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Current Status Bill Number:View additional legislative information at the LPITS web site.545 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19990302 Primary Sponsor:McConnell All Sponsors:McConnell Drafted Document Number:l:\council\bills\dka\3253mm99.doc Companion Bill Number:3641 Residing Body:Senate Current Committee:Judiciary Committee 11 SJ Subject:Development Impact Fee Act, Political Subdivisions, Development Board, Taxation History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ Senate 19990302 Introduced, read first time, 11 SJ referred to Committee Versions of This Bill
TO AMEND CHAPTER 1, TITLE 6, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO LOCAL GOVERNMENT, BY ADDING ARTICLE 9 SO AS TO PROVIDE FOR THE IMPOSITION OF A DEVELOPMENT IMPACT FEE BY A COUNTY OR MUNICIPALITY BY ORDINANCE; TO PROVIDE FOR AN ADVISORY COMMITTEE FOR RECOMMENDING, AND PROCEDURES FOR ADOPTING, LAND USE ASSUMPTIONS, A CAPITAL IMPROVEMENTS PLAN, AND IMPACT FEES; TO PROVIDE FOR COMPUTATION OF THE PROPORTIONATE SHARE OF COSTS OF NEW PUBLIC FACILITIES NEEDED TO SERVE NEW GROWTH AND DEVELOPMENT; AND TO LIMIT THE USES OF THE REVENUE COLLECTED FROM A DEVELOPMENT IMPACT FEE TO APPLICATION TOWARD THE INCREASED COST OF SERVING NEW GROWTH AND DEVELOPMENT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. (A) The General Assembly finds that the State is undergoing tremendous economic and population growth. As this growth occurs, local governments find it difficult to marshal the financial resources to fund the public facilities needed to provide essential government services. The General Assembly further finds that an additional source of revenue needs to be made available to municipalities and counties to address growth issues. Fundamental fairness dictates that:
(1) the new revenue be spread fairly and equitably to those to whom the growth is attributable;
(2) existing and new residents and businesses pay for their proportionate shares of facilities they use; and
(3) growth and development not be unduly burdened or inhibited.
Public input and scrutiny of the imposition of a fee to accomplish these goals before its adoption by the local government is essential.
(B) In the enactment of this legislation authorizing the imposition of a local development impact fee, it is the General Assembly's intent to:
(1) avoid double taxation;
(2) provide for an efficient and economical process for adoption of the fee; and
(3) avoid inappropriate burdens on fee payors.
SECTION 2. Chapter 1, Title 6 of the 1976 Code is amended by adding:
Section 6-1-910. This article may be cited as the 'South Carolina Development Impact Fee Act'.
Section 6-1-920. As used in this article:
(1) 'Affordable housing' means housing affordable to families whose incomes do not exceed eighty percent of the median income for the service area or areas within the jurisdiction of the governmental entity.
(2) 'Capital improvements' means improvements with a useful life of ten years or more, by new construction or other action, which increase the service capacity of a public facility.
(3) 'Capital improvements plan' means a plan that identifies capital improvements for which development impact fees may be used as a funding source.
(4) 'Connection charges' and 'hookup charges' mean charges for the actual cost of connecting a property to a public water or public sewer system, limited to labor and materials involved in making pipe connections, installation of water meters, and other actual costs.
(5) 'Developer' means an individual or corporation, partnership, or other entity undertaking development.
(6) 'Development' means construction or installation of a building or structure, or a change in use of a building or structure, or a change in the use, character, or appearance of land, any of which creates additional demand and need for public facilities.
(7) 'Development approval' means a document from a governmental entity which authorizes the commencement of a development.
