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H. 4223
STATUS INFORMATION
General Bill
Sponsors: Reps. Kirsh, McCraw and J.R. Smith
Document Path: l:\council\bills\pt\1516mm03.doc
Introduced in the House on May 15, 2003
Currently residing in the House Committee on Ways and Means
Summary: Industrial development projects requiring a fee in lieu of taxes
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 5/15/2003 House Introduced and read first time HJ-13 5/15/2003 House Referred to Committee on Ways and Means HJ-14
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND CHAPTER 12, TITLE 4, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE FEE IN LIEU OF PROPERTY TAXES ACT, SECTION 4-29-67, AS AMENDED, RELATING TO INDUSTRIAL DEVELOPMENT PROJECTS REQUIRING A FEE IN LIEU OF PROPERTY TAXES, AND CHAPTER 44 OF TITLE 12, RELATING TO THE FEE IN LIEU OF TAX SIMPLIFICATION ACT, ALL SO AS TO PROVIDE FOR DESIGNATIONS OF COUNTIES AS REDUCED INVESTMENT COUNTIES BY DECEMBER THIRTY-FIRST OF EACH YEAR BASED ON DATA AVAILABLE ON THE MOST RECENT NOVEMBER FIRST, TO PROVIDE WHEN THE DESIGNATIONS ARE EFFECTIVE FOR A SPONSOR, TO INCLUDE AMOUNTS EXPENDED AT A PROJECT AS A NONRESPONSIBLE PARTY PURSUANT TO THE BROWNFIELDS VOLUNTARY CLEANUP PROGRAM TOWARD THE MINIMUM INVESTMENT THRESHOLD, TO REPLACE THE WORD "INVESTOR" WITH THE WORD "SPONSOR", TO PROVIDE THAT FAILURE TO MAINTAIN THE MINIMUM LEVEL OF INVESTMENT IN A PROJECT RESULTS IN DISQUALIFICATION FOR THE FEE, TO SUSPEND THE STATUTE OF LIMITATIONS FOR ASSESSMENT OF TAXES OR FEES DUE ON A PROJECT IF NECESSARY TO THE DETERMINATION OF COMPLIANCE WITH INVESTMENT REQUIREMENTS, TO DELETE THE QUALIFICATION FOR A FOUR PERCENT ASSESSMENT ON INVESTMENTS OF AT LEAST FOUR HUNDRED MILLION DOLLARS IN LEAST DEVELOPED OR UNDERDEVELOPED COUNTIES BY A LIMITED LIABILITY COMPANY AND BY AN INVESTOR AFFILIATE LOCATED CONTIGUOUS TO THE INVESTOR PROJECT, TO SPECIFY THAT PROPERTY TAXES REFERENCES ARE TO AD VALOREM PROPERTY TAXES, TO PROVIDE FOR THE ESTABLISHMENT OF THE MILLAGE RATE BY WAY OF A MILLAGE RATE AGREEMENT OR THE INITIAL LEASE AGREEMENT, TO PROHIBIT AN INCREASE IN THE TERM OF THE AGREEMENT OR A DECREASE IN THE MILLAGE OR DISCOUNT RATE OR ASSESSMENT RATIO, TO CHANGE TIME PERIODS FOR MEETING CERTAIN INVESTMENT AND JOB CREATION REQUIREMENTS, TO PROVIDE FOR A NONCASH CREDIT AGAINST A FEE DUE FROM A SPONSOR, TO REQUIRE A CLAIM FOR ADJUSTMENT FOR A MISALLOCATION OF FEE BE MADE WITHIN ONE YEAR OF THE IMPROPER DISTRIBUTION, TO PROVIDE FOR THE BASIS IN TRANSFERRED PROPERTY SUBJECT TO THE FEE, TO CHANGE REFERENCES FROM "MULTICOUNTY PARK" TO "INDUSTRIAL DEVELOPMENT PARK", TO PROVIDE THAT A SPONSOR FILE DUPLICATE FORMS OR RETURNS WITH THE DEPARTMENT OF REVENUE AND THE COUNTY OR COUNTIES IN WHICH THE PROJECT IS LOCATED, TO PROVIDE FOR THE WAIVER OF CERTAIN ITEMS IN A RECAPITULATION OF THE CONTENTS OF AN AGREEMENT; AND TO AMEND SECTION 4-29-10, AS AMENDED, RELATING TO DEFINITIONS FOR PURPOSES OF INDUSTRIAL DEVELOPMENT PROJECTS REQUIRING A FEE IN LIEU OF TAXES, SO AS TO DELETE DEFINITIONS OF "INVESTOR", "INVESTOR AFFILIATE", AND "BUSINESS".
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. A. Chapter 12, Title 4 of the 1976 Code is amended to read:
Section 4-12-10. As used in this chapter:
(1) 'Department' means the South Carolina Department of Revenue.
(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 by a sponsor.
(3) 'Sponsor' means one or more entities which sign the fee inducement agreement with the county and also includes a sponsor affiliate unless the context clearly indicates otherwise.
(4) 'Sponsor affiliate' means an entity that joins with or is an affiliate of a sponsor and that participates in the investment in, or financing of, a project.
(5) 'Title to the property' as provided in Section 4-12-30 includes either record title or a leasehold or other interest including, without limitation, a sponsor or sponsor affiliate's interest in a nordic, synthetic, defeased tax benefit, or transfer lease 'Lease agreement' means an agreement between the county and the sponsor leasing the property at the project from the county to the sponsor.
Section 4-12-20. Every agreement between a county, municipality, school district, water and sewer authority, or other political subdivision and another party in the form of a lease must contain a provision requiring the other party to make payments to the county, municipality, school district, water and sewer authority, and other political subdivisions in which the project is located in lieu of taxes, in the amounts that would result from taxes levied on the project by a county, municipality, school district, water and sewer authority, and other political subdivisions, if the project were owned by the other party, but with appropriate reductions similar to the tax exemptions, if any, which would be afforded to the other party 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 a sponsor may enter into an inducement agreement which provides for a payment fee in lieu of taxes, as provided in this section, for certain property, title to which is held by the county, and leased to the sponsor. 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 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 through a lease agreement must include a legal description and plat of the real property.
