing costs onto new development rather than existing taxpayers. Impact fees are most useful in communities that are experiencing rapid growth and have significant land available for development.
Pursuant to Ordinance No. 2015-12, adopted by Fort Mill Town Council on August 24, 2015, the town began collecting impact fees for parks and recreation (residential only), fire protection and municipal facilities and equipment, on October 1, 2015.
Impact fees are calculated using a formula contained within the impact fee ordinance. Impact fees are based upon generally accepted industry criteria, including the U.S. Census Bureau and Institute of Transportation Engineers (ITE) data. Per capita and per employee replacement costs were determined based on the Development Impact Fee Study Report for Fort Mill.
In instances where an applicant contends that the assumptions included within the impact fee ordinance are not accurate for the intended use, the ordinance allows an applicant to perform an independent fee calculation (at the applicant’s expense). The ordinance also authorizes credit agreements for approved monetary or in-kind contributions.
The following formulas contains the multiplication symbol (x).
Parks and Recreation Impact Fee Formula Residential: Number of Dwelling Units x Persons per Household (U.S. Census) x Replacement Cost per Capita x Discount Rate Non-Residential: Not Applicable Fire Protection Impact Fee Formula Residential: Number of Dwelling Units x Persons per Household (U.S. Census) x Replacement Cost per Capita x Discount RateNon-Residential: Number of Units (SF, Rooms, Beds, etc.) x Average Employee Space Ratio (ITE) x Replacement Cost per Employee x Discount Rate Municipal Facilities & Equipment Impact Fee Formula Residential: Number of Dwelling Units x Persons per Household (U.S. Census) x Replacement Cost per Capita x Discount RateNon-Residential: Number of Units (SF, Rooms, Beds, etc.) x Average Employee Space Ratio (ITE) x Replacement Cost per Employee x Discount Rate
The Development Impact Fee Study Report for Fort Mill was used to determine the maximum per capita and per employee replacement cost for the four impact fee categories, and the fees for each category are calculated based on the actual replacement cost for all new development. As a matter of policy, the Fort Mill Town Council elected to discount the maximum allowable fees to provide a reasonable fee for residential and non-residential investments and to ensure that the impact fees collected do not exceed the cost to provide capital facilities and equipment that accommodate new development. Effective July 1, 2020, the Fort Mill Town Council adopted the following discount rates in the impact fee ordinance: parks and recreation (10%), fire protection (10%), and municipal facilities and equipment (10%). These discount rates will be automatically applied to any impact fees charged for new development.
Impact fees must be paid in full prior to the issuance of a building permit. Impact fees may be paid by cash or check. Fees may also be paid by credit or debit card with a 3% service charge.
The provisions of impact fee ordinance shall apply to all new development or redevelopment within Town limits for which a building permit or development approval is required. Consistent with state law, the impact fee ordinance authorizes exemptions for the following types of construction projects: rebuilding, remodeling, repairing or replacing an existing structure (provided there is no increase in the number of service units); residential additions; construction trailers and temporary offices; neighborhood amenities (playgrounds, tennis courts, clubhouses, etc.), volunteer fire stations, elementary schools, middle schools, secondary schools, and affordable housing units which meet minimum eligibility requirements.
In the event that a fee payer or Town staff contend that the land use for which the building permit is being sought is not within those land uses identified in Exhibit A, or if the fee payer contends that the Exhibit A calculations are not accurate for its intended use, then the Planning Director will make a determination as to the most comparable land use category to assume for calculating impact fees. If the fee payer disagrees with the determination of the Planning Director or if the Town otherwise deems it appropriate, an independent impact fee calculation may be performed to quantify the fair share of system improvement costs attributable to the development. Preparation of an independent impact fee calculation will immediately halt the building permit application process until such time that the necessary calculation is deemed complete by the Planning Director. If an independent calculation is requested, it must accompany the building permit application and be prepared in accordance with the impact fee ordinance. When an application for a building permit has been made that contains two or more land uses in any combination, including two or more land uses within a single building or structure, the total development impact fee assessment shall be the sum of the products for each land use, unless an independent impact fee calculation is performed and approved for use by the Planning Director.
