Current Status Bill Number:4397 Ratification Number:234 Act Number:231 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19960109 Primary Sponsor:Wilkins All Sponsors:Wilkins, Huff, Sharpe, H. Brown, D. Smith, Cato, Townsend, Haskins, J. Brown, Littlejohn, Herdklotz, Hutson, J. Young, Jennings, Simrill, Bailey, Harrell, Allison, Law, Walker, Gamble, Richardson Drafted Document Number:PFM\7754HTC.96 Date Bill Passed both Bodies:19960202 Date of Last Amendment:19960117 Governor's Action:S Date of Governor's Action:19960212 Subject:Economic Development Industrial Cluster Act of 1996
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
------ 19960222 Act No. A231
------ 19960212 Signed by Governor
------ 19960206 Ratified R234
Senate 19960202 Read third time, enrolled for
ratification
Senate 19960201 Read second time, unanimous consent
for third reading on Friday,
19960202
Senate 19960131 Committee report: Favorable 06 SF
Senate 19960123 Introduced, read first time, 06 SF
referred to Committee
House 19960118 Read third time, sent to Senate
House 19960117 Amended, read second time
House 19960116 Made Special Order under H.4449
House 19960116 Debate adjourned until
Wednesday, 19960117
House 19960116 Debate interrupted
House 19960110 Committee report: Favorable with 30 HWM
amendment
House 19960109 Introduced, read first time, 30 HWM
referred to Committee
House 19951220 Prefiled, referred to Committee 30 HWM
View additional legislative information at the LPITS web site.
(A231, R234, H4397)
AN ACT ENACTING THE ECONOMIC DEVELOPMENT INDUSTRIAL CLUSTER ACT OF 1996, BY AMENDING THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTIONS 12-6-3480, 38-7-190, 12-10-45, AND 12-20-105 SO AS TO ALLOW CERTAIN INCOME TAX CREDITS TO BE APPLIED AGAINST INSURANCE PREMIUM TAX LIABILITIES AND VICE VERSA, TO ALLOW CERTAIN INCOME TAX CREDITS TO BE APPLIED AGAINST CORPORATE LICENSE FEES, AND TO PROVIDE FOR THE DESIGNATION OF ADDITIONAL ENTERPRISE ZONES IN THE CASE OF PROJECTS OF QUALIFYING TIRE MANUFACTURERS; TO AMEND SECTION 12-6-3360, AS AMENDED, RELATING TO THE TARGETED JOBS TAX CREDIT, SO AS TO EXTEND THE TAX CREDIT CARRY FORWARD PERIOD FROM TEN TO FIFTEEN YEARS; TO AMEND SECTION 12-10-70, RELATING TO ADDITIONAL TAX CREDITS ALLOWED IN ENTERPRISE ZONES AND OTHER SITUATIONS RELATED TO SOCIO-ECONOMIC STATUS, SO AS TO EXTEND THESE PROVISIONS TO QUALIFYING TIRE MANUFACTURERS AND ALLOW THE QUALIFICATION OF A PERCENTAGE OF TRANSFERRED EMPLOYEES AS NEW EMPLOYEES IN THE CASE OF AN ELIGIBLE TIRE MANUFACTURER; TO AMEND SECTION 12-10-80, RELATING TO THE JOB DEVELOPMENT FEES ALLOWED QUALIFYING BUSINESSES, SO AS TO CLARIFY THE STATUS OF THE FEES IN THE EVENT OF DISQUALIFICATION AND PROVIDE ADDITIONAL CIRCUMSTANCES UNDER WHICH JOB DEVELOPMENT FEES MAY BE EXPENDED; TO AMEND SECTION 12-14-30, RELATING TO DEFINITIONS UNDER THE ECONOMIC IMPACT ZONE COMMUNITY DEVELOPMENT ACT OF 1995, SO AS TO PROVIDE ADDITIONAL ELIGIBILITY FOR QUALIFYING FOR THE BENEFITS ALLOWED IN THE ACT; TO AMEND SECTION 12-21-2423, AS AMENDED, RELATING TO THE RETENTION OF A PORTION OF ADMISSIONS LICENSE TAXES FOR MAJOR TOURISM OR RECREATION PROJECTS, SO AS TO CLARIFY THE APPLICATION OF THE PROVISION ALLOWING THE RETENTION OF THESE TAX REVENUES; TO AMEND SECTION 12-37-930, AS AMENDED, RELATING TO VALUATION OF PROPERTY AND ALLOWABLE DEPRECIATION OF PROPERTY FOR PURPOSES OF PROPERTY TAXATION, SO AS TO ALLOW A HIGHER DEPRECIATION RATE FOR RUBBER PRODUCTS AND ALLOW A LOWER DEPRECIATION LIMIT FOR QUALIFYING TIRE MANUFACTURERS; AND TO PROVIDE THE DUTIES OF THE CODE COMMISSIONER IN THE PREPARATION OF THE CUMULATIVE SUPPLEMENT WITH RESPECT TO SECTION 12-10-70 AS AMENDED BY THIS ACT.