(2) The investment must be a project which is must be 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 provided for in the agreement; and
(c) all the counties are parties to all agreements establishing the terms of the fee.
(3) The minimum level of investment in the project must be at least five million dollars and must be invested within the time period provided in subsection (C)(2). If a county has an average annual unemployment rate of at least twice the state average during each of the last two calendar years the last twenty-four months based on data available on the most recent November first, the minimum level of investment is one million dollars. The department shall designate these reduced investment counties by December thirty-first of each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose inducement agreement is signed in the calendar year following the county designation. Investments may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property at a project pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program, if the Department of Health and Environmental Control has issued a certificate of completion for the cleanup. If these the amounts, under the Brownfields Voluntary Cleanup Program, equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met.
(4)(a) A sponsor and a sponsor affiliate may qualify for the fee if each sponsor and sponsor affiliate invests the minimum level of investment as specified in subsection (B)(3).
(b) If the project consists of a manufacturing, research and development, corporate office, or distribution facility, as those terms are defined in Section 12-6-3360(M), each sponsor or sponsor affiliate is not required to invest the minimum investment required by subsection (B)(3), if the total investment in the project exceeds ten million dollars. The county and the sponsors who are part of the inducement agreement may agree that any investments
(c) Investments by sponsor affiliates within the time periods provided in subsections (C)(1) and (C)(2) qualify for the payment fee whether or not the affiliate was part of the inducement agreement. To qualify for the fee, the other sponsor affiliates must be are approved specifically by the county and must agree to be bound by agreements with the county relating to the fee, except that the sponsor affiliates are not bound by agreements, or portions of agreements, to the extent the agreements do not affect the county. Except as otherwise provided in The inducement agreement or the lease agreement may provide for a process for approval of sponsor affiliates. subsection (B)(2), the
(d) The investments pursuant to this subsection (B)(4)(b) item must be within the same county or industrial park at the same project.
(b)(e) The department must be notified in writing of all sponsor affiliates which have investments subject to the fee before or within ninety days after the end of the calendar year during which the project or pertinent 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 affect the fee adversely, 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, not to exceed fifty thousand dollars.
(c)(f)(i) If at any time a sponsor or sponsor affiliate no longer has the minimum level of investment as provided in subsection (B)(3), without regard to depreciation, that sponsor or sponsor affiliate no longer qualifies for the fee.
(ii) Except as provided in subsection (H)(3), if the sponsor qualifies for the fee under subsection (D)(4), the sponsor must maintain the applicable level of investment, without regard to the depreciation. If the sponsor fails to maintain the applicable investment it no longer qualifies for the fee.
(5)(a) Before undertaking a project, the county council or county councils shall find:
(i)(a) find 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)(b) find 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 provide 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)(c) In addition to the findings required in subsection (B)(5)(a) above, the county council or county councils, with assistance and advice, from the department or the Board of Economic Advisors shall determine find 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 the projects within the State is of paramount importance and
(d) find that the benefits of the project are greater than the cost costs.;
(e) seek the advice and assistance of the department or the Board of Economic Advisors of the Budget and Control Board in making the findings in items (a) through (d) above if necessary or helpful; and
(f) set forth in an ordinance its determination and findings.
(6) Every financing lease agreement with respect to a project shall must contain an a agreement provision obligating the industry sponsor to effect the completion of complete and maintain the project, and to carry all proper insurance with respect to the project. 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 sponsor and the county execute an inducement agreement, the sponsor 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 sponsor and the county execute the initial lease agreement, the sponsor has five years in which to complete its investment for purposes of qualifying for this section. If the sponsor does not anticipate completing the project within five years, the sponsor may apply to the county before the end of the five-year period for making the minimum investment 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 five 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 sponsor and the payment which is due under Section 4-12-20 is subject to interest, as provided in Section 12-54-25(D). To the extent necessary to determine if a sponsor or sponsor affiliate has met its investment requirements, any statute of limitations that might apply pursuant to Section 12-54-85 is suspended for all sponsors and sponsor affiliates during the time period allowed to make the required investment and the department or county may seek collection of any amount that may be due pursuant to this subsection. Any property placed in service after the five-year period, or up to ten years ten-year period 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 ad valorem property taxes, as provided in Chapter 37 of Title 12 if the sponsor has title to the property. For purposes of those businesses sponsors qualifying under subsection (D)(4), the five-year period referred to in this subsection is eight years.
(3) For those sponsors that, after qualifying pursuant to (D)(4), have more than five hundred million dollars in capital invested in this State and employ more than one thousand people in this State, the five-year period referred to in this subsection is ten years, and the ten-year period for completing the project is fifteen years.
(4) The annual fee provided by subsection (D)(2) is available for no more than twenty years for an applicable piece of property. 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 thirty years for the fee for a single project which has been granted an extension. For those businesses sponsors qualifying under subsection (D)(4), the annual fee is available for no more than thirty years for an applicable piece of property and for those projects placed in service in more than one year the annual fee is available for a maximum of thirty-seven forty years, or for those sponsors qualifying pursuant to (C)(3), forty-five years.
(4)(5) Annually, during the time period allowed to meet the minimum investment level, the sponsor shall provide the total amount invested to the appropriate county official.
(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 through (C)(3)(4), and no a lease is not considered an 'initial lease agreement' for purposes of this section subsection until the first day of the calendar year for which a fee payment is due under subsection (D) item (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, or four percent of those projects qualifying pursuant to (D)(4) except as provided in item (4) of this subsection, 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 property must be reported at its fair market value for ad valorem property tax purposes as determined by appraisal. The fair market value estimate established for the first year of the fee remains the fair market value of the real property for the life of the fee; 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 sponsor 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 is 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.
