For years, South Carolina and many other parts of the U.S. have suffered from a lack of workforce housing. As a result, businesses have struggled to find workers who can afford to live and work in their communities.
In an effort to address this problem, the South Carolina General Assembly earlier this year passed into law Act 57, which allows cities and towns across the state to use up to 15% of their state and local accommodations taxes for the development of workforce housing.
Because workforce housing presents challenges unique to each city and town, the “development of workforce housing” is undefined in the law, thereby providing cities and towns with the flexibility to tailor their workforce housing development ideas to suit their communities’ needs.
Act 57 defines workforce housing as “housing for rent or sale that is appropriately priced for rent or sale to a person or family whose income falls within thirty percent and one hundred twenty percent of the median income for the local area.”
Before cities and towns may use the accommodations taxes to develop workforce housing, they must conduct a housing impact analysis and adopt it into their state-mandated comprehensive plans. The housing impact analysis must include information about the effect a city’s comprehensive plan has on:
- the cost of developing, building, rehabilitating, improving, maintaining, or owning single-family or multifamily dwellings;
- the purchase price of new homes or the fair market value of existing homes;
- the cost and availability of financing to purchase or develop housing;
- housing costs; and
- the density, location, setback, size, or height development on a lot, parcel, land division, or subdivision; and
- an analysis of the relative impact of the ordinance on low- and moderate-income households.
The analysis must include a brief summary of the methodology the city used to develop its housing impact figures.
While cities and towns are developing their housing impact analysis and the housing element of their comprehensive plans, they should solicit input from homebuilders, developers, contractors and housing finance experts. Consultation with these individuals is required for use of the local accommodations tax.
Once the housing impact analysis is complete and prior to its inclusion in a city’s comprehensive plan, it must be submitted to the SC Department of Revenue and the SC Tourism Expenditure Review Committee. Neither agency’s approval or review is required before a city adopts the analysis into its comprehensive plan.
Several cities in the state have either begun crafting their housing impact analyses or are nearing completion of them.
The Town of Hilton Head Island, which introduced the concept that led to Act 57, has completed its analysis and is moving forward with a workforce housing development plan. Town officials will be on hand at the Municipal Association’s Hometown Legislative Action Day in Columbia on February 6 to discuss how the town developed its analysis and the role it will play in the town’s workforce housing program in the future.
Learn more about Hometown Legislative Action Day.