S 547 Session 112 (1997-1998)
S 0547 General Bill, By Matthews, Patterson and Washington
A BILL TO AMEND TITLE 34 OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING
TO BANKING, FINANCIAL INSTITUTIONS, AND MONEY, BY ADDING CHAPTER 30 SO AS TO
CREATE THE SOUTH CAROLINA COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS
COMMISSION, WHICH SHALL EXIST FOR THE PURPOSE OF CERTIFYING ENTITIES AS
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS, TO PROVIDE FOR THE APPOINTMENT
OF COMMISSION MEMBERS AND THE OPERATION OF THE COMMISSION, AND TO PROVIDE A
DEFINITION FOR COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION; AND TO AMEND
ARTICLE 10, CHAPTER 7, TITLE 12 OF THE 1976 CODE, RELATING TO INCOME TAX
CREDITS, BY ADDING SECTION 12-7-1255 SO AS TO PROVIDE A TAX CREDIT EQUAL TO
FIFTY PERCENT OF A TAXPAYER'S INVESTMENT IN A COMMUNITY DEVELOPMENT FINANCIAL
INSTITUTION, UP TO A MAXIMUM OF TEN MILLION DOLLARS FOR ALL TAXPAYERS FOR ALL
TAXABLE YEARS.
03/19/97 Senate Introduced and read first time SJ-5
03/19/97 Senate Referred to Committee on Banking and Insurance SJ-5
04/24/97 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-20
04/29/97 Senate Amended SJ-35
04/29/97 Senate Read second time SJ-35
04/29/97 Senate Ordered to third reading with notice of
amendments SJ-35
04/30/97 Senate Read third time and sent to House SJ-26
05/01/97 House Introduced and read first time HJ-13
05/01/97 House Referred to Committee on Ways and Means HJ-14
04/23/98 House Committee report: Majority favorable with amend.,
minority unfavorable Ways and Means HJ-48
04/29/98 House Debate adjourned until Thursday, April 30, 1998 HJ-51
05/06/98 House Debate adjourned until Thursday, May 7, 1998 HJ-24
05/07/98 House Recommitted to Committee on Ways and Means HJ-23
COMMITTEE REPORT
April 23, 1998
S. 547
Introduced by Senators Matthews, Patterson and
Washington
S. Printed 4/23/98--H.
Read the first time May 1, 1997.
THE COMMITTEE ON WAYS AND MEANS
To whom was referred a Bill (S. 547), to amend Title 34 of the
Code of Laws of South Carolina, 1976, relating to banking, financial
institutions, and money, by adding Chapter 30, etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking all after the enacting
words and inserting:
/SECTION 1. The General Assembly finds that:
(1) Many of South Carolina's urban and rural communities face
critical social and economic problems arising in part from the lack of
economic growth, people living in poverty, and the lack of
employment and other opportunities.
(2) The restoration and maintenance of these communities will
require increased access to credit and capital for development
activities, including investment in businesses, housing, human
development, and other activities that promote the long-term
economic and social viability of the community.
(3) Access to credit and capital is essential to unleash the untapped
entrepreneurial energy of South Carolina's poorest communities and
to empower individuals and communities to become self-sufficient.
(4) Community development financial institutions have proven
their ability to identify and respond to community needs for capital,
credit, and development services in the absence of, or as a
complement to, services provided by other lenders.
(5) Community development corporations have proven their
ability to identify and respond to community needs and manage
community assets for the purpose of community and economic
development on a local level.
(6) For the above reasons, it has determined to enact the
provisions of this act as being consistent with many public policy
objectives of our State including economic growth, higher
employment, and community development.
SECTION 2. Title 34 of the 1976 Code is amended by adding:
"CHAPTER 38
South Carolina Community Development
Corporations and Financial
Institutions Commission
Section 34-38-10. (A) There is created a South Carolina
Community Development Corporations and Financial Institutions
Commission. The commission shall exist for the purpose of
certifying entities as community development financial institutions,
as defined in Section 34-38-40, and as community development
corporations, as defined in Section 34-38-50. The commission also
may make grants and loans to community development financial
institutions and community development corporations from grant
funds made available to it by the General Assembly or from other
available funds. The General Assembly may appropriate funds to the
commission to be used to make grants and loans to community
development financial institutions and community development
corporations as authorized herein. The General Assembly may also
provide funds in the annual general appropriation act to be used to
pay salaries, employee benefits, and administrative expenses of the
commission.
(B) In addition to any other powers set forth in this chapter, the
commission may:
(1) promulgate regulations necessary to carry out its functions;
(2) contract for and accept, for use in carrying out the
provisions of this chapter, any grant or contribution of funds from
any political subdivision of the State or from any other source and
comply, subject to the provisions of this chapter, with the terms and
conditions thereof; and
(3) do anything necessary or convenient to carry out its powers
and functions.
