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Lexington County exploring impact fees as a way to offset cost of rapid growth

Lexington County, SC (Paul Kirby) – Lexington County is looking into the process of implementing an impact fee on new development to offset some of the cost of the explosive growth that has been occurring in the county over the past few decades across the area. Although Impact fees sounds like a no-brainer, according to one member of the council, implementing these are not as simple as one might think. This is because of the way that the legislation was written and passed decades ago in Columbia by state lawmakers.

First of all, impact fees are assessed at some point on new development that impacts services. What point those fees would be assessed isn’t quite so simple. If you assess these when a piece of property is sold for the purpose of development, some will argue that they bought the property as an investment for development purpose at some unspecified time in the future. Because the property is just going to sit for some time undeveloped, they shouldn't have to pay the fees until homes begin being built. In other cases, if you’ve lived in Lexington County for years and are now building on another property to either upsize or downsize, you could argue that you aren’t impacting anything because you’ve been paying your taxes to offset Lexington County services for years. In both cases, people could mount an effective argument that they shouldn’t have to pay those impact fees at either point. So when should these fees be assessed? That's just one thing that needs to be decided. It gets even more complicated as you delve into these fees further.

According to Councilmember Cullum, there are a lot of conditions that have to be met prior to implementing impact fees. One of the rules would prevent the council from just implementing these countywide. Instead, a specific service area would have to be identified before impact fees are collected. Another issue is identifying what services have been negatively impacted due to growth and what percentage of the strain on those services was caused by the new development.

Cullum said that the first thing a government must do before implementing these fees is to study growth and the impact it’s having on a specific area. The county has already commissioned an experienced consultant to work on a study for at least one area of Lexington County that is being adversely impacted primarily by residential growth. This geographical area being studied now is west of Lexington all the way to Calks Ferry Road, near Gilbert and some communities even further west.

According to Cullum, although the entire county is being impacted by growth, some areas are feeling the strain more than others. He explained that more urban areas that already have well established services are certainly impacted, but they don’t immediately see a service deficit like areas that have minimal services at best. “If you look at Lexington, Cayce or West Columbia, they are continuing to grow but their police, and in the two larger cities their fire services, aren’t feeling an immediate and substantial strain quite yet. Then, if you look at areas west of the Town of Lexington that are covered by the sheriff’s department, our Lexington County Fire Service, and EMS, those residents are accustomed to the lower level of service they currently receive. If you were to go into those areas and quickly build 2,000 new single-family homes, the services that the county currently provides would immediately decline and could eventually reach substandard levels. That’s why this is one of the areas we are looking at first while we are discussing impact fees to help keep the county’s core services at their current levels or better.”

Proof of what Cullum says can be found as quickly as checking the Town of Lexington’s Police Department’s Annual Report. That report shows no significant increase in the time it takes from the point when a caller dials 911 until the first police officer arrives on the scene over the last five years. (See that report here. Scroll to pg. 35 for response time statistics.) Even though the town of Lexington has experienced significant growth over the past five years, their core services have been able to keep up much better than the more rural areas when they experience significant growth. In fact, in 2019 the Lexington Police Department met their goal of having an officer on scene in 10 minutes after someone has called for help about 80% of the time. That statistic has consistently hovered around that percentage point for the last five years.

Cullum pointed out that impact fees are intended for financing real assets like land and buildings, not necessarily employees. “The construction of schools is not part of the council’s current discussion of impact fees. Residents have already provided the districts relief from capital expenses by voting in the one cent sales tax. That penny per dollar collected goes to the school districts to pay their construction bond debt. Those bonds have been issued to finance school building projects or capital expenditures. This proposed new impact fee we are discussing would be levied at some point on new growth and would be used to provide for additional levels of the county’s core functions of government like public safety and public works. Those are the services that are going to take an immediate hit when a new subdivision sprouts up in rural Lexington County.”

Councilmember Cullum explained that another problem with the impact fee legislation is that the governing body must show what percentage of a burden on services is caused by the new growth. If building a new housing development adds an additional 20% strain on existing services, governments cannot levy an impact fee that would pay 100% of the cost of adding services with that fee. Again, Lexington County can’t just estimate that 20% of the burden on services came from new growth either, they have to prove that. That’s where the consultant they’ve hired comes in. An additional study must be completed to determine the percentage of impact on county services caused by the new growth.

Impact fees certainly seem to make sense even with all the conditions tied to them. Many agree that as new homes and businesses are developed and strain Lexington County’s core services, the developers and new residents should pay their fair share for the impact they create when they move here. “It’s just not as easy to get this done as it sounds,” Cullum said. “That’s why we are moving slowly, using a consultant with experiencing in implementing impact fees in other areas, and making plans for the future. The only sure thing in this equation is that we need to do something so that we can grow our county services as the population of our county grows,” Cullum concluded.

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