Current Status Introducing Body:Senate Bill Number:1306 Primary Sponsor:Land Committee Number:06 Type of Legislation:GB Subject:Community Development Financial Institutions Act of 1994 Residing Body:Senate Current Committee:Finance Companion Bill Number:5000 Computer Document Number:BBM/9072SD.94 Introduced Date:19940329 Last History Body:Senate Last History Date:19940329 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Land Lander Jackson Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
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1306 Senate 19940329 Introduced, read first time, 06
referred to Committee
View additional legislative information at the LPITS web site.
TO ENACT THE "SOUTH CAROLINA COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS ACT OF 1994" INCLUDING PROVISIONS TO ADD SECTION 12-7-1255, CODE OF LAWS OF SOUTH CAROLINA, 1976, SO AS TO AUTHORIZE CERTAIN INCOME AND OTHER TAX CREDITS FOR INVESTMENTS MADE IN COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS DEFINED BELOW; TO ADD SECTION 34-13-175 SO AS TO PROVIDE THAT BANKS AND FINANCIAL INSTITUTIONS CHARTERED BY THE STATE OF SOUTH CAROLINA ARE AUTHORIZED TO INVEST IN COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS UP TO A SPECIFIED AMOUNT, TO PROVIDE THAT THESE INSTITUTIONS ARE EXEMPT FROM STATE INCOME TAXATION, AND TO DEFINE THE TERMS "COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION" AND "INVEST" FOR THIS PURPOSE; TO AMEND SECTION 41-44-10, AS AMENDED, RELATING TO DEFINITIONS FOR PURPOSES OF THE PALMETTO SEED CAPITAL FUND, SO AS TO REVISE THE DEFINITION OF A "SOUTH CAROLINA BUSINESS"; TO AMEND SECTION 41-44-60, AS AMENDED, RELATING TO PALMETTO SEED CAPITAL FUND, SO AS TO PROVIDE THAT THE ENTITIES INTO WHICH MONIES RAISED BY THE FUND MAY BE INVESTED INCLUDE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS AND TO REVISE THE REQUIRED PERCENTAGE ALLOCATIONS OF INVESTMENTS BY THE FUND; AND TO ADD SECTION 43-1-85 SO AS TO AUTHORIZE THE DEPARTMENT OF SOCIAL SERVICES, FROM GRANT FUNDS MADE AVAILABLE TO IT, TO MAKE GRANTS TO COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS, AND TO PROVIDE THAT THE GENERAL ASSEMBLY IN THE ANNUAL GENERAL APPROPRIATIONS ACT MAY APPROPRIATE FUNDS TO THE DEPARTMENT TO BE USED FOR THESE PURPOSES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. This act may be cited as the "South Carolina Community Development Financial Institutions Act of 1994".
SECTION 2. The General Assembly finds that:
(1) many of South Carolina's urban and rural communities face critical social and economic problems arising in part from the lack of economic growth, people living in poverty, and the lack of employment and other opportunities;
(2) the restoration and maintenance of these communities will require increased access to credit and capital for development activities, including investment in businesses, housing, human development, and other activities that promote the long-term economic and social viability of the community;
(3) access to credit and capital is essential to unleash the untapped entrepreneurial energy of South Carolina's poorest communities and to empower individuals and communities to become self-sufficient;
(4) community development financial institutions have proven their ability to identify and respond to community needs for capital, credit, and development services in the absence of, or as a complement to, services provided by other lenders; and
(5) for the above reasons, it has determined to enact the provisions of this act as being consistent with many public policy objectives of our State including economic growth, higher employment, and community development.
SECTION 3. The 1976 Code is amended by adding:
"Section 12-7-1255. (A) A taxpayer may claim as a credit against his state income tax, bank tax or premium tax liability fifty percent of all amounts invested in a community development financial institution as defined in Section 34-13-175.