(C) The commission may receive funds from, among other
sources, state appropriations and private contributions.
Section 34-38-20. (A) The governing body of the commission
shall consist of the following seven members which shall be
representative of the diverse ethnic population of the State:
(1) a chairman, representing a federally-chartered or
state-chartered financial institution doing business in this State, who
must be appointed by the Governor;
(2) the Secretary of Commerce, or his designee;
(3) three members representing the community economic
development industry as described by the National Congress for
Community Economic Development appointed by the Governor;
(4) two members representing federally-chartered or
state-chartered financial institutions or other business entities doing
business in this State, other than the institution represented by the
chairman, who must be appointed by the Governor.
(B) Commission members shall serve terms of four years and until
their successors are appointed and qualify.
(C) A member who is appointed to fill a vacancy on the
commission shall serve only for the remainder of the unexpired term
and until a successor is appointed and qualifies.
(D) The commission shall cease to exist on July 1, 2003, unless
further authorized by the General Assembly.
Section 34-38-30. (A) Four appointed members of the
commission are a quorum. However, the commission may not act on
any matter unless at least four members in attendance concur.
(B) The commission shall determine the times and places of its
meetings.
(C) Members of the commission, while serving on business of the
commission, shall receive, to the extent funding is available, per
diem, mileage, and subsistence as provided by law for members of
state boards, committees, and commissions.
(D) The commission may, to the extent funding is available,
employ or contract for such staff and consultants as it deems
necessary to assist in carrying out its duties and responsibilities under
this chapter.
(E) In its internal functions, the commission shall keep proper
records of its accounts and follow the procedures of this State that
govern the purchase of office space, supplies, facilities, materials,
equipment, and professional services. The commission must be
audited by the State Auditor as provided in Chapter 7 of Title 11.
(F) The commission shall make an annual report on its condition
and operations to the General Assembly and the Governor, including
the information required to be reported by Section 34-38-80.
Section 34-38-40. (A) The commission may certify an entity as
a community development financial institution if it meets the
definition provided in subsection (B).
(B) For purposes of this section:
(1) 'Community development financial institution' means an
organization that:
(a) has a primary mission of promoting community
development through the provision of credit, capital, or development
services to small businesses or home mortgage assistance to
individuals, including, but not limited to, the provision of capital
access programs, microlending, franchise financing, and guaranty
performance bonds;
(b) provides service delivery throughout the State;
(c) maintains through representation on its governing board
accountability to persons in need of the institution's services;
(d) is not an agent or instrumentality of the United States, or
of any state or political subdivision of a state or maintains an affiliate
relationship with the above;
(e) maintains a goal of providing a majority of its services to
low-income individuals, minorities, females, or rural areas;
(f) provides capital and technical assistance to small and
micro businesses, or mortgage assistance to individuals;
(g) does not provide credit, capital, or other assistance in an
amount greater than two hundred fifty thousand dollars at any one
time or in any one transaction. The dollar amount referenced in this
subitem shall be adjusted from time to time in the same manner as
provided in Section 37-1-109; and
(h) has been certified or recertified as a community
development financial institution as provided in this chapter.
(2) 'Low-income' means an income level which falls within the
eightieth percentile of the mean income for a family of four within
this State.
(3) The term 'invest' includes any advance of funds to a
community development financial institution whether by purchase of
stock or other equity interest or by charitable contribution.
(C) Banks and financial institutions chartered by the State of South
Carolina are authorized to invest in community development
financial institutions incorporated under the laws of this State, up to
a maximum of ten percent of a chartered bank or financial
institution's total capital and surplus.
(D) A federally-chartered or state-chartered financial institution
holding company may qualify as a community development financial
institution only if the holding company and the subsidiaries and
affiliates of the holding company collectively satisfy the requirements
of subsection (B).
(E) A community development financial institution shall not be
subject to any taxes based upon or measured by income which are
now or may be hereafter levied by the State.
Section 34-38-50. (A) The commission may certify an entity as a
community development corporation if it meets the definition
provided in subsection (B).
(B) For purposes of this section:
(1) 'Community development corporation' means a nonprofit
corporation:
(a) chartered pursuant to Chapter 31, Title 33;
(b) tax-exempt pursuant to Section 501(c)(3) of the Internal
Revenue Code of 1986;
(c) which has a primary mission of developing and improving
low-income communities and neighborhoods through economic and
related development;
(d) the activities and decisions of which are initiated,
managed, and controlled by the constituents of those local
communities;
(e) which has a primary function of developing projects and
activities designed to enhance the economic opportunities of the
people in the community served, including efforts to enable them to
become owners and managers of small businesses, and producers of
affordable housing and jobs in the community served; and
(f) which does not provide credit, capital, or other assistance
from public funds in an amount greater than twenty-five thousand
dollars at any one time or in any one transaction. The commission
shall adjust the dollar amount referenced in this item from time to
time in the same manner as provided in Section 37-1-109 .