Be it enacted by the General Assembly of the State of South Carolina:
Citation
SECTION 1. This act may be cited as the Economic Development Industrial Cluster Act of 1996.
Findings
SECTION 2. The General Assembly finds that:
(1) The economic well-being of the citizens of the State will be enhanced by the increased development and growth of business within the State, and that it is in the best interest of the State to induce the location or expansion of business within the State in order to promote the public purpose of creating new jobs within the State;
(2) This act will promote the creation of industrial clusters. These industrial clusters will produce new and vibrant growth which will in turn expand our economy through business interaction. These interactions will reinforce and strengthen the competitive position of each of the cluster's constituent businesses.
The industrial clusters will develop particular sets of location-specific strengths. Each area in the State which has a unique characteristic which promotes a cluster, such as raw materials, access to markets, or transportation access, will eventually create a concentration of knowledge in a particular discipline, all of which will expand economy opportunities to the citizens of the State.
Tax credits
SECTION 3. A. Article 25, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-3480. (A) Notwithstanding any other provision of law:
(1) Any credits under Title 38 may be applied against any taxes imposed under this chapter or license fees imposed under Chapter 20 of this title.
(2) Any credits under this chapter which are earned by one member of a controlled group of corporations may be used and applied by that member and by any other members of the controlled group of corporations.
(3) Any limitations upon the total amount of liability for taxes or license fees that can be reduced by the use of a credit must be computed before any other credit is used to reduce any tax or license fee liability under this chapter or Chapter 20 of this title. Subject to item (4), the taxpayer may apply any credits arising under this chapter in any order the taxpayer elects.
(4) No credit may be used more than once, and all credits must be used, to the extent possible in any given year, first by the company that earned them, and second against the tax which generated them.
(5) As used in this section:
(a) the term `controlled group of corporations' has the same meaning as provided under Section 1563 of the Internal Revenue Code without regard to Section 1563(a)(4), (b)(2)(A), only with respect to corporations which are in existence for less than one-half the number of days in the tax year referred to therein, and (b)(2)(C) and (D);
(b) the term `tax credit' or `credit' means a statutorily directed or authorized reduction in the tax liability made after any applicable tax rates are applied."
B. This section is effective for tax years beginning after 1995.
Tax credits
SECTION 4. A. Chapter 20, Title 12 of the 1976 Code, as added by Act 76 of 1995, is amended by adding:
"Section 12-20-105. License fees may be reduced by credits as provided in Section 12-6-3410 or Section 12-6-3480, or both of these sections."
B. This section is effective for tax years beginning after 1995.
Tax credits
SECTION 5. A. Chapter 7, Title 38 of the 1976 Code is amended by adding:
"Section 38-7-190. (A) Notwithstanding any other provision of law:
(1) Any credits under Chapter 6 of Title 12 may be applied against any taxes, license fees, and other assessments imposed under this title.
(2) Any credits under this title which are earned by one member of a controlled group of corporations may be used and applied by that member and any other members of the controlled group of corporations.
