Deep concerns are being expressed over proposed large hikes in impact fees on developments in Mt. Pleasant, with fears they will lead to a decrease in affordable housing.
Town Council members are considering increasing the impact fees to 44 percent of the maximum allowed by the state for transportation and 33 percent of the maximum for all others. This, it is estimated, will lower some fees, but double others, resulting in net increases.
The council move was made after a study showed that the fees being charged are much lower than the actual cost of the impact of developments, both commercial and residential.
National urban planning expert Wendell Cox, however, issued a stark warning to Mt. Pleasant policymakers.
"It is going to mean lower income or middle income will not be able to live in these municipalities," Cox, who heads the St. Louis-based Demographia consultancy, told the Palmetto Business Daily. "It is a real problem. We are in the process of seeing housing affordability go through the floor."
This is a direct cost to the homebuyer as the developer and home builder add the cost into the price point, Cox said, noting that if the cost of new homes rise, so do the costs of existing ones.
Local governments avoid directly raising taxes, but it still comes out of taxpayers' pockets, he said.
Cox said the "Charleston area is one of the worst in the country" in terms of housing cost. The average cost of a house is the equivalent of 4.4 years of medium household income. He warned local lawmakers to look to a city like San Francisco, where it the number is 9.5.
The Stantec study of Mt. Pleasant's fees found that the total for a new single family is $1,858, but that the true cost of the impacts is $7,722. The fees for a 100,000-square-foot shopping are listed as $328,000, but should be more than $1 million.
But a report prepared for the Charleston Trident Association of Realtors provided different numbers when adding up all fees.
It found that fees to construct a $250,000 single-family house -- for building permit, plan review and development impact fees including appropriate water and sewer provider -- is $13,203 in Mt. Pleasant. This compares to $7,269 in Charleston, $6,306 in Summerville, and $3,850 in North Charleston.
Council members approved the increase at a first reading of the ordinance in late February. A final vote on whether to raise fees is expected soon.
Councilman Mark Smith, who is opposed to increasing impact fees by the amount proposed, said he is concerned that the council "might be taking a step in the wrong direction."
"The consultants that conducted our Impact Fee study confirm that any increase to our already highest in the region impact fee will have a negatively and adversely effect on the affordable housing issue," Smith told Palmetto Business Daily. "I'm not comfortable with a special meeting of Town Council being called and why the significant residential and commercial increases in impact fees across the board are being pushed through so quickly and without much more public and stakeholder awareness, engagement, debate and vetting."
As chairman of the town's water supply committee, Smith has noted that one possible outcome of large increases in impact fees is the potential for less commercial development.
"These are very complex issues that need to be thoroughly vetted and debated," he said. "I again say, we need to slow down and get this right the first time."
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