H*4706 Session 111 (1995-1996)
H*4706(Rat #0542, Act #0462 of 1996) General Bill, By Wilkins, Anderson,
Askins, Boan, Breeland, H. Brown, T. Brown, Carnell, Cave, C.D. Chamblee,
Clyburn, Cobb-Hunter, Delleney, Easterday, J.G. Felder, Fleming, R.C. Fulmer,
Gamble, Govan, Harrell, J.L. Harris, Harrison, Harvin, R.J. Herdklotz, J. Hines,
M. Hines, J.H. Hodges, Howard, H.G. Hutson, Inabinett, Jennings, Keegan,
Kennedy, M.H. Kinon, Klauber, Knotts, Koon, Law, L.H. Limbaugh, Lloyd, Mason,
J.T. McElveen, D.E. McTeer, Meacham, J.H. Neal, Neilson, Rice, Richardson,
Riser, Robinson, Scott, Sharpe, J.S. Shissias, D. Smith, Spearman, Stuart,
Whipper, L.S. Whipper, J.M. White, D. Williams, D.A. Wright, W.J. Young and
Young-Brickell
A Bill to amend the Code of Laws of South Carolina, 1976, to enact the "South
Carolina Rural Development Act of 1996", to add Sections 12-10-85 and
12-10-88, providing guidelines for the uses of the State Rural Infrastructure
Fund and providing for redevelopment fees by redevelopment authorities from
employee withholding on wages paid employees by a federal employer at a closed
or realigned military installation.-amended short title
03/06/96 House Introduced and read first time HJ-4
03/06/96 House Referred to Committee on Ways and Means HJ-8
04/09/96 House Committee report: Favorable with amendment Ways
and Means HJ-15
04/11/96 House Debate adjourned until Tuesday, April 16, 1996 HJ-41
04/16/96 House Objection by Rep. Harrell, Young-Brickell, Wells,
Fleming, Robinson, Tripp, Clyburn, Vaughn, Cato,
Allison, Knotts & Sheheen HJ-22
04/24/96 House Objection withdrawn by Rep. Clyburn HJ-342
04/24/96 House Special order, set for immediate consideration
(Under H. 4974) HJ-351
04/24/96 House Amended HJ-355
04/24/96 House Read second time HJ-438
04/24/96 House Roll call Yeas-108 Nays-5 HJ-438
04/25/96 House Read third time and sent to Senate HJ-13
04/29/96 Senate Introduced and read first time SJ-14
04/29/96 Senate Referred to Committee on Finance SJ-14
05/22/96 Senate Committee report: Favorable with amendment
Finance SJ-101
05/23/96 Senate Read second time SJ-110
05/23/96 Senate Ordered to third reading with notice of
amendments SJ-110
05/29/96 Senate Amended SJ-83
05/29/96 Senate Read third time and returned to House with
amendments SJ-83
05/30/96 House Debate adjourned on amendments HJ-5
05/30/96 House Non-concurrence in Senate amendment HJ-136
05/30/96 Senate Senate insists upon amendment and conference
committee appointed Sens. Leatherman, Leventis,
Matthews SJ-50
05/30/96 House Conference committee appointed R. Smith, Felder &
Harrell HJ-174
06/12/96 Senate Sen. Washington replaces Sen. Matthews SJ-13
06/26/96 Senate Conference report continued if presented SJ-17
06/27/96 House Conference report received and adopted HJ-13
06/27/96 Senate Conference report received and adopted SJ-10
06/27/96 House Ordered enrolled for ratification HJ-84
06/27/96 Ratified R 542
06/27/96 ES 2
07/02/96 Signed By Governor
07/02/96 Effective date 07/02/96
07/02/96 See act for exception to or explanation of
effective date
07/16/96 Copies available
07/16/96 Act No. 462
(A462, R542, R-E.S.2, H4706)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ENACTING THE "SOUTH CAROLINA
RURAL DEVELOPMENT ACT OF 1996", TO ADD SECTIONS
12-10-85 AND 12-10-88, PROVIDING GUIDELINES FOR THE USES
OF THE STATE RURAL INFRASTRUCTURE FUND AND
PROVIDING FOR REDEVELOPMENT FEES BY REDEVELOPMENT
AUTHORITIES FROM EMPLOYEE WITHHOLDING ON WAGES
PAID EMPLOYEES BY A FEDERAL EMPLOYER AT A CLOSED
OR REALIGNED MILITARY INSTALLATION; TO ADD SECTION
58-27-240 CLARIFYING THE IMPACT OF THIS ACT ON THE
RETAIL AND WHOLESALE DISTRIBUTION AND SALE OF
ELECTRIC ENERGY; TO AMEND SECTIONS 4-12-30, 4-12-40, AND
4-29-67, AS AMENDED, RELATING TO FEES IN LIEU OF TAXES,
SO AS TO LOWER THE MINIMUM FEES WHICH MAY BE
NEGOTIATED, REVISE TERMS AND CONDITIONS FOR
NEGOTIATING FEES AND ACCOMPANYING AGREEMENTS,
PROVIDE FOR THE DISTRIBUTION OF FEE REVENUES, AND
PROVIDE THE QUALIFICATIONS OF THOSE ENTITIES WHICH
QUALIFY FOR THE REVISED FEE ARRANGEMENTS; TO AMEND
SECTION 12-6-2320, AS AMENDED, RELATING TO THE
ALLOCATION AND APPORTIONMENT OF A TAXPAYER'S
INCOME AND THE ACCOUNTING METHOD ALLOWED
THEREFOR, SO AS TO EXTEND THE COVERAGE OF THIS
SECTION TO ONE OR MORE OF A CONTROLLED GROUP OF
CORPORATIONS; TO AMEND SECTION 12-6-3360, AS AMENDED,
RELATING TO THE TARGETED JOBS TAX CREDIT, SO AS TO
AUTHORIZE THE CREDIT FOR ADDITIONAL EMPLOYEES,
REVISE THE METHOD WHEREBY COUNTIES ARE DESIGNATED
FOR PURPOSES OF THE AMOUNT OF THE CREDIT ALLOWED
FOR EACH NEW JOB CREATED, INCREASE THE JOB TAX
CREDITS ALLOWED, REVISE THE METHOD OF DETERMINING
THE CREDIT APPLICABLE IN JOINTLY ESTABLISHED
INDUSTRIAL PARKS AND LIMIT THE MAXIMUM CREDIT THAT
MAY BE CLAIMED IN ANY ONE TAX YEAR UNDER THIS
SECTION; TO AMEND SECTION 12-6-3450, RELATING TO
INCOME TAX CREDITS ALLOWED FOR EMPLOYING PERSONS
TERMINATED FROM EMPLOYMENT IN A CLOSING OR
REALIGNMENT OF A MILITARY INSTALLATION, SO AS TO
EXTEND THE CREDIT TO SUCH PERSONS FORMERLY
EMPLOYED IN AN APPLICABLE FEDERAL FACILITY AND
PROVIDE DEFINITIONS; TO AMEND SECTION 12-6-3470,
RELATING TO THE EMPLOYER INCOME TAX CREDIT FOR
PERSONS HIRED WHO FORMERLY WERE RECEIVING AFDC, SO
AS TO REVISE AND LIMIT THE CREDITS THAT ARE ALLOWED
AND ADD A CREDIT FOR CERTAIN HIRES IN "LEAST
DEVELOPED" COUNTIES; TO CLARIFY ELIGIBILITY
REQUIREMENTS AND ALLOW A CARRYFORWARD OF UNUSED
CREDITS; TO ADD SECTION 12-6-3490, SO AS TO ALLOW A
CORPORATE LICENSE TAX CREDIT FOR CERTAIN
INFRASTRUCTURE EXPENSES, TO PROVIDE A MAXIMUM
CREDIT AMOUNT, AND PROVIDE DEFINITIONS; TO AMEND
SECTIONS 12-10-20, 12-10-30, 12-10-40, AS AMENDED, 12-10-50,
12-10-80, AS AMENDED, AND 12-10-90, RELATING TO THE
ENTERPRISE ZONE ACT OF 1995, SO AS TO PROVIDE
ADDITIONAL STATEMENTS OF LEGISLATIVE INTENT, REVISE
DEFINITIONS, EXTEND THE BENEFITS UNDER THE ACT
STATEWIDE SUBJECT TO VARIATIONS BASED ON A COUNTY'S
DEVELOPMENT DESIGNATION, REVISE THE APPLICATION AND
USES OF THE JOB DEVELOPMENT FEE AND PROVIDE FOR THE
AMOUNT OF A JOB DEVELOPMENT THAT MAY BE RETAINED
BY THE EMPLOYER AND THE AMOUNTS THAT MUST BE
CREDITED TO THE STATE RURAL INFRASTRUCTURE FUND; TO
AMEND SECTION 12-14-30, AS AMENDED, RELATING TO
DEFINITIONS FOR PURPOSES OF THE "ECONOMIC IMPACT
ZONE COMMUNITY DEVELOPMENT ACT OF 1995", SO AS
TO DELETE A DEFINITION; TO AMEND SECTION 12-36-2120, AS
AMENDED, RELATING TO SALES AND USE TAX EXEMPTIONS,
SO AS TO EXEMPT CERTAIN MATERIAL HANDLING SYSTEMS
AND EQUIPMENT AND PARTS AND SUPPLIES USED IN
REPAIRING OR RECONDITIONING CERTAIN AIRCRAFT; TO
AMEND SECTION 12-37-220, AS AMENDED, RELATING TO
PROPERTY TAX EXEMPTIONS, SO AS TO CLARIFY THE
EXEMPTION ALLOWED AIR CARRIERS OPERATING A HUB IN
THIS STATE; TO AMEND SECTION 4-29-68, AS AMENDED,
RELATING TO SPECIAL SOURCE REVENUE BONDS, SO AS TO
EXTEND THE PURPOSES FOR WHICH THESE BONDS MAY BE
ISSUED TO UNIMPROVED OR IMPROVED REAL ESTATE USED
IN THE OPERATION OF A MANUFACTURING OR COMMERCIAL
ENTERPRISE; TO AMEND SECTION 61-9-312, AS AMENDED,
RELATING TO BEER AND WINE PERMITS FOR NONPROFIT
ORGANIZATIONS AND BUSINESS ESTABLISHMENTS, SO AS TO
PROVIDE THAT IMMEDIATELY FOLLOWING THE DISSOLUTION
OF A REDEVELOPMENT AUTHORITY, THE FEES DISTRIBUTED
TO THE DISSOLVED REDEVELOPMENT AUTHORITY MUST BE
DISTRIBUTED TO THE MUNICIPALITY OR COUNTY IN WHICH
THE RETAILER WHO PAID THE FEE IS LOCATED TO REDUCE
THE NUMBER OF JOBS BY WHICH EMPLOYMENT MUST HAVE
DECLINED IN A COUNTY FOR THIS DISTRIBUTION PLAN TO
APPLY AND PROVIDE FOR THE USES OF THE REVENUE; TO
AMEND SECTION 61-5-180, AS AMENDED, RELATING TO
ISSUANCE OF TEMPORARY ALCOHOLIC BEVERAGE PERMITS
TO NONPROFIT ORGANIZATIONS AND BUSINESS
ESTABLISHMENTS, SO AS TO PROVIDE THAT THE PERMIT
FEES MUST BE DISTRIBUTED TO THE MUNICIPALITY OR
COUNTY IN WHICH THE RETAILER WHO PAID THE FEE IS
LOCATED AND PROVIDE FOR THE USES OF THE REVENUE
AND PROVIDE FOR THE TEMPORARY USE OF THE REVENUE IN
A COUNTY IN WHICH A FEDERAL MILITARY BASE OR
INSTALLATION IS CLOSED, OR SCHEDULED TO BE CLOSED
AND WHEN A FEDERAL FACILITY HAS HAD A SPECIFIC JOB
LOSS; AND TO REPEAL SECTION 12-10-70, RELATING TO
BENEFITS UNDER THE ENTERPRISE ZONE ACT OF 1995, AND
TO PROVIDE EFFECTIVE DATES.