(3) Any limitations upon the total amount of liability for taxes that can be reduced by the use of a credit must be computed before any credit is used to reduce any tax liability under this title. Subject to item (4), the taxpayer may apply any credits arising under this title in any order the taxpayer elects.
(4) No credit can be used more than once, and all credits must be used, to the extent possible in any given year, first by the company that earned them, and second against the tax which generated them.
(5) As used in this section:
(a) The term `controlled group of corporations' has the same meaning as provided under Section 1563 of the Internal Revenue Code without regard to Section 1563(a)(4), (b)(2)(A) only with respect to corporations which are in existence for less than one-half the number of days in the tax year referred to therein, and (b)(2)(C) and (D);
(b) The term `tax credit' or `credit' means a statutorily directed or authorized reduction in the tax liability made after any applicable tax rates are applied."
B. This section is effective for tax years beginning after 1995.
Enterprise zone
SECTION 6. Chapter 10, Title 12 of the 1976 Code, as added by Act 25 of 1995, is amended by adding:
"Section 12-10-45. A tire manufacturer that has over one billion dollars in capital investment in this State, and employs over five thousand workers in this State may, after certification by the council, designate up to two census tracts, but not to exceed four hundred acres per site, in any area of the State as an enterprise zone provided that a capital investment of at least one hundred million dollars be made over a five-year period at each site. The tire manufacturer's capital investment must be based upon the gross cost of assets in South Carolina as shown on the manufacturer's property tax and fee-in-lieu of property tax filings. The council will certify the manufacturer if it determines that the available incentives are appropriate for the new project, the total benefits of the new project exceed the costs to the public, and the qualifying business otherwise fulfills the requirements of this chapter."
Carry forward
SECTION 7. A. Section 12-6-3360(H) of the 1976 Code, as added by Act 76 and amended by Act 145 of 1995, is further amended to read:
"(H) A credit claimed under this section but not used in a taxable year may be carried forward for fifteen years from the taxable year in which the credit is earned by the taxpayer. Credits which are carried forward must be used in the order earned and before jobs credits claimed in the current year."
B. This section is effective for taxable years beginning after 1995.
Tax credits
SECTION 8. Section 12-10-70(1) of the 1976 Code, as added by Act 25 of 1995, is amended to read:
"(1) (a) If at least fifty-one percent of the full-time employees hired for the project either reside in an enterprise zone at the time of employment, have a household income that is eighty percent or less of the median household income for the county prior to employment, or have been a recipient of Aid to Families with Dependent Children (AFDC) payments within the past twelve months; or
(b) If the business is a tire manufacturer that has a capital investment in this State which exceeds one billion dollars and employs more than five thousand employees in this State at all times during the tax year for which the credit is claimed, the qualifying business is entitled to the jobs tax credit for the period and in the amount provided in Section 12-6-3360(C)(1); in addition, a qualifying business is entitled to an additional five hundred dollars a year tax credit in the third, fourth, and fifth year of any AFDC recipient's continued employment with the qualifying business, based on the status of the employee at the time of beginning employment. Except as stated below, a new job is not considered a new job for the purpose of this credit if it replaces the same job that was part of a reduction in force in the preceding twelve months. A tire manufacturer may qualify as new jobs up to ninety percent of the employees transferred from an existing project in the State to one of up to three new projects approved by the council if:
(i) the tire manufacturer has a capital investment in this State which exceeds one billion dollars, as defined in Section 12-10-45;
(ii) the tire manufacturer employs more than five thousand employees in this State at all times during the tax year for which the credit is claimed;
(iii) the tire manufacturer makes a capital investment in excess of five hundred million dollars in this State over the five-year period beginning on the stipulated date; and
(iv) the council and the tire manufacturer enter into a revitalization agreement that, among other provisions:
(A) clearly defines the three new projects,
(B) limits the credit for transferred jobs to jobs that were either backfilled by other new hires in the State or the transfer was needed to retain an employee's employment in the State,
(C) includes a provision for an audit by the Department of Revenue and Taxation to ensure that the credit for transferred employees is only allowed for employees transferred for valid business reasons from projects in operation in the State on the stipulated date to one of the three defined new projects, and
(D) no credit will be allowed for employees transferred solely to obtain the credit."
