H*4774(Rat #0492, Act #0403 of 1996)  General Bill, By R.C. Fulmer
 A Bill to amend the Code of Laws of South Carolina, 1976, by adding Section
 12-43-227 so as to provide a method for valuing homeowners' association
 property for ad valorem tax purposes; and to amend Section 12-43-230, relating
 to the definitions of certain types of property for ad valorem tax purposes so
 as to define homeowners' association property.

   03/19/96  House  Introduced and read first time HJ-6
   03/19/96  House  Referred to Committee on Ways and Means HJ-6
   03/21/96  House  Committee report: Favorable Ways and Means HJ-4
   03/27/96  House  Debate adjourned until Wednesday, April 3, 1996 HJ-133
   03/28/96  House  Reconsidered HJ-21
   03/28/96  House  Debate adjourned until Tuesday, April 2, 1996 HJ-21
   04/02/96  House  Debate adjourned until Wednesday, April 3, 1996 HJ-15
   04/03/96  House  Objection by Rep. Kirsh, Cave, Moody-Lawrence,
                     Inabinett, Kennedy & Breeland HJ-28
   04/03/96  House  Objection withdrawn by Rep. Cave, Breeland, &
                     Inabinett HJ-64
   04/03/96  House  Objection by Rep. Scott, Canty, Neal & Lloyd HJ-64
   04/17/96  House  Read second time HJ-90
   04/17/96  House  Roll call Yeas-71  Nays-15 HJ-90
   04/18/96  House  Objection withdrawn by Rep. Scott HJ-38
   04/18/96  House  Read third time and sent to Senate HJ-43
   04/23/96  Senate Introduced and read first time SJ-25
   04/23/96  Senate Referred to Committee on Finance SJ-25
   05/08/96  Senate Recalled from Committee on Finance SJ-10
   05/21/96  Senate Read second time
   05/21/96  Senate Ordered to third reading with notice of amendments
   05/23/96  Senate Read third time and enrolled SJ-95
   05/30/96         Ratified R 492
   06/04/96         Signed By Governor
   06/04/96         Effective date 06/04/96 & applies to property tax
                     years beginning after 1995
   06/14/96         Copies available
   06/14/96         Act No. 403

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-43-227 SO AS TO PROVIDE A METHOD FOR VALUING HOMEOWNERS' ASSOCIATION PROPERTY FOR AD VALOREM TAX PURPOSES; AND TO AMEND SECTION 12-43-230, RELATING TO THE DEFINITIONS OF CERTAIN TYPES OF PROPERTY FOR AD VALOREM TAX PURPOSES SO AS TO DEFINE HOMEOWNERS' ASSOCIATION PROPERTY.

Be it enacted by the General Assembly of the State of South Carolina:

Valuation of Homeowners' Association property

SECTION 1. Article 3, Chapter 43, Title 12 of the 1976 Code is amended by adding:

"Section 12-43-227. The fair market value of homeowners' association property, as defined in Section 12-43-230, for ad valorem tax purposes is defined as the nonqualified earnings value to be determined by the capitalization of the property's nonqualified gross receipts. For purposes of this section, `nonqualified gross receipts', means the gross receipts from the use of the property other than:

(1) amounts received as membership dues, fees, or assessments from the members of the homeowners' association; and

(2) amounts received from the developer of the property owned by the homeowners' association as reported on the most recently filed application submitted pursuant to Section 12-43-230. If additional reporting is required pursuant to Section 12-43-230, nonqualified gross receipts shall be determined utilizing gross receipts from the most recent completed tax year. After a piece of property's nonqualified gross receipts have been established, they must be capitalized to determine nonqualified earnings value by utilizing a capitalization rate of twenty percent. Notwithstanding any other provision of this section, in the event of real property with zero or de minimus nonqualified gross receipts, the special valuation of homeowners' association property shall not result in any homeowners' association property being valued at a rate less than five hundred dollars an acre."

Definition of Homeowners' Association property

SECTION 2. Section 12-43-230 of the 1976 Code is amended by adding a new subitem (d) to read:

"(d) For purposes of this article, `homeowners' association property' means real and personal property owned by a homeowners' association if:

(1) property owned by the homeowners' association is held for the use, benefit, and enjoyment of members of the homeowners' association;

(2) each member of the homeowners' association has an irrevocable right to use and enjoy on an equal basis, property owned by the homeowners' association, subject to any restrictions imposed by the instruments conveying the right or the rules, regulations, or bylaws of the homeowners' association; and

(3) each irrevocable right to use and enjoy property owned by the homeowners' association is appurtenant to taxable real property owned by a member of the homeowners' association.

Notwithstanding any other provision of this subsection, homeowners' association property shall not be construed so as to include a golf course.

As used in this subsection, `homeowners' association' means an organization which is organized and operated to provide for the acquisition, construction, management, and maintenance of property.

Homeowners' association property does not come within the provisions of this subsection unless the owners of the real property or their agents make a written application therefor on or before the first penalty date for taxes due for the first tax year in which the special valuation is claimed. The application for the special valuation must be made to the assessor of the county in which the special valuation property is located, on forms provided by the county and approved by the department which includes the reporting of nonqualified gross receipts, and failure to apply constitutes a waiver of the special valuation for that year. No additional annual filing is required while the property remains homeowners' association property and the ownership remains the same, unless the nonqualified gross receipts within the meaning of Section 12-43-227 for the most recent completed tax year either (i) exceed the amount of nonqualified gross receipts with respect to the property reported on the most recently filed application by ten percent or more or (ii) are less than ninety percent of the amount of nonqualified gross receipts with respect to the property reported on the most recently filed application. In such a case, the owners of the real property or their agents must make additional written application with respect to the property and report the change in nonqualified gross receipts."

Time effective

SECTION 3. This act takes effect upon approval by the Governor and applies to property tax years beginning after 1995.

Approved the 4th day of June, 1996.