(4)(a) The assessment ratio may not be lower than four percent:
(i) in the case of a business single sponsor which is investing at least two hundred million dollars, which, when added to the previous investments, results resulting in a total investment of at least four hundred million dollars when added to previous investments by a sponsor, and which is creating at least two hundred new full-time jobs at the site qualifying for the fee a project;
(ii) in the case of a business single sponsor which is investing at least four hundred million dollars and which is creating at least two hundred new full-time jobs at a site qualifying for the fee project;
(iii) in the case of investments totaling at least four hundred million dollars, in a county classified as either least developed or underdeveloped, by a limited liability company and/or one or more of the members or equity holders where a member or equity holder is creating, at a site qualifying for the fee, at least one hundred new full-time jobs with an average annual salary of at least forty thousand dollars within four years of the date of execution of the millage rate agreement; or
(iv)(iii) in the case of a single sponsor and a sponsor affiliate, who together are investing at least four six hundred million dollars in this State and creating at least two hundred new full-time jobs at the site qualifying for the fee and:; and
a. the investment by the sponsor affiliate is considered necessary and suitable for the operation of the sponsor facility;
b. the sponsor affiliate is located contiguous to the sponsor project;
c. one hundred percent of the output of the sponsor affiliate is provided to the sponsor for the project; and
d. the sponsor affiliate is not considered a supplier of manufactured parts or of any value added output of the sponsor.
(v)(iv) in the case of a business including a corporation, its subsidiaries, and its limited liability company members, that (A):
A. builds a project consisting of gas-fired combined-cycle power facility and invests at least four hundred million dollars and creates at least twenty-five full-time jobs as defined in Section 12-6-3360(M) at that facility project; and (B)
B. invests an additional five hundred million dollars in this State.
(b) The new full-time jobs requirement of this item does not apply in the case of a taxpayer sponsor which for more than the twenty-five years ending on the date of the agreement paid more than fifty percent of all property taxes actually collected in the county.
(c) In an instance in which the governing body of a county has by contractual agreement provided for a change in fee-in-lieu of taxes arrangements conditioned on a future legislative enactment, any new enactment shall not bind the original parties to the agreement unless the change is ratified by the governing body of the county.
(5) Notwithstanding the use of the term 'assessment ratio', a business sponsor qualifying under item (2) or (4) of this subsection for the fee may negotiate an inducement agreement with a county using differing assessment ratios for different assessment years or levels of investment covered by the inducement agreement. However, the lowest assessment ratio allowed is the lowest ratio for which the business sponsor may qualify under this section.
(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) With regard to calculation of the fee provided in subsection (D)(2), the inducement agreement may provide for the disposal of property and the replacement of property subject to the fee as follows:
(1)(a) If a sponsor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property.
(b) Property is disposed of only when it is scrapped or sold in accordance with the lease agreement or it is removed from the project. If it is removed from the project it becomes subject to ad valorem property taxes to the extent the property remains in this State.
(c) If there is no provision in the agreement dealing with the disposal of property in accordance with this subsection, the fee remains fixed and no adjustment to the fee is allowed for disposed property.
(2) Any property which is placed in service as a replacement for property which is subject to the fee payment may become part of the fee payment, as provided in this item:
(a) Replacement property does not have to serve the same function as the property it is replacing. Replacement property is deemed to replace the oldest property subject to the fee, whether real or personal, which is disposed of in the same property tax year as the replacement property is placed in service. Replacement property qualifies for fee treatment provided in subsection (D)(2) only up to the original income tax basis of fee property it is replacing. More than one piece of replacement property can replace a single piece of fee property. To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the property which it is replacing, the excess amount is subject to payments, as provided in Section 4-12-20. Replacement property is entitled to the fee payment for the period of time remaining on the fee period for the property which it is replacing.
(b) The new replacement property which qualifies for the fee provided in subsection (D)(2) is recorded using its income tax basis and the fee is calculated using the millage rate and assessment ratio provided for the original fee property. The fee payment for replacement property must be based on subsection (D)(2)(a) or (D)(2)(b), if the sponsor originally used this method.
(c) In order to qualify as replacement property, title to the replacement property must be held by the county.
(d) If there is no provision in the inducement agreement dealing with replacement property, any property placed in service after the time period allowed for investments, as provided by subsection (C)(2), is subject to the payments required by Section 4-12-20 if the county has title to the property, or to ad valorem property taxes, as provided in Chapter 37 of Title 12, if the sponsor has title to the property.
(G)(1) The county and the sponsor may enter into an a millage rate 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 may be executed at any time up to and including, but not later than, 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 established pursuant to subsection (G)(1) must be no lower than a the cumulative property tax millage rate legally levied by or on behalf of all taxing entities within which the subject property project is to be located that is applicable during the period beginning on the thirtieth day of on either:
(a) June thirtieth of the year preceding the calendar year in which the millage rate agreement is executed and ending on the date or the initial lease agreement is executed if there is no millage rate agreement; or
(b) June thirtieth of the calendar year in which the millage rate agreement is executed. If a millage rate agreement is not executed on or before the date of the initial lease agreement, the millage rate the initial lease agreement is considered 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 agreement for purposes of this item.
(3) For purposes of determining the cumulative property tax millage rate pursuant to subsection (G)(2), the millage rate assessed by a municipality may not be included in the computation if, pursuant to agreement on the part of the taxing entity at the time of execution of the millage rate agreement, the taxing entity de-annexes the subject property before execution of the initial lease.
(H)(1) Upon agreement of the parties, and except as provided in item (2) of this subsection, an inducement agreement, a millage rate agreement, or both, may be amended or terminated and replaced with regard to all matters including, but not limited to, the addition or removal of sponsors or sponsor affiliates.
(2) No amendment or replacement of an inducement agreement or millage rate agreement may be used to change lower the millage rate, assessment ratio, or length increase the term of the agreement under any such agreement. However, existing inducement agreements which have not yet been implemented by the execution and delivery of a millage rate agreement or a lease purchase agreement may be amended up to the date of execution and delivery of a millage rate agreement or a lease purchase agreement in the discretion of the governing body.
