The Town will hold a public hearing on the proposed Cost Sharing Agreement with the James Island Public Service District at our regular meeting on Thursday, August 15 at 7:00 at the James Island Town Hall.
Town Council approved an ordinance and a draft agreement at our July meeting. I have scheduled second and final reading for our August meeting. If Council approves the agreement and the JIPSD Commission does as well, then we should see an approximate 15% saving on the property tax bills that will be sent to Town homeowners in October.
The Cost Sharing Agreement creates a process by which the Town will pay the JIPSD each month for part of the cost of providing solid waste collection and fire protection within the jurisdiction of the Town in exchange for the District allowing the Town to provide a tax credit on the JIPSD line on the property tax bills sent by the County Auditor in Town's tax district. The agreement distributes the credits to Town property taxpayers in proportion to their appraised taxable property values, following the procedure of the Local Option Sales Tax credits. The total amount the Town pays the JIPSD for services each year will be equal to the total amount of the credits on all the property tax bills in the Town. As a result, property taxpayers in the Town will pay less to the JIPSD, but the money paid by the Town to the JIPSD will result in it getting the same amount of revenue, allowing it to cover the cost of providing services to Town residents.
The Town will also pay the District a 1% administrative fee each year and deposit $10,000 with the District to cover any credits charged to the District's tax fund balance at the County Treasurer's office. This would happen if the proper credit is left off of some property taxpayer's bill and the County Treasurer debited the District's tax revenue account rather than bill the Town.
The budget approved by Town Council in May allocated $1 million for payments for JIPSD services this year. The Cost Sharing Agreement will result in payments by the Town to the District of $83,334 each month. The 1% administrative fee will be $10,000. The total of the tax credits on all the property tax bills in the Town will be $1 million.
For a Town of James Island homeowner, the result will be a 30% reduction in the property tax paid to the JIPSD. For an average James Island home (appraised at $250,000,) that will be a $200 saving. Since JIPSD property tax is slightly less than half of the total property tax for a homeowner, the percent reduction overall will be approximately 15%. Property taxes for homeowners in the Town will also be approximately 15% less than for those in the City of Charleston.
There will also be property tax savings for cars and boats as well as businesses and rental properties. Because of the higher assessment ratios for those properties and other state credits provided to homeowners, the percent savings will be lower.
While the direct financial benefit to the JIPSD is the $10,000 administrative fee, it will also reap an additional financial benefit because the Town will pay part of the cost of services on behalf of our residents even when some of Town taxpayers fail to pay. Since the collection rate in the Town is approximately 95%, the District will collect approximately $50,000 per year more as long as the program continues.
The Commissioners approved a Memorandum of Understanding that approved the tax credit plan in concept last spring and agreed to joint representation of the Town and the District by the Pope Flynn Law Group. The District's outside Auditor is working with our joint attorney from Pope Flynn to add a provision to review a sample of tax bills each year to make sure that the credits are properly applied. The County Auditor and County Treasurer have approved the tax credit plan, but both the Town and the Commission need to pass the needed ordinance on first reading before the end of August. The deadline for the October tax bills is coming up fast.
The Town has already passed first reading and will be ready for second reading on August 15. The JIPSD Commission meeting is Monday, August 26.
I remain optimistic that we will see significant tax relief for Town homeowners on the October property tax bills.
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