Octapharma Deal in Jeopardy After York County Amendment Strips Rock Hill’s Tax Share

York County Council unanimously approved second reading of a $1.5 billion fee-in-lieu of tax agreement with Octapharma on June 29, but not before a contentious 5-2 vote to restructure who absorbs the cost of the tax break. The amendment, introduced by Councilman William “Bump” Roddey, cuts Rock Hill Schools’ share of the tax sacrifice from 50 percent to 31.9 percent and shifts the difference entirely onto the city of Rock Hill, requiring the city to give up 100 percent of its potential property tax revenue from the project. The change does not alter the incentive Octapharma receives. What changed is who pays for it.

The amendment creates a significant complication. Rock Hill City Council passed its own resolution on June 22, providing conditional consent to the project’s inclusion in the York-Chester multi-county industrial park and to the fee-in-lieu agreement. But the city’s consent was tied to receiving its proportional share of the tax revenue. The county’s amendment effectively strips that share away entirely. That means the June 22 resolution is no longer sufficient. Rock Hill City Council must now take a new vote specifically authorizing the restructured terms before the agreement can be finalized. Whether the city does so is not certain.

If Rock Hill City Council declines to approve the amended terms, and York County Council does not revisit its position, the Octapharma project as currently structured could collapse. Third reading at York County Council is scheduled for July 13.

The Original Structure and What Changed

Under a standard fee-in-lieu of ad valorem tax agreement, a company pays a negotiated fee instead of full property taxes. In South Carolina, the standard commercial assessment ratio is 10 percent of a property’s value. Under this agreement, Octapharma would pay at a 4 percent rate instead, a reduction negotiated to make the county competitive with other states for the investment.

The gap between what the company would have paid at the full rate and what it pays under the FILOT represents the tax break being shared by all taxing entities that would otherwise collect from the property.

In the original agreement brought before council for second reading, that burden was divided equally among three entities: York County, the city of Rock Hill, and Rock Hill Schools each would forgo 50 percent of their respective potential tax revenue from the project.

Roddey moved to change those percentages. Under the amendment:

York County remains at 50 percent of its tax revenue forfeited. Rock Hill Schools is reduced from 50 percent to 31.9 percent. The city of Rock Hill increases from 50 percent to 100 percent, meaning the city gives up all of its potential property tax revenue from the project.

The numbers were developed with Economic Development Director Mitch Miller. Roddey said he had discussed the possibility of such a change with Octapharma Vice President of Finance Barry Pomeroy before the meeting and that it was not a surprise to the company. The company’s tax rate does not change under the amendment.

Why Roddey Pushed for the Change

Roddey framed the amendment as a matter of educational equity rooted in how property tax bills are structured.

School districts are the largest recipient of property tax revenue in York County. Roddey said Rock Hill Schools collects approximately 62 percent of the total property tax generated at the Palmetto Research Park site, compared to 24 percent for the city of Rock Hill and 14 percent for York County. Under a flat 50 percent FILOT reduction applied to all three, the school district gives up the most dollars in absolute terms because it starts with the largest share. The county, starting with the smallest share, gives up the least.

“The school district is the biggest recipient of your property taxes,” Roddey said. “The county is the smallest recipient of your property taxes. And so when we do these fee-in-lieu tax agreements, we take a huge chunk of money from our school system.”

He pointed to a pattern he said plays out repeatedly: Clover, Fort Mill, and York school districts have all come before council in recent years seeking help funding their schools through impact fees. Rock Hill Schools has not been able to pursue impact fees, he said, because the district lacks the population growth required to qualify under state law. That leaves the district with no equivalent relief valve when FILOT agreements reduce its tax base.

He argued Rock Hill is not left empty-handed under the amended terms. The city owns the Palmetto Research Park property and will sell it to Octapharma. The city is also the regional provider of water, sewer, and electricity, all of which a facility of this scale will consume in significant quantities. He drew a direct parallel to the failed Carolina Panthers deal, in which Rock Hill had agreed to give up 100 percent of its tax revenue to land that project.

“We’re not asking for anything other than what has already been agreed to for this property,” Roddey said. “Rockill was in the same boat four or five years ago when the Panthers deal was on the table. They were set to offer up 100 percent of the fee in lieu of taxes to the Panthers.”