A developer may file an administrative appeal with the Town Manager regarding the payment of development impact fees, independent calculation of impact fees, or credits or reimbursements by filing a written Notice of Appeal. The Notice shall be filed within thirty days of the decision which is subject to the appeal. The filing of an appeal will immediately halt the building permit application process, unless the developer posts a bond or submits an irrevocable letter of credit for the full amount of the development impact fees as calculated by the town. The Town manager will have thirty days to review the appeal and render a decision. Administrative appeals may be further appealed to the Fort Mill Town Council. A fee payer may pay development impact fees under protest. Payment under protest does not preclude the developer from filing an administrative appeal nor is the fee payer estopped from receiving a refund of an amount considered to have been collected illegally. A fee payer, at his option, may also post a bond or submit an irrevocable letter of credit for the amount of development impact fees due instead of making a cash payment under protest, pending the outcome of an appeal.
In most instances, impact fees will generally be charged only for new construction. In the case of a change, redevelopment, or modification of an existing land use, an impact fee may be required if the proposed use results in a substantial increase in service impact. In this instance, the fee will be based only on the net difference between the impact fee for the proposed use and the impact fee that would have been assigned for the current or former use.
Development impact fees shall not be imposed on a fee payer or developer who has entered into an agreement with the Town for certain contribution, payment, construction, or donation up to the cash value of specific improvements identified within the agreement. Any difference between total development impact fees due for the development and the cash value of the executed agreement remain eligible for collection pursuant to the rules and requirements of the ordinance. To be eligible for a credit, the monetary or in-kind contribution must be made toward one or more of the public facilities included in the Town of Fort Mill Capital Improvements Plan. An applicant who wishes to receive a credit against future impact fees must submit an Application for Credit Agreement. Applications will be reviewed within thirty days by a committee made up of the Town Manager, Finance Director, Code Enforcement Officer and Town Engineer.
Funds not obligated for expenditure within three (3) years of the date that they are scheduled to be expended in the Town of Fort Mill Capital Improvements Plan shall be refunded to the record owner of property for which the impact fees were paid, with actual interest earned, on a first-in, first-out basis. The owner of property eligible for a refund of one or more development impact fee payments shall submit to the Town Planning Director a notarized sworn statement that the person is the current owner of the property for which a refund is due, a certified copy of the latest recorded deed, and a copy of the most recent ad valorem tax bill for the property. When a right to a refund exists, the Town shall send a refund to the current owner of record within ninety (90) days after it is determined by Town Council that a refund is due. All refunds shall include the pro rata portion of the interest earned while on deposit in the specific development impact fee trust account. A record owner of property for which one or more development impact fee refunds are due has standing to sue for such refund pursuant to Section 6-1-1020(D) of the Act if there has not been a good-faith effort towards a timely payment of a refund pursuant to this section.
The basis for the impact fees (cost per capita, cost per employee and cost per trip) may only be changed upon an update of the Development Impact Fee Study Report. The report and capital improvements plan will be updated by the town no less than every five years. The discount rates are established by town council and may be changed by council at any time in the future. Any change to the existing discount rates must be done by ordinance, and will require two readings and a public hearing.
Development impact fees collected pursuant to the ordinance will be kept separate from other revenue of the Town. The ordinance establishes a trust fund for each of the impact fee categories included in the ordinance. Funds from development impact fee trust accounts shall be expended only for the public facilities and system improvements identified as eligible for impact fee funding in the Town of Fort Mill Capital Improvements Plan. No funds shall be used for administrative or operating costs associated with imposing any of the development impact fees. Eligible components of a public facility may include, but are not limited to, the following: design and construction; land acquisition; right-of-way acquisition; construction of new facilities; the purchase of new equipment with an individual purchase price of $100,000 or more; principal payments, interest and other financing charges.