H 5000 Session 110 (1993-1994)
H 5000 General Bill, By Alexander, R.A. Barber, H.H. Clyborne, Cobb-Hunter,
Harvin, Haskins, D.N. Holt, W.D. Keyserling, J.H. Neal, T.F. Rogers, J.J. Snow,
Stuart and L.S. Whipper
Similar(S 1306)
A Bill to enact the "South Carolina Community Development Financial
Institutions Act of 1994" including provisions to add Section 12-7-1255, Code
of Laws of South Carolina, 1976, so as to authorizecertain income and other
tax credits for investments made in community development financial
institutions defined below; to add Section 34-13-175 so as to provide that
banks and financial institutions chartered by the State of South Carolina are
authorized to invest in community development financial institutions up to a
specified amount, to provide that these institutions are exempt from state
income taxation, and to define the terms "community development financial
institution" and "invest" for this purpose; to amend Section 41-44-10, as
amended, relating to definitions for purposes of the Palmetto Seed Capital
Fund, so as to revise the definition of a "South Carolina business"; to amend
Section 41-44-60, as amended, relating to Palmetto Seed Capital Fund, so as to
provide that the entities into which monies raised by the Fund may be invested
include community development financial institutions and to revise the
required percentage allocations of investments by the Fund; and to add Section
43-1-85 so as to authorize the Department of Social Services, from grant funds
made available to it, to make grants to community development financial
institutions, and to provide that the General Assembly in the annual General
Appropriations Act may appropriate funds to the Department to be used for
these purposes.
03/30/94 House Introduced and read first time HJ-40
03/30/94 House Referred to Committee on Ways and Means HJ-41
A BILL
TO ENACT THE "SOUTH CAROLINA COMMUNITY
DEVELOPMENT FINANCIAL INSTITUTIONS ACT OF 1994"
INCLUDING PROVISIONS TO ADD SECTION 12-7-1255, CODE OF
LAWS OF SOUTH CAROLINA, 1976, SO AS TO AUTHORIZE
CERTAIN INCOME AND OTHER TAX CREDITS FOR
INVESTMENTS MADE IN COMMUNITY DEVELOPMENT
FINANCIAL INSTITUTIONS DEFINED BELOW; TO ADD
SECTION 34-13-175 SO AS TO PROVIDE THAT BANKS AND
FINANCIAL INSTITUTIONS CHARTERED BY THE STATE OF
SOUTH CAROLINA ARE AUTHORIZED TO INVEST IN
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS UP
TO A SPECIFIED AMOUNT, TO PROVIDE THAT THESE
INSTITUTIONS ARE EXEMPT FROM STATE INCOME
TAXATION, AND TO DEFINE THE TERMS "COMMUNITY
DEVELOPMENT FINANCIAL INSTITUTION" AND
"INVEST" FOR THIS PURPOSE; TO AMEND SECTION
41-44-10, AS AMENDED, RELATING TO DEFINITIONS FOR
PURPOSES OF THE PALMETTO SEED CAPITAL FUND, SO AS TO
REVISE THE DEFINITION OF A "SOUTH CAROLINA
BUSINESS"; TO AMEND SECTION 41-44-60, AS AMENDED,
RELATING TO PALMETTO SEED CAPITAL FUND, SO AS TO
PROVIDE THAT THE ENTITIES INTO WHICH MONIES RAISED
BY THE FUND MAY BE INVESTED INCLUDE COMMUNITY
DEVELOPMENT FINANCIAL INSTITUTIONS AND TO REVISE
THE REQUIRED PERCENTAGE ALLOCATIONS OF
INVESTMENTS BY THE FUND; AND TO ADD SECTION 43-1-85
SO AS TO AUTHORIZE THE DEPARTMENT OF SOCIAL
SERVICES, FROM GRANT FUNDS MADE AVAILABLE TO IT, TO
MAKE GRANTS TO COMMUNITY DEVELOPMENT FINANCIAL
INSTITUTIONS, AND TO PROVIDE THAT THE GENERAL
ASSEMBLY IN THE ANNUAL GENERAL APPROPRIATIONS ACT
MAY APPROPRIATE FUNDS TO THE DEPARTMENT TO BE
USED FOR THESE PURPOSES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act may be cited as the "South Carolina
Community Development Financial Institutions Act of 1994".
SECTION 2. The General Assembly finds that:
(1) many of South Carolina's urban and rural communities face
critical social and economic problems arising in part from the lack of
economic growth, people living in poverty, and the lack of employment
and other opportunities;
(2) the restoration and maintenance of these communities will
require increased access to credit and capital for development activities,
including investment in businesses, housing, human development, and
other activities that promote the long-term economic and social viability
of the community;
(3) access to credit and capital is essential to unleash the untapped
entrepreneurial energy of South Carolina's poorest communities and to
empower individuals and communities to become self-sufficient;
(4) community development financial institutions have proven their
ability to identify and respond to community needs for capital, credit,
and development services in the absence of, or as a complement to,
services provided by other lenders; and
(5) for the above reasons, it has determined to enact the provisions
of this act as being consistent with many public policy objectives of our
State including economic growth, higher employment, and community
development.