To qualify for this credit the taxpayer must obtain a certificate from the Department of Social Services certifying that the entity into which such funds are invested is a community development financial institution within the meaning of Section 34-13-175 and certifying that the credit taken or available to that taxpayer will not exceed the aggregate five million dollar limitation of all such credits as provided in subsection (B) when added to the credits previously taken or available to other taxpayers making similar investments. (B) The total amount of credits allowed under this section may not exceed in the aggregate five million dollars for all taxpayers and all taxable years. The credit must be allowed to taxpayers in the order of the time of the making of the qualified investments in community development financial institutions.
The Department of Social Services shall monitor the investments made by taxpayers in community development financial institutions as permitted by this section and shall perform the functions relating thereto as provided in subsection (A) above."
SECTION 4. The 1976 Code is amended by adding:
"Section 34-13-175. (A) For purposes of this section:
(1) `community development financial institution' means a public-private partnership that:
(a) has a primary mission of promoting community development through the provision of credit, capital, or development services to small businesses;
(b) provides service delivery throughout the State;
(c) combines a for-profit corporation with a nonprofit corporation to create a multi-investor community development corporation (CDC);
(d) maintains through representation on its governing board accountability to persons in need of the institution's services;
(e) is not an agent or instrumentality of the United States, or of any state or political subdivision of a state or maintains an affiliate relationship with the above;
(f) maintains a goal of providing a majority of its services to low-income individuals, minorities, or females; and
(g) provides capital and technical assistance to small and micro businesses.
(2) The term `invest' includes any advance of funds to a community development financial institution whether by purchase of stock, the making of a loan, or otherwise.
(B) Banks and financial institutions chartered by the State of South Carolina are authorized to invest in community development financial institutions incorporated under the laws of this State, up to a maximum of ten percent of total capital and surplus.
(C) A community development financial institution shall not be subject to any taxes based upon or measured by income which are now or may be hereafter levied by the State."
SECTION 5. Section 41-44-10(I) of the 1976 Code is amended to read:
"(I) `South Carolina business' means a for-profit or nonprofit corporation, or a general partnership, limited partnership, joint venture, trust, proprietorship or any other similar entity, or organization which is either established and operating or will be established to operate in South Carolina."
SECTION 6. Section 41-44-60(E) of the 1976 Code, as last amended by Act 505 of 1990, is further amended to read:
"(E) The fund shall raise funds to provide financing to high growth oriented businesses. A `high growth oriented business' for purposes of this chapter means a for-profit or nonprofit corporation, or a general partnership, limited partnership, joint venture, trust, proprietorship, or other similar entity or organization which is expected to experience significant sales or other growth over the subsequent five-year period. All investments made from investment monies raised by the fund, for which the tax credit provided by this chapter is allowed and for which the tax credit is made available by the fund in the prospectus or offering, must be made to provide seed capital to South Carolina businesses, this seed capital to be used primarily for the purpose of enhancing the production capacity of these businesses or their ability to do business in South Carolina. However, to the extent that the fund directly induces seed capital monies from outside the State to be invested in South Carolina businesses in which it is also investing, the fund may substitute up to two-thirds of these outside monies for its own capital in fulfillment of the requirements of this section. Except as otherwise provided below, Seventy seventy percent of these investment monies induced into the State or acquired by the fund for which the tax credit is allowed and available must be invested to provide seed capital financing of either start-up businesses or pre-start-up businesses. The remaining thirty percent may be invested as the general partner of the fund determines to provide capital to South Carolina businesses. Investments may be made by the fund in community development financial institutions as defined in Section 34-13-175, and these community development financial institutions are considered to be suitable investments for the fund. Notwithstanding the seventy and thirty percent investment requirements above, the fund may choose to invest a fractional percentage or all of its available monies in community development financial institutions after the effective date of the provisions of this subsection authorizing investments in these institutions." SECTION 7. The 1976 Code is amended by adding:
"Section 43-1-85. The Department of Social Services, from grant funds made available to the department by the General Assembly or from other available grant funds, may make grants to community development financial institutions as defined in Section 34-13-175 for the use of these organizations consistent with their stated objectives. The General Assembly in the annual general appropriations act may appropriate funds to the department to be used by it to make grants to community development financial institutions as authorized herein."
SECTION 8. This act takes effect upon approval by the Governor.