The term 'community development corporation' does not include a
nonprofit organization which has a sole purpose of providing
housing to neighborhoods or technical assistance to other nonprofit
organizations.
(2) The term 'invest' includes an advance of funds to a
community development corporation whether by charitable
contributions, purchase of stock, or other equity interest.
(3) The term 'low-income' means an income level which falls
within the eightieth percentile of the mean income for a family of
four within this State.
(C) The commission shall establish and implement criteria for
grants made to community development corporations pursuant to
Section 34-38-10. The criteria shall include a requirement that the
applicant has demonstrated a capacity to engage in community
development projects and has sufficient organizational structure to
ensure proper management. However, if the applicant is created after
the effective date of this section, the applicant shall present a strategic
plan for community development projects and shall show evidence
of developing an organizational structure which ensures proper
management.
(D) The commission shall contract with an appropriate entity or the
South Carolina Association of Community Development
Corporations to provide technical support to assist community
development corporations served under this section to be successful
in developing their organizational capacity and implementing their
projects.
(E) The commission shall make an annual report to the General
Assembly regarding grants made pursuant to this section. The report
required by this subsection may be included with the report required
by Section 34-38-30.
Section 34-38-60. (A) Application for certification shall be in
writing under oath and in the form prescribed by the commission.
The application shall contain such information as the commission
may require, including the names and addresses of the partners,
officers, directors or trustees, and such of the principal owners or
members as will provide the basis for investigations and findings
contemplated by subsection (B). At the time of making such
application, the applicant shall pay to the commission a fee for
investigating the application, as prescribed by the commission, which
will yield sufficient revenue to defray the commission's costs of
investigating the applicant.
(B) Upon the filing of the application and payment of the fees, the
commission shall investigate the facts concerning the application and
the requirements provided for in either Section 34-38-40 or in Section
34-38-50, as the case may be.
Section 34-38-70. (A) Certification of a community development
financial institution or a community development corporation shall
expire two years from the date of certification.
(B) Certification of a community development financial institution
or a community development corporation may be renewed for
additional two-year periods upon application by the institution or
corporation and approval by the commission.
(C) The commission shall not renew certification of an institution
or corporation unless it continues to comply with the regulations of
the commission and provisions of Section 34-38-40 or Section
34-38-50.
(D) The commission may revoke the certification of an institution
or corporation upon a finding that the institution or corporation does
not comply with the provisions of Section 34-38-40 or Section
34-38-50.
(E) The commission shall serve a notice of intent not to grant
certification, intent not to renew certification, or intent to revoke
certification upon the institution or corporation with a brief statement
of the reasons alleged. The institution or corporation may request a
hearing within thirty days of receiving notice by filing a request for
a hearing with the commission. The hearing must be held in
accordance with Article 3, Chapter 23, Title 1, the Administrative
Procedures Act.
(F) No taxpayer may claim the tax credit provided for in Section
12-6-3510 unless the institution or corporation in which the
investment is made is certified by the commission at the time the
investment is made. A taxpayer who invested in good faith in a
certified institution or corporation may claim the credit provided in
Section 12-6-3510 notwithstanding the fact that the certification is
subsequently revoked or not renewed by the commission.
Section 34-38-80. Each year, every community development
financial institution shall file with the commission, on or before the
anniversary date of its certification, a report for the preceding
calendar year. The report shall give information with respect to the
financial condition of the institution, and shall include balance sheets
at the beginning and end of the accounting period, a statement of
income and expenses for the period, a reconciliation of surplus with
the balance sheets, a schedule of assets used and useful by the
institution to conduct its business, an analysis of charges, size and
type of loans and other activities described in Section
34-38-40(B)(1)(a), and such other relevant information in form and
detail as the commission may prescribe. Such report shall be made
under oath and shall be in the form prescribed by the commission
which shall make and publish annually an analysis and recapitulation
of such reports for inclusion in its annual report to the Governor and
General Assembly as provided in Section 34-38-30(F)."
SECTION 3. Article 25, Chapter 6, Title 12 of the 1976 Code
is amended by adding:
"Section 12-6-3510. (A) A taxpayer may claim as a credit
against his state income tax, bank tax, or premium tax liability
thirty-three percent of all amounts invested in a community
development financial institution, as defined in Section 34-38-40, or
in a community development corporation, as defined in Section
34-38-50.
To qualify for this credit the taxpayer must obtain a certificate from
the South Carolina Community Development Corporations and
Financial Institutions Commission certifying that the entity into
which such funds are invested is a community development financial
institution within the meaning of Section 34-38-40 or a community
development corporation within the meaning of Section 34-38-50
and certifying that the credit taken or available to that taxpayer will
not exceed the aggregate ten million dollar limitation of all such
credits as provided in subsection (B) when added to the credits
previously taken or available to other taxpayers making similar
investments.
