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AS PASSED BY THE SENATE
April 17, 2002
Introduced by Senators J. Verne Smith, Leatherman, Drummond, McConnell, Land, Holland, Saleeby, Setzler, Leventis, Moore, Courson, Giese, Matthews, Thomas, Patterson, McGill, O'Dell, Reese, Hayes, Gregory, Martin, Mescher, Rankin, Ryberg, Short, Waldrep, Alexander, Fair, Hutto, Anderson, Ravenel, Branton, Grooms, Hawkins, Pinckney, Ritchie, Verdin, Kuhn, Richardson, Peeler and Bauer
S. Printed 4/17/02--S.
Read the first time April 10, 2002.
TO AMEND TITLE 11, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PUBLIC FINANCE, BY ADDING CHAPTER 41 ENACTING THE "STATE GENERAL OBLIGATION ECONOMIC DEVELOPMENT BOND ACT" SO AS TO AUTHORIZE THE ISSUANCE OF BONDS FOR INFRASTRUCTURE FINANCING AS GENERAL OBLIGATION BONDS OF THE STATE OF SOUTH CAROLINA AND TO PRESCRIBE THE TERMS, CONDITIONS, USES, AND DISTRIBUTION OF THE BONDS AND THEIR PROCEEDS; AND TO INCREASE THE LIMITATION ON GENERAL OBLIGATION BOND DEBT SERVICE PROVIDED IN ARTICLE X, SECTION 13 OF THE SOUTH CAROLINA CONSTITUTION FROM FIVE PERCENT TO SIX PERCENT WITH THE ADDITIONAL DEBT SERVICE LIMITED TO STATE GENERAL OBLIGATION ECONOMIC DEVELOPMENT BONDS AS PROVIDED IN THIS ACT.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 11 of the 1976 Code is amended by adding:
Section 11-41-10. This chapter may be cited as the 'State General Obligation Economic Development Bond Act'.
Section 11-41-20. As incident to this chapter, the General Assembly finds:
(1) That by Section 4, Act 10 of 1985, the General Assembly ratified an amendment to Article X, Section 13(6)(c), Constitution of this State. One amendment, in Article X, Section 13(6)(c), limits the issuance of general obligation debt of the State such that maximum annual debt service on all general obligation bonds of the State, excluding highway bonds, state institution bonds, tax anticipation notes, and bond anticipation notes, must not exceed five percent of the general revenues of the State for the fiscal year next preceding, excluding revenues which are authorized to be pledged for state highway bonds and state institution bonds.
(2) Article X, Section 13(6)(c), as amended, further provides that the percentage rate of general revenues of the State by which general obligation bond debt service is limited may be reduced to four or increased to seven percent by legislative enactment passed by a two-thirds vote of the total membership of the Senate and a two-thirds vote of the total membership of the House of Representatives.
(3) In order to foster economic development within the State, it is in the best interests of the State that the limitation on general obligation debt imposed by Article X, Section 13(6)(c) be increased to six percent with the additional debt service capacity available at any time as a consequence of the increase available only for the repayment of general obligation bonds issued to provide infrastructure for economic development within the State.
Section 11-41-30. As used in this chapter:
(1) 'Department' means the State Department of Commerce.
(2) 'Economic development project' or 'project' means a project as defined in Section 12-44-30(16) in which a total of at least four hundred million dollars is invested by the sponsor and at least four hundred new jobs are created at the project by the sponsor. To qualify as an economic development project for purposes of this chapter, the investment and job creation requirements must be attained no later than the eighth year after the project first begins operations.
(3) 'Infrastructure' must relate specifically to the economic development project and means:
(a) land acquisition;
(b) site preparation;
(c) road and highway improvements;
(d) rail spur construction;
(e) water service;
(f) wastewater treatment;
(g) employee training which may include equipment used for such purpose; and
(h) environmental mitigation.
(4) 'Investment' means money expended by the sponsor on capital assets directly related to the economic development project and does not include amounts expended in aid of the project by the state pursuant to this chapter or otherwise, or amounts expended in aid of the project by a county, municipality, a special purpose district, however financed.
(5) 'Sponsor' means a sole proprietor, partnership, corporation of any classification, limited liability company, or association taxable as a business entity or any combination of these entities.
(6) 'State general obligation economic development bonds', or 'economic development bonds' or 'bonds' means general obligation bonds of this State issued under the authority of this chapter.
(7) 'New job' means a full-time job created in this State at an economic development project. The term does not include a job created when an employee is shifted from an existing location in this State to a new or expanded facility whether the transferred job is from, or to, a project of the sponsor or a related person. A related person includes any entity or person that bears a relationship to the sponsor as described in Section 267 of the Internal Revenue Code of 1986. Full-time means a job requiring a minimum of thirty-five hours of an employee's time a week for the entire normal year of sponsor operations or a job requiring a minimum of thirty-five hours of an employee's time a week for a year if the employee was hired initially for or transferred to the project. Two half-time jobs are considered one full-time job. A half-time job is a job requiring a minimum of twenty hours of an employee's time a week otherwise meeting the full-time job requirements.
Section 11-41-40. To obtain funds for allocation to the department for financing of infrastructure, there are issued from time to time state general obligation economic development bonds under the conditions prescribed by this chapter.