(3) An inducement agreement or a lease agreement may provide that a sponsor who has committed to an investment under subsection (D)(4) may continue to receive the benefits of this chapter even if the sponsor fails to make or maintain the required investment or fails to create the jobs required by (D)(4), if the sponsor meets the five million minimum investment. If the sponsor fails to make or maintain the required investment or create the required number of jobs, the inducement agreement or the lease agreement may not provide for an assessment ratio and an exemption period more favorable than those allowed for the minimum investment. To the extent that the sponsor obtained a four percent assessment ratio under subsection (D)(4), the sponsor must recalculate the fee using a six percent ratio or such other ratio as the inducement agreement or lease agreement may provide for all years in which the four percent assessment ratio was used and pay the county any difference. This difference is subject to interest as provided in Section 12-54-25.
(I) Investment expenditures incurred by any sponsor in connection with a project, or relevant phase of a project in connection with for a project completed and placed in service in more than one year, qualify as expenditures subject to the fee in subsection (D)(2), so long as those expenditures are incurred:
(1) after, or within sixty days before, 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-year, eight-year, ten-year, or seven-year fifteen-year period referenced in subsection (C)(2) and or (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 adopts an inducement or similar resolution identifying the project by county council; otherwise, only investment expenditures made or incurred by any sponsor 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.
(3) Project investment expenditures which are incurred within the applicable time period provided in subsection (I) by an entity whose investments are not being computed in the level of investment for purposes of subsection (B)(3) or (C) (D)(4) qualify as investment expenditures subject to the fee in subsection (D)(2) where if:
(a) the expenditures are part of the original cost of the property which is transferred, within the applicable time period provided in subsection (I), to one or more other entities which are sponsors or sponsor affiliates and whose investments are being computed in the level of investment for purposes of subsection (B) or (C); and
(b) the property would have qualified for the fee in subsection (D)(2) if it had been initially acquired by the transferee entity sponsor rather than the transferor entity.;
(4)(c) The the income tax basis of the property immediately before the transfer must equal the income tax basis of the property immediately after the transfer. However, to the extent income tax basis of the property immediately after the transfer unintentionally exceeds the income tax basis of the property immediately before the transfer, the excess shall be subject to payments under Section 4-12-20.; and
(5)(d) The the county shall agree agrees to any inclusion in the fee of the property described in subsection (J)(1)(3).
(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, but without regard to an exemption otherwise available to the project pursuant to Section 12-37-220 for that year. 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 property taxes which would have been paid on the property if it were owned by the sponsor to each millage levying entity as a percentage of the total of such property 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.
(3) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes may use a portion of this revenue for the purposes outlined in Section 4-29-68 without the requirement of issuing special source revenue bonds or the requirements of Section 4-29-68(A)(4) by providing a credit against the fee due from a sponsor. A direct payment of cash may not be made to the sponsor.
(4) Misallocations of the distribution of the fee-in-lieu of taxes on the project pursuant to this chapter may be corrected by adjusting later distributions, but these adjustments must be made in the same fiscal year as the misallocations. To the extent distributions are made improperly in previous years, a claim for adjustment must be made within one year of the distribution.
(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)(1) Any interest in an inducement agreement, millage rate agreement, lease agreement, and property to which the these agreement agreements relates relate may be transferred to any other another entity at any time. Notwithstanding any other provision of this chapter, any equity interest in any entity with an interest in any inducement agreement, millage rate agreement, or lease agreement may be transferred to any other entity or person at any time a sponsor may be transferred to another entity or person at any time. To the extent an agreement is transferred, the transferee assumes the current basis the sponsor has in real or personal property subject to the fee for purposes of calculating the fee.
(2) A sponsor or a county may enter into any lending, financing, security, lease, or similar arrangement, or succession of such arrangements, with any financing entity, concerning all or part of a project including, without limitation, any sale-leaseback arrangement, equipment lease, build-to-suit lease, synthetic lease, nordic lease, defeased tax benefit, or transfer lease, an assignment, a sublease, or similar arrangement, or succession of such arrangements, with one or more financing entities, concerning all or part of a project, regardless of the identity of the income tax owner of the property which is subject to the fee payment under subsection (D)(2). Even though income tax basis is changed for income tax purposes, neither the original transfer to the financing entity nor the later transfer from the financing entity back to the original transferor, pursuant to terms in the sale-leaseback agreement, shall affect the amount of the fee due.
(3) All transfers undertaken with respect to other projects to effect a financing authorized under subsection (M) must meet the following requirements:
(a) The Department of Revenue department and the county must receive notification in writing within sixty days after the transfer of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement shall not adversely affect the fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a year or portion of a year up to a maximum penalty of fifty thousand dollars.
(b) If the sponsor affiliate or other a financing entity is the income tax owner of property, either the financing entity is primarily liable for the fee as to that portion of the project to which the transfer relates with the original transferor sponsor remaining secondarily liable for the payment of the fee or the original transferor sponsor must agree to continue to be primarily liable for the payment of the fee as to that portion of the project to which the transfer relates.
(4) Before a A sponsor may transfer an inducement agreement, millage rate agreement, lease agreement, or the assets subject to the lease agreement, if it shall obtain obtains the prior approval, or subsequent ratification, of the county with whom it entered into the original inducement agreement, millage rate agreement, or lease agreement. However, no such approval is required in connection with transfers to sponsor affiliates or other financing-related transfers.
(N) Reserved. 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.
(O) Notwithstanding any other provision of this section, if the investment based on income tax basis without regard to depreciation falls below the minimum level of investment provided in subsection (B)(3) at any time following the period provided in subsection (C)(2), the fee provided in subsection (D)(2) is no longer available and the investor must make the payments which are due pursuant to 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)(O)(1) The sponsor shall file the returns, contracts, and other information which may be required by the department.
