Richland Co. is struggling to keep up with growth. Can impact fees ease the taxpayer's burden? (2024)

COLUMBIA— Richland County is finding it harder to fund services and keep pace with rapid growth across the county.

An average of nearly 1,800 new homes were built in Richland County annually from 2017-2022, a rate that's expected to increase. As more people move in, demand for services like law enforcement, transportation, water and sewer grow.

Now, County Council leadership is considering implementing development impact fees to help pay for additional services and facilities.

"The purpose is to help reduce the tax burden on residents by not having to pay the complete cost of development in Richland County," Councilwoman Allison Terracio said.

Impact fees are one-time payments developers pay to local governments to help finance infrastructure projects that are needed as a result of new development.

The county paid for a feasibility study on impact fees, the results of which were discussed at a committee meeting on June 25. The study found the county's coffers are hurting from a lack of diversity in how it collects money and pays for infrastructure projects.

"The costs of energy, health, as well as construction materials have increased dramatically and are likely to exceed the rate of housing values in the future," the study said. "As a result, the county will have to either raise existing rates, find new revenue sources, and/or face deterioration in levels of service and quality of life."

The feasibility study identified law enforcement, EMS, trash collection and transportation as the most appropriate services for more county dollars from impact fees as the population grows.

Impact fees can't be used to finance ongoing operations or go in the county's general fund. They can only be used to finance new operations and must be earmarked as capital expenses.

Common criticism of impact fees from developers and others is that they stifle economic growth by making development more expensive. Findings from a 2003 study from the Brooking Institute suggest impact fees are a more efficient way for local governments to pay for public services than using property taxes.

The full council would still have to vote on an ordinance to move forward with impact fees. If approved, council would have to either wait until next year's budget to implement them, or make a budget amendment to this fiscal's year's budget, which was approved on June 18.