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(3) At the conclusion of the payments determined pursuant to items (1) and (2) of this subsection, an annual payment equal to the taxes due on the project as if it were taxable. When the property is no longer subject to the fee under subsection (D)(2), the fee or property taxes must be assessed:

(a) with respect to real property, based on the fair market value as of the latest reassessment date for similar taxable property; and

(b) with respect to personal property, based on the then depreciated value applicable to such property under the fee, and thereafter continuing with the South Carolina property tax depreciation schedule.

(4) (a) The assessment ratio may not be lower than four percent:

(i)in the case of a business which is investing at least two hundred million dollars, which when added to the previous investments, results in a total investment of at least four hundred million dollars, and which is creating at least two hundred new full-time jobs at the site qualifying for the fee;

(ii)in the case of a business which is investing at least four hundred million dollars and which is creating at least two hundred new full-time jobs at a site qualifying for the fee; or

(iii)in the case of investments totalling at least four hundred million dollars, in a county classified as either least developed or underdeveloped, by a limited liability company and/or one or more of the members or equity holders where a member or equity holder is creating, at a site qualifying for the fee, at least one hundred new full-time jobs with an average annual salary of at least forty thousand dollars within four years of the date of execution of the millage rate agreement.

(b) The new full-time jobs requirement of this item does not apply in the case of a taxpayer which for more than the twenty-five years ending on the date of the agreement paid more than fifty percent of all property taxes actually collected in the county.

(c) In an instance in which the governing body of a county has by contractual agreement provided for a change in fee-in-lieu of taxes arrangements conditioned on a future legislative enactment, any new enactment shall not bind the original parties to the agreement unless the change is ratified by the governing body of the county.

E. Section 4-12-30(F) of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"(F) (1) If an investor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property.

(2) Property is disposed of only when it is scrapped or sold in accordance with the lease agreement.
With regard to calculation of the fee provided in subsection (D)(2), the inducement agreement may provide for the disposal of property and the replacement of property subject to the fee as follows:

(1)(a) If an investor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property.

(b) Property is disposed of only when it is scrapped or sold in accordance with the lease agreement.

(c) If there is no provision in the agreement dealing with the disposal of property in accordance with this subsection, the fee remains fixed and no adjustment to the fee is allowed for disposed property.

(2) Any property which is placed in service as a replacement for property which is subject to the fee payment may become part of the fee payment as provided in this item:

(a) Replacement property does not have to serve the same function as the property it is replacing. Replacement property qualifies for fee treatment provided in subsection (D)(2) only up to the original income tax basis of fee property which is being disposed of in the same property tax year. More than one piece of property can replace a single piece of property. To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the property which it is replacing, the excess amount is subject to payments as provided in Section 4-12-20. Replacement property is entitled to the fee payment for the period of time remaining on the fee period for the property which it is replacing; provided, however, that where a single piece of property replaces two or more pieces of property, the fee period must be measured from the earliest of the dates on which the replaced pieces of property were placed in service.

(b) The new replacement property which qualifies for the fee provided in subsection (D)(2) is recorded using its income tax basis and

(d) If there is no provision in the inducement agreement dealing with replacement property, any property placed in service after the time period allowed for investments as provided by subsection (C)(2), is subject to the payments required by Section 4-12-20 if the county has title to the property, or to property taxes as provided in Chapter 37 of Title 12 if the investor has title to the property."

F. Items (1) and (2) of Section 4-12-30(H) of the 1976 Code, as added by Act 125 of 1995, are further amended to read:

"(1) Upon agreement of the parties, and except as provided in subsection (H) item (2) of this subsection, an inducement agreement, a millage rate agreement, or both, may be amended or terminated and replaced with regard to all matters including, but not limited to, the addition or removal of controlled group members; but no such amendment or termination and replacement may take place after the initial lease agreement date.

(2) No amendment or replacement of an inducement agreement or millage rate agreement may be used to change the millage rate, assessment ratio, or length of the agreement under any such agreement. However, existing inducement agreements which have not yet been implemented by the execution and delivery of a millage rate agreement or a lease purchase agreement, may be amended up to the date of execution and delivery of a millage rate agreement or a lease purchase agreement in the discretion of the governing body."