Be it enacted by the General Assembly of the State of South
Carolina:
Citation
SECTION 1. This act may be cited as the "South Carolina Rural
Development Act of 1996".
Findings
SECTION 2. The General Assembly finds that:
(1) The state's economy is centrally connected. As we increase the
wealth-generating capacity of South Carolina's businesses, the state's per
capita income will also increase. Success breeds success, and rural
locations in the State which promote positive economic development
momentum will tend to multiply their successes;
(2) Rural economies, left to themselves, with little incentives for
positive investment will remain with little economic development
momentum. On the other hand, rural economies with significant
incentives to induce capital investment and job creation will strengthen
the state's economy and well-being;
(3) The inducement provided in this act will encourage the creation
of jobs which would not otherwise exist and will create sources of tax
revenues for the State and its political subdivisions.
Infrastructure fund
SECTION 3. Chapter 10, Title 12 of the 1976 Code is amended by
adding:
"Section 12-10-85. (A) Funds received by the department for
the State Rural Infrastructure Fund must be deposited in the State Rural
Infrastructure Fund of the Council. The fund must be administered by
the council for the purpose of providing financial assistance to local
governments for:
(1) training costs and facilities;
(2) improvements to regionally-planned public and private water
and sewer systems;
(3) improvements to both public and private electricity, natural gas,
and telecommunications systems including, but not limited to, an electric
cooperative, electrical utility, or electric supplier described in Chapter 27
of Title 58; or
(4) fixed transportation facilities including highway, rail, water,
and air.
(B) Rural Infrastructure Fund grants must be available to benefit
counties designated as `least developed' or `under developed' as defined
in Section 12-6-3360 according to guidelines established by the council.
However, up to twenty-five percent of the funds annually available in
excess of five million dollars must be set aside for grants to areas of
moderately developed and developed counties. County governing bodies
must apply to the council for these set aside grants stating the reasons
that certain areas of their county qualify for these grants because they are
comparable to those conditions qualifying a county as `least developed'
or `under developed'.
(C) For the purposes of this section, `local government' means a
municipality organized pursuant to Chapters 7, 9, 11, and 13 of Title 5 or
a county organized pursuant to Section 4-9-20(a), (b), (c), or (d).
(D) The council shall submit a report to the Governor and General
Assembly by March fifteenth covering activities for the prior calendar
year."
Redevelopment fees
SECTION 4. A. Chapter 10, Title 12 of the 1976 Code is amended by
adding:
"Section 12-10-88. (A) Subject to the conditions provided in
subsection (B), South Carolina individual income tax withholding equal
to five percent of all South Carolina wages paid with respect to
employees that are employed by a federal employer at a closed or
realigned military installation must be remitted by the department to the
redevelopment authority vested with authority under Section 31-12-40(A)
to oversee the closed or realigned military installation. The amounts of
withholding collected and remitted to the applicable redevelopment
authority are referred to as `redevelopment fees'.
(B) The department shall remit the redevelopment fees during the
period described in subsection (C) for each calendar quarter for which the
redevelopment authority provides the department with a timely statement
from the federal employer that employs the employees working at the
closed or realigned military installation setting forth the number of
employees employed at the installation, the total wages paid to these
employees, and the total amount of South Carolina withholding withheld
from the employees for each quarter. In order to receive the
redevelopment fees for the applicable quarter, the redevelopment
authority shall submit the statement within thirty days of the later of the
date that the federal employer's South Carolina withholding tax return is
due or the date the federal employer files the withholding tax return.
(C) Redevelopment fees may be remitted to the applicable
redevelopment authority for a period beginning with the date that the
applicable redevelopment authority first submits the information
described in subsection (B) to the department and ending on the earlier of
fifteen years later or January 1, 2015. If the redevelopment authority
fails to provide the department with the required statement within the
requisite time limits, no redevelopment fees must be remitted for that
quarter.
(D) Neither the federal employer nor the applicable redevelopment
authority is required to meet the requirements of Section 12-10-50 for
subsection (A) to apply and the restrictions contained in Section
12-10-80(C) do not apply to redevelopment fees.
(E) For purposes of this section `closed or realigned military
installation' means a federal military base or installation in which
permanent employment was reduced by three thousand or more jobs after
December 31, 1990, and which is closed or realigned under:
(1) the Defense Base Closure and Realignment Act of 1990;
(2) Title 11 of the Defense Authorization Amendments and Base
Closure and Realignment Act; or
(3) Section 2687 of Title 10, United States Code."
B. This section is effective for tax years beginning after 1996.
Construing act
SECTION 5. Chapter 27, Title 58 of the 1976 Code is amended by
adding:
"Section 58-27-240. No provision of the South Carolina Rural
Development Act of 1996 may be construed to alter, modify, amend, or
repeal, directly or by implication, any provision of Chapter 27 of Title
58, Chapter 31 of Title 58, Chapter 33 of Title 58, Chapter 23 of Title 6,
Chapter 7 of Title 5, and Chapter 31 of Title 5, governing, among other
things, the retail and wholesale distribution and sale of electric energy in
this State."
Fee in lieu of taxes
SECTION 6. A. Section 4-12-30(B)(4)(b)(iv) of the 1976 Code, as
added by Act 125 of 1995, is amended to read:
"(iv) for purposes of this section, `controlled group' or
`controlled group of corporations' has the meaning provided under
Section 1563(a) of the Internal Revenue Code as defined in Chapter 6 of
Title 12 as of the date of the execution of the inducement agreement
without regard to amendments or replacements thereof, and without
regard to subsections (a)(4) and (b) of Section 1563."
B. Section 4-12-30(B)(5)(b) of the 1976 Code, as added by Act 125
of 1995, is amended to read:
"(b) In addition to the findings required in subsection (B)(5)(a)
above, the county council or county councils, with assistance and advice
from the Department or the Board of Economic Advisors shall determine
that the purposes to be accomplished by the project are proper
governmental and public purposes and that the inducement of the location
or expansion of the projects within the State is of paramount importance
and that the benefits of the project are greater than the cost."
C. Section 4-12-30(C) of the 1976 Code, as added by Act 125 of
1995, is amended to read:
"(C)(1) From the end of the property tax year in which the
investor and the county execute an inducement agreement, the investor
has five 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 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 4-12-20. The difference between the
fee actually paid by the investor and the payment which is due under
Section 4-12-20 is subject to interest as provided in Section 12-54-25(D).
Any property placed in service after the five-year period, or seven years
in the case of a project which has received an extension, is not part of
the fee agreement under subsection (D)(2) and 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.
For purposes of those businesses qualifying under subsection (D)(4),
the five-year period referred to in this subsection is eight years and the
seven-year period is ten years.
