Proposed Sea Pines Special Tax District
Sea Pines Special Tax District
Sea Pines CSA has identified $51 million needed for critical infrastructure projects over the next 10 years. This amount reflects the cost of repairing, rebuilding and improving the community’s roads, bridges, leisure trails, beach access points and the master drainage systems.
Each year, Sea Pines CSA has approximately $1.6 million to spend on infrastructure projects, so the Board believes the community can account for $16 million of this future 10-year need, leaving a $35 million deficit. This deficit is what must be raised over the next decade to complete this crucial work.
The Sea Pines CSA Board is currently trying to solve the community’s revenue problems through an increased assessment via a simple referendum. If the referendum does not achieve the required number of votes, the Sea Pines CSA Board will initiate the processes required to create the Special Tax District. Below is a regularly updated list of frequently asked questions related to Sea Pines Special Tax District.
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Sea Pines Special Tax District FAQs
How did CSA determine the cost of what is needed to fund the community’s critical infrastructure needs?
- CSA has identified $51 million in necessary infrastructure projects over the next 10 years. The 10-year expenditure cost estimates were developed using several documents and resources.
- The first is the 2016 Hydrology Study that examined our community’s drainage needs for the next 25 years. The second is a recently completed Sea Pines Capital Reserve Study. The Study, conducted by an outside consultant, itemizes CSA’s physical assets, including roads, leisure trails, bridges, facilities, vehicles and equipment, and estimates the cost and year of replacement of each asset based on its current condition. The Study looks out more than 10 years, but does not include repairs, improvements, or replacements of drainage infrastructure. Based on these two studies, current observations of infrastructure in the field, the actual reconstruction costs for the recently completed Greenwood Drive and Lighthouse Road projects, and the bids received last month to reconstruct and rebuild North Sea Pines Drive (Ocean Gate to Lighthouse Road), we believe we have a solid understanding of our infrastructure needs and their anticipated cost.
In what instance would a Sea Pines Special Tax District be established?
- Throughout the next few months, the Sea Pines CSA Staff and Board plan to continue working on the Special Tax District materials so that they will be ready to initiate the required processes should the referendum fail to achieve the required 75% +1 of the votes.
BACKGROUND + DETAILS
What is a Special Tax District?
- A Special Tax District is an entity formed by a county government at the request of the district’s electors to raise revenue. Its purpose is to provide specified services not offered by the county or municipality of which it is a part.
How will the anticipated $3.5 million raised per year be spent to improve our community?
- Funds raised will be earmarked specifically for the repair, replacement, addition and improvement of roads, bridges, bulk heads, leisure trails, stormwater facilities and drainage systems within Sea Pines. These projects have been identified by CSA as the top priority and they must be addressed as such.
Have Special Tax Districts been used before?
- Special Tax Districts are permitted under South Carolina law S.C. Code Ann. 4-9-30(5)(a)(i) and have been created throughout the state and used to secure funding to pay for authorized projects and services.
How much will the County encroach upon the historic operations of Sea Pines and the CSA?
- Rumors persist that implementation of a special tax district would allow Beaufort County Council to open our beach access to the public and even to require us to remove our gates. Others suggest that the County Council would ignore our request to appoint CSA’s officers as the governing body and instead install independent leadership. There is simply no reason to believe that the County Council would take this approach – and we are not aware of any situation where such action has occurred anywhere in the State. Further, the membership and appointment methodology for the governing body of the Special Tax District will be memorialized in the ordinance creating the Special Tax District, and CSA, acting through its legal counsel, will work closely with the County to ensure the proper constitution of the governing board.
How would a Sea Pines Special Tax District be created?
- Once the Special Tax District details are finalized, a petition will be created and circulated to residents within Sea Pines. If the petition gains the required number of signatures (15% of qualified electors within the proposed Sea Pines Special Tax District), the petition will be submitted to Beaufort County Council and Beaufort County Election Commission for certification and approval. A special election will then be called at a future date to be determined by Beaufort County Council. Assuming a simple majority of those voting in the special election support the establishment of the Sea Pines Special Tax District, the Beaufort County Council will proceed to establish the Sea Pines Special Tax District and provide for the terms of its operation by ordinance.
Why does the Board believe an ad valorem tax is the most equitable option when non-residents will pay 50% more than residents on a property of the same value?
- The CSA Board believes the ad valorem method is the most equitable option is because it imposes a significant assessment on the Resort and commercial partners based on property values, which will continue to increase as they improve and expand their facilities in Sea Pines. The alternative – imposing a flat fee on each property – would have resulted in the Resort and commercial partners paying the same amount on their various parcels as homeowners. Additionally, a flat fee would result in homeowners of condos and small homes paying the same as much larger homes, which many have criticized as inequitable. The Board had to decide which approach would be most equitable and decided that having the Resort and commercial partners pay a reasonable amount is the best choice for the future of Sea Pines.
What is the boundary of the Sea Pines Special Tax District?
- While the exact boundary is still being determined, the CSA Board anticipates that all land within Sea Pines will be included in the boundary.
- The boundary is still being determined. CSA will provide updated information as it becomes available.
Who is eligible to vote for a Sea Pines Special Tax District?
- Every person who is registered to vote at a residence within the proposed Sea Pines Special Tax District will be permitted to vote in the special election. If you are not registered to vote within the proposed Sea Pines Special Tax District, you will not be permitted to vote in the special election.