(8) 'Development impact fee' or 'impact fee' means a payment of money imposed as a condition of development approval to pay a proportionate share of the cost of system improvements needed to serve the people utilizing the improvements. The term does not include:
(a) a charge or fee to pay the administrative, plan review, or inspection costs associated with permits required for development;
(b) connection or hookup charges;
(c) amounts collected from a developer in a transaction in which the governmental entity has incurred expenses in constructing capital improvements for the development if the owner or developer has agreed to be financially responsible for the construction or installation of the capital improvements, unless the developer is entitled to a credit or reimbursement pursuant to Section 6-1-1010 for credit or reimbursement.
(9) 'Fee payor' means the individual or legal entity that pays or is required to pay a development impact fee.
(10) 'Governmental entity' means a county, as provided in Chapter 9, Title 4, and a municipality, as defined in Section 5-1-20.
(11) 'Incidental benefits' are benefits which accrue to a property as a secondary result or as a minor consequence of the provision of public facilities to another property.
(12) 'Land use assumptions' means a description of the service area and projections of land uses, densities, intensities, and population in the service area over at least a twenty-year period.
(13) 'Level of service' means a measure of the relationship between service capacity and service demand for public facilities. (14) 'Local planning commission' means the entity created pursuant to Article 1, Chapter 29, Title 6.
(15) 'Project' means a particular development on an identified parcel of land.
(16) 'Proportionate share' means that portion of the cost of system improvements determined pursuant to Section 6-1-1000 which reasonably relates to the service demands and needs of the project.
(17) 'Public facilities' means:
(a) water supply production, treatment, storage, and transmission facilities;
(b) wastewater collection, treatment, and disposal facilities;
(c) roads, streets, and bridges including, but not limited to, rights-of-way and traffic signals;
(d) storm water transmission, retention, detention, treatment, and disposal facilities and flood control facilities;
(e) parks, open space, and recreation areas; and
(f) public safety facilities, including law enforcement, fire, emergency medical and rescue, and street lighting facilities.
(18) 'Service area' means, based on sound planning or engineering principles, or both, a defined geographic area in which specific public facilities provide service to development within the area defined.
(19) 'Service unit' means a standardized measure of consumption, use, generation, or discharge attributable to an individual unit of development calculated in accordance with generally accepted engineering or planning standards for a particular category of capital improvements.
(20) 'System improvements' means capital improvements to public facilities which are designed to provide service to a service area.
(21) 'System improvement costs' means costs incurred for construction or reconstruction of system improvements, including design, acquisition, engineering, and other costs attributable to the improvements, and also including the costs of providing additional public facilities needed to serve new growth and development. System improvement costs do not include:
(a) construction, acquisition, or expansion of public facilities other than capital improvements identified in the capital improvements plan;
(b) repair, operation, or maintenance of existing or new capital improvements;
(c) upgrading, updating, expanding, or replacing existing capital improvements to serve existing development in order to meet stricter safety, efficiency, environmental, or regulatory standards;
(d) upgrading, updating, expanding, or replacing existing capital improvements to provide better service to existing development;
(e) administrative and operating costs of the governmental entity; or
(f) principal payments and interest or other finance charges on bonds or other indebtedness except financial obligations issued by or on behalf of the governmental entity to finance capital improvements identified in the capital improvements plan.
Section 6-1-930. (A)(1) Only a governmental entity that has a comprehensive plan, as provided in Chapter 29 of this title, and which complies with the requirements of this article may impose a development impact fee. A governmental entity may not impose an impact fee or similar fee, regardless of how it is designated, except as provided in this article.
(2) Before imposing a development impact fee, a governmental entity shall prepare a report which estimates the effect of recovering capital costs through impact fees on the availability of affordable housing within the political jurisdiction of the governmental entity. This report also must include an estimate of the number of households which would not be able to purchase or rent housing due to the imposition of impact fees.
(B)(1) An impact fee may be imposed and collected by the governmental entity only upon the passage of an ordinance approved by a positive majority, as defined in Article 3 of this chapter.
(2) The imposition of the impact fee is not effective until thirty days after the ordinance receives final approval.
(3) The amount of the development impact fee must be based on actual improvement costs or reasonable estimates of the costs, supported by sound engineering studies.