(3) The annual fee provided by subsection (D)(2) is available for no
more than twenty years. For projects which are completed and placed in
service during more than one year, each year's investment may be subject
to the fee in subsection (D)(2) for twenty years to a maximum total of
twenty-seven years for the fee for a single project which has been
granted an extension. For those businesses qualifying under subsection
(D)(4), the annual fee is available for no more than thirty years and for
those projects placed in service in more than one year the annual fee is
available for a maximum of thirty-seven years.
(4) Annually, during the time period allowed to meet the minimum
investment level, the investor shall provide the total amount invested to
the appropriate county official."
D. Section 4-12-30(D) of the 1976 Code, as added by Act 125 of
1995, is amended to read:
"(D) The inducement agreement must provide for fee payments,
to the extent applicable, as follows:
(1)(a) Any property, title to which is transferred to the county
before being placed in service, is subject to an annual fee payment as
provided in Section 4-12-20.
(b) Any undeveloped land, title to which is transferred to the
county, before being developed and placed in service, is subject to an
annual fee payment as provided in Section 4-12-20. The time during
which fee payments are made under Section 4-12-20 is not considered
part of the maximum periods provided in subsections (C)(2) and (C)(3),
and no lease is considered an `initial lease agreement' for purposes of
this section until the first day of the calendar year for which a fee
payment is due under subsection (D)(2) in connection with the lease.
(2) After property qualifying under subsection (B) is placed in
service, an annual fee payment determined in accordance with one of the
following is due:
(a) an annual payment in an amount not less than the property
taxes that would be due on the project if it were taxable, but using an
assessment ratio of not less than six percent, except as provided in item
(4) of this subsection, and a fixed millage rate as provided in subsection
(G), and a fair market value estimate determined by the department as
follows:
(i) for real property, using the original income tax basis for
South Carolina income tax purposes without regard to depreciation, but if
real property is constructed for the fee or is purchased in an arm's length
transaction, fair market value is deemed to equal the original income tax
basis; otherwise, the department shall determine fair market value by
appraisal; and
(ii) for personal property, using the original tax basis for South
Carolina income tax purposes less depreciation allowable for property tax
purposes, except that the investor is not entitled to any extraordinary
obsolescence.
(b) an annual payment as provided in subsection (D)(2)(a), except
that every fifth year the applicable millage rate is allowed to increase or
decrease in step with the average actual millage rate applicable in the
district where the project is located based on the preceding five-year
period.
(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.
(5) Notwithstanding the use of the term `assessment ratio', a
business qualifying under items (2) or (4) of this subsection may
negotiate an inducement agreement with a county using differing
assessment ratios for different assessment years covered by the
agreement. However, the lowest assessment ratio allowed is the lowest
ratio for which the business may qualify under this section."
E. Section 4-12-30(F) of the 1976 Code, as added by Act 125 of
1995, is amended to read:
"(F) 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
the fee is calculated using the millage rate and assessment ratio provided
for the original fee property. The fee payment for replacement property
must be based on subsection (D)(2)(a) or (D)(2)(b), if the investor
originally used this method.
(c) In order to qualify as replacement property, title to the
replacement property must be held by the county.
(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."
E. 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
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.
(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
being computed in the level of investment for purposes of subsection (B)
or (C); and
(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 property taxes which would have been paid on the
property if it was owned by the investor to 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:
"(M) (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
transferor must agree to continue to be primarily liable for the payment
of the fee as to that portion of the project to which the transfer
relates.
(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."
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 a lease agreement entered into
before January 1, 1996, are required to use the provisions of Section
4-29-67. Projects with lease agreements 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), may elect
to use the provisions of Section 4-29-67 or 4-12-30, but not both.
The minimum investment levels or job creation levels, or both,
required in order to qualify for a fee-in-lieu of property tax as provided
in Section 4-29-67 and as reduced in Section 12-10-70(2) may be used
for lease agreements executed before December 31, 1995, and for any
project which has received any of the required readings before county
council to enact the agreement before December 31, 1995."
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 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 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,
qualify as expenditures subject to the fee in subsection (D)(2), so long as
those expenditures are 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
(2) before the end of the applicable five- or seven-year period
referenced in subsection (C)(2) and (C)(3). An inducement agreement
must be executed within two years after the date on which 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; otherwise, only investment
expenditures made or incurred by any investor after the date of the
inducement agreement in connection with a project qualifies as
expenditures subject to the fee in subsection (D)(2)."
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.
Fee in lieu of taxes
SECTION 7. A. Subsections (A) through (U) of Section 4-29-67 of the
1976 Code, as last amended by Act 181 OF 1993, 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 development 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) the counties agree on the terms of the fee and the
distribution of the fee payment; (b) the minimum millage rate cannot be
lower than the millage rate applicable to the county in which the greatest
amount of investment occurs; and (c) all such counties must be parties to
all agreements establishing the terms of the fee.
(3) The minimum level of investment must be at least forty-five
million dollars and must be invested within the time period provided in
subsection (C).
(4)(a) Except as provided in 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 be assessed by the Department of Revenue and
Taxation for late notification for up to ten thousand dollars a month or
portion of a month with the total penalty not to exceed one hundred
twenty thousand dollars. Members of the controlled group must provide
the information considered necessary by the Department of Revenue and
Taxation to ensure that the investors are part of a controlled group.
(iii) If at any time the controlled group or any former member
(who has left the controlled group) no longer has the minimum 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 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 subsections (a)(4) and (b) of 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 12-54-25(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
which has received an extension, is not part of the fee agreement under
subsection (D)(2) and is subject to the payments required by Section
4-29-60 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.
For purposes of those businesses qualifying under Section
4-29-67(D)(4), the five-year period referred to in this subsection is eight
years and the seven-year period is ten years.
(3) The annual fee provided by subsection (D)(2) is available for
no more than twenty years. For projects which are completed and placed
in service during more than one year, each year's investment may be
subject to the fee in subsection (D)(2) for twenty years to a maximum
total of twenty-seven years for the fee for a single project which has been
granted an extension. For those businesses qualifying under subsection
(D)(4), the annual fee is available for no more than thirty years and for
those projects placed in service in more than one year the annual fee is
available for a maximum of thirty-seven years.
(4) Annually, during the time period allowed to meet the minimum
investment level, the investor must provide the total amount invested to
the appropriate county official.
(D) The inducement agreement must provide for fee payments, to the
extent applicable, as follows:
(1)(a) Any property, title to which is transferred to the county, will
be subject, before being placed in service, to an annual fee payment as
provided in Section 4-29-60.
(b) Any undeveloped land, title to which is transferred to the
county, will be subject, before being developed and placed in service, to
an annual fee payment as provided in Section 4-29-60. The time during
which fee payments are made under Section 4-29-60 will not be
considered part of the maximum periods provided in subsections (C)(2)
and (C)(3), and no lease shall be considered an `initial lease agreement'
for purposes of this section unless and until the first day of the calendar
year for which a fee payment is due under subsection (D)(2) in
connection with such lease.
(2) After property qualifying under subsection (B) is placed in
service, an annual fee payment determined in accordance with one of the
following is due:
(a) an annual payment in an amount not less than the property
taxes that would be due on the project if it were taxable, but using an
assessment ratio of not less than six percent, except as provided in
subsection (D)(4), and a fixed millage rate as provided in subsection (G),
and a fair market value estimate determined by the South Carolina
Department of Revenue and Taxation as follows:
(i) for real property using the original income tax basis for South
Carolina income tax purposes without regard to depreciation. However,
if real property is constructed for the fee or is purchased in an arm's
length transaction, fair market value is deemed to equal the original
income tax basis, otherwise the Department of Revenue and Taxation will
determine fair market value by appraisal; and
(ii) for personal property using the original income tax basis for
South Carolina income tax purposes less depreciation allowable for
property tax purposes, except that the investor is not entitled to any
extraordinary obsolescence.
(b) an annual payment based on any alternative arrangement
yielding a net present value of the sum of the fees for the life of the
agreement not less than the net present value of the fee schedule as
calculated under subsection (D)(2)(a). Net present value calculations
performed under this subsection must use a discount rate equivalent to
the yield in effect for new or existing United States Treasury bonds of
similar maturity as published during the month in which the inducement
agreement is executed. If no yield is available for the month in which
the inducement agreement is executed, the last published yield for the
appropriate maturity must be used. If there are no bonds of appropriate
maturity available, bonds of different maturities may be averaged to
obtain the appropriate maturity.
(c) an annual payment using a formula that results in a fee not
less than the amount required pursuant to subsection (D)(2)(a), except
that every fifth year the applicable millage rate is allowed to increase or
decrease in step with the average actual millage rate applicable in the
district where the project is located based on the preceding five-year
period.
(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 its
members or equity holders where the member or equity holder is
creating, at the site qualifying for the fee, at least one hundred new
full-time jobs with an annual average salary of at least forty thousand
dollars within four years of the date of execution of a 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.
(5) Notwithstanding the use of the term `assessment ratio', a
business qualifying under items (2) or (4) of this subsection may
negotiate an inducement agreement with a county using differing
assessment ratios for different assessment years covered by the
agreement. However, the lowest assessment ratio allowed is the lowest
ratio for which the business may qualify under this section.
(E) Calculations pursuant to subsection (D)(2) must be made on the
basis that the property, if taxable, is allowed all applicable property tax
exemptions except the exemption allowed under Section 3(g) of Article X
of the Constitution of this State and the exemption allowed pursuant to
Section 12-37-220B(32) and (34).
