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CHRISTMAS IN MARCH FOR DEVELOPERS
March 21, 2008
Ryan Castle, Editor
Summerville Journal-Scene
P. O. Box 715
Summerville, SC 29483
The sponsors for H.4745 are prepared to give the developers an early Christmas present. Dorchester County’s state Representative Annette Young who was until recently a vice-president for Summerville Homes is the bill’s principal sponsor.
Those that have been following the debate between the developers, their friends within the Dorchester Chamber of Commerce, and the taxpayers who desire the passage of the Adequate Public Facilities Ordinance (AFPO) for orderly growth will witness an attempt to pass an end-run using state law which, if you try to understand it, will require more than Philadelphia lawyers or those birds who defended Bill Clinton during testimony who gave a new meaning to the verb “is.” It requires years of practice by our South Carolina Legislature and its staff.
First of all, before I go into the purpose of the bill, know that a Residential Improvement District (RID) is a segment of land set aside from surrounding land that will have its own assessments not limited to public infrastructure improvements, such as parkways, parks and playgrounds. It is meant by the developers to counteract the APFO, which is fairer to the taxpayers.
Here is what the bill states, among other things: “Improvements include the construction of new schools and the renovation of existing schools, excluding maintenance and operational expenses which are not considered to be new improvements.” Improvements may be designated as public works eligible for revenue bond financing pursuant to Section 6-21-50, and the governing body (County Council or the School Board) may declare these improvements to be a system of related projects within the meaning of Section 6-21-40, where we taxpayers pick up the tab.
The governing body may also determine that improvements located outside the boundaries of a district “confer a benefit upon property inside the district or are necessary to make improvements within the district effective for the property inside the district.” Improvements, according to the bill, must service primarily an owner of the property within the district, this requirement being deemed to be met if the improvements are situation “within the district or a designated service area that benefits the district.” District means an area within the county or municipality designated by the owner (???) pursuant within which an improvement plan is to be accomplished. A district may be comprised of non-contiguous parcels of land made up of such land uses “as, but not limited to, residential, commercial, industrial or a combination of some or all of those.”
Okay, that was a sample of the legalese within the definitions section of the bill, but throughout the document, the wording is filled with such doublespeak.
This is what it does: Assessments must be proportional to the value of the improvements to be constructed within the RID. These improvements may include all public works and all planning, engineering, promotion, marketing and acquisition and demolition of existing facilities. Revenue bonds will likely provide all financing not provided by ALTERNATIVE FUNDING.
(As of 2006, “alternative funding” is against South Carolina law. What it used to mean was that a separate, “quasi-public,” corporation would be created to own the public facilities or, in our case, the schools, float bonds on the open market, and collect lease payments. The proceeds of the bonds were supposed to be used to pay for improvements such as water and sewer, new schools (including maintenance thereof) and other “public” works, which are currently being rented by the taxpayers to reimburse the corporation for the interest and principle on the bonds. Look for the alternative funding restrictions to be rescinded in the near future, if the RID bill is passed.)
Improvements may be requested even in areas outside the RID, if the improvements “effectively benefit” the RID, are contiguous to improvements situated within the district or in an area that serves the district in any way, as determined by the owner of the land (which, of course, would initially be the developers of the subdivision or subdivisions comprising the RID).
So if a corner of the RID extends beyond the attendance lines of a given school or any public works (roads, sewer and water, etc.), look for negotiations to require taxpayers living outside the RID and those new and old residents within it each to pay a share of the taxes for the new, and potentially unwanted or unnecessary improvements. For example, if a school needed renovation so that houses would sell better inside the RID, the money would be committed first as part of a system of related projects and then, in all likelihood, the balance of the school renovation would be provided by alternative funding, or other such borrowing by the school district. Not until that is provided by written agreement could the school district collect a “fee” from the owner of the RID.
(The “fee” that is being discussed as though it were an impact fee, which it definitely is not, is 4% of the face value of any bond securing the receipt of borrowed funds to provide for the scheduled improvements required by the RID. One year’s interest on the bonds is higher than 4% and most of the 4% would be spent on the lawyers and bankers who draw up the bond indenture!)
What really bothers me is that the owner (the developer) may include within the proposed RID improvements in multiple districts, to be known as collective improvements. Also, the owner and the governing body (County Council or the School Board) may agree to designate all or part of the 4% fee for the construction of “collective” improvements. Of course, the rates of assessment within a district need not be uniform, though the owner of the RID and the governing body “shall agree upon the rates of assessment across different sections of, or uses within, the district.”
Section 6-35-170 is a capstan of arrogance: Say a developer brings County Council a written proposal to create a district for all owners of the property. If there is one owner, say a developer, he owns the land, makes all the rules and what comprises a proposed district. The local planning commission reviews the proposal and recommends an improvement district ordinance, which will likely require everyone outside the district to pay additional taxes to support the district. As each parcel of the subdivision is sold, the cost of the improvements to the developer is reduced, until the final lot for sale is closed and with it the developer’s obligation to the development.
The original owner, the developer, walks away having paid only a small fraction of the cost of the improvements, leaving the residents within the RID and those outside who share responsibility for what the developer wanted, whether they did or not, to pay taxes in perpetuity to fund the RID.
No serious consideration of the adequacy of the existing public facilities beyond what suits the developer of the RID, no serious consideration of new facilities being concurrent with the impact of the development other than to facilitate sales of new homes in the RID, and no accountability for the cost of the new facilities other than for the estimate approved under the ordinance creating the RID. And all of this secured by a long-term ironclad development agreement.
Is that a sweet deal for an early Christmas, or what??
Joe Kress, Vice-President