Opinion
By Bill Danielson, Mayor of Irmo
When most people hear a town talking about annexation, they may assume the goal is simply to become bigger. I believe that is the wrong way to look at annexation in Irmo.
Our goal should not be to make Irmo larger simply by adding acreage. Our goal should be to make Irmo stronger.
For Irmo, strategic annexation is about economic growth, more logical municipal boundaries, better long term planning, and creating a broader and more sustainable revenue base for the future.
Irmo is different
To understand why annexation matters to Irmo, it helps to understand how our Town is funded.
Irmo does not have a municipal property tax. We also do not operate water, sewer, electric or other utility systems that generate significant revenue for many municipalities.
According to the Town’s Fiscal Year 2025 Independent Auditor’s Report conducted by Highsmith & Highsmith, LLC, approximately 31 percent of our revenue comes from business licenses, permits and inspection fees. Hospitality taxes account for approximately 13 percent, and local option sales taxes provide another 13 percent.
Sanitation fees account for approximately 12 percent of revenue, but those funds are essentially a pass through for providing that service. Franchise fees, grants and fire taxes represent much smaller percentages of the Town’s overall revenue, with fire taxes also functioning as a pass through. The remainder comes from smaller sources, including shared state revenue, fines and forfeitures, and miscellaneous fees.
That revenue structure makes economic growth particularly important to Irmo.
A town with a property tax can increase revenue as property values rise or as new taxable property enters the municipality. Irmo has deliberately chosen a different path.
That means one of the best ways for Irmo to strengthen its financial future is to increase the amount of economic activity occurring within our municipal boundaries.
Strategic annexation gives us an opportunity to do exactly that.
Not all annexation is equal
I do not believe Irmo should annex property simply because it can.
Every annexation should be evaluated based on a straightforward question: Will bringing this property into Irmo make the Town stronger over the long term?
A commercial property containing restaurants, retail businesses, professional offices or other employers can contribute to the Town in several ways. Depending upon the property and its use, annexation can generate business license revenue, hospitality tax revenue, permit and inspection fees, local option sales tax revenue and other economic activity.
Residential annexation has benefits as well. It can create more logical municipal boundaries, strengthen neighborhoods, improve our ability to plan for future development and give residents who already consider themselves part of the Irmo community an opportunity to have a direct voice in town government.
But whether the property is residential or commercial, we must consider both sides of the equation.
What revenue and community benefits will the property produce, and what will it cost Irmo to provide municipal services?
That is responsible annexation.
Investing today for revenue tomorrow
Irmo has recently taken another step toward encouraging voluntary annexation through our Economic Development Incentive Grant, established under Section 10-52 of the Town Code.
The idea is simple. We recognize that a business considering annexation may be concerned about taking on a new business license expense. Rather than allowing that initial cost to become a barrier, Irmo is willing to invest in the relationship.
Under the program, a qualifying brick and mortar business that annexes into the Town applies for the Economic Development Incentive Grant and pays its required business license fee. The Town then issues a grant payment to the business equal to 100 percent of that license fee during each of the first three years. In years four and five, the grant is equal to 50 percent of the business license fee.
The Economic Development Incentive Grant also applies to qualifying new and existing home based businesses with fewer than 10 employees.
This distinction is important. Irmo is not waiving its business license requirements. The business obtains and pays for its license just as required by Town ordinance. The Town then makes a deliberate economic development investment by returning the applicable amount through the Economic Development Incentive Grant.
Why would a town that depends heavily on business license revenue make that investment?
Because we are thinking beyond next year’s budget.
During the first three years, Irmo is investing the equivalent of the business license revenue back into the newly annexed business. In years four and five, the Town and the business effectively share that transition, with the grant reduced to 50 percent. Beginning in year six, the incentive period has ended and the business becomes a full contributor to Irmo’s recurring business license revenue.
More importantly, the property itself is now part of Irmo.
Businesses come and go. Buildings are renovated. Properties are redeveloped. A site occupied by one business today may contain an entirely different business 10 or 20 years from now.
Annexation is therefore not simply about the business occupying a property today. It is about bringing that property and its future economic potential into Irmo.
Look beyond five years
Consider a simple example.
Suppose a business that would ordinarily pay $2,000 per year for an Irmo business license voluntarily annexes into Town under the incentive program.
During the first three years, Irmo would provide grants equal to $6,000 in license fees. During years four and five, the business would receive grants equal to half of its normal license fee, meaning the Town would retain $2,000 in net business license revenue over those two years.
Beginning in year six, assuming the license fee remained the same for purposes of this simple example, the Town would begin retaining the full $2,000 annually.
By the end of year 10, Irmo would have retained approximately $12,000 in net business license revenue from a property that previously produced no business license revenue for the Town.
And year 10 is not the end of the story.
In year 11, the revenue continues. In year 15, it continues. In year 20, it continues, assuming the property remains commercially active. Future businesses occupying that property can continue contributing to Irmo’s economic base.
That is why the real value of annexation cannot be measured solely by what happens during the first budget year.
Growth Without Increasing the Burden on Existing Taxpayers
There is another important reason Irmo should pursue thoughtful annexation.
When a town needs additional revenue, one option is to ask the people and businesses already inside the town to pay more.
Another option is to grow the economic base.
I prefer growth.
If Irmo can bring additional businesses, commercial properties, residents and economic activity into the Town, we can potentially increase recurring revenue without increasing the financial burden on the people and businesses already here.
That does not mean annexation eliminates every financial challenge. Nor does it mean every proposed annexation will make financial sense.
It means we should recognize annexation as one of the most important economic development tools available to a town with Irmo’s unusual revenue structure.
Who is really part of Irmo?
There is also a community question that goes beyond dollars.
Many people live, work, shop, dine and operate businesses in areas they consider to be Irmo, even though those properties are outside the municipal limits.
They have an Irmo mailing address. Their customers may believe their business is in Irmo. They participate in the community and identify with our Town.
Yet they are not actually inside the Town of Irmo.
Strategic voluntary annexation gives us an opportunity to gradually bring more of the greater Irmo community into the municipality itself.
That creates more logical boundaries and gives the Town greater ability to influence how the community develops. It also gives newly annexed residents a direct voice in municipal government and allows businesses to become full participants in the community whose name they may already use every day.
Planning for the next generation
Municipal government requires us to think beyond the next election and beyond the next annual budget.
The decisions we make about Irmo’s boundaries today may influence the Town for the next 25, 50 or even 100 years.
That is why I believe we should view annexation as an investment.
We should pursue properties that strengthen our commercial base. We should welcome neighborhoods that want to become part of Irmo. We should encourage businesses to join us. And when it makes financial sense, we should be willing to provide incentives that make voluntary annexation attractive.
Most importantly, we should evaluate success over decades rather than months.
Irmo has built something unusual and worth protecting: a strong community that operates without a municipal property tax.
If we want to preserve that model for future generations, we must continually look for responsible ways to expand and diversify the economic base supporting our Town.
Strategic annexation can help us do that.
The real value of annexation is not the revenue Irmo receives tomorrow. It is the recurring revenue, economic opportunity and stronger community we create for decades to come.