G. Section 4-12-30(J) of the 1976 Code, as added by Act 125 of 1995, is amended by adding at the end:

"(3) Project investment expenditures which are incurred within the applicable time period provided in subsection (I) by an entity whose investments are not being computed in the level of investment for purposes of subsection (B) or (C) qualify as investment expenditures subject to the fee in subsection (D)(2) where:

(a) the expenditures are part of the original cost of the property which is transferred, within the applicable time period provided in subsection (I), to one or more other entities which are members of the same controlled group as the transferor entity and whose investments are

(b) the property would have qualified for the fee in subsection (D)(2) if it had been initially acquired by the transferee entity rather than the transferor entity.

(4) The income tax basis of the property immediately before the transfer must equal the income tax basis of the property immediately after the transfer. However, to the extent income tax basis of the property immediately after the transfer unintentionally exceeds the income tax basis of the property immediately before the transfer, the excess shall be subject to payments under Section 4-12-20.

(5) The county shall agree to any inclusion in the fee of the property described in subsection (J)(1)."

H.Section 4-12-30(K) of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"(K)(1) For a project not located in an industrial development park as defined in Section 4-1-170, distribution of the fee-in-lieu of taxes on the project must be made in the same manner and proportion that the millage levied for school and other purposes would be distributed if the property were taxable. For this purpose, the relative proportions must be calculated based on the following procedure: holding constant the millage rate set in subsection (G) and using all tax abatements automatically granted for taxable property, a full schedule of the property taxes that would otherwise have been distributed to each millage levying entity in the county must be prepared for the life of the agreement, up to twenty years maximum. The total property taxes which would have been paid on the property if it was owned by the investor to for each millage levying entity as a percentage of the total of such property taxes for all such entities determines each entity's relative shares of each year's fee payment for all subsequent years of the agreement.

(2) For a project located in an industrial development park as defined in Section 4-1-170, distribution of the fee-in-lieu of taxes on the project must be made in the manner provided for by the agreement establishing the industrial development park.

(3) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes may use a portion of this revenue for the purposes outlined in Section 4-29-68 without the requirement of issuing special source revenue bonds or the requirements of Section 4-29-68(A)(4)."

I. Section 4-12-30(M) of the 1976 Code, as added by Act 125 of 1995, is amended to read:

(1) Any interest in an inducement agreement, millage rate agreement, lease agreement, and property to which the agreement relates may be transferred to any other entity at any time. Notwithstanding any other provision of this chapter, any equity interest in any entity with an interest in any inducement agreement, millage rate agreement, or lease agreement may be transferred to any other entity or person at any time.

(2) A single entity, or two or more entities which are members of a controlled group, may enter into any lending, financing, security, or similar arrangement, or succession of such arrangements, with any financing entity, concerning all or part of a project and may enter into any sale-leaseback arrangement including, without limitation, an assignment, a sublease, or similar arrangement, or succession of such arrangements, with one or more financing entities, concerning all or part of a project, regardless of the identity of the income tax owner of the property which is subject to the fee payment under subsection (D)(2). Even though income tax basis is changed for income tax purposes, neither the original transfer to the financing entity nor the later transfer from the financing entity back to the original transferor or members of its controlled group, pursuant to terms in the sale-leaseback agreement, shall affect the amount of the fee due.

(3) All transfers undertaken with respect to other projects to effect a financing authorized under subsection (M) must meet the following requirements:

(a) The Department of Revenue and Taxation must receive notification in writing within sixty days after the transfer of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement shall not adversely affect the fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a year or portion of a year up to a maximum penalty of fifty thousand dollars.

(b) If the financing entity is the income tax owner of property, either the financing entity is primarily liable for the fee as to that portion of the project to which the transfer relates with the original transferor remaining secondarily liable for the payment of the fee or the original

(4) Before an investor may transfer an inducement agreement, millage rate agreement, lease agreement, or the assets subject to the lease agreement, it shall obtain the approval of the county with whom it entered into the original inducement agreement, millage rate agreement, or lease agreement. However, no such approval is required in connection with financing-related transfers."

