New Study Suggests Horry County Development Impact Fees Hurt Home Sales and Economy | Myrtle Beach shop
MYRTLE BEACH – Imposing impact fees on new developments in Horry County could push up home prices and lead to a drop in sales, according to a recent study by a University of South Carolina economist.
Horry County, the state’s fastest-growing county, in October began collecting Impact Fees — an additional one-time fee for new residential, commercial, or hotel developments that governments use to generate revenue to fund infrastructure and support other projects.
The county charges $1,236 for each new home. County Council has proposed increasing the impact fee from July 1 and adding commercial development fees.
The study, commissioned by the Coastal Carolina Association of Realtors and shared with Post and Courier Myrtle Beach, found that any future impact fees could increase the average single-family home price by 2.6 percent to $291,229, according to the study by USC economist Joey Von Nessen.
The higher sales prices would reduce sales by about 1.8 percent annually, which corresponds to 306 apartments. This, in turn, could cost an estimated $8.7 million in local economy damage by missing out on 65 jobs and $2 million in labor income, according to the study.
Von Nessen examined sold real estate transactions in the club’s Multiple Listing Service database from 2007 to 2021. The club has spoken out against the impact fees.
“Anytime impact fees are considered, there are inherent tradeoffs that the community must consider,” von Nessen said. “The higher property price resulting from impact fee collection, together with all the attendant side effects such as a decrease in property production, sales and affordability; affects the entire economy.”
Horry County spokeswoman Kelly Moore said it was premature to comment on the study.
“The county council will continue to discuss impact fees as part of the budget process in the coming weeks,” she said
The study states that impact fees would reduce housing affordability for the average Horry County household by an estimated 4.9 percent, which is currently $50,704.
Von Nessen said nearly 75 percent of all Horry County households earning less than the median household income are already burdened by housing costs, with more than a third of their income going towards housing costs.
But Von Nessen warned that in western parts of Horry County, where the median household income is just $35,407 a year, numbers could drop by as much as 7.1 percent if new impact fees were introduced.
If Horry County enacted a commercial real estate impact fee, they would likely reduce new commercial office space development by 10 to 19 percent per year, which translates to 26,000 to 52,000 square feet per year, Von Nessen said.
In addition, the average monthly rent for office space in Horry County could rise 24 percent to $20.69 per square foot. Industrial space could see a 15 to 26 percent drop in sales activity, or an additional 18,000 to 33,000 square feet per year.
Von Nessen said this would be an estimated $76.4 million loss in commercial business activity for Horry County in the first five years after all new impact fees, as well as 624 jobs and a potential $23.1 million in earned income that would not be generated.
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