SECTION 3. The 1976 Code is amended by adding:
"Section 12-7-1255. (A) A taxpayer may claim as a credit
against his state income tax, bank tax or premium tax liability fifty
percent of all amounts invested in a community development financial
institution as defined in Section 34-13-175.
To qualify for this credit the taxpayer must obtain a certificate from
the Department of Social Services certifying that the entity into which
such funds are invested is a community development financial institution
within the meaning of Section 34-13-175 and certifying that the credit
taken or available to that taxpayer will not exceed the aggregate five
million dollar limitation of all such credits as provided in subsection (B)
when added to the credits previously taken or available to other
taxpayers making similar investments.
(B) The total amount of credits allowed under this section may not
exceed in the aggregate five million dollars for all taxpayers and all
taxable years. The credit must be allowed to taxpayers in the order of
the time of the making of the qualified investments in community
development financial institutions.
The Department of Social Services shall monitor the investments
made by taxpayers in community development financial institutions as
permitted by this section and shall perform the functions relating thereto
as provided in subsection (A) above."
SECTION 4. The 1976 Code is amended by adding:
"Section 34-13-175. (A) For purposes of this section:
(1) `community development financial institution' means a
public-private partnership that:
(a) has a primary mission of promoting community
development through the provision of credit, capital, or development
services to small businesses;
(b) provides service delivery throughout the State;
(c) combines a for-profit corporation with a nonprofit
corporation to create a multi-investor community development
corporation (CDC);
(d) maintains through representation on its governing board
accountability to persons in need of the institution's services;
(e) is not an agent or instrumentality of the United States, or of
any state or political subdivision of a state or maintains an affiliate
relationship with the above;
(f) maintains a goal of providing a majority of its services to
low-income individuals, minorities, or females; and
(g) provides capital and technical assistance to small and micro
businesses.
(2) The term `invest' includes any advance of funds to a
community development financial institution whether by purchase of
stock, the making of a loan, or otherwise.
(B) Banks and financial institutions chartered by the State of South
Carolina are authorized to invest in community development financial
institutions incorporated under the laws of this State, up to a maximum
of ten percent of total capital and surplus.
(C) A community development financial institution shall not be
subject to any taxes based upon or measured by income which are now
or may be hereafter levied by the State."
SECTION 5. Section 41-44-10(I) of the 1976 Code is amended to
read:
"(I) `South Carolina business' means a for-profit or
nonprofit corporation, or a general partnership,
limited partnership, joint venture, trust, proprietorship or any other
similar entity, or organization which is either established and
operating or will be established to operate in South Carolina."
SECTION 6. Section 41-44-60(E) of the 1976 Code, as last amended
by Act 505 of 1990, is further amended to read:
"(E) The fund shall raise funds to provide financing to high
growth oriented businesses. A `high growth oriented business' for
purposes of this chapter means a for-profit or nonprofit
corporation, or a general partnership, limited
partnership, joint venture, trust, proprietorship, or other similar entity or
organization which is expected to experience significant sales or
other growth over the subsequent five-year period. All investments
made from investment monies raised by the fund, for which the tax
credit provided by this chapter is allowed and for which the tax credit is
made available by the fund in the prospectus or offering, must be made
to provide seed capital to South Carolina businesses, this seed capital to
be used primarily for the purpose of enhancing the production capacity
of these businesses or their ability to do business in South Carolina.
However, to the extent that the fund directly induces seed capital monies
from outside the State to be invested in South Carolina businesses in
which it is also investing, the fund may substitute up to two-thirds of
these outside monies for its own capital in fulfillment of the
requirements of this section. Except as otherwise provided
below, Seventy seventy percent of these investment
monies induced into the State or acquired by the fund for which the tax
credit is allowed and available must be invested to provide seed capital
financing of either start-up businesses or pre-start-up businesses. The
remaining thirty percent may be invested as the general partner of the
fund determines to provide capital to South Carolina businesses.
Investments may be made by the fund in community development
financial institutions as defined in Section 34-13-175, and these
community development financial institutions are considered to be
suitable investments for the fund. Notwithstanding the seventy and
thirty percent investment requirements above, the fund may choose to
invest a fractional percentage or all of its available monies in community
development financial institutions after the effective date of the
provisions of this subsection authorizing investments in these
institutions."
SECTION 7. The 1976 Code is amended by adding:
"Section 43-1-85. The Department of Social Services, from
grant funds made available to the department by the General Assembly
or from other available grant funds, may make grants to community
development financial institutions as defined in Section 34-13-175 for
the use of these organizations consistent with their stated objectives.
The General Assembly in the annual general appropriations act may
appropriate funds to the department to be used by it to make grants to
community development financial institutions as authorized
herein."
SECTION 8. This act takes effect upon approval by the Governor.
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