More than $670,000 in property tax refunds for James Island town residents are in jeopardy because a judge has ruled the town was formed illegally.
Sixteenth Circuit Judge John C. Hayes III ruled the town may keep operating until his decision is appealed on one condition: That it take no action other than what is needed for its "safe and efficient operation."
Charleston Mayor Joseph P. Riley Jr. said Tuesday the ruling means the town may not use its sales tax proceeds as a rebate on this year's property tax bills, which will arrive in the mail this week. Riley said he has asked city attorneys to move to block the refunds.
If the city succeeds, the effect would be to raise the property tax on a $100,000 home in the town by $103. The owner of a $50,000 would have to pay $51.50 more.
Melinda Lucka, an attorney for the town, said the refunds should be allowed to proceed. "To construe this order to mean that (refunds are illegal) is a little bit of a stretch. The order does not say that," she said.
The local option refund - which appears on the bill as a municipal credit - was figured into the thousands of tax bills sent to James Island property owners, Charleston County Deputy Auditor Ron Hall said Tuesday.
Hall said he knew there was a chance the refund could be canceled, but added, "I haven't heard anything yet telling us to stop."
He said revising the bills could cause headaches for county tax officials, especially in cases where homeowners already had paid their bills.
"In my opinion, it's not going to be a pleasant experience, but it can be done," he said.
James Island Mayor Joan Sooy said she had not seen the ruling and did not agree with the interpretation.
"I'm certainly not going on what the city of Charleston's attorneys say," she said.
Sooy said Riley, who is seeking re-election this fall, could be hurting his campaign by pushing the tax refund issue.
"The people on James Island do have friends downtown and West Ashley (areas inside the city limits)," she said.
However, Riley said the James Island sales tax money should have been sent to the cities of Charleston, North Charleston, Mount Pleasant, Isle of Palms and others so they could lower their property taxes.
Voters in the town of James Island narrowly agreed to incorporate in 1992, and the town was formed in 1993. The city of Charleston, James Island resident Robert Kizer and two others filed a lawsuit claiming the town was actually nine separate areas that could not be linked together without crossing Charleston's city limits.
Town officials disagreed, and Hayes heard the court case this summer. His ruling against the town will be appealed to the S.C. Supreme Court, Lucka said.
Regan said the judge's ruling not only could restrict the town's ability to give tax refunds, but it also could hinder its ability to hire employees, expand departments, rezone property and take on any new debt.
"They can continue to operate, but if they are a nullity, that ought to raise an even bigger caution flag," he said.
Other than that, Hayes' ruling might have little immediate effect. The county and the James Island Public Service District provide most local government services such as fire, police and garbage collection.
"It's just a paper town. All they do is approve permits and that sort of thing. They don't have any activities beyond a little recreation," Regan said.
Hayes ruled the city of Charleston had legal standing to file a suit, that the boundaries were not contiguous, that the city brought the suit in a timely enough fashion, and that the town's two-year existence was no reason by itself to allow it to continue.
"The court said to allow the town of James Island would emasculate the statutory requirements for incorporation," Regan said.
Given the certainty of an appeal - and that Hayes' decision already had been leaked to the press - the formal order Tuesday created relatively little stir.
Sooy said she was not disturbed by Hayes' ruling and is optimistic the town will prevail on appeal.
"The Supreme Court already gave us permission to operate for 2 1/2 years," she said.
Riley happily announced Hayes' ruling to a packed Rotary Club meeting in downtown Charleston Tuesday, and he said it puts the city in a good position to prevail.
"It puts James Island on the defensive," he said, adding the city probably would ask for a quick hearing before the high court.
Kizer, a town resident who fought incorporation from the start, said he was ecstatic about Hayes' ruling.
"I think the judge has pretty much said what we had in our hearts the whole time - they weren't contiguous, and they kind of put a sham on the people of James Island when they said that they were," he said.
__________________________________________
Copyright © 1995, The Post and Courier, All Rights Reserved