Job development fee
SECTION 9. A. Subsection (A) of Section 12-10-80 of the 1976 Code, as added by Act 32 of 1995, is amended to read:
"(A) Upon certification by the council to the department of the council's determination that a business is a qualifying business, a qualifying business may collect a job development fee by retaining an amount of employee withholding permitted by subsection (C) or (D), or both, for the purposes permitted by subsection (B) or (D), respectively. The amount retained is the property of the business, subject to all of the conditions in this section including the later possible requirement that the funds be transferred to this State as withholding and the possible forfeiture of the funds to this State as misappropriated withholding. The retained withholding must be maintained in an escrow account with a bank which is insured by the Federal Deposit Insurance Corporation. To the extent the money is not used as permitted by subsection (B) or (D), it must be treated as misappropriated employee withholding. Employee withholding may not be retained from an employee whose job was created in this State before the entry of the qualifying business into a revitalization agreement. If a qualifying business retains employee withholding under this section, it shall make its payroll books and records available for inspection by the council and the department at the times the council and the department request. Each qualifying business retaining employee withholding under this section shall file with the council and the department the information and documentation respecting the retention and use of the employee withholding according to the revitalization agreement. Each qualifying business which retains in excess of ten thousand dollars in any calendar year shall furnish an audited report prepared by an independent certified public accountant which itemizes the sources and uses of the funds. The audited report must be filed with the council and the department no later than June thirtieth following the calendar year of the retention. Each qualifying business retaining employee withholding under this section is allowed a credit against the withholding tax liability provided in Chapter 9 of this title otherwise owed to the State, the credit not to exceed the lesser of the amount of such tax or the aggregate amount of employee withholding retained. No employer may withhold an amount that results in any employee ever receiving a smaller amount of wages on either a weekly or on an annual basis than the employee would otherwise receive in the absence of this chapter."
B. That portion of subsection (B) preceding item (1) of Section 12-10-80 of the 1976 Code, as added by Act 32 of 1995, is amended to read:
"A qualifying business may collect a job development fee under the revitalization agreement for a period not to exceed fifteen years. A qualifying business must create at least ten new, full-time jobs at the South Carolina facility described in the revitalization agreement. Capital expenditures from the escrow account must be expended at the above-described facility or for utility or transportation improvements that serve this facility. The qualifying business may expend funds from the escrow account if (a) the expenditures are incurred during the term of the revitalization agreement or within sixty days before the execution of a revitalization agreement, including a preliminary revitalization agreement, (b) the expenditures from the escrow account are authorized by the revitalization agreement, (c) the expenditures are approved in writing by the council and the department prior to expenditure, and (d) the expenditures are for any of the following purposes:"
C. This section is effective April 4, 1995.
Definitions
SECTION 10. A. Section 12-14-30 of the 1976 Code, as added by Act 25 of 1995, is amended to read:
"Section 12-14-30. As used in this chapter:
(1) An `economic impact zone' is a county or municipality, any portion of which is located within fifty miles of the boundaries of an applicable federal military installation or an applicable federal facility, and any area not otherwise included as part of the economic impact zone if the State Budget and Control Board determines the area to be adversely impacted by the closing, realignment, or downsizing of an applicable federal military installation or an applicable federal facility.
(2) An `applicable federal military installation' is one which is closed or realigned under:
(a) the Defense Base Closure and Realignment Act of 1990;
(b) Title II of the Defense Authorization Amendments and Base Closure and Realignment Act; or
(c) Section 2687 of Title 10, United States Code.