If I am not a registered voter in Sea Pines, do I have a say regarding the creation of the Special Tax District?
- You must be a registered voter within Sea Pines to vote in the special election to establish the Special Tax District.
When would a Special Tax District be established?
- The goal is to establish the Special Tax District in 2021 in order to begin collecting tax revenues by mid-January 2022.
Who is providing CSA legal guidance and representation?
- CSA has hired legal representation through Pope Flynn, LLC , a law firm specializing in providing counsel to local government entities throughout South Carolina.
REVENUE + FUNDS
How much revenue will be raised by the proposed Sea Pines Special Tax District?
- Based on an assessment of Sea Pines’ needs, it is anticipated that the Special Tax District would raise $3.5 million per year.
- These numbers are still being determined. CSA will provide updated information as it becomes available.
How would funds raised through the creation of a Special Tax District be used?
- Funds raised would belong to the Sea Pines Special Tax District and use will be restricted to the purposes listed in the petition. As a result, any monies received would be strictly earmarked for specific infrastructure projects in Sea Pines.
- The statute permitting the creation of the proposed Sea Pines Special Tax District permits revenues to be raised through ad valorem taxes or user service charges (fees), or both.
- It is anticipated that the proposed Sea Pines Special Tax District will utilize the taxing authorization in the statutes to raise the proposed revenues. As a result, the taxes levied by the Sea Pines Special Tax District will be levied on the annual Beaufort County tax bill alongside other tax levies in the County (i.e. Beaufort County, Beaufort County Schools and the Town of Hilton Head).
How will the tax be determined?
- It is anticipated that an ad valorem tax, or a tax based on taxable assessed property values, would be levied and collected. This is the same way all other ad valorem property taxes levied in Beaufort County are assessed and includes consideration for disparate classifications of assessments based on property type (i.e. residential versus commercial including second homes).
How will the tax be levied?
- Per South Carolina and Beaufort County laws, the Special Tax District tax will be applied to your property’s “taxable value,” which does reflect a difference in the assessment ratio between non-residents (6%) and residents (4%).
Where does the money go? Who would oversee the funds to ensure they are properly used?
- If the Sea Pines Special Tax District is formally approved and created, all tax revenues will be collected by the Beaufort County Treasurer for the benefit of the Sea Pines Special Tax District. Upon collection, the monies (at some regular interval) would be transferred to a custodial bank account held in the name of the Sea Pines Special Tax District. Use of these funds would be administered by a separate five-person governing board. Subject to the ordinance of the Beaufort County Council empowering the Sea Pines Special Tax District, it is anticipated that the governing board of the Special Tax District would be the CSA officers.
- The Sea Pines Special Tax District would be an agency of Beaufort County and therefore would be required to publicly account for and report the receipt and expenditure of all funds and be subject to the provisions of the South Carolina Freedom of Information Act.
- Clarification has also been requested on the process for collecting the funds for the Sea Pines Special Tax District. Upon application of the tax levy on the annual tax rolls, the funds will be collected and remitted by the Beaufort County Treasurer. Use of the funds will be administered by the governing board of the Special Tax District, which CSA fully intends will consist of the five governing officers of CSA. As public funds, the collected monies must be properly budgeted and publicly accounted for and reported. The receipt and expenditure of all funds, including the accounting reports therefor, will be subject to the provisions of the South Carolina Freedom of Information Act. Finally, expenditure of the money will be limited to the specific purposes recited in the approval petition and approved by the voters in the Special Tax District referendum. This strict oversight gives us the confidence and assurance that the funds will be spent how they were intended – addressing our community’s critical infrastructure needs.
What fees will Beaufort County charge to collect funds through the Special Tax District?
- The CSA Board expects Beaufort County to charge nominal administration fees to collect funds through the Special Tax District.
- These numbers are still being determined. CSA will provide updated information as it becomes available.
Will the funds collected from the Special Tax District be used to redevelop the Gallery of Shops at 14 Greenwood Drive?
- The CSA Board has expressly determined that funds collected from the Special Tax District would not be used for the redevelopment of the Gallery of Shops.
If the Special Tax District is created, will it be imposed indefinitely, or will there be a sunset clause included?
- This is still being determined. CSA will provide updated information as it becomes available.
How are annual tax levies established?
- South Carolina law related to the establishment of a Special Tax District requires that an annual maximum amount of levy be specified. CSA has been advised by legal counsel that when the levy is ad valorem, the maximum amount may be stated in terms of a maximum millage rate. The board of the Special Tax District may then set a millage rate each year, so long as the maximum rate is not exceeded.
- Each property owner will be able to calculate their required tax payable based on the taxable value as determined by the County assessor and auditor (as disclosed on the annual property tax bill) multiplied by the millage rate.
- Typically, a Special Tax District will specify a maximum rate higher than what is contemplated for the amount of funds deemed necessary for expected expenditures. This provides the district’s board flexibility in determining a rate that will achieve the aggregate amount of funds needed and expected to be received in any year, as aggregate taxable values increase or decrease.
- At this time, CSA is working to determine current aggregate taxable values within the district to be used in the determination of a maximum millage rate appropriate for Sea Pines.
How will the tax compare to the amount proposed during the 2019 vote?
- For residential properties, the annual tax may be greater or less than the proposed increase in the 2019 vote and will depend on your property’s tax value and the millage rate selected by the Sea Pines Special Tax District’s Board.