Sea Pines leaders may consider $2.5M tax district for residents, sidestepping failed vote
After failing to garner the votes from Sea Pines property owners last summer to raise $2.6 million each year for roads projects, the Hilton Head Island community’s board is attempting to raise the money another way: by adopting a special tax district that only half the community would need to approve.
Some Sea Pines property owners say the proposed tax hike circumvents the community’s iron-clad rules on raising assessments. Sea Pines covenants require a 75% threshold for changes to pass.
Opponents of the tax district say the plan would benefit the county, and that makes it a conflict of interest for County Council chair and Sea Pines finance committee chair Stu Rodman, the official who broached the idea.
In June, Sea Pines voters narrowly defeated a ballot measure that would have raised their annual assessments by $450 in the coming years. The referendum failed by just 122 votes — 72% voted for it.
Only 50% of the votes would be needed to approve a special tax district.
Although the same people would be paying the tax as would have paid the assessment, a vastly different pool of people would decide on the tax increase. State code allows only Beaufort County voters to vote on the tax, which would leave nearly 60% of Sea Pines property owners — those who live in other counties or states — without a say.
What is a special tax district?
A special tax district is formed to collect taxes from a specific area for certain services.
South Carolina state code gives Beaufort County the power to tax different areas at different rates.
To establish a special tax district, 15% of voters within the proposed district must petition the county government for a vote. Once on the ballot, a special tax district has to amass only a simple majority of votes to pass.
That’s a lower standard than the 75% of votes needed to change Sea Pines’ covenants — covenants that all property owners signed when they purchased the property.
“When somebody buys into Sea Pines, these are the rules you are to live by and they are not supposed to be easy to change,” said Sue Ehmke, a resident and an attorney. “The covenants are a contract between us and Sea Pines management.”
In other states, tax districts collect money to maintain airports, public utilities and cemeteries.
Beaufort Countyhas been home to six special tax districts, all of which are north of the Broad River and have been used to pay for road maintenance, paving and, in one instance, a community pool.
County control
If voters established a tax district, the County Council would operate it, not Sea Pines. According to state code, the council would add the tax to property owners’ tax bills. That’s different from the failed referendum, where the increased property assessments would have been collected and overseen by the POA.
“It’s an excessive transfer of power to the County Council,” said Michael Wolfe, a Sea Pines resident and retired lobbyist.
The council could either oversee the district itself or appoint a board of three to five people, state code says.
The common factor in the tax district proposal and the body that would oversee it: County Council chair Rodman.
Rodman wears two hats on this issue. He chairs the finance committee in Sea Pines, a committee that meets behind closed doors and hasn’t released minutes of its meetings since May 2019.
In those two leadership roles, Rodman oversees the budgets for Sea Pines and for the entire county.
Wolfe, a resident speaking on behalf of other Sea Pines property owners, said Rodman’s positions create a conflict of interest.
Rodman disagrees.
“There’s no conflict of interest for a couple of reasons,” he said. “There can’t be one because I don’t benefit personally, and there would be an oversight board approved by the electorate.”
Just one month after the referendum failed in July, Rodman’s committee brought the idea of a special tax district to the full Sea Pines board of directors. Rodman said Tuesday his committee was “clearly” considering the special tax district in response to the referendum failing.
The tax district could raise the exact amount the referendum was supposed to, according to a resolution approved unanimously by the board.
“The funding levels, for the first three years, (are) to remain consistent as previously presented in referendum 2019,” the resolution said.
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That would mean about $2.6 million per year, according to previous reporting by The Island Packet. Money raised by the referendum was slated to be used for stormwater, landscape and traffic projects, Community Services Associates president Bret Martin said.
The special tax district would go toward the same projects, Martin said.
Tom Lennox, Ward 5 representative on Hilton Head Town Council, said Tuesday the failure to fund projects is making Sea Pines an outdated place to live.
“I think the 75% super majority required by the covenants is almost impossible to overcome, regardless of the issue. That’s really hurting the effort to try to get some things done in Sea Pines,” he said. “With all this deferred maintenance, we’re going to age.”
Who gets to vote?
The earliest the tax district could be finalized is in a year, Rodman said. To get it in place, the board would need to have a plan by summer 2020.
He said the county’s role in the process would be “limited” to accepting a petition of at least 15% of voters, conducting the vote and putting an ordinance in place if it passes.
CSA president Martin had a different idea of the timeline.
“It would be later than that,” he said. “At least a year, maybe two.”
The people who can vote to establish a tax district are different from those who voted on the failed referendum.
In a referendum to change Sea Pines covenants, each individual property gets one collective vote. That includes non-resident property owners.
In a vote for a tax district, any owner in Sea Pines who is registered to vote in Beaufort County could cast a ballot.
“We’re part of the county, and we’re part of the town,” Martin said, adding that “all the people in the community pay taxes” so he didn’t see how a special tax district would disenfranchise voters.
However, the district would exclude non-resident property owners or second-home owners — who make up about 60% of property owners in Sea Pines, according to outgoing Association of Sea Pines Plantation Property Owners board Richard Matthews.
For the people who own homes in Sea Pines but don’t live there full time, Matthews said, “it’s clearly taxation without representation.”
This story was originally published December 20, 2019 at 4:30 AM.
