The local option penny sales tax will mean big savings to city homeowners.

City Administrator James Taylor told city council members Monday the newly-enacted sales tax is projected to generate $800,000 over the first 12 months.

Since the sales tax took effect in July and hasn’t been collected over a full 12-month span, that figure represented the best estimate of officials familiar with the sales tax, including former South Carolina Municipal Association Director Howard Duvall, the administrator said.

According to the sales tax legislation, 71 percent of the money generated — a sizeable sum — will go to property tax relief.

Taylor said property tax relief will take the form of a credit on the tax notice. The tax credit on a home valued at $100,000 would reduce the tax bill from $460 to $319.

The savings would double to nearly $300 on a home valued at $200,000.

“There is some significant savings,” Taylor said.

If the city’s sales tax collections exceed $800,000, they will take the form of an additional tax credit in 2010, according to Taylor.

“If we collect more, we can’t keep it as a windfall,” he told council members.

City tax notices are expected to be mailed at the end of the month.