(F) 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 the investor used any method to compute the fee other than
that provided in subsection (D)(2)(a), the fee on the property which was
disposed of must be recomputed in accordance with subsection (D)(2)(a)
and to the extent that the amount which would have been paid under
subsection (D)(2)(a) exceeds the fee actually paid by the investor, the
investor must pay the difference with the next fee payment due after the
property is disposed of. If the investor used the method provided in
subsection (D)(2)(c), the millage rate provided in subsection (D)(2)(c)
must be used to calculate the amount which would have been paid under
subsection (D)(2)(a).
(d) 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 4-29-60. Replacement property is entitled to the
fee payment for the period of time remaining on the twenty-year 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,
such fee period shall 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
the fee is calculated using the millage rate and assessment ratio provided
on the original fee property. The fee payment for replacement property
must be based on subsection (D)(2)(a) or (D)(2)(c), if the investor
originally used this method, without regard to present value.
(c) In order to qualify as replacement property, title to the
replacement property must be held by the county.
(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 4-29-60 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.
(G)(1) The county and the investor may enter into an agreement to
establish the millage rate (millage rate agreement) for purposes of
calculating payments under subsection (D)(2)(a) and the first five years
under subsection (D)(2)(c). This millage rate agreement must be
executed on the date of the inducement agreement or anytime thereafter
up to and including the date of the initial lease agreement. This millage
rate agreement may be a separate agreement or may be made a part of
either the inducement agreement or the initial lease agreement.
(2) The millage rate cannot be lower than the cumulative property
tax millage rate legally levied by or on behalf of all taxing entities within
which the subject property is to be located which is the cumulative rate
applicable on the thirtieth day of June preceding the calendar year in
which the millage rate agreement is executed. If no millage rate
agreement is executed before the date of the initial lease agreement, the
millage rate is deemed to be the cumulative property tax millage rate
applicable on the thirtieth day of June preceding the calendar year in
which the initial lease agreement is executed by the parties.
(H)(1) Upon agreement of the parties, and except as provided in
subsection (H)(2), 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.
(2) No amendment or replacement of an inducement agreement or
millage rate agreement may be used to change the millage rate, discount
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.
(I) Investment expenditures incurred by any investor in connection
with a project, or relevant phase of a project for those projects completed
and placed in service in more than one year, qualify as expenditures
subject to the fee in subsection (D)(2), so long as these expenditures are
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
(2) before the end of the applicable time period for investments
referenced in subsection (C)(2) and (C)(3).
An inducement agreement must be executed within two years after
the date on which 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;
otherwise, only investment expenditures made or incurred by any investor
after the date of such inducement agreement in connection with a project
shall qualify as expenditures subject to the fee in subsection (D)(2).
(J)(1) Subject to subsection (K), 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 subsections (B) or (C) shall
qualify as investment expenditures subject to the fee in subsection (D)(2)
where:
(a) such 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
being computed in the level of investment for purposes of subsections
(B) or (C); and
(b) such 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.
(2) The income tax basis of such property immediately before such
transfer must equal the income tax basis of such property immediately
after such transfer; provided, however, that to the extent income tax basis
of such property immediately after such transfer unintentionally exceeds
the income tax basis of such property immediately before such transfer,
such excess shall be subject to payments under Section 4-29-60.
(3) The county must agree to any inclusion in the fee of the
property described in subsection (J)(1).
(K)(1) Property which has been previously subject to property taxes
in South Carolina will not qualify for the fee except as provided in this
subsection:
(a) Land, excluding improvements thereon, on which a new
project will be located may qualify for the fee even if it has previously
been subject to South Carolina property taxes;
(b) Property which has been subject to South Carolina property
taxes, but which has never been placed in service in South Carolina, may
qualify for the fee; and
(c) Property which has been placed in service in South Carolina
and subject to South Carolina property taxes which is purchased in a
transaction other than between any of the entities specified in Section
267(b) of the Internal Revenue Code, as defined under Chapter 6 of Title
12 as of the time of the transfer, may qualify for the fee provided the
fee-paying entity invests at least an additional forty-five million dollars in
the project.
(2) Repairs, alterations, or modifications to real or personal
property which are not subject to a fee will not be eligible for a fee, even
if they are capitalized expenditures, except for modifications to existing
real property improvements which constitute an expansion of such
improvements.
(L)(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, for the
maximum time period allowed under (C)(3). The property taxes which
would have been paid on the property if it was owned by the investor to
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).
(M) As a directly foreseeable result of negotiating the fee, gross
revenue of a school district in which a project is located in any year a fee
negotiated pursuant to this section is paid, may not be less than gross
revenues of the district in the year before the first year for which a fee in
lieu of taxes is paid. In negotiating the fee, the parties shall assume that
the formulas for the distribution of state aid at the time of the execution
of the inducement agreement must remain unchanged for the duration of
the lease agreement.
(N) Projects on which a fee in lieu of taxes is paid pursuant to this
section are considered taxable property at the level of the negotiated
payments for purposes of bonded indebtedness pursuant to Sections 14
and 15 of Article X of the Constitution of this State, and for purposes of
computing the index of taxpaying ability pursuant to Section 59-20-20(3).
However, for a project located in an industrial development park as
defined in Section 4-1-170, projects are considered taxable property in
the manner provided in Section 4-1-170 for purposes of bonded
indebtedness pursuant to Sections 14 and 15 of Article X of the
Constitution of this State, and for purposes of computing the index of
taxpaying ability pursuant to Section 59-20-20(3). Provided, however,
that the computation of bonded indebtedness limitation is subject to the
requirements of Section 4-29-68(E).
(O)(1) Any interest in an inducement agreement, millage rate
agreement, and 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,
affects the amount of the fee due.
(3) All transfers undertaken with respect to the project to effect a
financing authorized under subsection (O) 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 will 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 one hundred twenty 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
transferor must agree to continue to be primarily liable for the payment
of the fee as to that portion of the project to which the transfer
relates.
(4) Before an investor may transfer an inducement agreement,
millage rate agreement, lease agreement or the assets subject to the lease
agreement, it must obtain the approval of the county with which 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.
(P) Reserved.
(Q) Reserved.
(R) For purposes of subsections (O)(1)(a) and (P), and subject to
subsection (U), each transferee, with respect to a project which is the
subject of a transfer, shall be considered to have made amounts of
qualified investments represented by the property interest which is subject
to the fee and which is transferred, without regard to depreciation.
(S) Reserved.
(T) No inducement agreement, millage rate agreement, or lease
agreement, nor the rights of any entity pursuant to any such agreement,
including without limitation the availability of the subsection (D)(2) fee,
shall be adversely affected if the bonds issued pursuant to any such
agreement are purchased by one or more of the entities which are or
become parties to any such agreement.
(U) (1) Notwithstanding any other provision of this section, if an
investor fails to make the minimum investment required under subsection
(D)(2) within the time provided in subsection (C)(2), then if and to the
extent allowed pursuant to an applicable agreement between the investor
and the county, the investor is entitled to the benefits of Chapter 12 of
this title. Otherwise, the fee provided in subsection (D)(2) is no longer
available and the investor is required to make the payments which are
due under Section 4-29-60 for the remainder of the lease period.
(2) Notwithstanding any other provision of this section, if at any
time following the period provided in subsection (C)(2), the investment
based income tax basis without regard to depreciation falls below the
forty-five million dollar minimum investment to which the fee relates and
is held by an entity or controlled group of entities, then if and to the
extent allowed pursuant to any applicable agreement between the investor
and the county, the investor is entitled to the benefits provided under
Chapter 12 of this title. Otherwise, the fee provided in subsection (D)(2)
is no longer available and the investor is required to make the payments
which are due under Section 4-29-60 for the remainder of the lease
period."
B.(1) Section 4-29-67(Z) of the 1976 Code, as added by Act 497 of
1994, is amended to read:
"(Z) Reserved."
(2) This item is effective January 1, 1996.
C. The amendments to Section 4-29-67 of the 1976 Code contained
in this section are effective for inducement resolutions, inducement
agreements, millage rate agreements, and lease agreements with regard to
projects for which lease agreements are entered into after December 31,
1995. However, the provisions affecting Section 4-29-67(B)(3),
(B)(4)(b)(iii), (H), (K)(1)(c), (O), and (U) of the 1976 Code are effective
for inducement resolutions, inducement agreements, millage rate
agreements, and lease agreements with regard to projects for which lease
agreements have been entered into on or before December 31, 1995, if
the investor and the county agree to modify the agreement to allow these
provisions to apply to their agreement. However, except as provided in
Section 4-29-67(H) of the 1976 Code, no amendment to an inducement
agreement or millage rate agreement may reduce the millage rate,
discount rate, or assessment ratio under such agreements.
Allocations and apportionment
SECTION 8. A. Section 12-6-2320(B) of the 1976 Code, as last
amended by Act 76 of 1995, is further amended to read:
"(B) (1) For the purposes of this chapter, the department may
enter into an agreement with the taxpayer establishing the allocation and
apportionment of the taxpayer's income for a period not to exceed five
years, if the following conditions are met:
(a) the taxpayer is planning a new facility in this State or an
expansion of an existing facility;
(b) the taxpayer asks the department to enter into a contract under
this subsection reciting an allocation and apportionment method; and
(c) after reviewing the taxpayer's proposal and planned new
facility or expansion, the Advisory Coordinating Council for Economic
Development certifies that the new facility or expansion will have a
significant beneficial economic effect on the region for which it is
planned and that its benefits to the public exceed its costs to the public.