(4) An ordinance authorizing the imposition of a development impact fee must:
(a) establish a procedure for timely processing of applications for determinations by the governmental entity of development impact fees applicable to all property subject to impact fees and for the timely processing of applications for individual assessment of development impact fees, credits, or reimbursements allowed or paid under this article;
(b) contain a schedule of development impact fees for various land uses for a unit of development by service area;
(c) include a description of acceptable levels of service for system improvements; and
(d) provide for a definite date on which the impact fee must terminate.
(C) A governmental entity shall prepare and publish an annual report describing the amount of all impact fees collected, appropriated, or spent during the preceding year by category of public facility and service area.
(D) Payment of an impact fee may result in an incidental benefit to property owners or developers within the service area other than the fee payor, except that an impact fee that results in benefits to property owners or developers within the service area, other than the fee payor, in an amount which is greater than incidental benefits is prohibited.
Section 6-1-940. A governmental entity imposing an impact fee must provide written certification, at the time of preliminary plat approval or preliminary site plan approval, of the amount of impact fee due for each unit of development in a project for which an individual building permit or certificate of occupancy is issued. The governmental entity is bound by the amount of impact fee certified and may not charge higher or additional impact fees unless the number of service units increases or the scope of the development changes and the amount of additional impact fees is limited to the amount attributable to the additional service units or change in scope of the development. The written certification must:
(1) include an explanation of the calculation of the impact fee, including an explanation of the factors considered pursuant to this article;
(2) specify the system improvements for which the impact fee is intended to be used;
(3) inform the developer that he may pay a project's proportionate share of system improvement costs by payment of impact fees according to the fee schedule as full and complete payment of the development project's proportionate share of system improvements costs;
(4) inform the fee payor that:
(a) he may have an individual assessment of the impact fee made instead of the fee established in the ordinance;
(b) he has the right of appeal, as provided in Section 6-1-1040;
(c) the impact fee must be paid no later than the time of issuance of the certificate of occupancy, or building permit if a certificate of occupancy is not required by the governmental entity.
Section 6-1-950. (A) The governing body of a governmental entity begins the process for adoption of an ordinance imposing an impact fee by enacting a resolution directing the local planning commission to conduct the studies and to recommend an impact fee ordinance, developed in accordance with the requirements of this article.
(B) Upon receipt of the resolution enacted pursuant to subsection (A), the local planning commission may develop and make recommendations to the governmental entity for a capital improvements plan and impact fees by service unit. The local planning commission shall prepare and adopt its recommendations in the same manner and using the same procedures as those used for developing recommendations for a comprehensive plan as provided in Article 3, Chapter 29, Title 6, except as otherwise provided in this article. The commission shall review and update the capital improvements plan and impact fees in the same manner and on the same review cycle as the governmental entity's comprehensive plan or elements of it.
Section 6-1-960. (A) The local planning commission shall establish a development impact fee advisory committee, composed of at least five members. Members of the advisory committee may not include elected officials or employees of the governmental entity. Three or more members must be active in the business of development, building, civil engineering, or other real estate related professional work.
The development impact fee advisory committee shall serve in an advisory capacity and is established to:
(1) review and make recommendations on the land use assumptions to be used in determining the need for public facilities;
(2) review and comment on the capital improvements plan proposed by the local planning commission before its adoption and to review and comment on proposed amendments to the plan;
(3) monitor and evaluate implementation of the capital improvements plan; and
(4) advise the local planning commission and the governing body of the governmental entity of the need to update or revise land use assumptions, capital improvements plans, and development impact fees.
(B) The local planning commission shall make available to the advisory committee, upon request, all financial and accounting information, professional reports in relation to other development and implementation of land use assumptions, the capital improvements plans, and impact fees.
(C) The local planning commission shall provide the impact fee advisory committee with requested staff support which is reasonably necessary.
