Can a South Carolina sewer district charge the same property tax rate on land that has no access to the sewer line?

Plain-English summary

A Spartanburg County auditor asked the South Carolina Attorney General whether the Spartanburg Sanitary Sewer District can keep charging the same 8.6-mill ad valorem tax on annexed property that has no access to the district's sewer line, since those owners only get a $45 reimbursement toward septic tank repairs instead of an actual sewer hookup.

The AG's office concluded the district can. The district's 1970 enabling legislation requires its elected commission to levy an ad valorem tax on all taxable property in the district sufficient to pay bond principal and interest and cover administrative, maintenance, and operating costs. The opinion draws a key legal distinction: a tax is imposed on all property to fund government generally, while a special assessment is charged only to property that benefits from a specific improvement. Because Spartanburg's letter described a charge applied uniformly to all property at the same rate, the AG treated it as a tax, not a fee or assessment, and the state constitution's uniformity requirement means a tax must be levied equally within the district regardless of whether any specific owner receives an equivalent individual benefit.

What this means for you

County auditors and special purpose district commissions

The opinion holds that when a special purpose district's enabling legislation requires an ad valorem tax to fund bond obligations and operations, that levy must be applied uniformly to all taxable property in the district, and courts do not require the tax to track individual owners' benefit the way a service fee or assessment would.

Property owners in a sewer or utility district who lack direct access to the service

The opinion confirms that being charged the same district tax as your neighbors, even without full access to the underlying service, is not itself a constitutional violation if the charge is a genuine ad valorem tax rather than a service fee or special assessment; the prior opinions on service fees (which do require a benefit to the payer) do not control here.

Attorneys distinguishing taxes, fees, and special assessments for local governments

The opinion applies the classic Celanese Corp. v. Strange distinction, taxes are imposed on all property for government maintenance generally, while assessments are laid only on property benefited by a specific improvement, and confirms under Davis v. County of Greenville that the state constitution's uniformity clause requires equal levying within the taxing jurisdiction, not equal distribution of the resulting services.

Common questions

Q: Does a sewer district have to give every taxpayer equal benefit for their tax dollars? A: No. The opinion quotes a 1969 AG opinion for the proposition that "it is not necessary... that there be a coequal benefit for every tax dollar exacted," and explains that uniform taxation under Article X requires equal levying, not equal distribution of services.

Q: What is the difference between a tax and a special assessment or service fee in South Carolina? A: Based on the cases discussed here, a tax is imposed on all property to maintain government generally, while an assessment or fee is charged only to property that receives a specific benefit from an improvement or service. Courts look past the label used to the real substance of the charge.

Q: Could this same property be charged a separate sewer connection fee instead of a tax? A: The opinion notes that prior AG opinions require sewer connection or service fees to actually benefit the payer, so a straight sewer fee on property with no sewer access would likely not be valid the way the district's uniform ad valorem tax is.

Background and statutory framework

The Spartanburg Sanitary Sewer District was created by the General Assembly through a 1929 act and reorganized by Act 1503 of 1970, which requires the district's elected commission to levy an annual ad valorem tax, without limit as to rate or amount, sufficient to pay bond principal and interest and to cover administrative, maintenance, and operating expenses. General law governing special purpose and public service districts, S.C. Code Ann. § 6-11-270, similarly requires taxes to be levied on all assessable property within a district. Article X of the South Carolina Constitution requires uniform assessment of property and requires that property tax levies be uniform with respect to persons and property within the jurisdiction of the taxing body, though the South Carolina Supreme Court has held that uniformity applies to how the tax is levied, not to how services funded by the tax are distributed.

Citations and references

Statutes:

• 1970 S.C. Acts 1503, Spartanburg Sanitary Sewer District's enabling and tax-levy legislation
• S.C. Code Ann. § 6-11-270 (2004), levy and disbursement of taxes by special purpose and public service districts
• S.C. Const. art. X, § 1, uniform and equal assessment of property
• S.C. Const. art. X, § 6, uniform property tax levies within a political subdivision

Cases:

• C.R. Campbell Construction Company v. City of Charleston, 325 S.C. 235, 481 S.E.2d 437 (1997), test for a valid uniform service charge
• Casey v. Richland County Council, 282 S.C. 387, 320 S.E.2d 443 (1984), taxes imposed equally on all properties versus assessments only on benefited properties
• Davis v. County of Greenville, 313 S.C. 459, 443 S.E.2d 383 (1994), uniformity is obtained when taxes are levied equally, not through equal service distribution
• Celanese Corporation v. Strange, 272 S.C. 399, 252 S.E.2d 137 (1979), the substantive distinction between a tax and a special assessment

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-addressing-a-sewer-district-s-ability-to-levy-a-uniform-tax-where-not-all-of-its-residents-receive-sewer-service/
• Original PDF: https://www.scag.gov/media/mitmx1or/03366031.pdf

Original opinion text

Alan Wilson
Attorney General

August 14, 2023

The Honorable Sharon H. West, Auditor
Spartanburg County

County Administrative Building, Suite 200
366 North Church Street
Spartanburg, South Carolina 29303
Dear Ms. West:

We received your request for an opinion of this Office as to whether a sewer district can levy an ad valorem tax on property having no access to the sewer system? With your request, you included the following information: We have a sewer district for which I levy 8.6 mils for ad valorem property tax. The district has annexed property over the years and the annexed property is charged 8.6 mils for the district even though the property has no access to the

sewer line. The district identifies the benefit to the owners of the property within the district who cannot access the sewer line as a $45 reimbursement if the property owner has a problem with his septic tank and is charged for the repair. A taxpayer in the sewer district who owns and lives in $150,000 home (average value of an owner-occupied home in Spartanburg County) will pay more than $50 tax for the sewer each year. The property within the district with access to the sewer line pays the same 8.6 mils but has the advantage of tapping onto the sewer line by paying a tap on fee.