It is within the Advisory Coordinating Council for Economic
Development's sole discretion to determine whether a new facility or
expansion has a significant economic effect on the region for which it is
planned.
(2) For the purposes of this subsection the word `taxpayer'
includes any one or more of the members of a controlled group of
corporations authorized to file a consolidated return under Section
12-6-5020."
B. This section is effective April 4, 1995.
Tax credit
SECTION 9. A. Section 12-6-3360 of the 1976 Code, as last amended
by an act of 1996 bearing ratification number 234, is further amended to
read:
"Section 12-6-3360. (A) Taxpayers that operate
manufacturing, tourism, processing, warehousing, distribution, research
and development, corporate office, and qualifying service-related
facilities are allowed an annual job tax credit as provided in this section.
In addition, taxpayers that operate retail facilities and service related
industries qualify for an annual jobs tax credit in counties designated as
least developed. Credits under this section may be claimed against
income taxes imposed by Section 12-6-510 or 12-6-530, and insurance
premium taxes imposed pursuant to Chapter 7 of Title 38, and are limited
in use to fifty percent of the taxpayer's South Carolina income tax,
insurance premium tax liability. In computing any tax payable by a
taxpayer under Section 38-7-90, the credit allowable under this section
must be treated as a premium tax paid under Section 38-7-20.
(B) The department shall rank and designate the state's counties by
December thirty-first each year using data from the South Carolina
Employment Security Commission and the United States Department of
Commerce. The counties are ranked using data from the most recent
thirty-six month period with equal weight given to unemployment rate
and per capita income as follows:
(1) The twelve counties with a combination of the highest
unemployment rate and lowest per capita income are designated least
developed counties.
(2) The twelve counties with a combination of the next highest
unemployment rate and next lowest per capita income are designated
under developed counties.
(3) The eleven counties with a combination of the next highest
unemployment rate and the next lowest per capita income are designated
moderately developed counties.
(4) The eleven counties with a combination of the lowest
unemployment rate and the highest per capita income are designated
developed counties. The designation by the department is effective for
corporate taxable years which begin after the date of designation.
(5)(a) A county, any portion of which is located within twenty-five
miles of the boundaries of an applicable military installation or applicable
federal facility as defined in Section 12-6-3450(1), shall receive the
benefits of the next increased credit designation for five years beginning
with the year in which the military installation or federal facility became
an applicable military installation or applicable federal facility as defined
in Section 12-6-3450(1), with the additional requirement that the military
installation must have reduced employment on the installation of at least
three thousand employees.
(b) For a county in which is located an applicable military
installation or applicable federal facility meeting the requirements for the
increased credit provided in subitem (a) of this item, the credit allowed is
two tiers higher than the credit for which the county would otherwise
qualify for five years beginning with the year the installation or facility
meets the requirements.
(c) Notwithstanding the designations in Section 12-6-3360,
Laurens, Cherokee, and Union Counties shall qualify for the next
increased credit designation.
(d) In a county where less than five percent of the work force is
in manufacturing, the credit allowed is one tier higher than the credit for
which the county would otherwise qualify.
(C) Subject to the conditions provided in subsection (N) of this
section, a job tax credit is allowed for five years beginning in year two
after the creation of the job for each new full-time job created if the
minimum level of new jobs is maintained. The credit is only available to
taxpayers that increase employment by ten or more full-time jobs, and no
credit is allowed for the year or any subsequent year in which the net
employment increase falls below the minimum level of ten. The amount
of the initial job credit is as follows:
(1) Four thousand five hundred dollars for each new full-time job
created in least developed counties.
(2) Three thousand five hundred dollars for each new full-time job
created in under developed counties.
(3) Two thousand five hundred dollars for each new full-time job
created in moderately developed counties.
(4) One thousand five hundred dollars for each new full-time job
created in developed counties.
(D) If the taxpayer qualifying for the new jobs credit under
subsection (C) creates additional new full-time jobs in years two through
six, the taxpayer may obtain a credit for those new jobs for five years
following the year in which the job is created. The amount of the credit
for each new full-time job is the same as provided in subsection (C).
(E) Taxpayers which qualify for the job tax credit provided in
subsection (C) and which are located in a business or industrial park
jointly established and developed by a group of counties pursuant to
Section 13 of Article VIII of the Constitution of this State are allowed an
additional one thousand dollar credit for each new full-time job created.
This additional credit is permitted for five years beginning in the taxable
year following the creation of the job.
(F) The number of new and additional new full-time jobs is
determined by comparing the monthly average number of full-time
employees subject to South Carolina income tax withholding in the
applicable county for the taxable year with the monthly average in the
prior taxable year. For purposes of calculating the monthly average
number of full-time employees in the first year of operation in this State,
a taxpayer may use the actual months in operation or a full twelve-month
period. If a taxpayer's business is only in operation for less than twelve
months a year, the number of new and additional new full-time jobs is
determined using the monthly average for the months the business is in
operation.
(G) Except for credits carried forward under subsection (H), the
credits available under this section are only allowed for the job level that
is maintained in the taxable year that the credit is claimed. If the job
level for which a credit was claimed decreases, the five-year period for
eligibility for the credit continues to run.
(H) A credit claimed under this section but not used in a taxable year
may be carried forward for fifteen years from the taxable year in which
the credit is earned by the taxpayer. Credits which are carried forward
must be used in the order earned and before jobs credits claimed in the
current year.
(I) The merger, consolidation, or reorganization of a taxpayer where
tax attributes survive does not create new eligibility in a succeeding
taxpayer, but unused job tax credits may be transferred and continued by
the succeeding taxpayer subject to the limitations of Section 12-6-3320.
In addition, a taxpayer may assign its rights to its jobs tax credit to
another taxpayer if it transfers all, or substantially all, of the assets of the
taxpayer or all, or substantially all, of the assets of a trade or business or
operating division of a taxpayer related to the generation of the jobs tax
credits to that taxpayer if the required number of new jobs is maintained
for that amount of credit. No taxpayer is allowed a jobs tax credit if the
net employment increase for that taxpayer falls below ten. The
appropriate agency shall determine whether or not qualifying net
increases or decreases have occurred and may require reports, promulgate
rules or regulations, and hold hearings needed for substantiation and
qualification.
(J) For a taxpayer which plans a significant expansion in its labor
forces at a location in this State, the appropriate agency shall prescribe
certification procedures to ensure that the taxpayer can claim credits in
future years even if a particular county is removed from the list of least
developed, under developed, or moderately developed counties.
(K) (1) In addition to those credits allowed under subsection (C) of
this section a corporation, partnership, or limited liability company that
qualifies for a credit under this section as an S corporation, partnership,
or limited liability company, entitles each shareholder of the S
corporation, partner of the partnership, or member of the limited liability
company to a nonrefundable credit against taxes imposed pursuant to
Section 12-6-510.
(2) The amount of the credit allowed a shareholder, partner, or
owner of a limited liability company by this subsection is equal to the
shareholder's percentage of stock ownership, partner's interest in the
partnership, or member's interest in the limited liability company for the
taxable year multiplied by the amount of the credit the taxpayer would
have been entitled to if it were taxed as a corporation.
(3) A credit claimed under this subsection but not used in a taxable
year may be carried forward for fifteen years from the close of the tax
year in which the credit is earned by the S corporation, partnership, or
limited liability company. However, the credit established by this section
taken in one tax year may not exceed fifty percent of the taxpayer's tax
liability under Section 12-6-510.
(L) Notwithstanding any other provision of this section, a county
with a population under twenty thousand as determined by the most
recent United States Census shall receive the next increased credit
designation for purposes of the credit allowed by this section.
(M) As used in this section:
(1) `Taxpayer' means a sole proprietor, partnership, corporation of
any classification, limited liability company, or association taxable as a
business entity which is subject to South Carolina taxes as contained in
Sections 12-6-510 and 12-6-530 and Chapter 7 of Title 38.
(2) `Appropriate agency' means the Department of Revenue and
Taxation for corporations subject to tax under Section 12-6-530 and the
Department of Insurance for corporations subject to the premium tax
under Chapter 7 of Title 38.
(3) `New job' means a job created in this State at the time a new
facility or an expansion is initially staffed. The term does not include a
job created when an employee is shifted from an existing location in this
State to a new or expanded facility. The term `new job' also includes
existing jobs at a facility of an employer which are reinstated after the
employer has rebuilt the facility due to its destruction by accidental fire,
natural disaster, or act of God. Destruction for purposes of this provision
means that more than fifty percent of the facility was destroyed. The
year of reinstatement is considered to be the year of creation of the job.
All such jobs so reinstated qualify for the credit under this section, and
no comparison is required to be made between the number of full-time
jobs of the employer in the taxable year and the number of full-time jobs
of the employer with the corresponding period of the prior taxable
year.
(4) `Full-time' means a job requiring a minimum of thirty-five
hours of an employee's time a week for the entire normal year of
company operations or a job requiring a minimum of thirty-five hours of
an employee's time for a week for a year in which the employee was
hired initially for or transferred to the South Carolina facility. For the
purposes of this section, two half-time jobs are considered one full-time
job. A `half-time job' is a job requiring a minimum of twenty hours of
an employee's time a week for the entire normal year of the company's
operations or a job requiring a minimum of twenty hours of an
employee's time a week for a year in which the employee was hired
initially for or transferred to the South Carolina facility.