J. Section 4-12-30(N) of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"(N) Reserved An entire fee interest may be transferred to another entity which is qualified to enter into a fee agreement under subsection (B)(4)(a). A fee interest is an inducement agreement, millage rate agreement, lease agreement, and the entity's entire property interest in the project subject to the fee. Equity interests in a partnership, corporation, association, or limited liability company which properly files its South Carolina income tax returns as a partnership or corporation and which has an interest in an inducement agreement, millage rate agreement, and lease agreement, such equity interests collectively and individually referred to as an `entity interest' may be transferred by any entity to any entity, if the entity whose entity interest is being transferred holds at least a five million dollar investment based on income tax basis without regard to depreciation in the project as of the time of the transfer.

(2) All transfers of fee interests or entity interests authorized under subsection (N) must meet the following requirements:

(a) The county must approve the transfer within six months before the transfer.

(b) The department must receive notification in writing of the identity of each transferee and other information required by the department within thirty days after the transfer becomes effective. The department may extend the thirty-day period upon written request. Failure to meet this notice requirement does not adversely affect the fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a month or portion of a month, with the total penalty not to exceed fifty thousand dollars.

(c) No election under Internal Revenue Code of 1986, as amended, Sections 338 or 754 may be made with respect to the transfer.

(d) Each transferee must agree to be bound by the applicable agreements constituting the fee arrangement.

(e) Any transfer must be for fair market value or result in a carryover basis for income tax purposes. If for income tax purposes, the

K. Section 4-12-40 of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"Section 4-12-40. Projects with respect to which a lease agreement has been entered into before January 1, 1996, the effective date of this chapter are required to use the provisions of Section 4-29-67. Projects with respect to which a lease agreement agreements is entered into after December 31, 1995, are required to use the provisions contained in this chapter. However, those projects with lease agreements entered into after December 31, 1995, in which the total investment exceeds forty-five million dollars within the time provided in subsection (C)(2), have the option of using may elect to use the provisions contained in of Section 4-29-67 or 4-12-30, but not both."

L. Section 4-12-30(B)(4)(a) of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"(a) Except as provided in subsection subsections (B)(4)(b) and (D)(4)(a), the investment must be made by a single entity. For purposes of this section:

(i) any partnership or other association which properly files its South Carolina income tax returns as a partnership for South Carolina income tax purposes must be treated as a single entity and as a partnership,

(ii) any corporation or other association which properly files its South Carolina income tax returns as a corporation for South Carolina tax purposes must be treated as a single entity and as a corporation, and

(iii) any limited liability companies must be treated as a single entity.

M. Section 4-12-30(I) of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"(I) Investment expenditures made or incurred by any investor in connection with a project, or relevant phase of a project in connection with a project completed and placed in service in more than one year, qualifies qualify as expenditures subject to the fee in subsection (D)(2), so long as these those expenditures are made incurred:

(1) after, or within sixty days before, the county takes action reflecting or identifying the project or proposed project or investment including, but not limited to, the adoption of an inducement or similar resolution by county council; and

N. The amendments made in this section to Chapter 12, Title 4 of the 1976 Code are effective upon signature by the Governor. These amendments may be applied to inducement resolutions, inducement agreements, millage rate agreements, and lease agreements with regard to projects for which lease agreements have been entered into prior to the effective date of this act, if the parties to each such agreement agree to modify such agreement to provide for the application of the appropriate provisions. However, except as provided in Section 4-12-30(H) of the 1976 Code, no amendment to such agreements may reduce the millage rate or assessment ratio under such agreements."

SECTION 8. A. Subsections (A) through (U) of Section 4-29-67 of the 1976 Code, as last amended by Act 32 of 1995, are amended to read:

"(A) Notwithstanding the provisions of Section 4-29-60, in the case of a financing agreement in the form of one or more lease agreements for a project qualifying under subsection (B), the county and the investor may enter into an inducement agreement which provides for payment in lieu of taxes (fee) as provided in this section. All references in this section to a lease agreement shall be deemed also to refer to a lease purchase agreement.