(3) An `applicable federal facility' is one which is:
(a) a federal facility that has reduced its permanent employment by three thousand or more jobs after December 31, 1990;
(b) a manufacturing facility that has closed or experienced permanent layoffs and notified the Employment Security Commission under the federal Worker Adjustment and Retraining Notification (WARN) Act of 1988. The number of jobs lost must equal twenty-five percent or more of the total workforce in the census tract in which the facility is located at the time the layoff occurred. The job loss must have occurred no more than five years before April 4, 1995, except in any census tract where a catastrophic loss of one thousand or more jobs from a single employer has occurred since 1980 and fewer than half the jobs have been replaced.
(4) `Internal Revenue Code' has the meaning provided in Section 12-6-40(A)."
B. This section is effective April 4, 1995.
Admissions taxes
SECTION 11. Section 12-21-2423 of the 1976 Code, as last amended by Act 497 of 1994, is further amended to read:
"Section 12-21-2423. An amount equal to one-fourth of the license tax on admissions to a major tourism or recreation facility collected by the Department of Revenue and Taxation beginning when the facility is open to the general public or the application is approved by the department, whichever is later, and ending fifteen years thereafter must be paid to the county or municipality in which the major tourism or recreation facility is located to be used directly or indirectly for additional infrastructure improvements. If the facility is located in an unincorporated area of a county, the payment must be made to the county governing body and, if located within the corporate limits of a municipality, the payment must be made to the municipal governing body. The county or municipal governing body may share funds received from these payments with another county, special purpose district, or municipal governing body to provide additional infrastructure facilities or services in support of the tourism or recreation facility that generates the admission tax revenues responsible for the payments. An additional amount equal to one-fourth of the license tax on admissions to a major tourism or recreation facility collected by the beginning when the facility is open to the general public or the application is approved by the department, whichever is later, and ending fifteen years thereafter must be transferred to the State Treasurer to be deposited into a special tourism infrastructure development fund and distributed pursuant to the approval of the Advisory Coordinating Council for Economic Development of the Department of Commerce as provided in this section. Deposits into the fund must be separated into special accounts based on which facility generated the transfer. Local units of governments within five miles of a major tourism or recreation facility may apply to the council for infrastructure development grants from the special account for which they are eligible. The amount of the funds received by each of the eligible local governments must be determined by the council based upon its review of a grant application submitted by each government. Preference must be given to applications for projects which directly or indirectly serve the generating facility or other development occurring as a result of the generating facility. Grants may run for more than one year and may be based upon a specified dollar amount or a percentage of the funds annually deposited into the special account. After approval of a grant application the council may approve the release of funds to eligible local governments. Funds must be used directly or indirectly for additional infrastructure improvements provided in this section. The council shall adopt guidelines to administer the fund including, but not limited to, tourism infrastructure development grant application criteria for review and approval of grant applications. Expenses incurred by the council in administering the fund may be paid from the fund. The application may be filed anytime within the five-year investment period.
For purposes of this section `major tourism or recreation facility' means an establishment or predetermined formally `designated development area' to which an aggregate investment in land and new capital assets or in refurbishing or expanding an existing facility of at least twenty million dollars is made within a five-year period and which is used for a theme park, an amusement park, an historical, educational, or trade museum, a botanical or zoological garden, an aquarium, a cultural center, a theater, a motion picture production studio, a convention center, an arena, a coliseum, an auditorium, a golf course, or a spectator or participatory sports facility and similar establishments. Secondary support facilities such as hotels, food, and retail services located within the establishment or the designated development area or immediately adjacent to and which directly support the primary `tourism or recreation facility' are included as part of the aggregate investment of at least twenty million dollars for the primary tourism or recreation facility. One or more such establishments may be included within a designated development area as part of the aggregate investment of at least twenty million dollars. The aggregate investment totaling at least twenty million dollars may include private or public sector funds or a combination of private and public sector funds. A designated development area includes, but is not limited to, a downtown or waterfront redevelopment area, a local historic district, redevelopment of a closed military facility, or a newly designated economic development site