(5) `Manufacturing facility' means an establishment where tangible
personal property is produced or assembled.
(6) `Processing facility' means an establishment engaged in
services such as manufacturing-related, computer-related,
communication-related, energy-related, or transportation-related services,
but the term `processing facility' does not include an establishment where
retail sales of tangible personal property or services are made to retail
customers. The term also includes a business entity engaged in
processing agricultural, aquacultural, or maricultural products.
(7) `Warehousing facility' means an establishment where tangible
personal property is stored but does not include any establishment where
retail sales of tangible personal property are made to retail customers.
(8) `Distribution facility' means an establishment where shipments
of tangible personal property are processed for delivery to customers.
The term does not include an establishment where retail sales of tangible
personal property are made to retail customers on more than twelve days
a year except for a facility which processes customer sales orders by
mail, telephone, or electronic means, if the facility also processes
shipments of tangible personal property to customers and if at least
seventy-five percent of the dollar amount of goods sold through the
facility are sold to customers outside of South Carolina.
(9) `Research and development facility' means an establishment
engaged in laboratory, scientific, or experimental testing and development
related to new products, new uses for existing products, or improving
existing products. The term does not include an establishment engaged
in efficiency surveys, management studies, consumer surveys, economic
surveys, advertising, promotion, or research in connection with literary,
historical, or similar projects.
(10) `Corporate office facility' means the location where corporate
managerial, professional, technical, and administrative personnel are
domiciled and employed, and where corporate financial, personnel, legal,
technical, support services, and other business functions are handled.
Support services include, but are not limited to, claims processing, data
entry, word processing, sales order processing, and telemarketing. The
term does not include an establishment where retail sales of tangible
personal property or retail services are made to retail customers except
for a facility which processes customer sales orders by mail, telephone,
or electronic means, if the facility also processes shipments of tangible
personal property to customers and if at least seventy-five percent of the
dollar amount of goods sold through the facility are sold to customers
outside of this State.
(11) The terms `retail sales' and `tangible personal property' for
purposes of this section are defined in Chapter 36 of this title.
(12) `Tourism facility' means an establishment used for a theme
park; amusement park; historical, educational, or trade museum; botanical
garden; cultural center; theater; motion picture production studio;
convention center; arena; auditorium; or a spectator or participatory
sports facility; and similar establishments where entertainment, education,
or recreation is provided to the general public. Tourism facility also
includes new hotel and motel construction, except that to qualify for the
credits allowed by this section and regardless of the county in which the
facility is located, the number of new jobs that must be created by the
new hotel or motel is twenty or more. It does not include that portion of
an establishment where retail merchandise or retail services are sold
directly to retail customers.
(13) `Qualifying service-related facility' means (a) an establishment
engaged in an activity or activities listed under the Standard Industrial
Classification (SIC) Code 80 according to the Federal Office of
Management and Budget Standard Industrial Classification Manual, 1987
edition; or, (b) a business for which over fifty percent of the gross
receipts are from providing services, as opposed to manufacturing or
selling or dealing in tangible personal property and which creates at least
two hundred fifty jobs at a single location.
(N) The maximum aggregate credit that may be claimed in any tax
year for a single employee under this section and Section
12-6-3470(A)(1) is five thousand five hundred dollars."
B. The amendments to Section 12-6-3360 of the 1976 Code as
amended by this section are effective for taxable years beginning after
1995, and in the case of qualifying jobs created after 1995, these jobs are
not subject to a pre-existing revitalization agreement. For the purposes
of Section 12-6-3360(B)(5) of the 1976 Code as amended by this section,
the five-year period begins at the later of the date specified in Section
12-6-3360(B)(5) or the general effective date of this act. The provisions
of Section 12-10-70(1)(b) of the 1976 Code, as amended by Act 231 of
1996, relating to the transferring of jobs, continue to apply for an
affected project notwithstanding the repeal of Section 12-10-70 of the
1976 Code contained in this act.
Federal facility
SECTION 10. A. Items (1), (2), and (4) of Section 12-6-3450(A) of the
1976 Code, as added by Act 76 of 1995, are amended to read:
"(1)(a) `Applicable federal military installation' means a
federal military installation or other facility which is closed or realigned
under:
(i) The Defense Base Closure and Realignment Act of 1990;
(ii) Title II of the Defense Authorization Amendments and Base
Closure and Realignment Act; or
(iii) Section 2687 of Title 10, United States Code.
(b) `Applicable federal facility' means a federal facility that has
reduced its permanent employment by three thousand or more jobs after
December 31, 1990.
(2) `Economic impact region' means a county or municipality, any
portion of which is located within twenty-five miles of the boundaries of
an applicable federal military installation or applicable federal facility,
and any area not otherwise included as part of the economic impact
region if the Department of Commerce determines the area to be
adversely impacted by the closing or realignment of an applicable federal
military installation or applicable federal facility;
(4)(a) `Qualified wages' include, with respect to an individual, only
wages attributable to services rendered during the one year beginning
with the day the individual first works for an employer after becoming a
terminated employee.
(b) Qualified wages for a taxable year may not exceed ten
thousand dollars.
(c) Qualified wages do not include wages paid for services
performed as an employee of the federal government or an agency or
instrumentality of the federal government."
B. This section is effective for taxable years beginning after 1995.
Tax credit
SECTION 11. A. Section 12-6-3470 of the 1976 Code, as added by
Act 102 of 1995, is amended to read:
"Section 12-6-3470. (A) A taxpayer who employs a person
who received Aid to Families with Dependent Children payments within
this State for three months before becoming employed is eligible for an
income tax credit of:
(1) twenty percent of the wages paid to the employee for each full
month of employment for the first twelve months of employment;
(2) fifteen percent of the wages paid to the employee for each full
month of employment during the second twelve months of
employment;
(3) ten percent of the wages paid to the employee for each full
month during the third twelve months of employment.
The maximum aggregate credit that may be claimed in a tax year for
a single employee under this subsection and Section 12-6-3360 is five
thousand five hundred dollars.
(B) In addition to the credits provided for in subsection (A) and
Section 12-6-3360, a taxpayer who employs a person who received
AFDC payments within this State for three months before becoming
employed and employs that person to work full time in a least developed
county, as defined in Section 12-6-3360, is allowed a credit in an amount
equal to one hundred seventy-five dollars for each full month during the
first thirty-six months of employment.
(C) The income tax credit provided by subsection (A) is not allowed
unless the taxpayer also makes available full individual or participating
family health care coverage for the benefit of each qualified employee for
which the credit is earned.
(D) The Department of Social Services and the South Carolina
Employment Security Commission must make information available to
employers interested in hiring AFDC recipients and must provide
documentation to employers verifying a person's status as an AFDC
recipient. An employer shall request documentation as to AFDC
eligibility from the South Carolina Employment Security Commission in
writing within five days of employment. The commission has sixty days
in which to either issue or deny this documentation.
(E) No income tax credit provided for in subsection (A) may be
taken under this section if the position filled by the former AFDC
recipient was made available due to the termination or forced resignation
of an employee for the purpose of obtaining the tax credit. Nothing in
this section creates a private cause of action which does not otherwise
exist at law.
(F) A credit claimed under this section but not used in a taxable year
may be carried forward fifteen years from the taxable year in which the
credit is earned."
B. This section is effective for taxable years beginning after 1995.
Tax credit
SECTION 12. Article 25, Chapter 6, Title 12 of the 1976 Code is
amended by adding:
"Section 12-6-3490. (A) Any company subject to a license tax
under Section 12-20-100 may apply for a credit against its tax liability
for amounts paid in cash to provide infrastructure for a project qualifying
for income tax credits under Chapter 6 of Title 12, withholding tax
credits under Chapter 10 of Title 12, income tax credits under Chapter 14
of Title 12, and fees in lieu of property taxes under Chapter 12 of Title
4.
(B) For the purpose of this section `infrastructure' means
improvements to a building or the land for water, sewer, gas, steam,
electric energy, and communication services which are considered
necessary, suitable, or useful to a project qualifying for income tax
credits under Chapter 6 of Title 12, withholding tax credits under Chapter
10 of Title 12, income tax credits under Chapter 14 of Title 12, and fees
in lieu of property taxes under Chapter 12 of Title 4. These
improvements include, but are not limited to:
(1) improvements to both public or private water and sewer
systems;
(2) improvements to both public or private electric, natural gas,
and telecommunication systems including, but not limited to, ones owned
or leased by an electric cooperative, electrical utility, or electric supplier
as defined by Chapter 27, Title 58;
(3) fixed transportation facilities including highway, rail, water,
and air.
(C) A company is not allowed the credit provided by this section for
actual expenses it incurs in the construction and operation of electric
system improvements or building electric facilities it owns, leases,
manages, or operates.
(D) The maximum aggregate credit that may be claimed in any tax
year by a single company is three hundred thousand dollars.
(E) The credits allowed by this section may not reduce the license
tax liability of the company below zero. If the applicable credit exceeds
the liability and is otherwise deductible under subsection (D) the amount of the excess may be carried forward and deducted in the
succeeding taxable year."
Legislative intent
SECTION 13. Section 12-10-20 of the 1976 Code, as added by Act 25
of 1995, is amended by adding at the end:
"(4) The state's per capita income has not reached the United
States average and certain rural, less developed counties have not
experienced capital investment, per capita income, and job growth at a
level equal to the state's average. The economic well-being of these
areas will not be sustained without significant incentive to induce capital
investment and job creation."
