After three years with no property tax increases, Isle of Palms finds itself facing millions of dollars in capital expenses — and a likely tax hike.
The island city, like many coastal communities, is grappling with flooding during major high tide events and a sobering future that could see such flooding every other day by 2045, if climate projections hold.
To combat that, IOP is embarking on a project to improve its stormwater outfalls, which drain runoff into the waterway behind the island. That drainage work could cost almost $23 million before it's all said and done, but the timeline for that project depends on funding availability, Interim City Administrator Desiree Fragoso said.
"We the residents on Isle of Palms need to take our head out of the sand and say it's going to cost us money," Mayor Jimmy Carroll said. "For Isle of Palms, we are the Lowcountry and no matter where we are and what we do, the sea level is rising. In my lifetime, I'm seeing more and more flooding events."
That's on top of other major capital needs facing the city, including a new $1.4 million firetruck, $3 million in repairs at the city's marina and repairs to the Public Safety building — a combination fire protection and police facility that was subject to a four-year lawsuit over alleged shoddy workmanship.
The city finally settled last summer and will receive $1.2 million, Carroll said. It's estimated that remediation work will cost between $3 million and $5 million, but nobody knows the total cost for sure, he said.
"We don't know what we’re going to be faced with there in that building until we open it up and look inside," Carroll said. The building is being used, but has water and air filtration issues, he added.
Under state law, municipalities are limited in how much they can raise property taxes. Isle of Palms has a relatively low property tax rate compared to both Folly Beach and Sullivan's Island.
City staff are working to find other ways to save money, such as refurbishing the fire department's ladder truck in lieu of buying a new one, which could decrease that cost by as much as $800,000.
But some expenses cannot be avoided, like an increased contribution to public employees' pension fund, which was mandated by the state in 2017.
If the city were to raise its property tax rate as much as possible in its next budget, it would raise a total of $344,000 in additional income. That would amount to about a $53 increase in taxes for an owner-occupied home worth $800,000, roughly the median home price on the island.
That's still not enough to cover all of the city's upcoming expenses, Councilman Randy Bell said, but because IOP is limited in its ability to grow its tax base, there aren't many alternative options. There are 1,544 owner-occupied homes on IOP and roughly 4,300 residences total.
The potential tax hike is "a very small contribution against a lot of capital challenges we have," Bell said. "In my opinion, this should have been done years ago."