Hidden Woods Special Tax Controversy

December 27, 2012 6:14 AM0 commentsViews: 279

Hidden Woods Special Tax District Controversy

Hidden Woods Special Tax District Controversy

By Paul Gable

The residents of Hidden Woods sub-division in Horry County got a shock in October when property tax bills, with their new special tax district assessments included, arrived in the mail.

This is just another example of the many problems with homeowner associations or, in the case of Hidden Woods a property owner’s association.

In this case, the Hidden Woods POA led an initiative over the past several years to get roads in the private community up to county standards so they could be included in the county road system.

This included getting 15 percent of the property owners in Hidden Woods to sign a petition seeking a referendum to approve the establishment of a special tax district to finance road improvements.

A referendum to establish the special tax district was held in November 2011. The results were reported as 104 of the 250 qualified voters in the district voting on the referendum, with 89 voting to approve and 15 voting against the referendum.

Within those results lie some of the problems with state law that affect homeowner’s associations.

Qualified voters were those residing in the proposed special tax district and duly registered to vote. Some of these are homeowners while some are renters. Non-resident property owners were not eligible to vote on the referendum, pursuant to applicable state law.

Some of the property in the district is assessed at the 4 percent owner-occupied rate while some is assessed at the 6 percent rental property rate. Some of the homes pay no tax at all due to exemptions for those over age 65 and/or disabled.

Sticker shock arrived in October when property owners received tax bills that included the special tax district assessment for the first time. In a majority of cases, property taxes more than doubled.

This led to a number of the affected homeowners attending the December 18, 2012 meeting of Horry County Council. Second reading and public review of an ordinance to approve an $850,000 bond issue to pay for the road improvements in Hidden Woods was on the agenda.

While the property owner contingent spoke against approval of the bond issue that would not solve the problem. County council just did what the POA requested – allow a referendum on establishment of a special tax district and include the approved, new assessment on property tax bills.

The special tax district was established and approved according to the provisions of state law. Whether bonds are issued or not, the district is in effect and the increased taxes are due. It is not easy to establish a special tax district. It is even more difficult to disestablish one.

The problem here seems to be the normal one with HOA’s – lack of communication between the board and the property owners. Current state law allows these boards to act behind a veil of secrecy if they choose and nothing in state law forces HOA boards to divulge financial records.

Whether that happened in this case or not is unclear. A significant number of property owners are now facing an increase of over 100 percent in their property tax bills and they are not happy.

County government is severely limited in the amount it can raise taxes in any tax year by provisions in state law. Special tax districts are not and neither are the dues charged by HOA’s for common expenses.

As the property owners of Hidden Woods just found out, the devil is in the details and they may not even have to be disclosed.

 

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