The sewer district was created by the General Assembly and is run by commissioners who are elected by those who live within the district. These elected commissioners have the authority to establish the millage rate.

Law/Analysis

We presume you are referring to the Spartanburg Sanitary Sewer District (the “District”). According to Act 1503 of 1970, the General Assembly established the District in 1929 by Act 556 to provide “interceptor trunk lines and sewerage treatment facilities within the district.” 1970 S.C. Acts 1503. Act 1503 placed governance of the District with its elected commission and gave the commission the authority to impose charges, assessments, and ad valorem taxes as may be required

for carrying out its purposes. Id. In fact, Act 1503 requires “a tax levy shall be annually made on all taxable property within the district for the purpose of paying the principal and interest [of its

general obligation bonds].” Id. (emphasis added). Act 1503 also provides: KEMbERT C. DENNIS BUILDING

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The Honorable Sharon H. West
Page 2

August 14, 2023

For the payment of the general obligation bonds, both principal and interest, the full faith, credit, resources and taxing power of the district shall be pledged and there shall be levied annually an ad valorem tax without limit as to rate or amount on all taxable property as hereinabove specifically provided sufficient to pay the principal of and interest on the bonds as they become due. In addition to the above, there shall also be levied annually an ad valorem tax without limit as to rate or amount on all taxable property within the district sufficient to provide for the administrative expenses of the district and for the cost of maintenance and operation of the interceptors and the sewerage treatment facilities of the district . . . The commissioners of the district shall be authorized and empowered to annually determine the amount of millage required for administrative and operational expenses as above referred to and to pay the above-mentioned principal and interest on outstanding bonds of the district.

Id. (emphasis added). Thus, according to the District’s enabling legislation, its commission is mandated to levy an ad valorem tax on all taxable property within the district sufficient to meet its bond obligations and cover its administrative expenses as well as the cost of maintenance and operation of its interceptors and the sewerage treatment facilities.

Moreover, the general law
regarding special purpose and public service districts allows for the levy, collection, and disbursement of taxes by special purpose and public service districts and provides as follows: After the approval thereof by the county supervisor, taxes shall be levied to meet such expenses upon all assessable property in the district and upon collection of them by the county treasurer they shall be disbursed only upon the

approval of the board of commissioners of the said electric light, water supply,

fire protection or sewerage district, as the case may be, by an order on the county treasurer drawn by the supervisor of the county in which said district is located. All taxes so levied for any such district shall be kept separate on the assessment roll from other levies and moneys so collected shall be kept in a separate fund for the district.

S.C. Code Ann. § 6-1 1-270 (2004) (emphasis added). As such, general law requires any tax levied by a special purpose or public service district must be levied on all property located within its boundaries. Both the special law governing the District and general law governing special purpose

and public service districts are consistent with article X, sections 1 1 and 62 of the South Carolina Constitution (2009), which require uniform taxation within a political subdivision imposing a tax. 1 Article X, § 1 requires “[t]he assessment of all property shall be equal and uniform . . . .” 2 Article X, § 6 states in relevant part: Except as otherwise provided in this section, the General Assembly may vest the power of assessing and collecting taxes in all of the political subdivisions of the State, including counties, municipalities, special purpose districts, public service districts, and school districts. Property tax levies shall be uniform in respect to persons and property within the jurisdiction of the body imposing such taxes: provided, that on properties located in an area receiving special benefits

The Honorable Sharon H. West
Page 3

August 14, 2023

In your letter, you reference two opinions issued by this Office in 2008 and 2018. The 2008 opinion addressed whether a county can impose sewer fees on county residents who do not receive sewer service. Op, Att’y Gen., 2008 WL 5476554 (S.C.A.G. Dec. 3, 2008). First, we considered the test for a valid uniform service charge employed by the Supreme Court in C.R. Campbell Construction Company v. City of Charleston, 325 S.C. 235, 481 S.E.2d 437, 438 (1997), which

requires the charge to benefit the payer. Id. Then, we considered the statutory authority allowing counties to levy fees including section 6-15-10 of the South Carolina Code which states they may be levied upon “those to whom service is rendered . . . .” Id, Thus, we concluded “those paying the fee must at a minimum receive some benefit from paying the charge.” Id. In our 2018 opinion, we considered whether a county can charge a sewer fee on homes and cars whose owners are not on the sewer line. Op. Att’y Gen., 2018 WL 3698382 (S.C.A.G. July 20, 2018). We noted counties have authority under state law to operate sewer systems and to collect

service and user fees for providing those services. Id. However, we determined to be a valid fee, rather than a tax which must be uniform, those paying it must receive a benefit. Id. We also included a lengthy discussion of the difference between a tax and a fee. Id. Relying on the Supreme

