H*4158 Session 111 (1995-1996)
H*4158(Rat #0190, Act #0125 of 1995) General Bill, By House Ways and Means
A Bill to amend Sections 12-4-710 and 12-4-720, as amended, Code of Laws of
South Carolina, 1976, relating to the powers of the Department of Revenue and
Taxation with respect to property tax exemptions and the method of applying
for the exemptions, so as to revise or extend the time for filing exemption
applications and add additional categories of exemptions for which no
application is required; to provide that listing a property as exempt on a
property tax return is considered an application; to require property
taxpayers filing property tax returns to claim the exemption on the return for
each year the property is exempt; and to provide when additional applications
must be filed by taxpayers not required to file annual property tax returns;
and to amend Section 12-37-220, as amended, relating to property tax
exemptions, so as to conform it to the amendments made by this Act, to extend
the exemption for two personal motor vehicles of persons required to use
wheelchairs to instances when the owner is eligible for the special motor
vehicle license plate allowed such persons, to exempt one personal motor
vehicle owned or leased by a legal guardian of a minor who is blind or
required to use a wheelchair when the vehicle is used to transport the minor,
and to exempt boats and motors valued below the amount determined necessary by
the county auditor to generate a tax bill equal to fifteen dollars; and to
amend Title 4 of the 1976 Code, relating to county government, by adding
Chapter 12 so as to provide for a fee in lieu of property taxes and to provide
the requirements necessary for projects eligible for such fees including,
among other things, a minimum investment threshold of ten million dollars, an
assessment ratio of not less than six percent, and a maximum period for the
fee of twenty years plus extensions not to exceed a total of twenty-seven
years in cases of property placed in service over a period of years, and to
provide which fee in lieu of taxes provisions are available for projects based
on the date agreements are entered into and the total amount of the project
investment; and to amend Sections 4-29-68 and 12-7-1220, as amended, relating
to the fee in lieu of taxes for special source revenue bond projects and the
targeted jobs state income tax credit, so as to conform these provisions to
the fee in lieu of taxes of the C
04/26/95 House Introduced, read first time, placed on calendar
without reference HJ-14
05/03/95 House Read second time HJ-74
05/04/95 House Read third time and sent to Senate HJ-9
05/05/95 Senate Introduced and read first time SJ-9
05/05/95 Senate Referred to Committee on Finance SJ-9
05/17/95 Senate Recalled from Committee on Finance SJ-9
05/18/95 Senate Read second time SJ-58
05/18/95 Senate Ordered to third reading with notice of
amendments SJ-58
05/24/95 Senate Amended SJ-32
05/30/95 Senate Amended SJ-72
05/30/95 Senate Read third time and returned to House with
amendments SJ-72
06/01/95 House Debate adjourned on Senate amendments HJ-38
06/01/95 House Concurred in Senate amendment and enrolled HJ-67
