On School Impact Fees

Editor's Note: Last week HBA of Greenville Executive Vice President Michael Dey and Greater Greenville Association of REALTORS® Chief Executive Office Nick Sabatine co-authored an editorial that appeared in the Greenville News. It is reprinted here:

Before proceeding with a proposal to impose a development impact fee on new homes built in Greenville County, the Greenville County School Board of Trustees should give consideration to the following facts about impact fees:

• Home Builders and Developers do not pay impact fees; the buyers of the homes in the communities they build pay the fees, which will have a negative impact on the ability of young home buyers who are expected to dominate the new home market in the coming decade.
• Any buyer of any new home and the owners of existing homes, who add on to their home, even if they do not have children in school, will be required to pay the impact fee. However, the buyer of an existing home will not be assed an impact fee, even if they have children in school.
• The “South Carolina Development Impact Fee Act” (SC 6-1-190) specifically lists seven public facilities that are eligible to receive funding from development impact fees. Eligible public facilities include roads, parks, and libraries. Specifically excluded from the list are schools.
• When the school board begins assessing an impact fee, consider that those homeowners who pay the fee will be inclined to oppose a bond referendum or millage increase - both of which raise far more money than an impact fee - because they have paid for their burden on the school system.
  

The Greenville County School Board of Trustees also should consider the fact that in Greenville, South Carolina, new housing pays for itself, and quickly. In fact, according to two studies conducted by Dr. Elliott Eisenberg of the National Association of Homes Builders, new homes actually subsidize existing homes through their contribution to the local tax base.

In 2008, Home Builders in Greenville County built 1,852 new single-family homes. The impact of those homes on Greenville County include: Local income for workers was $308.8 million; Taxes and fees for local governments was $51.2 million; and local jobs created was 5,388.

Imagine first the condition our local school board’s budget would be in if housing production were able to rebound. Now imagine the effect an impact fee will have on new home construction in the future.

In addition to the effect that new home construction has on our local economy and tax collections, homes continue to benefit our community after they are built. The homes built in 2008 have continued to benefit our local economy and governments by contributing $45.1 million per year in local income to workers and $12.3 million in taxes and fees to local governments, while supporting 879 local jobs.

The question we have for our local school board trustees is on what basis do you conclude that new homes are not contributing fully to the demands they place on the school system and other local governments? Based on the studies we referenced, the following are facts:

• By the end of the first year after 1,852 new homes were built in 2008, economic impacts of constructing those homes offset all fiscal costs of serving those new homes, including all infrastructure costs like schools.
• Since the second year, those same new homes have been contributing NET INCOME to local governments, like the Greenville County School System, of more than $2 million per year.
• After 10 years, those new homes will have contributed NET INCOME to local governments of more than $25 million.
  

Even in the peak years of home building, the rate at which home building pays for its impact on government facilities was similar to 2008.

We caution our local school board trustees that adding a tax on new construction would actually hurt revenues for local schools, not help them.

Nick Sabatine, Chief Executive Officer
Greater Greenville Association of REALTORS®

Michael Dey, Executive Vice President
Home Builders Association of Greenville