Section 11-41-50. Pursuant to Article X, Section 13(6)(c) of the Constitution of this State, the General Assembly provides that the maximum annual debt service on all general obligation bonds of the State, including economic development bonds, but excluding highway bonds, state institution bonds, tax anticipation notes, and bond anticipation notes, must not exceed six percent of the general revenues of the State for the fiscal year next preceding, excluding revenues which are authorized to be pledged for state highway bonds and state institution bonds. The State at any time must not have outstanding general obligation bonds, excluding economic development bonds, highway bonds, state institution bonds, tax anticipation notes, and bond anticipation notes, the maximum annual debt service on which exceeds five percent of the general revenues of the State for the fiscal year next preceding, excluding revenues which are authorized to be pledged for state highway bonds and state institution bonds.
Section 11-41-60. The maximum annual debt service on bonds issued pursuant to this chapter must not exceed one percent of the general revenues of this State for the fiscal year next preceding, excluding revenues which are authorized to be pledged for state highway bonds and state institution bonds.
Section 11-41-70. Before issuing economic development bonds, the department shall notify the Joint Bond Review Committee and the State Budget and Control Board of the following:
(1) the amount then required for allocation to the department to defray the costs of the proposed infrastructure;
(2) a description of the infrastructure for which the bonds are to be issued, including a certification by the secretary of the department that each economic development project to benefit from the expenditure of the proceeds of the bonds consists of an investment in the State of not less than four hundred million dollars and creates no fewer than four hundred new jobs;
(3) a tentative time schedule setting forth the period of time during which the sum requested is to be expended;
(4) a debt service table showing the annual principal and interest requirements for all bonds then outstanding; and
(5) the total amount of all bonds issued.
Section 11-41-80. Following the receipt of the notification presented pursuant to Section 11-41-70 and after approval by the Joint Bond Review Committee, the State Budget and Control Board, by resolution duly adopted, shall effect the issue of bonds, or pending the issue of the bonds, effect the issue of bond anticipation notes pursuant to Chapter 17 of this title.
Section 11-41-90. To effect the issuance of bonds, the State Budget and Control Board shall adopt a resolution providing for the issuance of bonds pursuant to the provisions of this chapter. The authorizing resolution must include:
(1) a schedule showing the aggregate of bonds issued, the annual principal payments required to retire the bonds, and the interest on the bonds;
(2) the amount of bonds proposed to be issued;
(3) a schedule showing future annual principal requirements and estimated annual interest requirements on the bonds to be issued; and
(4) certificates evidencing that the provisions of Sections 11-41-50 and 11-41-60 of this chapter have been or will be met.
Section 11-41-100. The bonds must bear the date and mature at the time that the resolution provides, except that a bond may not mature more than thirty years from its date of issue. The bonds may be in the denominations, be payable in the medium of payment, be payable at the place and at the time, and be subject to redemption or repurchase and contain other provisions determined by the State Budget and Control Board before their issue. The bonds may bear interest payable at the times and at the rates determined by the State Budget and Control Board.
Section 11-41-110. All bonds issued under this chapter are exempt from taxation as provided in Section 12-2-50.
Section 11-41-120. All bonds issued under this chapter must be signed by the Governor and the State Treasurer. The Governor and State Treasurer may sign these obligations by a facsimile of their signatures. The Great Seal of the State must be affixed to, impressed on, or reproduced upon each of them and each must be attested by the Secretary of State. The delivery of the bonds executed and authenticated is valid notwithstanding changes in officers or seal occurring after the execution or authentication.
Section 11-41-130. For the payment of the principal and interest on all bonds issued and outstanding pursuant to this chapter there is pledged the full faith, credit, and taxing power of this State, and in accordance with the provisions of Section 13(4), Article X of the Constitution of this State, the General Assembly allocates on an annual basis sufficient tax revenues to provide for the punctual payment of the principal and interest on the debt authorized by this chapter.
Section 11-41-140. Bonds must be sold by the Governor and the State Treasurer upon sealed proposals, after publication of notice of the sale one or more times at least seven days before the sale, in a financial paper published in New York City which regularly publishes notices of sale of state or municipal bonds. The bonds may be awarded upon the terms and in the manner as prescribed by the State Treasurer. The right is reserved to reject all bids and to readvertise the bonds for sale. For the purpose of bringing about successful sales of the bonds, the State Treasurer may do all things ordinarily and customarily done in connection with the sale of state or municipal bonds. All expenses incident to the sale of the bonds must be paid from the proceeds of the sale of the bonds.
Section 11-41-150. The proceeds of the sale of bonds must be received by the State Treasurer and applied by him to the purposes for which issued, except that the accrued interest, if any, may be used to discharge in part the first interest to become due on the bonds, and the premium, if any, must be used to discharge the payment of the first installment of principal to become due on the bonds, but the purchasers of the bonds in no way are liable for the proper application of the proceeds to the purposes for which they are intended.
Section 11-41-160. It is lawful for all executors, administrators, guardians, and other fiduciaries to invest any monies in their hands in bonds issued pursuant to this chapter.
Section 11-41-170. The proceeds received from the issuance of bonds, after deducting the costs of issuance, must be expended only for the purpose of providing infrastructure."
SECTION 2. This act takes effect upon approval by the Governor.
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