(B) The total amount of credits allowed under this section may not
exceed in the aggregate ten million dollars for all taxpayers and all
taxable years. The total amount of credits allowed for investments in
community development financial institutions may not exceed in the
aggregate nine million dollars for all taxpayers and all taxable years.
The total amount of credits allowed for investments in community
development corporations may not exceed in the aggregate one
million dollars for all taxpayers and all taxable years. The credit must
be allowed to taxpayers in the order of the time of the making of the
qualified investments in community development financial
institutions and community development corporations.
The commission shall monitor the investments made by taxpayers
in community development financial institutions and community
development corporations as permitted by this section and shall
perform the functions relating thereto as provided in subsection (A)
above.
(C) If the amount of the credit determined under subsection (A)
exceeds the taxpayer's state tax liability for the applicable taxable
year, then the taxpayer may carry the excess over to the immediately
succeeding taxable years. However, the credit carryover may not be
used for any taxable year that begins on or after ten years from the
date of the qualified investment. The amount of the credit carryover
from a taxable year must be reduced to the extent that the carryover
is used by the taxpayer to obtain a credit under this chapter for any
subsequent taxable year.
(D) Notwithstanding the provisions of subsections (A), (B), and
(C) above, if on April 1, 1999, or as soon thereafter as the
commission is able to determine, the total amount of tax credits
which may be claimed by all taxpayers exceeds the total amount of
tax credits authorized by this section, then the credits must be
determined on a pro rata basis. For purposes of this subsection, any
community development financial institution or community
development corporation for which an investment may be claimed as
a tax credit under this section must report all investments made prior
to April 1, 1999, to the commission by April 1, 1999, which shall, as
soon as reasonably possible, inform all community development
financial institutions and community development corporations of the
total of all investments in all institutions and corporations as of April
1, 1999.
(E) If a qualified investment which is the basis for a credit under
this section is redeemed by a taxpayer within five years of the date
it is purchased, the credit provided by this section for the qualified
investment is disallowed, and any credit previously claimed and
allowed with respect to the qualified investment so redeemed must be
paid to the Department of Revenue with the appropriate return of the
taxpayer covering the period in which the redemption occurred.
When payments are made to the Department of Revenue under this
section, the amount collected must be handled in the same manner as
if no credit had been allowed.
(F) To receive the credit provided by this section, a taxpayer shall:
(1) claim the credit on the taxpayer's annual state income or
premium tax return in the manner prescribed by the Department of
Revenue; and
(2) file with the Department of Revenue and with the taxpayer's
annual state income or premium tax return a copy of the form issued
by the commission as to the qualified investment by the taxpayer,
which includes an undertaking by the taxpayer to report to the
Department of Revenue any redemption of the qualified investment.
(G) The commission shall complete forms prescribed by the
Department of Revenue which must show as to each qualified
investment in a community development financial institution or a
community development corporation:
(1) the name, address, and identification number of the taxpayer
who purchased a qualified investment; and
(2) the nature of the qualified investment purchased by the
taxpayer and the amount paid for it.
These forms must be filed with the Department of Revenue on or
before the fifteenth day of the third month following the month in
which the qualified investment is purchased. Copies of the forms to
be provided to the Department of Revenue must be mailed to the
taxpayer on or before the fifteenth day of the second month following
the month in which the qualified investment is purchased.
(H) No taxpayer may claim the tax credit provided in this section
unless the community development financial institution or
community development corporation in which the investment is made
has been certified at the time the investment is made. A taxpayer
who invested in good faith in a certified institution or corporation
may claim the credit provided in this section, notwithstanding the
fact that the certification is subsequently revoked or not renewed by
the commission.
(I) If the community development financial institution in which
the investment is made is a tax-exempt nonprofit corporation, the tax
credit provided in this section shall not be allowed if the taxpayer
claims the investment as a deduction under Section 170 of the
Internal Revenue Code.
(J) The total amount of credits which may be allowed by the
Department of Revenue shall not exceed one million five hundred
thousand dollars in a community development financial institution for
fiscal year 1999-2000 and each fiscal year after that until the total
aggregate amount of nine million dollars is reached. The total
amount of credits which may be allowed by the Department of
Revenue shall not exceed five hundred thousand dollars in a
community development corporation for fiscal year 1999-2000 and
each fiscal year after that until the total aggregate amount of one
million dollars is reached. Any credit which is disallowed because
of this subsection may be carried forward as provided in this
section."
SECTION 4. This act takes effect upon approval of the
Governor, except that Section 3 applies to tax years beginning after
1998./
Amend title to conform.
Majority favorable. Minority unfavorable.
