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Lawsuit filed against Berkeley County to refund $10 million in unspent impact fees

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BERKELEY COUNTY, SC (WCSC) - A lawsuit has been filed against Berkeley County to refund $10 million in unspent impact fees. 

A press release by the law office of Richardson, Patrick, Westbrook and Brickman states the county is illegally holding onto at least $10 million in impact fees charged to new businesses and homeowners over the past decade. 

"These fees should have been used to fund road infrastructure projects associated with the county's rapid growth, according to a complaint filed on May 12, 2015, in the Ninth Circuit Court of Common Pleas," read a statement by the law office. 

Attorneys representing four residents and three county businesses filed the lawsuit, which seeks class action status on behalf of approximately 6,000 property owners in Berkeley County. 

The complaint alleges that under the South Carolina Development Impact Fee Act, the county must refund impact fees due to its failures to timely spend the money, review and update its capital improvements plan and perform mandatory yearly program reviews.

“Berkeley County collected millions of dollars in fees from people who moved and started businesses here and then ignored the laws that detail how to manage and spend those funds,” said attorney Ross Appel of McCullough Khan, LLC, who represents the plaintiffs along with Clay McCullough of McCullough Khan, LLC and James L. Ward, Jr. of Richardson, Patrick, Westbrook & Brickman, LLC. “County officials failed to spend the money they collected on needed projects and didn't timely update their capital improvement plan. Today, the County holds $10 million in a segregated impact fee account that by law can no longer be used and must be immediately refunded to Berkeley County residents and businesses.”

The law office's full statement is below: 

Berkeley County is illegally holding onto at least $10 million in impact fees charged to new businesses and homeowners over the past decade. These fees should have been used to fund road infrastructure projects associated with the county's rapid growth, according to a complaint filed on May 12, 2015, in the Ninth Circuit Court of Common Pleas.

Attorneys representing four residents and three county businesses filed the lawsuit, which seeks class action status on behalf of approximately 6,000 property owners in Berkeley County. The complaint alleges that under the South Carolina Development Impact Fee Act, the county must refund impact fees due to its failures to timely spend the money, review and update its capital improvements plan and perform mandatory yearly program reviews.

“Berkeley County collected millions of dollars in fees from people who moved and started businesses here and then ignored the laws that detail how to manage and spend those funds,” said attorney Ross Appel of McCullough Khan, LLC, who represents the plaintiffs along with Clay McCullough of McCullough Khan, LLC and James L. Ward, Jr. of Richardson, Patrick, Westbrook & Brickman, LLC. “County officials failed to spend the money they collected on needed projects and didn't timely update their capital improvement plan. Today, the County holds $10 million in a segregated impact fee account that by law can no longer be used and must be immediately refunded to Berkeley County residents and businesses.”

Berkeley County Council authorized the collection of impact fees in 2006 to pay for two road projects: a new I-26 interchange called the Sheep Island Interchange and a spine road between the Dorchester County line and U.S. 17-A. Neither has been constructed and both are only in the very early planning stages, despite the county having collected approximately $12 million in impact fees since 2006.

The county's plans called for all of the money to be spent by fiscal year 2011, which ended on June 30, 2011. However, state law gives local governments an additional three years to spend impact fees beyond the scheduled date. That window closed on June 30, 2014. Only about $1.9 million of the collected fees was spent.

Lawyers representing the plaintiffs and those representing Berkeley County have been in discussions about a potential resolution; however, those efforts were unsuccessful.

“Having repeatedly acknowledged the problems with its impact fee program, we were optimistic the county was prepared to do the right thing and refund the impact fees to thousands of Berkeley County residents and businesses.” said attorney Clay McCullough. “Unfortunately, we are left with no other option but to ask the court to force the current administration to do what Berkeley County officials should have done a long time ago. We are surprised the county would commit tax dollars to defend a program they admit has been mishandled in the hopes of blocking refund checks from going out to thousands of its residents.”

Berkeley County's impact fee program was repealed on December 8, 2014, but the county has attempted to give itself the authority to spend the remaining fees despite being in violation of state law.

State law requires local governments to review their capital improvements plan every five years and to update all elements of the plans every 10 years. In this instance, Berkeley County Council approved the capital improvements plan in November 2006, but failed to review or update it until November 2014, a full eight years after it was adopted.

Impact fees were heavily criticized during the 2014 County Supervisor election. County Supervisor Bill Peagler's campaign website states “small businesses – the heart of our economy – cannot afford the outrageous Transportation Impact Fees which are an impediment to job creation.” Dan Davis, the outgoing County Supervisor stated the impact fee was “one of the worst things that Berkeley County has ever done.”

If the lawsuit is successful, thousands of residents and businesses would receive refund checks in the mail.

Last November, voters approved a half-cent sales tax increase to fund infrastructure projects, eliminating the need for impact fees.

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