06/06/95 Ratified R 190
06/07/95 Signed By Governor
06/07/95 Effective date 06/07/95
08/15/95 Copies available
08/15/95 Act No. 125
(A125, R190, H4158)
AN ACT TO AMEND SECTIONS 12-4-710 AND 12-4-720, AS
AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO THE POWERS OF THE DEPARTMENT OF
REVENUE AND TAXATION WITH RESPECT TO PROPERTY TAX
EXEMPTIONS AND THE METHOD OF APPLYING FOR THE
EXEMPTIONS, SO AS TO REVISE OR EXTEND THE TIME FOR
FILING EXEMPTION APPLICATIONS AND ADD ADDITIONAL
CATEGORIES OF EXEMPTIONS FOR WHICH NO APPLICATION IS
REQUIRED; TO PROVIDE THAT LISTING A PROPERTY AS
EXEMPT ON A PROPERTY TAX RETURN IS CONSIDERED AN
APPLICATION; TO REQUIRE PROPERTY TAXPAYERS FILING
PROPERTY TAX RETURNS TO CLAIM THE EXEMPTION ON THE
RETURN FOR EACH YEAR THE PROPERTY IS EXEMPT; AND TO
PROVIDE WHEN ADDITIONAL APPLICATIONS MUST BE FILED
BY TAXPAYERS NOT REQUIRED TO FILE ANNUAL PROPERTY
TAX RETURNS; TO AMEND SECTION 12-37-220, AS AMENDED,
RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO
CONFORM IT TO THE AMENDMENTS MADE BY THIS ACT, TO
EXTEND THE EXEMPTION FOR TWO PERSONAL MOTOR
VEHICLES OF PERSONS REQUIRED TO USE WHEELCHAIRS TO
INSTANCES WHEN THE OWNER IS ELIGIBLE FOR THE SPECIAL
MOTOR VEHICLE LICENSE PLATE ALLOWED SUCH PERSONS,
TO EXEMPT ONE PERSONAL MOTOR VEHICLE OWNED OR
LEASED BY A LEGAL GUARDIAN OF A MINOR WHO IS BLIND
OR REQUIRED TO USE A WHEELCHAIR WHEN THE VEHICLE IS
USED TO TRANSPORT THE MINOR, AND TO EXEMPT BOATS
AND MOTORS VALUED BELOW THE AMOUNT DETERMINED
NECESSARY BY THE COUNTY AUDITOR TO GENERATE A TAX
BILL EQUAL TO FIFTEEN DOLLARS; AND TO AMEND TITLE 4
OF THE 1976 CODE, RELATING TO COUNTY GOVERNMENT, BY
ADDING CHAPTER 12 SO AS TO PROVIDE FOR A FEE IN LIEU
OF PROPERTY TAXES AND TO PROVIDE THE REQUIREMENTS
NECESSARY FOR PROJECTS ELIGIBLE FOR SUCH FEES
INCLUDING, AMONG OTHER THINGS, A MINIMUM
INVESTMENT THRESHOLD OF FIVE MILLION DOLLARS, AN
ASSESSMENT RATIO OF NOT LESS THAN SIX PERCENT, AND A
MAXIMUM PERIOD FOR THE FEE OF TWENTY YEARS PLUS
EXTENSIONS NOT TO EXCEED A TOTAL OF TWENTY-SEVEN
YEARS IN CASES OF PROPERTY PLACED IN SERVICE OVER A
PERIOD OF YEARS, AND TO PROVIDE WHICH FEE IN LIEU OF
TAXES PROVISIONS ARE AVAILABLE FOR PROJECTS BASED
ON THE DATE AGREEMENTS ARE ENTERED INTO AND THE
TOTAL AMOUNT OF THE PROJECT INVESTMENT; AND TO
AMEND SECTIONS 4-29-68 AND 12-7-1220, AS AMENDED,
RELATING TO THE FEE IN LIEU OF TAXES FOR SPECIAL
SOURCE REVENUE BOND PROJECTS AND THE TARGETED JOBS
STATE INCOME TAX CREDIT, SO AS TO CONFORM THESE
PROVISIONS TO THE FEE IN LIEU OF TAXES OF THE CHAPTER
ADDED BY THIS ACT.
Be it enacted by the General Assembly of the State of South
Carolina:
Exemption determination
SECTION 1. Section 12-4-710 of the 1976 Code, as added by Act 50 of
1991, is amended to read:
"Section 12-4-710. Except for the exemption provided by
Section 12-37-220(A)(9), the department shall determine if any property
qualifies for exemption from local property taxes under Section
12-37-220 in accordance with the Constitution and general laws of this
State. This determination must be made on an annual basis and the
appropriate county official so advised by June first of each year by the
commission."
