Impact fee has not generated the funds Berkeley County expected Impact fees


Margaret Dunbar cashed out her retirement fund last year to open a new business in the fast-growing corridor of U.S. Highway 176 in rural Berkeley County.

She aimed for a mid-August opening for her franchise of Ladles, an eatery that serves homemade soups, salads and sandwiches, in a 1,200-square-foot space in The Market at Cane Bay. That changed when she learned she would have to pay a $4,600 impact fee to Berkeley County.

"It totally threw me off," she said. "I was not expecting that at all. It pushed back some of our projects and we ended up opening in late October."

The fee was intended to help pay for infrastructure, like road improvements, bridges and traffic signals.

But Berkeley County officials say the fee, which was implemented in 2006 in the unincorporated southwestern part of the county, has backfired. Now they want to abolish it - if voters approve an extension of the current 1 percent sales tax in November.

"The impact fee is excessive as far as the amounts that some businesses pay, and it actually has had a dampening effect on development," said County Supervisor Dan Davis, who has described the fee as "a business-killer and one of the worst things that Berkeley County has ever done."

Councilman Tim Callanan, chairman of the county's finance committee, is often at odds with Davis, but agrees with him on this issue.

"It comes down to this," he said. "The impact fee is only in a small little section of the county, the fastest growing part, residential-wise," he said. "It has not slowed down residential growth, but it has essentially brought to a halt any sort of employment growth for that area. If I'm a person looking to open a small business and can open in area that has impact fee or can move to area that doesn't have one, there isn't even a question."

Charleston County does not charge a transportation impact fee and Dorchester County has one similar to Berkeley's, enacted in 2010.

Houses are assessed a flat fee of almost $1,400.

The costs for businesses and other development are determined by a complicated formula that takes into account the business' size plus the impact it will have on the roads.

Earlier this year, the Berkeley County School District paid $215,177 in impact fees for Nexton Elementary School, which is under construction.

The money was to help fund a new interchange from Interstate 26 at mile marker 197, Jedburg Road, a project that is expected to cost about $178 million, but collections have been less than expected, Davis said. Since it was started, the fee has collected about $10.4 million.

"The impact fee was well-intentioned, but instead of helping with development, the fees are so high that it's an impediment," Davis said.

The impact fee will be abolished if voters approve a referendum in November to extend the 1 percent sales tax, which also pays for infrastructure. Some of that money will replace the impact fee, Davis said.

He also pointed out that many people who shop in the county do not live in the county, so it shifts some of the cost burden off county residents.

Callanan predicted that business will boom in the area, offsetting the loss from impact fees. The penny sales tax has collected about $72 million since it was started in 2008.

"There's no doubt in my mind we will see a massive influx of businesses that are dying to open," he said. "I think if we eliminate it, it will pay for itself 10 times over."

Because officials have been talking about ending the fee, some businesses are putting projects on hold, Davis said. If voters approve the tax extension, he hopes to end the impact fee by the end of the year.

"It passed by a good margin in 2008, and now we have all these projects that we can show that we've done, so I've got all the confidence in the world that it will pass for seven more years," he said.

County officials will start working on a list of projects to be included in the next phases of funding at the June council meeting.

Reach Brenda Rindge at 937-5713 or @brindge on Twitter.