(2) Fee payments and returns showing investments and calculating fee payments 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 sponsor 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 a sponsor fails to make the fee or lease payments as provided by the agreements between the entity sponsor 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 sponsor.
(7) Within thirty days of the date of execution of an inducement or lease agreement, a copy of the agreement must be filed with the Department of Revenue department and the county auditors and the county assessors for the county or counties in which the project is located. If the project is located in a an multicounty industrial development park, the agreements must be filed with the auditors and assessors for all counties participating in the multicounty industrial development park.
(8) The department, for good cause, may allow additional time for filing of returns required under this chapter. The request for an extension may be granted only if the request is filed with the department on or before the date the return is due. However, the extension must not exceed sixty days from the date the return is due. The department shall develop applicable forms and procedures for handling and processing extension requests. An extension may not be granted to a taxpayer sponsor who has been granted an extension for a previous period and has not fulfilled the requirements of the previous period.
(9) To the extent a form or a return is filed with the department, the sponsor must file a copy of the form or return with the county auditor, assessor, and the treasurer of the county or counties in which the project is located. To the extent requested, the county auditor of the county in which the project is physically located shall make these forms and returns available to any county auditor of a county participating in an industrial development park in which the project is located.
(R)(P) 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 a lease agreement entered into before January 1, 1996, are required to use the provisions of Section 4-29-67. Projects with lease agreements entered into after December 31, 1995, are required to use the provisions contained in this chapter. However, those projects with lease agreements entered into after December 31, 1995, in which the total investment exceeds forty-five million dollars within the time provided in subsection (C)(2), may elect to use the provisions of Section 4-29-67 or 4-12-30, but not both.
The minimum investment levels or job creation levels, or both, required in order to qualify for a fee-in-lieu of property tax as provided in Section 4-29-67 and as reduced in Section 12-10-70(2) may be used for lease agreements executed before December 31, 1995, and for any project which has received any of the required readings before county council to enact the agreement before December 31, 1995. (Reserved)
Section 4-12-45. (A) All agreements entered into pursuant to this chapter must include as the first portion of the document a recapitulation of the remaining contents of the document which includes, but is not limited to, the following:
(1) the legal name of each party to the agreement;
(2) the county and street address of the project and property to be subject to the agreement;
(3) the minimum investment agreed upon;
(4) the length and term of the agreement;
(5) the assessment ratio applicable for each year of the agreement;
(6) the millage rate applicable for each year of the agreement;
(7) a schedule showing the amount of the fee and its calculation for each year of the agreement;
(8) a schedule showing the amount to be distributed annually to each of the affected taxing entities;
(9) a statement answering the following questions:
(a) Is the project to be located in a multi-county park formed pursuant to Chapter 29 of Title 4?;
(b) Is disposal of property subject to the fee allowed?;
(c) Will special source revenue bonds be issued or credits for infrastructure investment be allowed in connection with this project?;
(d) Will payment amounts be modified using a net present value calculation?; and
(e) Do replacement property provisions apply?
(10) any other feature or aspect of the agreement which may affect the calculation of items (7) and (8) of this subsection;
(11) a description of the effect upon the schedules required by items (7) and (8) of this subsection of any feature covered by items (9) and (10) not reflected in the schedules for items (7) and (8) of this subsection;
(12) which party or parties to the agreement are responsible for updating any information contained in the summary document.
(B) The auditor shall prepare a bill for each installment of the fee according to the schedule set forth in subsection (A)(7) or as modified pursuant to subsection (A)(10), (11), or (12) and that payment must be distributed to the affected taxing entities according to the schedule in subsection (A)(8) or as modified pursuant to subsection (A)(10), (11), or (12).
(C) The county and the sponsor and sponsor affiliates may agree to waive any or all of the items described in this section.
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. The provisions of SECTION 1 are effective as of January 1, 2003; except that, the provisions may not impair applicable rights under agreements or other writings with respect to which the effective date would constitute an impairment of contractual rights under applicable law. Without limiting the generality of the preceding sentence, (i) for those projects which have been granted a two-year extension of time to complete the project and that two-year period has not expired, the sponsor may at any during the two-year extension request an additional three years to complete the project, and (ii) the county and the sponsor may agree to waive the provisions of Section 4-12-45 under any agreement whenever executed.
SECTION 2. A. Section 4-29-67 of the 1976 Code, as last amended by Act 334 of 2002, is further amended to read:
"Section 4-29-67. (A)(1) As used in this section:
(a) 'Department' means the South Carolina Department of Revenue.
(b) 'Lease agreement' means an agreement between the county and a sponsor leasing the property at the project from the county to a sponsor.
(c) 'Project' means land, buildings and other improvements on the land including 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 by a sponsor.
(d) 'Sponsor' means one or more entities which sign the inducement agreement with the county and also includes a sponsor affiliate unless the context clearly indicates otherwise.
(e) 'Sponsor affiliate' means an entity that joins with, or is an affiliate of, a sponsor and that participates in the investment in, or financing of, a project.
(2) Notwithstanding the provisions of Section 4-29-60, and notwithstanding that the sponsor does not request the county to issue bonds to finance the property in the case of a financing agreement in the form of one or more lease agreements for a project qualifying pursuant to subsection (B), the county and the a investor sponsor may enter into an inducement agreement that provides for payment of a fee in lieu of taxes as provided in this section for certain property, title to which is held by the county and which is leased to a sponsor. A reference in this section to a lease agreement is considered a reference also to a lease purchase agreement.
(B) 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 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, provided if each county is a member of the industrial development park. Real property transferred to the county through a lease agreement must include a legal description and plat of the real property.
(2) The investment must be a project that is must be 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 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 provided for in the agreement to the county in which the greatest amount of investment occurs; and
(c) all the counties must be are parties to all agreements establishing the terms of the fee.
