Thursday, Oct. 11, 2007

Unlikely source proposes new idea for making growth pay for itself

THEY’RE grumbling again in Irmo: We’ve already paid our share to build all the schools we needed. Now all these new people are moving into our community, demanding new schools, and they expect us to pay for them too. They ought to do it themselves.

As November’s $256 million bond referendum approaches, the grumbling is more muted than it has been in the past, in part because 40 percent of the money will go to renovate older schools.

Still, it’s undeniable. And the complaint, echoed with varying degrees of emotional intensity in fast-growing communities across the state, is legitimate. But our Legislature has barred school districts from addressing it. As long as the kids keep coming, schools must educate them, which means either building more schools or buying portables, which makes about as much sense as renting your house for 30 years.

In a lot of states, the answer would be easy: Levy an “impact fee” on new homes, to cover the cost of new schools (and fire stations, police substations, roads and so on) that the community wouldn’t need if those new homes hadn’t been built. Everybody still pays to operate the schools, but the people who have already paid once to build schools don’t have to pay again.

Not in South Carolina. Here, the Legislature has decreed that impact fees cannot be used for the single purpose for which we need them most: to build schools.

Into this impasse steps Nick Kremydas, chief executive officer of the S.C. Realtors Association, with a plan to let local governments collect the rough equivalent of an impact fee.

Mr. Kremydas might seem an unlikely proponent of such a measure: The Realtors, along with the S.C. Homebuilders Association, are the main reason we don’t have a usable impact fee today. So when he talks up his plan, “it’s always met with a little skepticism; no one quite believes you’re trying to help.”

But he has been working hard to define the Realtors not just as a trade group with narrow interests, but as an organization that promotes healthy communities — and offers alternatives rather than simply saying “No.” Moreover, he has reason to worry if he can’t find common-ground. The near-ban on impact fees is leading to some creativity he’d rather not see. The Summerville and Dorchester County councils are debating plans to deny new building permits unless the infrastructure has the “capacity” to support new construction — capacity that builders could demonstrate by putting up the cash to create it. A sort of make-me-an-offer-I-can’t-refuse deal that has the whole housing industry in an uproar.

Mr. Kremydas’ plan would allow a city or a county to create a “residential improvement district” and charge an annual fee to property owners to pay for new schools, roads, fire stations and other infrastructure. The district could include properties that aren’t contiguous, and the improvements could be outside the boundaries, as long as they served the residents of the district. So, for instance, officials could draw two subdivisions into a single district and charge residents a fee to pay for a new elementary school halfway between them. Councils could pull existing neighborhoods into an improvement district, but Mr. Kremydas expects they would mostly draw in neighborhoods that haven’t yet been built.

He calls it “a vehicle for getting rid of overcrowded schools, traffic congestion and all the problems the public associates with high growth.”

Critics call it a way to avoid impact fees. And they balk at the idea of letting cities and counties, rather than school districts, set the fees for school construction.

I actually like that second provision, because I don’t think school boards should set tax (or fee) rates, any more than the Department of Education should levy taxes for state education funding. Mr. Kremydas says he hopes this would force more collaboration between school districts and the cities and counties in which they operate, which we certainly need. But his main reason for that provision is far more practical: He thinks a plan to give school boards additional revenue-raising authority would be DOA at the State House.

On the other hand, I agree with the critics who say we ought to be able to assess impact fees to pay for schools, rather than settling for impact fees-lite. But while Mr. Kremydas and I have long disagreed, vehemently, on both the constitutionality and the propriety of impact fees for schools, I think he has a couple of legitimate criticisms.

First, they put an extra burden on buyers at closing, which they can escape only by rolling the fee into the mortgage, and paying an obscene amount of interest on it. Second, since the builder is the one assessed an impact fee, the cost is added to the purchase price, which increases the property tax homeowners pay for as long as they own the home (in essence, making them pay a property tax on a school tax) and also jacks up the assessed value of nearby homes, which leads to higher taxes for everyone else.

Again though, the main point is practical: To say this is an attempt to dodge real impact fees is to ignore the reality that the Legislature has no intention of loosening the existing impact fee law, no matter how much it should. So either we can keep sitting around in our respective corners complaining about how we ought to be able to collect impact fees or how awful it is that local governments are trying to come up with work-arounds to skirt the law, or we can try to address the legitimate concerns that each side has. The actual bill that Mr. Kremydas has proposed is not perfect, by a long shot. But the idea behind it is one that everybody would be smart to work together on.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571.