Section 6-1-970. (A) The local planning commission shall recommend to the governmental entity a capital improvements plan which may be adopted by the governmental entity by ordinance. The recommendations of the commission are not binding on the governmental entity, which may amend or alter the plan. After reasonable public notice, a public hearing must be held before final action to adopt the ordinance approving the capital improvements plan. The notice must be published not less than thirty days before the time of the hearing in at least one newspaper of general circulation in the county. The notice must advise the public of the time and place of the hearing, that a copy of the capital improvements plan is available for public inspection in the offices of the governmental entity, and that members of the public will be given an opportunity to be heard.
(B) The capital improvements plan must contain:
(1) a general description of all existing public facilities, and their existing deficiencies, within the service area or areas of the governmental entity, a reasonable estimate of all costs, and a plan to develop the funding resources, including existing sources of revenues, related to curing the existing deficiencies including, but not limited to, the upgrading, updating, improving, expanding, or replacing of these facilities to meet existing needs and usage;
(2) an analysis of the total capacity, the level of current usage, and commitments for usage of capacity of existing public facilities, which must be prepared by a qualified engineer licensed to perform engineering services in this State;
(3) a description of the land use assumptions;
(4) a definitive table establishing the specific service unit for each category of system improvements and an equivalency or conversion table establishing the ratio of a service unit to various types of land uses, including residential, commercial, agricultural, and industrial;
(5) a description of all system improvements and their costs necessitated by and attributable to new development in the service area, based on the approved land use assumptions, to provide a level of service not to exceed the level of service currently existing in the community or service area;
(6) the total number of service units necessitated by and attributable to new development within the service area based on the land use assumptions and calculated in accordance with generally accepted engineering or planning criteria;
(7) the projected demand for system improvements required by new service units projected over a reasonable period of time not to exceed twenty years;
(8) identification of all sources and levels of funding available to the governmental entity for the financing of the system improvements; and
(9) a schedule setting forth estimated dates for commencing and completing construction of all improvements identified in the capital improvements plan.
(C) Changes in the capital improvements plan must be approved in the same manner as approval of the original plan.
Section 6-1-980. (A) In addition to other structures or activities which may be subject to an impact fee, an impact fee must be assessed for the installation of modular buildings, manufactured homes, and recreational vehicles unless the fee payor can demonstrate by documentation, such as utility bills and tax records, that either the structure was legally in place on the lot or space before the effective date of the impact fee ordinance or an impact fee was paid previously on the same lot or space.
(B) The following structures or activities are exempt from impact fees:
(1) rebuilding the same amount of floor space of a structure that was destroyed by fire or other catastrophe;
(2) remodeling or repairing a structure that does not result in an increase in the number of service units;
(3) replacing a residential unit, including a manufactured home, with another residential unit on the same lot, if the number of service units does not increase;
(4) placing a construction trailer or office on a lot during the period of construction on the lot;
(5) constructing an addition on a residential structure which does not increase the number of service units;
(6) adding uses that are typically accessory to residential uses, such as a tennis court or a clubhouse, unless it is demonstrated clearly that the use creates a significant impact on the system's capacity; and
(7) all or part of a particular development project if:
(a) the project is determined to create affordable housing;
(b) public policy which supports the exemption is contained in the governmental entity's comprehensive plan; and
(c) exempt development's proportionate share of system improvements is funded through a revenue source other than development impact fees.
(C) A credit or reimbursement provided for in this section that is not applied to an impact fee may be applied, at the discretion of the fee payor, to any other tax liability of the fee payor to the governmental entity or other unit of government.
(D) The amount paid as an impact fee by a fee payor may be claimed, in whole or in part, as a credit against any other liability of the fee payor to the governmental entity or other unit of government.
Section 6-1-990. (A) The impact fee for each service unit may not exceed the amount determined by dividing the costs of the capital improvements by the total number of projected service units that potentially could use the capital improvement. If the number of new service units projected over a reasonable period of time is less than the total number of new service units shown by the approved land use assumptions at full development of the service area, the maximum impact fee for each service unit must be calculated by dividing the costs of the part of the capital improvements necessitated by and attributable to the projected new service units by the total projected new service units.