Procedure to claim exemption
SECTION 2. A. Section 12-4-720 of the 1976 Code, as last amended
by Act 516 of 1994, is further amended to read:
"Section 12-4-720. (A) Applications for property exemptions,
other than the exemption provided by Section 12-37-220(A)(9), must be
filed as follows:
(1) Except as otherwise provided, any property owner whose
property may qualify for property exemption shall file an application for
exemption with the department within the period provided in Section
12-47-440 for claims for refund. This item does not relieve the taxpayer
of any responsibility to file timely and accurate property tax returns.
(2) Owners of property exempt under Section 12-37-220A(8) shall
file an application for exemption before the first penalty date for payment
of property taxes.
(3) Applications for exemption are not required for properties owned
by the United States Government or those exempt properties enumerated
in Section 12-37-220(A)(1), (5), (6), (10), and (B)(9), (13), (14), (15),
(17), (23), (25), and (30).
(B) If a taxpayer files a property tax return listing property as exempt,
that listing is considered an application for exemption from property
taxes.
(C) A taxpayer who is required to file property tax returns with the
department shall claim any exemption on the return each year the
property is exempt.
(D) Except for the requirement in subsection (C), the owner is not
required to file more than one application for each exemption, unless
there is a change in the status of the property as reported in the initial
application or unless requesting an exemption for property which was not
included in the initial or subsequent application."
B. If the South Carolina Revenue Procedures Act is enacted during the
1995 Session of the General Assembly, Section 12-4-720(A)(1) of the
1976 Code, as amended by subsection A of this section, is further
amended to read effective on the effective date of the South Carolina
Revenue Procedures Act:
"(1) Except as otherwise provided any property owner whose
property may qualify for property exemption shall file an application for
exemption with the department within the period provided in Section
12-54-85(F) for claims for refund. This item does not relieve the
taxpayer of any responsibility to file timely and accurate property tax
returns."
Exemptions
SECTION 3. A. That portion of subsection (A) of Section 12-37-220
of the 1976 Code which precedes item (1) is amended to read:
"Pursuant to the provisions of Section 3 of Article X of the State
Constitution and subject to the provisions of Section 12-4-720, there is
exempt from ad valorem taxation:"
B. That portion of subsection (B) of Section 12-37-220 of the 1976
Code which precedes item (1) is amended to read:
"In addition to the exemptions provided in subsection (A), the
following classes of property are exempt from ad valorem taxation
subject to the provisions of Section 12-4-720;"
C. Section 12-37-220(B)(27) of the 1976 Code, as last amended by Act
516 of 1994, is further amended to read:
"(27) Two personal motor vehicles, owned or leased either
solely or jointly by persons required to use wheelchairs, who qualify for
special license tags under the provisions of Section 56-3-1910."
D. Section 12-37-220(B) of the 1976 Code is amended by adding an
appropriately numbered item to read:
"( ) one personal motor vehicle owned or leased by a legal
guardian of a minor who is blind or required to use a wheelchair when
the vehicle is used to transport the minor."
Fee in lieu of taxes
SECTION 4. A. Title 4 of the 1976 Code is amended by adding:
"CHAPTER 12
Fee in Lieu of Property Taxes
Section 4-12-10. As used in this chapter:
(1) `Department' means the South Carolina Department of Revenue
and Taxation.
(2) `Project' means any land and any buildings and other
improvements on the land including, without limiting the generality of
the foregoing, water, sewage treatment and disposal facilities, air
pollution control facilities, and all other machinery, apparatus, equipment,
office facilities, and furnishings which are considered necessary, suitable,
or useful.
Section 4-12-20. Every agreement between a county council or
county councils and another party in the form of a lease must contain a
provision requiring the industry to make payments to the county or
counties, municipality or municipalities, school district or school districts,
and other political units in which the project is located in lieu of taxes, in
the amounts that would result from taxes levied on the project by the
county or counties, municipality or municipalities, school district or
school districts, and other political unit or units, if the project were
owned by the industry, but with appropriate reductions similar to the tax
exemptions, if any, which would be afforded to the industry if it were
owner of the project.