Definition deleted
SECTION 14. Section 12-10-30(7) of the 1976 Code, as added by Act
25 of 1995, is amended to read:
"(7) Reserved."
Designation revised
SECTION 15. Section 12-10-40 of the 1976 Code, as last amended by
Act 145 of 1995, is further amended to read:
"Section 12-10-40. The amount of benefits available to
qualified businesses is determined by the county designation as defined in
Section 12-6-3360(B), in which the business is located."
Criteria
SECTION 16. Section 12-10-50 of the 1976 Code, as added by Act 25
of 1995, is amended to read:
"Section 12-10-50. To qualify for the benefits provided in this
chapter, a business must be located within this State and satisfy the
following criteria:
(1) it must be primarily engaged in a business of the type identified
in Section 12-6-3360;
(2) the business shall provide a benefits package to full-time
employees which includes health care;
(3) the business shall enter into a revitalization agreement which is
approved by the council, except that no revitalization agreement is
required for a qualifying business with respect to Section 12-10-80(D);
and
(4) the council shall determine that the available incentives are
appropriate for the project, and the council shall certify that the total
benefits of the project exceed the costs to the public, and that the
business otherwise fulfills the requirements of this chapter. No provision
of this chapter must be construed to allow the council to negotiate a
fee-in-lieu of property taxes agreement or approve job training or
retraining."
Job development fee
SECTION 17. A. Subsections (A) through (D) of Section 12-10-80 of
the 1976 Code, as amended by an act of 1996 bearing ratification number
234, are further amended to read:
"(A) Upon certification by the council to the department of the
council's determination that a business is a qualifying business, a
qualifying business may collect a job development fee by retaining an
amount of employee withholding permitted by subsection (B) or (D), or
both, for the purposes permitted by subsection (C) or (D), respectively.
To qualify for a job development fee, a qualifying business shall create at
least ten new, full-time jobs at the South Carolina facility described in
the revitalization agreement. A qualifying business may collect a job
development fee under the revitalization agreement for not more than
fifteen years. The amount retained is the property of the business,
subject to all of the conditions in this section including the later possible
requirement that the funds be transferred to this State as withholding and
the possible forfeiture of the funds to this State as misappropriated
withholding. The retained withholding must be maintained in an escrow
account with a bank which is insured by the Federal Deposit Insurance
Corporation. To the extent the money is not used as permitted by
subsection (C) or (D), it must be treated as misappropriated employee
withholding. Employee withholding may not be retained for purposes of
(B) and (C) with regard to any employee whose job was created in this
State before the taxable year of the qualifying business in which it enters
into a revitalization agreement. If a qualifying business retains employee
withholding under this section, it shall make its payroll books and
records available for inspection by the council and the department at the
times the council and the department request. Each qualifying business
retaining employee withholding under this section shall file with the
council and the department the information and documentation respecting
the retention and use of the employee withholding according to the
revitalization agreement. Each qualifying business which retains in
excess of ten thousand dollars in any calendar year shall furnish an
audited report prepared by an independent certified public accountant
which itemizes the sources and uses of the funds. The audited report
must be filed with the council and the department no later than June
thirtieth following the calendar year of the retention. Each qualifying
business retaining employee withholding under this section is allowed a
credit against the withholding tax liability provided in Chapter 8 of this
title otherwise owed to the State, the credit not to exceed the lesser of the
amount of such tax or the aggregate amount of employee withholding
retained. No employer may withhold an amount that results in any
employee ever receiving a smaller amount of wages on either a weekly
or on an annual basis than the employee would otherwise receive in the
absence of this chapter.
(B) The total amount retained from employee withholding by the
qualifying business may not exceed the sum of the following
amounts:
(1) two percent of the gross wages of each new employee who
earns six dollars or more an hour but less than eight dollars an hour;
(2) three percent of the gross wages of each new employee who
earns eight dollars or more an hour but less than ten dollars an hour;
(3) four percent of the gross wages of each new employee who
earns ten dollars or more an hour but less than fifteen dollars an hour;
and
(4) five percent of the gross wages of each new employee who
earns fifteen dollars or more an hour.
The hourly gross wage figures set forth in this section must be
adjusted annually by an inflation factor determined by the State Budget
and Control Board. The amount which may be retained by a qualifying
business is limited by subsection (C)(6) and the revitalization agreement.
The council may approve a waiver of ninety-five percent of the limits
under subsection (C)(6) for qualifying businesses making a significant
capital investment as defined in Section 4-12-30(D)(4) or Section
4-29-67(D)(4).
(C) Capital expenditures from the escrow account must be expended
at the above-described facility or for utility or transportation
improvements that serve this facility. The qualifying business may
expend funds from the escrow account if (a) the expenditures are
incurred during the term of the revitalization agreement or within sixty
days before the execution of a revitalization agreement, including a
preliminary revitalization agreement, (b) the expenditures from the
escrow account are authorized by the revitalization agreement, and (c) the
expenditures are for any of the following purposes:
(1) training costs and facilities;
(2) acquiring and improving real estate whether constructed or
acquired by purchase, or in cases approved by the council, acquired by
lease or otherwise;
(3) improvements to both public and private utility systems
including water, sewer, electricity, natural gas, and
telecommunications;
(4) fixed transportation facilities including highway, rail, water,
and air;
(5) construction or improvements of any real property and fixtures
constructed or improved primarily for the purpose of complying with
local, state, or federal environmental laws or regulations;
(6) the amount of job development fees a qualifying business may
retain for its use for qualifying expenditures is limited according to the
designation of the county as defined in Section 12-6-3360 as follows:
(a) one hundred percent of the maximum job development fees
may be retained by businesses located in counties designated as `least
developed';
(b) eighty-five percent of the maximum job development fees
may be retained by businesses located in counties designated as `under
developed';
(c) seventy percent of the maximum job development fees may
be retained by businesses located in counties designated as `moderately
developed'; or
(d) fifty-five percent of the maximum job development fees may
be retained by businesses located in counties designated as
`developed'.
The council shall certify to the department the maximum job
development fee for each qualifying business. After receiving
certification, the department shall remit an amount equal to the difference
between the maximum job development fee and the job development fee
actually retained to the State Rural Infrastructure Fund as defined and
provided in Section 12-10-85.
(D) Subject to the conditions in this section, any qualifying business
in this State may negotiate with the council to retain from employee
withholding an amount equal to five hundred dollars a year for each
production employee being retrained, where this retraining is necessary
for the qualifying business to remain competitive or to introduce new
technologies. This retraining must be approved by and performed by the
technical college under the jurisdiction of the State Board for Technical
and Comprehensive Education serving the designated enterprise zone.
The technical college may provide the retraining program delivery
directly or contract with other training entities to accomplish the required
training outcomes. In addition to the yearly limits, the amount retained
from employee withholding may not exceed two thousand dollars over
five years for each production employee being retrained. Additionally,
the qualifying business must match on a dollar-for-dollar basis the
amount retained from employee withholding. The total amount retained
from withholding and all of the qualifying business' matching funds must
be paid to the technical college that provides the training to defray the
cost of the training program. Any training cost in excess of the job
development fees and matching funds is the responsibility of the
qualifying business based on negotiations with the technical
college."
B. Section 12-10-80 of the 1976 Code, as last amended by an act of
1996 bearing ratification number 234, is further amended by adding at
the end:
"(H) Job development fees may not be retained by a
governmental employer who employs persons at a closed or realigned
military installation as defined in Section 12-10-85(E)."
Investment levels
SECTION 18. Section 12-10-90 of the 1976 Code, as added by Act 25
of 1995, is amended to read:
"Section 12-10-90. If a qualifying business fails to achieve the
level of capital investment or employment set forth in the revitalization
agreement, the council may terminate the revitalization agreement and
reduce or suspend all or any part of the incentives until the time the
anticipated capital investment and employment levels are met. However,
these incentives must not be suspended retroactively. The council shall
provide in the revitalization agreement entered into in connection with a
project for the levels of capital investment and employment which must
be achieved and for the time period in which the levels must be
achieved."
Definition deleted
SECTION 19. Section 12-14-30(3)(b) of the 1976 Code, as amended by
an act of 1996 bearing ratification number 234, is further amended to
read:
"(b) Reserved."
Sales tax exemptions
SECTION 20. A. Section 12-36-2120 of the 1976 Code, as amended, is
further amended by adding the following new items to be appropriately
numbered to read:
"( ) Material handling systems and material handling
equipment including, but not limited to, racks, whether or not the racks
are used to support a facility structure or part thereof, used in the
operation of a distribution facility or a manufacturing facility. In order
to qualify for this exemption, the taxpayer shall notify the department
before the first month it uses the exemption and shall invest at least forty
million dollars in any real or personal property in this State over the
five-year period beginning on the date provided by the taxpayer to the
department in its notices.
( ) Parts and supplies used by persons engaged in the business of
repairing or reconditioning aircraft owned by or leased to the federal
government or commercial air carriers. This exemption does not extend
to tools and other equipment not attached to or that do not become a part
of the aircraft."
B. The first unnumbered item added in Section 12-36-2120 of the
1976 Code by subsection A. of this section takes effect March 1, 1996.
The second unnumbered item so added takes effect on the first day of the
second month following approval by the Governor.