(3) The minimum level of investment in the project must be at least forty-five million dollars and must be invested within the time period provided in subsection (C). If a county has an average annual unemployment rate of at least twice the state average during the last twenty-four months based on data available on the most recent November first, the minimum level of investment is one million dollars. The department shall designate these reduced investment counties by December thirty-first of each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose inducement agreement is signed in the calendar year following the county designation. Investments may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property at the project pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program, if the Department of Health and Environmental Control certifies completion of the cleanup. If the amounts under the Brownfields Voluntary Cleanup Program equal at least one million dollars, the investment threshold requirement of this section is met.
(4)(a) Investment may be made by a business or a combination of businesses, except that each business must invest at least five million dollars at the project. A sponsor and a sponsor affiliate may qualify for the fee if each sponsor and sponsor affiliate invests the minimum level of investment at the project. If the project consists of a manufacturing, research and development, corporate office, or distribution facility as those terms are defined in Section 12-6-3360(M), each sponsor or sponsor affiliate is not required to invest the minimum investment required by subsection (B)(3) if the total investment at the project exceeds forty-five million dollars.
(b)(i) The county and the investors and investor affiliates who are part of the inducement agreement may agree that investments Investments by other investor sponsor affiliates within the time periods provided in subsection (C)(1) and (2) qualify for the payment fee regardless of whether or not the investor sponsor affiliate was part of the inducement agreement., To qualify for the fee, so long as investor sponsor affiliates must be are approved specifically by the county and must agree to be bound by agreements with the county relating to the fee; except that investor sponsor affiliates need are not be bound by agreements, or portions of agreements, to the extent those agreements do not affect the county. Investor affiliates are not bound by agreements or portions of agreements which do affect the county, if the affected county consents not to bind them. Except as otherwise provided in subsection (B)(2), the The investments pursuant to this subsection (B)(4)(b) must be at the same project. The inducement agreement or the lease agreement may provide for a process for approval of sponsor affiliates:
(ii) The Department of Revenue department must be notified in writing of all investors and investor sponsor affiliates that have investments subject to the fee within thirty on or before ninety days after the execution of the lease agreement covering the investment by the investor or investor affiliate end of the calendar year during which the project or pertinent phase of the project is placed in service. The Department of Revenue department may extend the this thirty-day period upon written request. Failure to meet this notice requirement does not affect adversely the fee, but a penalty of up to ten thousand dollars a month or portion of a month with the total penalty not to exceed one hundred twenty thousand dollars may be assessed by the Department of Revenue department for late notification.
(iii)A. Except as provided in subsection (D)(4) If if, at any time, the investment at the project falls below forty-five million dollars, the investor and investor affiliate a sponsor no longer has the minimum level of investment as provided in subsection (B)(e), that sponsor no longer qualify qualifies for the fee.
B. Except as provided in subsection (Q), if a sponsor qualifies for the fee pursuant to subsection (D)(4), the sponsor must maintain the applicable level of investment, without regard to depreciation, and any applicable job requirements provided in (D)(4). If the sponsor fails to maintain the applicable investment or any job requirements provided in (D)(4), it no longer qualifies for the fee.
C. Except as provided in subsection (Q), if an inducement agreement or a lease agreement provides for an investment above the minimum investment provided in subsection (B)(3), and the sponsor fails to maintain the investment provided for in the agreement, the sponsor no longer qualifies for the fee.
(iv) If, at any time, a business no longer has a minimum investment of five million dollars at the project, without regard to depreciation, the investor or investor affiliate no longer qualifies for the fee.
(5) Investment for all purposes of this section may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program if the Department of Health and Environmental Control certifies completion of the cleanup. If these amounts equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met.
(C)(1) From the end of the property tax year in which the investor sponsor and the county execute an inducement agreement, the investor sponsor has seven five years in which to enter into an initial lease agreement with the county.
(2)(a) From the end of the property tax year in which the investor sponsor and the county execute the initial lease agreement, the investor sponsor has five years in which to complete its investment for purposes of qualifying for this section. If the investor sponsor does not anticipate completing the project within five years, the investor sponsor may apply to the county before the end of the five-year period for making the investment for an extension of time, up to five years, to complete the project. The If the county's county agreement agrees to grant the extension, it must be in writing, and a copy must be delivered to the Department of Revenue department within thirty days of the date the extension was granted. The extension may not exceed five years.
(b) An extension of the five-year period in which to meet the minimum level of investment is not allowed. If the minimum level of investment is not met within five years, all property covered by the lease agreement or agreements reverts retroactively to the payments required by Section 4-29-60. The difference between the fee actually paid by the investor sponsor and the payment due pursuant to Section 4-29-60 is subject to interest, as provided in Section 12-54-25. To the extent necessary to determine if a sponsor or sponsor affiliate has met its investment requirements, any statute of limitation that might apply pursuant to Section 12-54-85 is suspended for all sponsors and sponsor affiliates and the department or the county may seek to collect any amounts that may be due pursuant to this section.
(c) Unless property qualifies as replacement property pursuant to a contract provision enacted pursuant to subsection (F)(2), property placed in service after the five-year period, or up to the ten years ten-year period in the case of a project which has received an extension, is not part of the fee agreement pursuant to subsection (D)(2) and is subject to the payments required by Section 4-29-60 if the county has title to: (i) the property; or (ii) ad valorem property taxes, as provided in Chapter 37 of Title 12, if the investor sponsor has title to the property.
(d) For purposes of those businesses qualifying under Section 4-29-67 subsection (D)(4), the five-year period referred to in this subsection is eight years and the seven-year period is ten years. However, for For those businesses sponsors which, after qualifying under pursuant to Section 4-29-67 subsection (D)(4), have more than five hundred million dollars in capital invested in this State and employ more than one thousand people in this State, the five-year period referred to in this subsection is ten years, and the ten-year extended period referred to in the previous sentence is fifteen years.
(3) The annual fee provided by subsection (D)(2) is available for no more than twenty years for an applicable piece of property. 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 thirty years for the fee for a single project which has been granted an extension. For those businesses sponsors qualifying under subsection (D)(4), the annual fee is available for no more than thirty years for an applicable piece of property and for those projects placed in service in more than one year, the annual fee is available for a maximum of forty years or, for those businesses sponsors qualifying for the fifteen-year extended period pursuant to item (2)(d), forty-five years.