Section 4-12-30. (A) Notwithstanding the provisions of Section
4-12-20, in the case of an 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
a payment in lieu of taxes as provided in this section. All references in
this section to a lease agreement also are considered 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, if 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
if:
(a) the counties agree on the terms of the fee and the distribution
of the fee payment;
(b) the minimum millage rate is not lower than the millage rate
applicable to the county in which the greatest amount of investment
occurs; and
(c) all the counties are parties to all agreements establishing the
terms of the fee.
(3) The minimum level of investment must be at least five million
dollars and must be invested within the time period provided in
subsection (C)(2).
(4)(a) Except as provided in subsection (B)(4)(b), 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.
(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) qualify for the
payment whether or not the member was part of the inducement
agreement. However, in order to qualify for the fee, the 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, but the controlled group members need not be bound by agreements,
or portions of agreements, to the extent the agreements do not 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 shall invest at least five million dollars in the county or
industrial park.
(ii) The department must be notified in writing of all members
which have investments subject to the fee before or within ninety days
after the end of the calendar year during which the project or phase of
the project was first placed in service. The department may extend this
period upon written request. Failure to meet this notice requirement does
not adversely affect the fee, but a penalty may be assessed by the
department for late notification in the amount of ten thousand dollars a
month or portion of a month but not to exceed fifty thousand dollars.
Members of the controlled group shall provide the information
considered necessary by the department to ensure that the investors are
part of a controlled group.
(iii) If at any time the controlled group, or any former member
which has left the controlled group no longer has the minimum 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, no
longer qualifies for the fee.
(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 7 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 subsection (b) of Section 1563.
(5)(a) Before undertaking a project, the county council or county
councils shall find:
(i) that the project is anticipated to benefit the general public
welfare of the locality by providing services, employment, recreation, or
other public benefits not otherwise provided locally;
(ii) that the project gives rise to no pecuniary liability of the
county or incorporated municipality or a charge against its general credit
or taxing power; and
(iii) unless the terms of an agreement with respect to a project
provides that the industry shall maintain the project and carry all proper
insurance with respect thereto, the estimated cost of maintaining the
project in good repair and keeping it properly insured must be included
in the lease payment.
The determinations and findings of the county council or county
councils required to be made above must be set forth in the proceedings
under which the ordinance is enacted.
(b) 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
projects within the State is of paramount importance and that the benefits
of the project are greater than the costs.
(6) Every financing agreement with respect to a project shall contain
an agreement obligating the industry to effect the completion of the
project, and obligating the industry to pay an amount under the terms of
a lease agreement, which must be sufficient to build up and maintain any
reserve considered by the county council or county councils to be
advisable in connection with the agreement.
(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 12-43-305.
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.
(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.
(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, 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.
(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 12-37-220(B)(32) and (34).
(F)(1) If an investor disposes of property subject to the fee, the fee
must be reduced by the amount of the fee applicable to that property.
(2) Property is disposed of only when it is scrapped or sold in
accordance with the lease agreement.
(G)(1) The county and the investor may enter into an agreement to
establish the millage rate, a millage rate agreement, for purposes of
calculating payments under subsection (D)(2)(a) and the first five years
under subsection (D)(2)(b). This millage rate agreement must be
executed on the date of the inducement agreement or any time 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, but no such amendment or termination and replacement may
take place after the initial lease agreement date.
(2) No amendment or replacement of an inducement agreement or
millage rate agreement may be used to change the millage rate under any
such agreement.
(I) Investment expenditures made or incurred by any investor in
connection with a project, or relevant phase of a project in connection
with a project completed and placed in service in more than one year,
qualifies as expenditures subject to the fee in subsection (D)(2), so long
as these expenditures are made:
(1) after 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).
(J)(1) Property which has been previously subject to property taxes in
South Carolina does not qualify for the fee except as provided in this
subsection:
(a) land, excluding improvements on the land, on which a new
project is to 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.