(B) An impact fee must be calculated in accordance with generally accepted accounting principles.
Section 6-1-1000. (A) The impact fee imposed upon a fee payor may not exceed a proportionate share of the costs incurred by the governmental entity in providing system improvements to serve the new development. The proportionate share is the cost attributable to the development after the governmental entity reduces the amount to be imposed by the following factors:
(1) appropriate credit, offset, or contribution of money, dedication of land, or construction of system improvements;
(2) payments reasonably anticipated to be made by or as a result of a new development in the form of user fees, debt service payments, or taxes including, but not limited to, sales and property taxes which are dedicated for system improvements for which impact fees would otherwise be imposed; and
(3) all other available sources of funding the system improvements including funds available from economic development incentives or grants secured.
(B) In determining the proportionate share of the cost of system improvements to be paid, the governmental entity imposing the impact fee must consider the:
(1) cost of existing system improvements resulting from new development within the service area or areas;
(2) means by which existing system improvements have been financed;
(3) extent to which the new development contributes to the cost of system improvements through taxation, assessment, or developer or landowner contributions, or has previously contributed to the cost of system improvements through developer or landowner contributions to offset the cost;
(4) extent to which the new development is required to contribute to the cost of existing system improvements in the future;
(5) extent to which the new development must be credited for providing system improvements, without charge to other properties within the service area or areas;
(6) time and price differentials inherent in a fair comparison of fees paid at different times; and
(7) availability of other sources of funding system improvements including, but not limited to, user charges, general tax levies, intergovernmental transfers, and special taxation.
(C) A developer may not be required to pay more than his proportionate share of the costs of the project or to oversize his facilities for use of others outside of the project without fair compensation or reimbursement.
Section 6-1-1010. (A) In the calculation of development impact fees for a particular project, credit or reimbursement must be given for the present value of any construction of system improvements or contribution or dedication of land or money required by a governmental entity from a developer for system improvements of the category for which the development impact fee is being collected.
(B) If a developer is required to construct, fund, or contribute system improvements in excess of the development project's proportionate share of system improvement costs, the developer shall receive a credit on future impact fees or be reimbursed, at the developer's option, for excess construction, funding, or contribution from development impact fees paid by future development which impacts the system improvements constructed, funded, or contributed by the developer or fee payor.
Section 6-1-1020. (A) Revenues from all development impact fees must be maintained in one or more interest-bearing accounts. Accounting records must be maintained for each category of system improvements and the service area in which the fees are collected. Interest earned on development impact fees must be considered funds of the account on which it is earned, and must be subject to all restrictions placed on the use of impact fees pursuant to the provisions of this article.
(B) Expenditures of development impact fees must be made only for the category of system improvements and within or for the benefit of the service area for which the impact fee was imposed as shown by the capital improvements plan and as authorized in this article. Impact fees may not be used for:
(a) a purpose other than system improvement costs to create additional improvements to serve new growth;
(b) a category of system improvements other than that for which they were collected; or
(c) the benefit of service areas other than the area for which they were imposed.
Section 6-1-1030. (A) An impact fee must be refunded to the owner of record of property on which a development impact fee has been paid if:
(1) the impact fees have not been expended within five years of the date they were collected on a first-in, first-out basis;
(2) service is available but not provided;
(3) a building permit or permit for installation of a manufactured home is denied or abandoned; or
(4) the governmental entity, after collecting the fee when service is not available, has failed to appropriate and expend the collected development impact fees.
(B) When the right to a refund exists, the governmental entity shall send a refund to the owner of record within ninety days after it is determined by the entity that a refund is due.
(C) A refund must include the pro rata portion of interest earned while on deposit in the impact fee account.
(D) A person entitled to a refund has standing to sue for a refund pursuant to this article if there has not been a timely payment of a refund pursuant to subsection (B) of this section.