(4) During the time period allowed to meet the minimum investment level, the investor annually must inform the appropriate county official of the total amount invested.
(D) The inducement agreement must provide for fee payments, to the extent applicable, as follows:
(1)(a) If title of property is transferred to the county, the Any property is subject to an annual fee payment as provided in Section 4-29-60 before being placed in service.
(b) If title to undeveloped land is transferred to the county, the Any undeveloped land is subject to an annual fee payment as provided in Section 4-29-60 before being developed and placed in service. The time during which fee payments are made pursuant to Section 4-29-60 are is not considered part of the maximum periods provided in subsection (C)(2) and (3), and a lease is not an 'initial lease agreement' for purposes of this section unless and until the first day of the calendar year for which a fee payment is due pursuant to subsection (D)(2) in connection with the lease.
(2) After property qualifying pursuant to 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:
(i) an assessment ratio of at least six percent, except as provided in or four percent for those projects qualifying pursuant to subsection (D)(4);
(ii) a fixed millage rate as provided in subsection (G); and
(iii) a fair market value estimate determined by the South Carolina Department of Revenue department as follows.:
A. The estimate for real property, is using the original income tax basis for South Carolina income tax purposes without regard to depreciation. However, if If real property is constructed for the fee or is purchased in an arms-length transaction, fair market value equals using the original income tax basis, otherwise the property must be reported at its fair market value for ad valorem property tax purposes as determined Department of Revenue department shall determine fair market value by appraisal. The fair market value established for the first year of the fee remains the fair market value for the life of the fee; and
B. The estimate for personal property, is using the original income tax basis for South Carolina income tax purposes, less depreciation allowable for property tax purposes; except that the investor sponsor is not entitled to any extraordinary obsolescence;
(b) an annual payment based on an alternative arrangement 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 subsection (D)(2)(a). Net present value calculations performed pursuant to this subsection must use a discount rate equivalent to the yield in effect for new or existing United States Treasury bonds of similar maturity as published during the month in which the inducement agreement is executed. If no yield is available for the month in which the inducement agreement is executed, the last published yield for the appropriate maturity must be used. If there are no bonds of appropriate maturity available, bonds of different maturities may be averaged to obtain the appropriate maturity; or
(c) an annual payment using a formula that results in a fee not less than the amount required pursuant to as provided in subsection (D)(2)(a), except that every fifth year the applicable millage rate may 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 the annual fee payment is equal to the taxes due on the project as if it were taxable. When the property is no longer subject to the fee pursuant to 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 the property under the fee, and after that continuing with the South Carolina property tax depreciation schedule.
(4)(a) The assessment ratio must be at least four percent:
(i) in the case of a business single sponsor investing at least two hundred million dollars, resulting in a total investment of at least four hundred million dollars when added to previous investments by a sponsor, and which is creating at least two hundred new full-time jobs at the site qualifying for the fee project;
(ii) in the case of a business single sponsor investing at least four hundred million dollars and which is creating at least two hundred new full-time jobs at a site qualifying for the fee the project;
(iii) in the case of investments totaling at least four hundred million dollars in a county classified as either least developed or underdeveloped, by a limited liability company or one or more of its members or equity holders, or both of them, if the member or equity holder is creating at least one hundred new full-time jobs, at the site qualifying for the fee, with an annual average salary of at least forty thousand dollars within four years of the date of execution of a millage rate agreement;
(iv)(iii) in the case of a business single sponsor which is investing at least six hundred million dollars in this State; or
(v) in the case of investments totaling at least four hundred million dollars and creating at least two hundred new full-time jobs at the site qualifying for the fee and:
a. the investment by the investor affiliate is considered necessary and suitable for the operation of the sponsor facility;
b. the investor affiliate is located contiguous to the investor project;
c. one hundred percent of the output of the investor affiliate is provided to the investor for the project; and
d. the investor affiliate is not considered a supplier of manufactured parts or of any value added output of the investor.
(vi)(v) in the case of a business including a corporation, its subsidiaries, and its limited liability company members, that (A):
A. builds a project consisting of gas-fired combined-cycle power facility and invests at least four hundred million dollars and creates at least twenty-five full-time jobs as defined in Section 12-6-3360(M) at that facility; and (B)
B. invests an additional five hundred million dollars in this State.
(b) The new full-time jobs requirement of this item does not apply in the case of a business that paid more than fifty percent of all property taxes actually collected in the county for more than the twenty-five years ending on the date of the inducement agreement.
(c) In an instance in which the governing body of a county has provided, by contractual agreement, has provided for a change in fee-in-lieu of taxes arrangements conditioned on a future legislative enactment, a new enactment does not bind the original parties to the agreement unless the change is ratified by the governing body of the county.
(5) Notwithstanding the use of the term 'assessment ratio', an investor a sponsor qualifying for the fee pursuant to item (2) or (4) of this subsection may negotiate an inducement agreement with a county using differing assessment ratios for different assessment years or levels of investment covered by the inducement agreement. The lowest assessment ratio allowed is the lowest ratio for which the investor sponsor may qualify under this section.
(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 pursuant to Section 3(g) of Article X of the Constitution of this State and the exemptions allowed pursuant to Section 12-37-220(B)(32) and (34).
(F) With regard to calculation of the fee provided in subsection (D)(2), the inducement agreement may provide for the disposal of property and the replacement of property subject to the fee as follows:
(1) If an investor a sponsor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property. Property is disposed of only when it is scrapped or sold or removed from the project. If it is removed from the project, it becomes subject to ad valorem property taxes to the extent it remains in the State in accordance with the lease agreement. If the investor sponsor used any method to compute the fee other than that provided in subsection (D)(2)(a), the fee on the property which was disposed of must be recomputed in accordance with subsection (D)(2)(a) and to the extent the amount that would have been paid pursuant to subsection (D)(2)(a) exceeds the fee actually paid by the investor sponsor, the investor sponsor must pay the difference with the next fee payment due after the property is disposed of. If the investor sponsor used the method provided in subsection (D)(2)(c), the millage rate provided in subsection (D)(2)(c) must be used to calculate the amount which would have been paid pursuant to subsection (D)(2)(a). If there is no provision in the agreement dealing with the disposal of property in accordance with this subsection, the fee remains fixed and no adjustment to the fee is allowed for disposed property.