Property tax exemption
SECTION 21. Section 12-37-220(B)(33) of the 1976 Code, as last
amended by Act 181 of 1993, is further amended to read:
"(33) All personal property including aircraft of an air carrier
which operates an air carrier hub terminal facility in this State for a
period of ten consecutive years from the date of qualification, if its
qualifications are maintained. An air carrier hub terminal facility is
defined in Section 55-11-500."
Job Development fees
SECTION 22. Notwithstanding any other provision of law, Section
12-10-80(A) of the 1976 Code, job development fees may be retained for
employees hired after December 31, 1995, if the qualified business
qualifies under Section 4-12-30(D)(4) of the 1976 Code or Section
4-29-67(D)(4) of the 1976 Code and enters into a revitalization
agreement applying to these employees before August 1, 1996.
Special purpose bonds
SECTION 23. Section 4-29-68(A)(2) of the 1976 Code, as last
amended by Act 125 of 1995, is further amended to read:
"(2) The bonds are issued solely for the purpose of paying the
cost of designing, acquiring, constructing, improving, or expanding the
infrastructure serving the issuer and for improved or unimproved real
estate used in the operation of a manufacturing or commercial enterprise
in order to enhance the economic development of the issuer and costs of
issuance of the bonds. Bonds issued pursuant to this section to finance
the acquisition of real or personal property may be additionally secured
by a mortgage of that real or personal property."
Temporary permits
SECTION 24. A. Section 61-9-312 of the 1976 Code, as amended by
Section 75A, Part II, Act 145 of 1995, is further amended to read:
"Section 61-9-312. (A) In counties or municipalities where
temporary permits are authorized to be issued pursuant to Section
61-5-180, in lieu of the retail permit fee required pursuant to Section
61-9-310, a retail dealer otherwise eligible for the retail permit under that
section may elect to apply for a special version of that permit which
allows sales for off-premises consumption without regard to the
restrictions on the days or hours of sales provided in Sections 61-9-90,
61-9-100, 61-9-110, and 61-9-130. The annual fee for this special retail
permit is one thousand dollars.
(B) Revenue generated by the fees must be credited to the general
fund of the State except that revenue generated by the fees within a
county where a federal military base or installation has been closed, or is
designated to be closed and where the federal facility has reduced its
permanent civilian employment by seven hundred fifty or more jobs after
December 31, 1990, for a period of ten years after the effective date of
Chapter 12 of Title 31, must be credited to a special separate and distinct
account with the Budget and Control Board for support of a
redevelopment authority created therein pursuant to Chapter 12 of Title
31. All other requirements for retail permits provided in Section
61-9-310 apply to the special permits authorized by this section.
(C) (1) Immediately following the dissolution of a redevelopment
authority pursuant to Section 31-12-100(A), the fees distributed to the
dissolved redevelopment authority pursuant to subsection (B) must be
distributed to the municipality or county in which the retailer who paid
the fee is located. The revenue may only be used by the municipality or
county for the following purposes:
(a) capital improvements to tourism-related buildings
including, but not limited to, civic centers, convention centers, coliseums,
aquariums, stadiums, marinas, parks, and recreational facilities;
(b) purchase or renovation of buildings which are historic
properties as defined in Section 60-12-10(4) and (5);
(c) festivals which have a demonstrable and significant impact
on tourism;
(d) acquiring fee and less than fee interest in land while it is
still available to be held in perpetuity as wildlife preserves or believed to
be needed by the public in the future for active and passive recreation
uses and scenic easements, to include the following types of land: ocean,
harbor, and pond frontage in the form of beaches, dunes, and adjoining
backlands; barrier beaches; fresh and saltwater marshes and adjoining
uplands; land for bicycle paths; land protecting existing and future; public
water supply, well fields, highway buffering and aquifer recharge areas;
and land for wildlife preserves; and land for future public recreational
facilities;
(e) nourishment, renourishment (resanding) and maintenance
of beaches;
(f) dune restoration, including the planting of grass, sea oats, or
other vegetation useful in preserving the dune system;
(g) maintenance of public beach access;
(h) capital improvements to the beaches and beach related
facilities, such as public parking areas for beach access; dune walkovers
and rest room facilities, with or without changing rooms, at public beach
parks; and
(i) construction and maintenance of drainage systems.
(2) The revenue may not be used for operating expenses of
tourism-related buildings."
B. Section 61-5-180 of the 1976 Code, as last amended by Section
1584 of Act 181 of 1993, is further amended to read:
"Section 61-5-180. (A) In addition to the provisions of
Section 61-5-85, the department may issue a temporary permit to allow
the possession, sale, and consumption of alcoholic liquors in sealed
containers of two ounces or less. This permit is valid for a period not to
exceed twenty-four hours and may be issued only to bona fide nonprofit
organizations and business establishments otherwise authorized to be
licensed for sales. The department shall charge a nonrefundable filing
fee of one hundred dollars for processing each application and a daily
permit fee of fifty dollars for each day for which a permit is approved.
An application must be filed for each permit requested. The department
in its sole discretion shall specify the terms and conditions of the
permit.
(B) (1) The permit fees must be distributed to the municipality or
county in which the retailer who paid the fee is located. The revenue may
only be used by the municipality or county for the following
purposes:
(a) capital improvements to tourism-related buildings
including, but not limited to, civic centers, convention centers, coliseums,
aquariums, stadiums, marinas, parks, and recreational facilities;
(b) purchase or renovation of buildings which are historic
properties as defined in Section 60-12-10(4) and (5);
(c) festivals which have a demonstrable and significant impact
on tourism;
(d) local youth mentor programs to serve juvenile offenders
under the jurisdiction of the family court;
(e) contributions to matching funds necessary for a local
government or entity to receive funding from the Legacy Trust Fund
pursuant to Chapter 22 of Title 51;
(f) contributions to a redevelopment authority pursuant to
Section 31-12-10, et seq.
(g) acquiring fee and less than fee interest in land while it is
still available to be held in perpetuity as wildlife preserves or believed to
be needed by the public in the future for active and passive recreation
uses and scenic easements, to include the following types of land: ocean,
harbor, and pond frontage in the form of beaches, dunes, and adjoining
backlands; barrier beaches; fresh and saltwater marshes and adjoining
uplands; land for bicycle paths; land protecting existing and future; public
water supply, well fields, highway buffering and aquifer recharge areas;
and land for wildlife preserves; and land for future public recreational
facilities;
(h) nourishment, renourishment (resanding) and maintenance
of beaches;
(i) dune restoration, including the planting of grass, sea oats, or
other vegetation useful in preserving the dune system;
(j) maintenance of public beach access;
(k) capital improvements to the beaches and beach related
facilities, such as public parking areas for beach access; dune walkovers
and rest room facilities, with or without changing rooms, at public beach
parks; and
(l) construction and maintenance of drainage systems.
(2) The revenue may not be used for operating expenses of
tourism-related buildings.
(C) Permits authorized by this section may be issued only in those
counties or municipalities where a majority of the qualified electors
voting in a referendum vote in favor of the issuance of the permits. The
county or municipal election commission, as the case may be, shall
conduct a referendum upon petition of at least ten percent but not more
than twenty-five hundred qualified electors of the county or municipality,
as the case may be, in not less than thirty nor more than forty days after
receiving the petition. The election commission shall cause a notice to
be published in a newspaper circulated in the county or municipality, as
the case may be, at least seven days before the referendum. The state
election laws shall apply to the referendum, mutatis mutandis. The
election commission shall publish the results of the referendum and
certify them to the South Carolina Department of Revenue and Taxation.
The question on the ballot shall read substantially as follows:
`Shall the South Carolina Department of Revenue and Taxation be
authorized to issue temporary permits in this (county)(municipality) for a
period not to exceed twenty-four hours to allow the possession, sale, and
consumption of alcoholic liquors in sealed containers of two ounces or
less to bona fide nonprofit organizations and business establishments
otherwise authorized to be licensed for sales?'
A referendum for this purpose may not be held more often than once
in forty-eight months.
The expenses of any such referendum must be paid by the county or
municipality conducting the referendum."
C. In a county in which temporary permits may be issued pursuant to
Section 61-5-180, revenue generated by the fees imposed under that
section within a county where a federal military base or installation has
been closed, or is designated to be closed and where the federal facility
has reduced its permanent civilian employment by seven hundred fifty or
more jobs, but not more than two thousand nine hundred ninety-nine
jobs, after December 31, 1990, for a period of five years beginning July
1, 1997, must be credited to a special separate and distinct account with
the Budget and Control Board for support of a redevelopment authority
created therein pursuant to Chapter 12 of Title 31.
D. This section is effective for property tax years beginning after
1996.
Repeal
SECTION 25. Section 12-10-70 of the 1976 Code is repealed.
Time effective
SECTION 26. Except where otherwise specifically provided in this act,
this act is effective upon approval by the Governor. In determining
qualification for benefits available to a taxpayer, taxpayers entering into
revitalization agreements on or before December 31, 1996, may elect
to:
(1) use Sections 12-10-10 through 12-10-90 of the 1976 Code as
they existed prior to amendment by this act; or
(2) use the provisions of this act.
However, regardless of the election made by the taxpayer under this
section, all contracts with schools made pursuant to Section 12-10-80(D)
of the 1976 Code after the effective date of this act will be governed by
this act. Taxpayers entering into revitalization agreements on or after
January 1, 1997, will be governed by this act.
Approved the 2nd day of July, 1996. |