1987-1988 Bill 3706: Fee in lieu of taxes - South Carolina Legislature Online

South Carolina General Assembly
107th Session, 1987-1988

Bill 3706

                    Current Status

Bill Number:               3706
Ratification Number:       544
Act Number                 487
Introducing Body:          House
Subject:                   Fee in lieu of taxes

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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A487, R544, H3706)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 4-29-67 SO AS TO PROVIDE FOR PAYMENTS IN LIEU OF TAXES FOR INDUSTRIAL DEVELOPMENT PROJECTS VALUED AT EIGHTY-FIVE MILLION DOLLARS OR MORE FINANCED BY INDUSTRIAL REVENUE BONDS, TO PROVIDE FOR AGREEMENTS FOR PAYMENTS NOT TO EXCEED TWENTY YEARS AND TO PROVIDE FOR THE MINIMUM AMOUNT OF THE PAYMENTS, TO PROVIDE THAT AFTER THE EXPIRATION OF ANY AGREEMENT, THE FEE MUST BE EQUAL TO TAXES THAT WOULD BE DUE ON THE PROJECT IF IT WERE TAXABLE, TO PROVIDE FOR THE DISTRIBUTION OF THE PAYMENTS, TO PROVIDE THAT PROJECT-MAKING PAYMENTS IN LIEU OF TAXES ARE CONSIDERED TAXABLE PROPERTY FOR PURPOSES OF DETERMINING LIMITS OF BONDED INDEBTEDNESS AND THE INDEX OF TAXPAYING ABILITY, AND TO PROVIDE THAT THE THRESHOLD INVESTMENT AMOUNT UNDER THIS SECTION MAY NOT BE REDUCED EXCEPT BY SPECIAL VOTE OF THE GENERAL ASSEMBLY AND TO DEFINE THE SPECIAL VOTE.

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

Fee in lieu of taxes

SECTION 1. Chapter 29, Title 4 of the 1976 Code is amended by adding:

"Section 4-29-67. (A) Notwithstanding the provisions of Section 4-29-60, in a financing agreement in the form of a lease or a lease purchase, for a project involving an initial investment of at least eighty-five million dollars, the lease or lease purchase agreement must contain a provision for a payment in lieu of taxes as follows:

(1) a predetermined annual payment for not more than twenty years in an amount not less than the ad valorem 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 millage rate not less than the rate applicable at the time of execution of the agreement, and a fair market value estimate as determined by the South Carolina Tax Commission using original cost for the real property and original cost less allowable depreciation for the personal property as provided in Section 12-37-930;

(2) an annual payment for not more than twenty years based on any alternative agreement 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 pursuant to item (1);

(3) at the conclusion of any agreement pursuant to item (1) or (2), an annual payment equal to the taxes due on the project if it were taxable;

(4) as a result of negotiating the fee, gross revenues of a school district in which a project is located may not in any year a fee negotiated pursuant to items (1) and (2) of this subsection is paid be less than gross revenues of the district in the year prior to the first year for which a fee in lieu of taxes is paid. In negotiating the fee, the parties must assume that the formulas for the distribution of state aid at the time of the execution of the agreement shall remain unchanged for the duration of the agreement.

(B) Distribution of the payment 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. Millage rates must be determined for school and other purposes as if the property were taxable.

(C) Calculations pursuant to subsection (A) must be made on the basis that the property, if taxable, is allowed all applicable ad valorem tax exemptions except the exemption allowed pursuant to Section 3(g) of Article X of the Constitution of this State.

(D) Projects on which payments in lieu of taxes are made pursuant to this section are considered taxable property at the level of the negotiated payment 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).

(E) The minimum amount of the initial investment provided in subsection (A) 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."

Time effective

SECTION 2. This act takes effect upon approval by the Governor.