Court’s decision in Casey v. Richland County Council, 282 S.C. 387, 320 S.E.2d 443 (1984), we determined “taxes should be imposed equally on all properties while assessments should only be on those properties benefitted.” Id. As such, we determined, this Office believes generally a court will rule that a sewer fee in and of itself

cannot be charged as a valid charge to those who receive no benefit. Id.; Op. S.C. Att’y Gen., 2008 WL 5476554 (S.C.A.G. December 3, 2008); Hosp. Ass’n of S.C. , Inc, v. County of Charleston, 320 S.C. 219, 231-34, 464 S.E.2d 113, 122 (1995); J.K. Construction. Inc, v. Western Carolina Regional Sewer

Authority, 336 S.C. 162, 519 S.E.2d 561 (1999); Casey v. Richland County Council, 282 S.C. 387, 320 S.E.2d 443 (1984); and pursuant to the use of

“rendered” in § 6-15-60. Moreover, we believe that a court will generally find that sewer connection fees are a service charge and that they offer no benefit to those properties not using the sewer service, such as properties that already have a septic system or other alternative septic treatment system. As such, this Office believes a court will find that sewer connection fees cannot be imposed where they offer no benefit pursuant to the Supreme Court’s ruling in Casey v. Richland County Council, 282 S.C. 387, 320 S.E.2d 443 (1984). See also C.R.

Campbell Const. Co. v. City of Charleston, 325 S.C. 235, 481 S.E.2d 437 (1997) (citing Brown v. County of Horry, 308 S.C. 180, 417 S.C.2d 565 (1992)).

from the taxes collected, special levies may be permitted by general law applicable to the same type of political subdivision throughout the State, and the General Assembly shall specify the precise condition under which such special levies shall be assessed. S.C. Const, art. X, § 6 (emphasis added).

The Honorable Sharon H. West
Page 4
August 14, 2023

According to your letter, the District imposed what you describe as a tax rather than an assessment or a fee. As our Supreme Court explained in Celanese Corporation v. Strange, 272 S.C. 399, 40102, 252 S.E.2d 137, 138 (1979):

The distinction between a tax and a special assessment was stated in Jackson v. Breeland, 103 S.C. 184, 88 S.E. 128 (1916), as follows:

“It is very true that in popular parlance, and even in legislative enactments, assessments are frequently called taxes, but courts will look

behind mere words to find the real meaning. Taxes, in the strict sense of the word, are imposed upon all property, both real and personal, for the maintenance of the government, or some division thereof, while assessments are laid only on the property to be benefitted by the proposed improvements. This is the vital distinction running through all the cases.” 88 S.E. at 130.

Therefore, courts will look beyond terms used to determine if the imposition is a tax.

In this
instance, your letter explains all property within the district, original and annexed, is charged 8.6

mils. As such, it appears to us to be tax. As a tax, it presumably benefits the District as a whole rather than individual property owners. However, your concern is that some property owners

receive no benefit.
As we stated in a prior opinion, “It is not necessary . . . that there be a coequal benefit for every tax dollar exacted.”

Op. Att’y Gen., 1969 WL 10646 (S.C.A.G. Mar. 3,1969). Moreover, the Supreme Court in Davis v. County of Greenville, 313 S.C. 459, 464, 443 S.E.2d 383, 386 (1994)

addressed a similar issue of whether a county could tax all residents the same while providing certain services only in the unincorporated areas of the county. The Court cited to section 6 of article X of the South Carolina Constitution and explained: “The plain language of Article X, § 6 does not impose uniformity on the distribution of taxes. Under Article X, § 6, uniformity is obtained when property taxes are levied equally within the county.” Id. at 464, 443 S.E.2d at 386

(citing Charleston County Aviation Auth. v. Wasson, 277 S.C. 480, 289 S.E.2d 416 (1982)). As such, we believe the District is required to impose the same tax throughout the District regardless of whether any particular homeowner receives a benefit. Conclusion

Based on your letter, we presume the sewer district you reference is the Spartanburg Sanitary Sewer District. If so, in accordance with the District’s enabling legislation, its commission is charged with levying ad valorem taxes on all property located in the District sufficient for the payment of principal and interest on its bonds in addition to administrative, maintenance, and operating expenses. While our prior opinions conclude residents must receive some benefit to be charged sewer service or connection fees, the same is not true for a tax. The South Carolina Constitution requires the uniform imposition of ad valorem taxes, but our Supreme Court made

The Honorable Sharon H. West
Page 5
August 14, 2023

clear that uniformity is not required in the distribution of taxes. In our view, the millage imposed

by the District as described in your letter is most likely a tax rather than a fee.

As such, while

some residents of the District may not receive the same services as others, the taxes imposed must

be uniform.

Sincerely,

Cydney Milling
Assistant Attorney General

REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General

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