that includes tourism or recreation facilities as described in this section. For those facilities opening before January 1, 1996, a designated development area and its boundaries must be determined within three years of the opening of the new or expanded facilities by municipal ordinance, if located in a municipality, and otherwise by county ordinance, if located in an unincorporated county area, or by more than one ordinance by municipal or county governments, or both, if it embraces areas within two or more governmental jurisdictions. For those facilities opening after December 31, 1995, a designated development area and its boundaries must be determined within one year of the opening of the new or expanded facilities, the total aggregate amount of a designated development area within any municipality or county may not exceed five percent of the total acreage of the municipality or unincorporated county area. One or more designated development areas may be located within a municipality or unincorporated county area. The total acreage for all designated development areas within a municipality must not exceed ten percent of the total acreage of the municipality and the total acreage for all designated development areas within unincorporated areas of a county must not exceed ten percent of the total acreage of the county's unincorporated areas. The acreage limitations for municipalities and unincorporated county areas do not apply to designated development areas located on a closed federal military facility as defined by the Base Realignment and Closure Commission, and the acreage for a designated development area on a closed military facility are in addition to the acreage limitations applicable to any other designated development areas within the same municipality or unincorporated county area. Two or more municipal or county governments or combination of these governments may adopt ordinances to designate a `designated development area' embracing contiguous lands within two or more of the involved county-municipal entities, but the acreage for each involved municipality or county must not exceed five percent of the total acreage in each involved municipality or unincorporated county area. For purposes of this section `additional infrastructure improvement' means a publicly-owned road or pedestrian access way, a right-of-way, a bridge, a water and sewer facility, an electric or a gas facility, a landfill or waste treatment facility, a hospital or other medical facility, a fire station, a school, a transportation facility, a telephone or communications system, or similar infrastructure facility and facilities ancillary thereto including, but not limited to, a publicly-owned tourism or recreation facility which generated the admissions tax from which funds were paid to a county, municipality, or special purpose district.
If an existing establishment or designated development area which includes facilities that generate admissions tax revenues is expanded with an aggregate investment in new land and new capital assets of at least twenty million dollars, the amount of admissions tax revenues to be returned to local governments for a fifteen-year period under the terms of this section is the amount in excess of the annual admissions tax revenues previously generated by the establishment or establishments within the development area. This amount is determined by using the average of the admissions tax revenues generated during the two fiscal years preceding the first year of new and expanded land and capital assets of at least twenty million dollars."
Annual depreciation
SECTION 12A. Item 26 of the schedule contained in the first paragraph of Section 12-37-930 of the 1976 Code is amended to read:
"26. Rubber Products........ 15%."
Depreciation floor
SECTION 12B. The penultimate paragraph of Section 12-37-930 of the 1976 Code, as amended by Act 32 of 1995, is further amended to read:
"In no event may the original cost be reduced by more than eighty percent, except this limit is ninety percent for:
(1) custom molds and dies used in the conduct of manufacturing electronic interconnection component assembly devices for computers and computer peripherals; and
(2) equipment used in the manufacture of tires by manufacturers who employ more than five thousand employees in this State and have over one billion dollars in capital investment in this State. Capital investment will be based upon the gross cost of assets in South Carolina as shown on the manufacturer's property tax and fee-in-lieu of property tax filings. In the year of acquisition, depreciation is allowed as if the property were owned for the full year. The term `original cost' means gross capitalized cost, including property on which the taxpayer made the election allowed pursuant to Section 179 of the Internal Revenue Code of 1986, as shown by the taxpayer's records for income tax purposes. For purposes of this paragraph, custom molds and dies used in the conduct of manufacturing electronic interconnection component assembly devices for computers and computer peripherals are molds and dies designed, produced, and conditioned to the special order of a manufacturer."
Stipulated date
SECTION 13. As used in the amendments to Section 12-10-70(1)(b) contained in this act, the phrase "stipulated date" means the general effective date of this act and the Code Commissioner in the preparation of the cumulative supplement to the Code of Laws of South Carolina, 1976, is directed to delete the phrase "stipulated date" and insert the calendar date that is the general effective date of this act.
Time effective
SECTION 14. Except where otherwise stated, this act takes effect upon approval by the Governor.
Approved the 12th day of February, 1996.