HENRY E. BROWN, JR. LARRY L. KOON
For Majority. For Minority.
STATEMENT OF ESTIMATED FISCAL
IMPACT
ESTIMATED FISCAL IMPACT ON GENERAL FUND
IS:
An Additional Cost to the General Fund of the State as Shown Below
The Department of Commerce estimates the cost to implement the
new "Community Development Corporation Grant and Loan
Program" to be approximately $2,081,000. The cost includes
$2,000,000 for the grant/revolving loan fund assuming the issuance
of 80 loans/grants averaging $25,000 each. The fund would need to
be replenished every few years as failures occur and loans are written
off. To administer a program of this size, an economic development
manager III at a salary of $45,700 and an administrative assistant at
a salary of $25,300, including fringes, and approximately $10,000 for
operating costs would be required. A larger program would require
additional staff.
Approved By:
Michael L. Shealy
Office of State Budget
STATEMENT OF ESTIMATED FISCAL
IMPACT
This bill would reduce general fund revenue by $5 million in
FY1999-00 and $5 million in FY2000-01.
This bill would create the South Carolina Community
Development Corporations and Financial Institutions Commission
which would make grants and loans to community development
financial institutions and community financial corporations from
grant funds made available to it by the General Assembly, private
investors, or other available funds. This bill would allow a private
investor to claim a credit against state income tax, bank tax, or
premium tax liability of fifty percent of all amounts invested in a
community development financial institution or in a community
development corporation. The total amount of the credits may not
exceed $5 million in FY1999-00 and is limited to a total of $10
million for all taxpayers and all taxable years, and may be carried
forward up to ten years. Based on past experience with existing
credits, it is anticipated that the full amount of available credits will
be used. This bill applies to tax years beginning after 1998, and
would reduce general fund income, bank, and premium tax revenue
by $5 million in FY1999-00 and $5 million in FY2000-01.
Approved By:
William C. Gillespie
Board of Economic Advisors
A BILL
TO AMEND TITLE 34 OF THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO BANKING, FINANCIAL
INSTITUTIONS, AND MONEY, BY ADDING CHAPTER 30 SO
AS TO CREATE THE SOUTH CAROLINA COMMUNITY
DEVELOPMENT FINANCIAL INSTITUTIONS COMMISSION,
WHICH SHALL EXIST FOR THE PURPOSE OF CERTIFYING
ENTITIES AS COMMUNITY DEVELOPMENT FINANCIAL
INSTITUTIONS, TO PROVIDE FOR THE APPOINTMENT OF
COMMISSION MEMBERS AND THE OPERATION OF THE
COMMISSION, AND TO PROVIDE A DEFINITION FOR
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION;
AND TO AMEND ARTICLE 10, CHAPTER 7, TITLE 12 OF THE
1976 CODE, RELATING TO INCOME TAX CREDITS, BY
ADDING SECTION 12-7-1255 SO AS TO PROVIDE A TAX
CREDIT EQUAL TO FIFTY PERCENT OF A TAXPAYER'S
INVESTMENT IN A COMMUNITY DEVELOPMENT
FINANCIAL INSTITUTION, UP TO A MAXIMUM OF TEN
MILLION DOLLARS FOR ALL TAXPAYERS FOR ALL
TAXABLE YEARS.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. The General Assembly finds that:
(1) Many of South Carolina's urban and rural communities face
critical social and economic problems arising in part from the lack of
economic growth, people living in poverty, and the lack of
employment and other opportunities.
(2) The restoration and maintenance of these communities will
require increased access to credit and capital for development
activities, including investment in businesses, housing, human
development, and other activities that promote the long-term
economic and social viability of the community.
(3) Access to credit and capital is essential to unleash the untapped
entrepreneurial energy of South Carolina's poorest communities and
to empower individuals and communities to become self-sufficient.
(4) Community development financial institutions have proven
their ability to identify and respond to community needs for capital,
credit, and development services in the absence of, or as a
complement to, services provided by other lenders.
(5) For the above reasons, it has determined to enact the
provisions of this act as being consistent with many public policy
objectives of our State including economic growth, higher
employment, and community development.
SECTION 2. Title 34 of the 1976 Code is amended by adding:
"CHAPTER 38
South Carolina Community Development
Financial Institutions Commission
Section 34-30-10. (A) There is created a South Carolina
Community Development Financial Institutions Commission. The
commission shall exist for the purpose of certifying entities as
community development financial institutions, as defined in Section
34-30-40, and as community development corporations, as defined
in Section 34-30-50. The commission also may make grants to
community development financial institutions and community
development corporations from grant funds made available to it by
the General Assembly or from other available funds. The General
Assembly may appropriate funds to the commission to be used to
make grants to community development financial institutions and
community development corporations as authorized herein. The
General Assembly may also provide funds in the annual general
appropriation act to be used to pay salaries, employee benefits, and
administrative expenses of the commission.