Section 6-1-1040. (A) A governmental entity which adopts a development impact fee ordinance shall provide for administrative appeals by the developer or fee payor from discretionary action or inaction by or on behalf of the governmental entity.
(B) A fee payor may pay a development impact fee under protest. A fee payor making the payment is not estopped from exercising the right of appeal provided in this article, nor is the fee payor estopped from receiving a refund of an amount considered to have been illegally collected. Instead of making a payment of an impact fee under protest, a fee payor, at his option, may post a bond or submit an irrevocable letter of credit for the amount of impact fees due, pending the outcome of an appeal.
(C) A governmental entity which adopts a development impact fee ordinance shall provide for mediation by a qualified independent party, upon voluntary agreement by the fee payor and the governmental entity, to address a disagreement related to the impact fee for proposed development. Participation in mediation does not preclude the fee payor from pursuing other remedies provided for in this section or otherwise available by law.
Section 6-1-1050. A governmental entity may provide in a development impact fee ordinance the method for collection of development impact fees including, but not limited to:
(1) additions to the fee for reasonable interest and penalties for nonpayment or late payment;
(2) withholding of the certificate of occupancy, or building permit if no certificate of occupancy is required, until the development impact fee is paid;
(3) withholding of utility services until the development impact fee is paid; and
(4) imposing liens for failure to pay timely a development impact fee.
Section 6-1-1060. A fee payor and developer may enter into an agreement with a governmental entity, including an agreement entered into pursuant to the South Carolina Local Government Development Agreement Act, providing for payments instead of impact fees. That agreement may provide for the construction or installation of system improvements by the fee payor or developer and for credits or reimbursements for costs incurred by a fee payor or developer including interproject transfers of credits or reimbursement for project improvements which are used or shared by more than one development project. An impact fee may not be imposed on a fee payor or developer who has entered into an agreement as described in this section.
Section 6-1-1070 (A) The provisions of this article do not repeal existing laws authorizing a governmental entity to impose fees or require contributions or property dedications for capital improvements. Ordinances imposing development impact fees or similar fees must be brought into conformance with the provisions of this article within one year after its effective date. Impact fees collected and developer agreements entered into before the expiration of the one-year period are invalid unless the collection or agreement conforms to this article. Notwithstanding another provision of law, after adoption of a development impact fee ordinance in accordance with the provisions of this article, requirements for developers to pay in whole or in part for system improvements may be imposed by governmental entities only by way of impact fees imposed pursuant to the ordinance.
(B) Notwithstanding another provision of this article, property for which a valid building permit or certificate of occupancy has been issued or construction has commenced before the effective date of a development impact fee ordinance is not subject to additional development impact fees.
(C) That portion of a project for which a preliminary plat has been approved before the effective date of a development impact fee ordinance is not subject to development impact fees.
Section 6-1-1080. (A) If the proposed system improvements include the improvement of public facilities under the jurisdiction of another unit of government including, but not limited to, a special purpose district, a commission of public works, and a public service district an agreement between the governmental entity and other unit of government must specify the reasonable share of funding by each unit. The governmental entity authorized to impose impact fees may not assume more than its reasonable share of funding joint improvements, nor may a governmental entity which is not authorized to impose impact fees do so unless the expenditure is pursuant to an agreement under Section 6-1-1060 of this section.
(B) A governmental entity may enter into an agreement with another unit of government including, but not limited to, a special purpose district, a commission of public works, and a public service district, that has the responsibility of providing the service for which an impact fee may be imposed. The determination of the amount of the impact fee for the contracting governmental entity must be made in the same manner and is subject to the same procedures and limitations as provided in this article. The agreement must provide for the collection of the impact fee by the governmental entity and for the expenditure of the impact fee by another unit of government including, but not limited to, a special purpose district, a commission of public works, and a public services district unless otherwise provided by contract."
SECTION 3. This act takes effect upon approval by the Governor.
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