(B) In order for property to qualify for the fee as provided in subsection (D)(2):

(1) Title to the property must be held by the county or in the case of a project located in an industrial development park as defined in Section 4-1-170, title may be held by more than one county, provided each county is a member of the industrial development park. Any real property transferred to the county must include a legal description and plat of the property.

(2) The investment must be a project which is located in a single county or an industrial park as defined in Section 4-1-170. A project located on a contiguous tract of land in more than one county, but not in such an industrial development park, may qualify for the fee provided (a)

(3) The minimum level of investment must be at least eighty-five forty-five million dollars and must be invested within the time period provided in subsection (C).

(4)(a) Except as provided in subsection subsections (B)(4)(b) and (D)(4)(a), the investment must be made by a single entity. For purposes of this section, (i) any partnership or other association which properly files its South Carolina income tax returns as a partnership for South Carolina income tax purposes will be treated as a single entity and as a partnership, and (ii) any corporation or other association which properly files its South Carolina income tax returns as a corporation for South Carolina income tax purposes will be treated as a single entity and as a corporation.

(b)(i) The members of the same controlled group of corporations can qualify for the fee if the combined investment in the county by the members meets the minimum investment requirements. The county and the members who are part of the inducement agreement may agree that any investments by other members of the controlled group within the time periods provided in subsections (C)(1) and (C)(2) shall qualify for the payment regardless of whether the member was part of the inducement agreement; provided, however, in order to qualify for the fee, such other members of the controlled group must be specifically approved by the county and must agree to be bound by agreements with the county relating to the fee; provided, however, such controlled group members need not be bound by agreements, or portions of agreements, to the extent such agreements do not affect the county; provided, further, that with the consent of the county, such members will not be bound by agreements or portions of agreements which do affect the county. Except as otherwise provided in subsection (B)(2), the investments under this subsection (B)(4)(b) must be within the same county or industrial park. Any controlled group member which is claiming the fee must invest at least ten million dollars in the county or industrial park.

(ii) The Department of Revenue and Taxation must be notified in writing of all members which have investments subject to the fee before or within thirty days after the execution of the lease agreement covering the investment by the member. The Department of Revenue and Taxation may extend the thirty-day period upon written request. Failure to meet this notice requirement will not adversely affect the fee, but a penalty may

(iii) If at any time the controlled group or any former member (who has left the controlled group) no longer has the minimum eighty-five forty-five million dollars of investment (without regard to depreciation), that group or former member no longer holding the minimum amount of investment as provided in subsection (B)(3) (without regard to depreciation) will no longer qualify for the fee.

(iv) For purposes of this section, `controlled group' or `controlled group of corporations' shall have the meaning provided under Section 1563(a) of the Internal Revenue Code as defined in Chapter 7 6 of Title 12 as of the date of the execution of the inducement agreement (without regard to amendments or replacements thereof), without regard to subsection subsections (a)(4) and (b) of such Section 1563.

(C)(1) From the end of the property tax year in which the investor and the county execute an inducement agreement, the investor has seven years in which to enter into an initial lease agreement with the county.

(2) From the end of the property tax year in which the investor and the county execute the initial lease agreement, the investor has five years in which to complete its investment for purposes of qualifying for this section. If the investor does not anticipate completing the project within five years, the investor may apply to the county before the end of the five-year period for an extension of time to complete the project. If the county agrees to grant the extension, the county must do so in writing, and a copy must be delivered to the Department of Revenue and Taxation within thirty days of the date the extension was granted. The extension may not exceed two years in which to complete the project.

There is no extension allowed for the five-year period in which to meet the minimum level of investment. If the minimum level of investment is not met within five years, all property under the lease agreement or agreements reverts retroactively to the payments required by Section 4-29-60. The difference between the fee actually paid by the investor and the payment which is due under Section 4-29-60 is subject to interest as provided in Section 12-43-305 12-54-25(D).

Unless property qualifies as replacement property under a contract provision enacted pursuant to subsection (F)(2), any property placed in service after the five-year period, or seven years in the case of a project

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