(B) In addition to any other powers set forth in this chapter, the
commission may:
(1) promulgate regulations necessary to carry out its functions;
(2) contract for and accept, for use in carrying out the
provisions of this chapter, any grant or contribution of funds from
any political subdivision of the State or from any other source and
comply, subject to the provisions of this chapter, with the terms and
conditions thereof; and
(3) do anything necessary or convenient to carry out its powers
and functions.
(C) The commission may receive funds from, among other
sources, state appropriations and private contributions.
Section 34-30-20. (A) The governing body of the commission
shall consist of the following seven members which shall be
representative of the diverse ethnic population of the State:
(1) a chairman, representing a federally-chartered or
state-chartered financial institution doing business in this State, who
must be appointed by the Governor, with the advice and consent of
the Senate;
(2) the Secretary of Commerce, or his designee;
(3) three members appointed by the Governor, with the advice
and consent of the Senate;
(4) two members representing federally-chartered or
state-chartered financial institutions or other business entities doing
business in this State, other than the institution represented by the
chairman, who must be appointed by the Governor, with the advice
and consent of the Senate.
(B) Commission members shall serve terms of four years and until
their successors are appointed and qualify.
(C) A member who is appointed to fill a vacancy on the
commission shall serve only for the remainder of the unexpired term
and until a successor is appointed and qualifies.
(D) The commission shall cease to exist on July 1, 2003, unless
further authorized by the General Assembly.
Section 34-30-30. (A) Four appointed members of the
commission are a quorum. However, the commission may not act on
any matter unless at least four members in attendance concur.
(B) The commission shall determine the times and places of its
meetings.
(C) Members of the commission, while serving on business of the
commission, shall receive, to the extent funding is available, per
diem, mileage, and subsistence as provided by law for members of
state boards, committees, and commissions.
(D) The commission may, to the extent funding is available,
employ or contract for such staff and consultants as it deems
necessary to assist in carrying out its duties and responsibilities under
this chapter.
(E) In its internal functions, the commission shall keep proper
records of its accounts and follow the procedures of this State that
govern the purchase of office space, supplies, facilities, materials,
equipment, and professional services. The commission must be
audited by the State Auditor as provided in Chapter 7 of Title 11.
(F) The commission shall make an annual report on its condition
and operations to the General Assembly and the Governor, including
the information required to be reported by Section 34-30-80.
Section 34-30-40. (A) The commission may certify an entity as
a community development financial institution if it meets the
definition provided in subsection (B).
(B) For purposes of this section:
(1) `Community development financial institution' means an
organization that:
(a) has a primary mission of promoting community
development through the provision of credit, capital, or development
services to small businesses or home mortgage assistance to
individuals, including, but not limited to, the provision of capital
access programs, microlending, franchise financing, and guaranty
performance bonds;
(b) provides service delivery throughout the State;
(c) maintains through representation on its governing board
accountability to persons in need of the institution's services;
(d) is not an agent or instrumentality of the United States, or
of any state or political subdivision of a state or maintains an affiliate
relationship with the above;
(e) maintains a goal of providing a majority of its services to
low-income individuals, minorities, females, or rural areas;
(f) provides capital and technical assistance to small and
micro businesses, or mortgage assistance to individuals;
(g) does not provide credit, capital, or other assistance in an
amount greater than two hundred fifty thousand dollars at any one
time or in any one transaction. The dollar amount referenced in this
subitem shall be adjusted from time to time in the same manner as
provided in Section 37-1-109; and
(h) has been certified or recertified as a community
development financial institution as provided in this chapter.
(2) `Low-income' means individuals whose income level falls
within the eightieth percentile of the mean income for a family of
four within this State.
(3) The term `invest' includes any advance of funds to a
community development financial institution whether by purchase of
stock or other equity interest or by charitable contribution.
(C) Banks and financial institutions chartered by the State of South
Carolina are authorized to invest in community development
financial institutions incorporated under the laws of this State, up to
a maximum of ten percent of a chartered bank or financial
institution's total capital and surplus.
(D) A federally-chartered or state-chartered financial institution
holding company may qualify as a community development financial
institution only if the holding company and the subsidiaries and
affiliates of the holding company collectively satisfy the requirements
of subsection (B).
(E) A community development financial institution shall not be
subject to any taxes based upon or measured by income which are
now or may be hereafter levied by the State.
Section 34-30-50. (A) The commission may certify an entity as a
community development corporation if it meets the definition
provided in subsection (B).