(2) Repairs, alterations, or modifications to real or personal property
which are not subject to a fee are not eligible for a fee, even if they are
capitalized expenditures, except for modifications to existing real
property improvements which constitute an expansion of the
improvements.
(K)(1) For a project not located in an industrial development park as
defined in Section 4-1-170, distribution of the fee-in-lieu of taxes on the
project must be made in the same manner and proportion that the millage
levied for school and other purposes would be distributed if the property
were taxable. For this purpose, the relative proportions must be
calculated based on the following procedure: holding constant the millage
rate set in subsection (G) and using all tax abatements automatically
granted for taxable property, a full schedule of the property taxes that
would otherwise have been distributed to each millage levying entity in
the county must be prepared for the life of the agreement, up to twenty
years maximum. The total taxes for each millage levying entity as a
percentage of the total 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.
(L) 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). However, the
computation of bonded indebtedness limitation is subject to the
requirements of Section 4-29-68(E).
(M) An entity subject to the fee may enter into any lending,
financing, security or similar arrangement, with any financing entity,
concerning all or part of a project, provided that the income tax
ownership of the property which is subject to the fee payment under
subsection (D)(2) is held, by the time the fee payments relating to such
property begin under subsection (D)(2), by the entity subject to the
fee.
(N) An entire fee interest may be transferred to another entity which is
qualified to enter into a fee agreement under subsection (B)(4)(a). A fee
interest is an inducement agreement, millage rate agreement, lease
agreement, and the entity's entire property interest in the project subject
to the fee. Equity interests in a partnership, corporation, association, or
limited liability company which properly files its South Carolina income
tax returns as a partnership or corporation and which has an interest in an
inducement agreement, millage rate agreement, and lease agreement, such
equity interests collectively and individually referred to as an `entity
interest' may be transferred by any entity to any entity, if the entity
whose entity interest is being transferred holds at least a
five-million-dollar investment based on income tax basis without regard
to depreciation in the project as of the time of the transfer.
(2) All transfers of fee interests or entity interests authorized under
subsection (N) must meet the following requirements:
(a) The county must approve the transfer within six months before
the transfer.
(b) The department must receive notification in writing of the
identity of each transferee and other information required by the
department within thirty days after the transfer becomes effective. The
department may extend the thirty-day period upon written request.
Failure to meet this notice requirement does not adversely affect the fee,
but a penalty may be assessed by the department for late notification for
up to ten thousand dollars a month or portion of a month, with the total
penalty not to exceed fifty thousand dollars.
(c) No election under Internal Revenue Code of 1986, as amended,
Sections 338 or 754 may be made with respect to the transfer.
(d) Each transferee must agree to be bound by the applicable
agreements constituting the fee arrangement.
(e) Any transfer must be for fair market value or result in a
carryover basis for income tax purposes. If for income tax purposes, the
property begins a new depreciable life for the asset, the property also
begins a new depreciable life for purposes of computing the fee. In no
event is the time period for receiving the fee extended.
(O) Notwithstanding any other provision of this section, if at any time
following the period provided in subsection (C)(2), the investment based
on income tax basis without regard to depreciation falls below the
five-million-dollar-minimum investment to which the fee relates, 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 4-12-20 for
the remainder of the lease period.
(P) The minimum amount of investment provided in subsection (B)(3)
of this section may not be reduced except by a special vote which, for
purposes of this section, means an affirmative vote in each branch of the
General Assembly by two-thirds of the members present and voting, but
not less than three-fifths of the total membership in each branch.
(Q)(1) The investor shall file the returns, contracts, and other
information which may be required by the department.
(2) Fee payments and returns showing investments are due at the
same time as property tax payments and property tax returns would be
due if the property were owned by the party obligated to make the fee
payments and file the returns.
(3) Failure to make a timely fee payment and file required returns
shall result in penalties being assessed as if the payment or return were a
property tax payment or return.
