S*1147(Rat #0639, Act #0558 of 1988)  General Bill, By J.M. Waddell, J.C. Hayes, 
Leatherman and I.E. Lourie

Similar(H 3667)
 A Bill to amend Section 12-43-220, Code of Laws of South Carolina, 1976,
 relating to classification of property for purposes of property taxation and
 the applicable assessment ratios, so as to provide a formula for determining
 fair market value for agricultural purposes for agricultural real property for
 tax years beginning after 1987 and to require the South Carolina Tax
 Commission to promulgate regulations establishing a classification for timber
 wetlands for purposes of property taxation.

   01/28/88  Senate Introduced and read first time SJ-8
   01/28/88  Senate Referred to Committee on Finance SJ-8
   03/22/88  Senate Committee report: Favorable Finance SJ-17
   03/29/88  Senate Read second time SJ-18
   03/29/88  Senate Ordered to third reading with notice of
                     amendments SJ-18
   03/30/88  Senate Read third time and sent to House SJ-16
   04/05/88  House  Introduced and read first time HJ-2443
   04/05/88  House  Referred to Committee on Ways and Means HJ-2443
   04/27/88  House  Committee report: Favorable Ways and Means HJ-3224
   05/04/88  House  Objection by Rep. EB McLeod, Blanding & G. Brown
                     HJ-3540
   05/05/88  House  Special order, set for Tues 5/10/88 follow call
                     of uncont cal (Under H 4243) HJ-3609
   05/10/88  House  Debate interrupted HJ-3652
   05/11/88  House  Read second time HJ-3688
   05/12/88  House  Read third time and enrolled HJ-3770
   05/24/88         Ratified R 639
   05/29/88         Signed By Governor
   05/29/88         Effective date 05/29/88
   05/29/88         Act No. 558
   06/14/88         Copies available

AN ACT TO AMEND SECTION 12-43-220, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CLASSIFICATION OF PROPERTY FOR PURPOSES OF PROPERTY TAXATION AND THE APPLICABLE ASSESSMENT RATIOS, SO AS TO PROVIDE A FORMULA FOR DETERMINING FAIR MARKET VALUE FOR AGRICULTURAL PURPOSES FOR AGRICULTURAL REAL PROPERTY FOR TAX YEARS BEGINNING AFTER 1987 AND TO REQUIRE THE SOUTH CAROLINA TAX COMMISSION TO PROMULGATE REGULATIONS ESTABLISHING A CLASSIFICATION FOR TIMBER WETLANDS FOR PURPOSES OF PROPERTY TAXATION.

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

Agricultural use

SECTION 1. Section 12-43-220(d)(2) of the 1976 Code is amended to read:

"(2)(A) 'Fair market value for agricultural purposes', when applicable to land used for the growth of timber, is defined as the productive earning power based on soil capability to be determined by capitalization of typical cash rents of the lands for timber growth or by capitalization of typical net income of similar soil in the region or a reasonable area of the region from the sale of timber, not including the timber growing thereon, and when applicable to land used for the growth of other agricultural products the term is defined as the productive earning power based on soil capability to be determined by capitalization of typical cash rents or by capitalization of typical net annual income of similar soil in the region or a reasonable area of the region, not including the agricultural products thereon. Soil capability when applicable to lands used for the growth of timber products means the capability of the soil to produce such timber products of the region considering any natural deterrents to the potential capability of the soil as of the current assessment date. The term, when applicable to lands used for the growth of other agricultural products, means the capability of the soil to produce typical agricultural products of the region considering any natural deterrents to the potential capability of the soil as of the current assessment date. The term 'region' means that geographical part of the State as determined by the commission to be reasonably similar for the production of the agricultural products.

After average net annual earnings have been established for agricultural lands, they must be capitalized to determine use-value of the property based on a capitalization rate which includes:

1. an interest component;

2. a local property tax differential

component;

3. a risk component;

4. an illiquidity component.

Each of these components of the capitalization rate must be based on identifiable factors related to agricultural use of the property. The interest rate component is the average coupon (interest) rate applicable on all bonds which the Federal Land Bank of Columbia, which serves South Carolina farmers, has outstanding on July first of the crop-years being used to estimate net earnings and agricultural use-value. Implementation of the provisions contained in this section is the responsibility of the commission.

(B)(i) For tax year 1988 and subsequent tax years, fair market value for agricultural purposes must be determined by adjusting the applicable base year value by an amount equal to the product of multiplying the applicable base year value by a percentage factor obtained through the formula provided in this item. For tax year 1988, the applicable base year is 1981. After the initial use of the valuation

method provided in this item for tax year 1988, fair market value for agricultural purposes must be redetermined every three years if the percentage factor in that year exceeds five percent but at least every six years regardless of the percentage.

(ii) The percentage factor provided in this item is derived from the most recent edition of the United States Department of Agriculture publication 'AGRICULTURAL LAND VALUES AND MARKETS', specifically, from 'Table 1--Farm Real Estate Values: Indexes of the average value per acre of land and buildings...' as listed for this State. The formula to determine the applicable percentage factor is the index of the year of change less the index of the base year with the resulting amount being divided by the index of the base year and rounded to the nearest whole number. For purposes of the formula, the base year is the last year in which values were adjusted under this item."

Timber wetlands regulations

SECTION 2. The South Carolina Tax Commission shall promulgate regulations establishing a classification for timber wetlands for purposes of property taxation.

Applicable years

SECTION 3. The amendment to Section 12-43-220(d) of the 1976 Code contained in this act is effective for taxable years beginning after 1987.

Time effective

SECTION 4. This act takes effect upon approval by the Governor.