(B) `Community development corporation' means a nonprofit
corporation:
(1) chartered pursuant to Chapter 31, Title 33;
(2) tax-exempt pursuant to Section 501(c)(3) of the Internal
Revenue Code of 1986;
(3) which has a primary mission of developing and improving
low-income communities and neighborhoods through economic and
related development;
(4) the activities and decisions of which are initiated, managed,
and controlled by the constituents of those local communities;
(5) which has a primary function of developing projects and
activities designed to enhance the economic opportunities of the
people in the community served, including efforts to enable them to
become owners and managers of small businesses, and producers of
affordable housing and jobs in the community served; and
(6) which does not provide credit, capital, or other assistance in
an amount greater than five thousand dollars at any one time or in
any one transaction. The commission shall adjust the dollar amount
referenced in this item from time to time in the same manner as
provided in Section 37-1-109 .
The term `community development corporation' does not include a
nonprofit organization which has a sole purpose of providing
housing to neighborhoods or technical assistance to other nonprofit
organizations.
(C) The commission shall establish and implement criteria for
grants made to community development corporations pursuant to
Section 34-30-10. The criteria shall include a requirement that the
applicant has demonstrated a capacity to engage in community
development projects and has sufficient organizational structure to
ensure proper management. However, if the applicant is created after
the effective date of this section, the applicant shall present a strategic
plan for community development projects and shall show evidence
of developing an organizational structure which ensures proper
management.
(D) The commission may provide, or contract with an appropriate
entity to provide, technical support to assist community development
corporations to be successful in developing their organizational
capacity and implementing their projects.
(E) The commission shall make an annual report to the General
Assembly regarding grants made pursuant to this section. The report
required by this subsection may be included with the report required
by Section 34-30-30.
Section 34-30-60. (A) Application for certification shall be in
writing under oath and in the form prescribed by the commission.
The application shall contain such information as the commission
may require, including the names and addresses of the partners,
officers, directors or trustees, and such of the principal owners or
members as will provide the basis for investigations and findings
contemplated by subsection (B). At the time of making such
application, the applicant shall pay to the commission a fee for
investigating the application, as prescribed by the commission, which
will yield sufficient revenue to defray the commission's costs of
investigating the applicant.
(B) Upon the filing of the application and payment of the fees, the
commission shall investigate the facts concerning the application and
the requirements provided for in either Section 34-30-40 or in Section
34-30-50, as the case may be.
Section 34-30-70. (A) Certification of a community development
financial institution or a community development corporation shall
expire two years from the date of certification.
(B) Certification of a community development financial institution
or a community development corporation may be renewed for
additional two-year periods upon application by the institution or
corporation and approval by the commission.
(C) The commission shall not renew certification of an institution
or corporation unless it continues to comply with the provisions of
Section 34-30-40 or Section 34-30-50, as the case may be.
(D) The commission may revoke the certification of an institution
or corporation upon a finding that the institution or corporation does
not comply with the provisions of Section 34-30-40 or Section
34-30-50, as the case may be.
(E) The commission shall serve a notice of intent not to grant
certification, intent not to renew certification, or intent to revoke
certification upon the institution or corporation with a brief statement
of the reasons alleged. The institution or corporation may request a
hearing within thirty days of receiving notice by filing a request for
a hearing with the commission. The hearing must be held in
accordance with Article 3, Chapter 23, Title 1, the Administrative
Procedures Act.
(F) No taxpayer may claim the tax credit provided for in Section
12-6-3500 unless the institution or corporation in which the
investment is made is certified by the commission at the time the
investment is made. A taxpayer who invested in good faith in a
certified institution or corporation may claim the credit provided in
Section 12-6-3500 notwithstanding the fact that the certification is
subsequently revoked or not renewed by the commission.
Section 34-30-80. Each year, every community development
financial institution shall file with the commission, on or before the
anniversary date of its certification, a report for the preceding
calendar year. The report shall give information with respect to the
financial condition of the institution, and shall include balance sheets
at the beginning and end of the accounting period, a statement of
income and expenses for the period, a reconciliation of surplus with
the balance sheets, a schedule of assets used and useful by the
institution to conduct its business, an analysis of charges, size and
type of loans and other activities described in Section
34-30-40(B)(1)(a), and such other relevant information in form and
detail as the commission may prescribe. Such report shall be made
under oath and shall be in the form prescribed by the commission
which shall make and publish annually an analysis and recapitulation
of such reports for inclusion in its annual report to the Governor and
General Assembly as provided in Section 34-30-30(F)."
SECTION 3. Article 25, Chapter 6, Title 12 of the 1976 Code is
amended by adding:
"Section 12-6-3500. (A) A taxpayer may claim as a credit
against his state income tax, bank tax, or premium tax liability fifty
percent of all amounts invested in a community development
financial institution, as defined in Section 34-30-40, or in a
community development corporation, as defined in Section 34-30-50.