(4) The department may issue the rulings and promulgate regulations
it determines necessary or appropriate to carry out the purpose of this
section.
(5) The provisions of Chapters 4 and 54 of Title 12 applicable to
property taxes shall apply to this section; and for purposes of such
application, the fee is considered a property tax. Sections 12-54-80 and
12-54-155 do not apply to this section.
(6) If the entity subject to the fee fails to make the fee lease
payments as provided by the agreements between the entity and the
county, upon ninety days' notice, the county may terminate the fee and
lease agreement and sell the property to which the county has title free
from any claim by the entity.
(R) All references in this section to taxes must be considered to mean
South Carolina taxes unless otherwise expressly stated.
Section 4-12-40. Projects with respect to which a lease agreement
has been entered into before the effective date of this chapter are required
to use the provisions of Section 4-29-67. Projects with respect to which
a lease agreement is entered into after December 31, 1995, are required
to use the provisions contained in this chapter. However, those projects
in which the total investment exceeds forty-five million dollars within the
time provided in subsection (C)(2) have the option of using the
provisions contained in Section 4-29-67 or 4-12-30.
Section 4-12-50. If any provision of this chapter or its application to
any circumstance is held by a court of competent jurisdiction to be
invalid for any reason, this holding does not affect other provisions or
applications of this chapter which can be given effect without the invalid
provision or application, and to this end, the provisions of this chapter
are severable."
B. Subsections (A), (B), and (C) of Section 4-29-68 of the 1976 Code,
as last amended by Act 123 of 1993, are further amended to read:
"(A) A county or municipality or special purpose district that
receives and retains revenues from a payment in lieu of taxes pursuant to
Section 4-29-60, Section 4-29-67, Section 4-12-20, or Section 4-12-30
may issue special source revenue bonds secured by and payable from all
or a part of such revenues, subject to the following terms and
conditions:
(1) The issuance of bonds is authorized by a duly adopted
ordinance of the governing body of the issuer or, if the issuer is a special
purpose district, an ordinance of the county council or councils in the
county or counties in which the special purpose district is located, and a
resolution of the governing body of the issuer, after a public hearing is
held at least fifteen days after notice of the hearing is published in a
newspaper of general circulation in the county or municipality or special
purpose district.
(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 in order to enhance the economic
development of the issuer and costs of issuance of the bonds. For
purposes of this section, infrastructure includes improved and unimproved
real property. 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.
(3) The bonds may include amounts for capitalized interest for a
period not to extend beyond the later of (a) the date that is three years
from the date of issuance of the bonds and (b) the first date on which
any ad valorem taxes (including, but not limited to, county or school
district taxes) would have been payable on the property (other than
unimproved real property) which is the subject of the payment in lieu of
taxes.
(4) The issuer may use proceeds of the bonds (including by
establishment of a reserve fund to be used) (a) directly for infrastructure
owned or controlled by the issuer or (b) to make loans or grants to, or to
participate in joint undertakings with, other agencies or political
subdivisions of the State that own or control the infrastructure referred to
in item (2) of this subsection.
(5) The bonds are, and must state on their face that they are, (a)
payable solely from all or a specifically described part of the payments in
lieu of taxes received and retained by the issuer under Section 4-29-60,
Section 4-29-67, Section 4-12-20, Section 4-12-30, or Section 13 of
Article VIII of the Constitution of this State, (b) not secured by, or in
any way entitled to, a pledge of the full faith, credit, or taxing power of
the issuer, (c) not an indebtedness of the issuer within the meaning of
any state constitutional provision or statutory limitation but are payable
solely from a special source that does not include revenues from any tax
or license, and (d) not a pecuniary liability of the issuer or a charge
against the issuer's general credit or taxing power.
(6) The ordinance authorizing the issuance of the bonds shall
specifically describe the portion of the payments in lieu of taxes received
and retained by the issuer from which the bonds are payable and by
which the bonds are secured.