He also pushed back on the argument that utility revenues cannot benefit city operations, noting that Rock Hill has transferred more than $100 million from its enterprise fund to its general fund over the past decade, a fact he said council has been made aware of on paper.

Roddey was direct about the stakes for the school district: “It’s asinine that we don’t continue to support our schools as much as we can to continue to educate our kids so that they can get these $100,000 jobs.”

The Opposition

Councilmen Andy Litten and A. Watts Huckabee, Sr. voted against the amendment.

Litten raised three objections. Rock Hill Schools had not requested the change, the school board had not voted on it, and no formal letter had been received by the county. He said council was making a financial decision on behalf of another governing body without being asked.

His second objection was strategic. He argued the amendment could kill the project entirely. If Rock Hill City Council rejects the restructured terms and the deal falls through, Rock Hill Schools would receive nothing from the Octapharma project rather than a reduced but real amount under the original structure.

“I would take $30 million versus $40 million versus zero. I would take the 30 all day,” Litten said.

He also disputed Roddey’s enterprise fund argument, saying utility revenues are legally restricted and cannot be redirected into general fund operations such as public safety or salaries. He warned the amendment would further damage an already strained relationship between the county and the city.

“What should be happening here in this county is we should be working strategically with every strategic partner,” Litten said. “But what are we doing tonight? We’re tearing the rest of the bridge down.”

Huckabee said the school district and city had not been consulted and should have been. He questioned the process of unilaterally restructuring another entity’s revenue without being asked. He said he had been consistent on this position throughout his time on council.

“I cannot support taking money away from Rock Hill and giving it to the Rockill School District” without a formal request, Huckabee said. “I just find this to be an inappropriate way to handle this type of funding.”

What Rock Hill City Council Already Approved

Seven days before York County’s special called meeting, Rock Hill City Council voted 5-0 on June 22 to pass a resolution providing conditional consent to include the Palmetto Research Park property in the York-Chester Industrial Park and to the fee-in-lieu tax incentives for the project.

Under state law, because the property sits within Rock Hill’s city limits, the city must consent before any parcel can be included in a multi-county industrial and business park. Without that consent, the tax incentive structure cannot legally apply to the project.

Rock Hill’s resolution included specific conditions on that consent. The most significant: the city’s consent remains in effect only for as long as the city continues to receive a distribution of property taxes or fees in lieu of taxes from the property, calculated based on the proportion that the city’s millage rate bears to the total millage rate applicable to the property for each tax year.

That condition matters enormously in light of the county’s amendment. The county’s amendment requires the city to forfeit 100 percent of its potential tax revenue from the project. The city’s own resolution conditions its consent on continuing to receive its proportional share. Those two positions are in direct conflict.

The resolution also set limits on special source revenue credits that can be applied against the fees in lieu of taxes paid on the project: credits cannot exceed 50 percent for the first 10 years of payments, 35 percent for the next 10 years, and 20 percent for the following 10 years.

The Procedural Path Forward and What Is at Stake

The county attorney confirmed at the June 29 meeting that because the amendment alters the internal revenue distribution within the York-Chester Industrial Park, Rock Hill City Council must vote to authorize the change. This is not optional. She noted the same process was required when Costco located in Rock Hill and the revenue distribution was modified for that project.

That puts the project at a fork in the road.

If Rock Hill City Council accepts the amended terms and votes to authorize the 100 percent forfeiture of its tax revenue, the agreement moves forward. Third reading at York County Council is July 13, and if that vote is unanimous the ordinance takes effect.

If Rock Hill City Council declines to approve the amended terms, the county would face a choice: revise the amendment to restore some portion of the city’s share, or hold its position. If neither body moves, the FILOT agreement cannot be finalized and Octapharma does not receive the tax incentive as structured.

Councilwoman Debi Cloninger, who voted for the amendment, acknowledged there is still time before a final decision. “I think that we still have another reading,” she said, leaving open the possibility of further adjustment before July 13. Several council members indicated the discussion between now and third reading, including conversations with Rock Hill city officials, will be important.

What is not in question is whether the full council supports the project. Before leaving the meeting, Cox invited everyone in the room who supports the Octapharma project to stand. Most of the crowd did.

The final vote on the amended FILOT agreement was 7-0 in favor of second reading. The question for July 13 is whether the terms the county has now set are ones Rock Hill City Council can accept.