To qualify for this credit the taxpayer must obtain a certificate from
the South Carolina Community Development Financial Institutions
Commission certifying that the entity into which such funds are
invested is a community development financial institution within the
meaning of Section 34-30-40 or a community development
corporation within the meaning of Section 34-30-50 and certifying
that the credit taken or available to that taxpayer will not exceed the
aggregate ten million dollar limitation of all such credits as provided
in subsection (B) when added to the credits previously taken or
available to other taxpayers making similar investments.
(B) The total amount of credits allowed under this section may not
exceed in the aggregate ten million dollars for all taxpayers and all
taxable years. The total amount of credits allowed for investments in
community development financial institutions may not exceed in the
aggregate nine million dollars for all taxpayers and all taxable years.
The total amount of credits allowed for investments in community
development corporations may not exceed in the aggregate one
million dollars for all taxpayers and all taxable years. The credit must
be allowed to taxpayers in the order of the time of the making of the
qualified investments in community development financial
institutions and community development corporations.
The commission shall monitor the investments made by taxpayers
in community development financial institutions and community
development corporations as permitted by this section and shall
perform the functions relating thereto as provided in subsection (A)
above.
(C) If the amount of the credit determined under subsection (A)
exceeds the taxpayer's state tax liability for the applicable taxable
year, then the taxpayer may carry the excess over to the immediately
succeeding taxable years. However, the credit carryover may not be
used for any taxable year that begins on or after ten years from the
date of the qualified investment. The amount of the credit carryover
from a taxable year must be reduced to the extent that the carryover
is used by the taxpayer to obtain a credit under this chapter for any
subsequent taxable year.
(D) Notwithstanding the provisions of subsections (A), (B), and
(C) above, if on April 1, 1998, or as soon thereafter as the
commission is able to determine, the total amount of tax credits
which may be claimed by all taxpayers exceeds the total amount of
tax credits authorized by this section, then the credits must be
determined on a pro rata basis. For purposes of this subsection, any
community development financial institution or community
development corporation for which an investment may be claimed as
a tax credit under this section must report all investments made prior
to April 1, 1998, to the commission by April 1, 1998, which shall, as
soon as reasonably possible, inform all community development
financial institutions and community development corporations of the
total of all investments in all institutions and corporations as of April
1, 1998.
(E) If a qualified investment which is the basis for a credit under
this section is redeemed by a taxpayer within five years of the date
it is purchased, the credit provided by this section for the qualified
investment is disallowed, and any credit previously claimed and
allowed with respect to the qualified investment so redeemed must be
paid to the Department of Revenue with the appropriate return of the
taxpayer covering the period in which the redemption occurred.
When payments are made to the Department of Revenue under this
section, the amount collected must be handled in the same manner as
if no credit had been allowed.
(F) To receive the credit provided by this section, a taxpayer shall:
(1) claim the credit on the taxpayer's annual state income or
premium tax return in the manner prescribed by the Department of
Revenue; and
(2) file with the Department of Revenue and with the taxpayer's
annual state income or premium tax return a copy of the form issued
by the commission as to the qualified investment by the taxpayer,
which includes an undertaking by the taxpayer to report to the
Department of Revenue any redemption of the qualified investment.
(G) The commission shall complete forms prescribed by the
Department of Revenue which must show as to each qualified
investment in a community development financial institution or a
community development corporation:
(1) the name, address, and identification number of the taxpayer
who purchased a qualified investment; and
(2) the nature of the qualified investment purchased by the
taxpayer and the amount paid for it.
These forms must be filed with the Department of Revenue on or
before the fifteenth day of the third month following the month in
which the qualified investment is purchased. Copies of the forms to
be provided to the Department of Revenue must be mailed to the
taxpayer on or before the fifteenth day of the second month following
the month in which the qualified investment is purchased.
(H) No taxpayer may claim the tax credit provided in this section
unless the community development financial institution or
community development corporation in which the investment is made
has been certified at the time the investment is made. A taxpayer
who invested in good faith in a certified institution or corporation
may claim the credit provided in this section, notwithstanding the
fact that the certification is subsequently revoked or not renewed by
the commission.
(I) A taxpayer may transfer or assign the tax credit provided in
this section, except that for purposes of any time period within which
an act must occur under this section, such transfer or assignment shall
relate back to the time of original investment made by the transferor
or assignor.
(J) If the community development financial institution in which
the investment is made is a tax-exempt non-profit corporation, the
tax credit provided in this section shall not be allowed if the taxpayer
claims the investment as a deduction under Section 170 of the
Internal Revenue Code.
(K) The total amount of credits which may be allowed by the
Department of Revenue shall not exceed five million dollars,
respectively, for the fiscal years 1997-98 and 1998-99. Any credit
which is disallowed because of this subsection may be carried
forward as provided in this section."
SECTION 4. This act takes effect upon approval of the Governor,
except that Section 3 applies to tax years beginning after 1997.
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