Jeanette and Bob Heiterer had their West Ashley home annexed into Charleston two years ago to save money on property taxes, but they have now learned it's not so easy to leave the St. Andrews Public Service District.
The Heiterers are among hundreds of West Ashley residents who will be paying more tax than expected this year because Charleston County decided to charge them as though they had never left the PSD.
"We looked at it and said, gee, this (property tax bill) looks like more than I thought it would be," Jeanette Heiterer said. "I just think this is very illegal, because I'm in the city and now they are acting like we are not."
Officials with the county and the PSD say the law is on their side.
They cite a 7-year-old change to the state code that says service districts get to keep serving, and keep taxing, properties annexed by a municipality until there's an agreement on how to transition the services and the revenue.
Transition agreements are meant to help service districts pay off equipment, such as garbage and fire trucks, that they might have purchased to serve residents who later chose to annex out of the district.
"Charleston County finally understood that the statute does not allow them to divert tax money to the city of Charleston," said Trent Kernodle, attorney for the PSD. "This year, they did what they should have done all along."
Charleston Chief Financial Officer Steve Bedard said the city will find a way to rebate the extra tax money, so that annexed West Ashley residents pay the same as other Charlestonians. For a family with a $225,000 home, the difference in property tax is about $225.
Kernodle said that in addition to taxing properties annexed into Charleston, the PSD will be seeking all the tax money that should have gone to the service district during the past seven years.
Since 2000, when the change to state law was made, Charleston has annexed 247 properties in West Ashley, Kernodle said.
"Yes, it affects a lot of people, but why is it St. Andrews Public Service District's fault? We didn't annex the properties," he said.
Charleston Corporation Counsel Charlton deSaussure and Charleston County Auditor Peggy Moseley said the decision to change the tax bills was made by the county's top lawyer, Joe Dawson.
"The city was never told there would be a change from what was done previously, nor were the citizens," deSaussure said.
Jennie Davis, the county's public information officer, said Dawson will not speak to reporters. She provided written statements about the law guiding the county's decision but offered no explanation as to why the city and residents were not told of the policy change.
"Those properties should not have been put under the City's millage in the first place," Davis' statement said. "Once the matter was brought to the County's attention, we righted the situation by putting the properties back under the PSD, where they should have been."
"Although the County recognizes the unfortunate position this situation has created for the taxpayers who were formerly in the PSD, only the PSD and the City are empowered to resolve it," she stated.
Moseley, whose office prepares the property tax bills, said the issue is out of her hands.
"We don't make any legal decisions in here," she said. "We just do as we're told."
When the city learned of the change to the tax bills, deSaussure said he asked the county if it could bill the annexed properties with the lower city tax rate, and let Charleston make up the difference to the PSD, but the county refused.
Bedard said the situation could confuse banks that factor property tax bills into mortgage payments.
"Even when we fix this, these people's escrow accounts are going to be squirrely for the rest of forever," said Bedard.
Most of the West Ashley properties annexed into Charleston since 2000 joined the city in 2006, after the gap between city and PSD tax rates widened.
That year, Charleston annexed 133 West Ashley properties that were home to 448 people.
The property tax rate in Charleston is lower than in the St. Andrews PSD. City residents get a property tax credit from local option sales tax that is unavailable to PSD residents, and city residents pay lower water and sewer rates.
The city promoted those benefits with direct mail, a Web site, neighborhood meetings and in-person visits to property owners. Kernodle said the city's pitch was misleading, because the law allows the PSD to keep taxing annexed properties until a deal is reached with the city.
Kernodle said St. Andrews PSD has the right to provide services to the homes annexed into Charleston, but won't fight over who gets to pick up the trash.