(7) The bonds may be executed and delivered at any time as a
single issue or from time to time as several issues, be in the form and
denominations, be of the tenor, be payable in the installments and at the
time or times not to exceed the time over which payments in lieu of
taxes are scheduled to be received, be subject to the terms of redemption,
be payable at the place or places, bear interest at the rate or rates which
is payable at the place or places, and contain provisions not inconsistent
with this section, all of which must be provided in the ordinance
authorizing the bonds.
(8) The bonds may be sold at public or private sale at the prices
and in the manner and from time to time as may be determined by the
governing board to be most advantageous, and the governing board may
pay, as a part of the costs described in item (2) of this subsection, and
out of the bond proceeds, all expenses, premiums, commissions, and
expenses which the governing board considers necessary or advantageous
in connection with the authorization, sale, and issuance of the bonds.
(9) The ordinance may provide for the issuance, in the future, of
further bonds on a parity with those initially issued, but the proceedings
may preclude the issuance of bonds or any obligations of any sort
secured by a lien prior to the lien of the bond or bonds afterward issued
on a parity with the bonds.
(10) Pending the issuance of bonds, bond anticipation notes may be
issued, and to the end that a vehicle be provided therefor, the provisions
of Section 11-17-10 to Section 11-17-110, as now or hereafter amended,
are applicable to the bond anticipatory borrowing.
(11) The ordinance authorizing the issuance of the bonds may
contain agreements and provisions customarily contained in the
instruments securing revenue or special source bonds as the governing
board considers advisable, but the issuer does not have the power to
obligate itself to impose or maintain any particular level of tax rates.
(B) A county or municipality or special purpose district that receives
and retains revenues from a payment in lieu of taxes pursuant to Section
4-29-60, Section 4-29-67, Section 4-12-20, or Section 4-12-30 may
pledge the revenues as additional security for general obligation debt or
revenue debt of the issuer if the general obligation debt or revenue debt
is issued in accordance with items (1) and (2) of this subsection.
(C) A county or municipality or special purpose district that receives
and retains revenues from a payment in lieu of taxes pursuant to Section
4-29-60, Section 4-29-67, Section 4-12-20, or Section 4-12-30 may
pledge the revenues as additional security for general obligation debt or
revenue debt of other agencies or political subdivisions of the State
referred to in item (4)(b) of this subsection if the pledge is authorized by
a duly-adopted ordinance of the governing body of the county or
municipality or special purpose district after a public hearing is held at
least fifteen days after notice of the hearing is published in a newspaper
of general circulation in the county or municipality or special purpose
district, and if the general obligation debt or revenue debt to which the
revenues received from a payment in lieu of taxes are pledged is issued
solely for the purpose of paying the cost of designing, acquiring,
constructing, improving, or expanding the infrastructure serving the
county or municipality or special purpose district in order to enhance the
economic development of the county or municipality or special purpose
district and costs of issuance of the bonds."
C. Section 12-7-1220(J)(1) of the 1976 Code, as added by Act 164 of
1993, is amended to read:
"(1) If a corporation qualifies to use the fee in lieu of property
taxes provided in Section 4-29-67 or 4-12-30 and fails to qualify for a
credit under this section solely because it is an S corporation, then each
of the shareholders of the S corporation qualifies for a nonrefundable
credit against taxes imposed pursuant to Section 12-7-210."
D. This section is effective for taxable years beginning after 1995.
Value exempt
SECTION 5. A. Section 12-37-220(B) of the 1976 Code is amended by
adding an appropriately numbered item at the end to read:
"( ) Boats and motors valued below the amount determined by
the county auditor necessary to generate a tax bill equal to fifteen
dollars."
B. This section takes effect upon approval by the Governor and applies
for property tax years beginning after 1995.
Time effective
SECTION 6. This act takes effect upon approval by the Governor.
Approved the 7th day of June, 1995. |