(2) Property placed in service as a replacement for property that is subject to the fee payment may become part of the fee payment as provided in this item:
(a) Replacement property may have a function that differs from the property it is replacing. Replacement property is considered to replace the oldest real or personal property subject to the fee and disposed of in the same property tax year as the replacement property is placed in service. Replacement property qualifies for fee treatment provided in subsection (D)(2) only up to the original income tax basis of fee property it replaces. More than one piece of replacement property may replace a single piece of fee property. To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the property it replaces, the excess amount is subject to payments as provided in Section 4-29-60. Replacement property is entitled to the fee payment for the period of time remaining on the twenty-year fee period for the property it replaces.
(b) The new replacement property that qualifies for the fee provided in subsection (D)(2) is recorded using its income tax basis, and the fee is calculated using the millage rate and assessment ratio provided on the original fee property. The fee payment for replacement property must be based on subsection (D)(2)(a) or (c) if the investor originally used that method, without regard to present value.
(c) To qualify as replacement property, title to the replacement property must be held by the county.
(d) If there is no provision in the inducement agreement dealing with replacement property, any property placed in service after the time period allowed for investments as provided by subsection (C)(2), is subject to the payments required by Section 4-29-60 if the county has title to: (i) the property; or (ii) ad valorem property taxes, as provided in Chapter 37 of Title 12, if the investor sponsor has title to the property.
(G)(1) The county and the investor sponsor may enter into an a millage rate agreement to establish the millage rate for purposes of calculating payments pursuant to subsection (D)(2)(a) and the first five years pursuant to subsection (D)(2)(c). This millage rate agreement may be executed at any time up to and including, but not later than, 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 established pursuant to item (1) of this subsection must be no lower than a the cumulative property tax millage rate legally levied by or on behalf of all taxing entities within which the subject property project is to be located that is applicable during the period beginning on the thirtieth day of June preceding the calendar year on either:
(a) in June thirtieth of the year preceding the year in which the millage rate agreement is executed and ending on the date or the initial lease agreement is executed if no millage rate agreement is executed.; or
(b) June thirtieth of the year in which the millage rate agreement is executed if a millage rate agreement is not executed on or the before the date of the initial lease agreement, is deemed to be the millage rate is 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 agreement for purposes of this item.
(H)(1) Upon agreement of the county, investors, and investor affiliates 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 including, but not limited to, the addition or removal of investors sponsors or investor sponsor affiliates.
(2) An amendment or a replacement of an inducement agreement or millage rate agreement may not be used to change lower the millage rate, discount rate, assessment ratio, or duration increase the term of the agreement; except that an existing inducement agreement that has not been implemented by the execution and delivery of a millage rate agreement or a lease purchase agreement may be amended up to the date of execution and delivery of a millage rate agreement or a lease purchase agreement in the discretion of the governing body.
(I) Investment expenditures incurred by an investor a sponsor in connection with a the project, or relevant phase of a project, for those a projects project completed and placed in service in more than one year, qualify as expenditures subject to the fee in subsection (D)(2), so long as these expenditures are incurred:
(1) any time after, or within sixty days before, 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 time five-year, eight-year, ten-year, or fifteen-year period for investments referenced in subsection (C)(2) and or (3). An inducement agreement must be executed within two years after the date on which the county adopts an inducement resolution 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 an investor a sponsor after the date of the inducement agreement in connection with a project qualify as expenditures subject to the fee in subsection (D)(2).
(J)(1) Subject to subsection (K), project investment expenditures incurred within the applicable time period provided in subsection (I) by an investor entity whose investments are not computed at the level of investment for purposes of subsection (B) or (C) qualify as investment expenditures subject to the fee in subsection (D)(2) if the:
(a) expenditures are part of the original cost of property that is transferred, within the applicable time period provided in subsection (I) to one or more other investors or investor affiliates whose investments are being computed at the level of investment for purposes of subsection (B) or (C); and
(b) property would have qualified for the fee in subsection (D)(2) if it had been initially acquired by the transferee entity sponsor instead of the transferor entity.;
(2)(c) The the income tax basis of the property immediately before the transfer must equal the income tax basis of the property immediately after the transfer; except that, to the extent income tax basis of the property immediately after the transfer unintentionally exceeds the income tax basis of the property immediately before the transfer, the excess is subject to payments pursuant to Section 4-29-60.;
(3)(d) The the county must agree agrees to an inclusion in the fee of the property described in subsection (J)(1).
(K)(1) Property 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 it, on which a new project is located may qualify for the fee even if it has previously been subject to South Carolina property taxes;
(b) property that has been subject previously to South Carolina property taxes, but has never been placed in service in South Carolina, may qualify for the fee; and
(c) property placed in service in South Carolina and subject to South Carolina property taxes that is purchased in a transaction other than between any of the entities specified in Section 267(b) of the Internal Revenue Code, as defined pursuant to Chapter 6 of Title 12 as of the time of the transfer, may qualify for the fee if the investor sponsor invests at least an additional forty-five million dollars in the project.
(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 constituting an expansion of the improvements.
(L)(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 but without regard to exemptions otherwise available to a project pursuant to Section 12-37-220 for that year. 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, for the maximum time period allowed pursuant to (C)(3). The property taxes that would have been paid on the property if it were owned by the investor to each millage-levying entity as a percentage of the total of the property taxes for all the 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.
(3) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes may use a portion of this revenue for the purposes outlined in Section 4-29-68 without the requirement of issuing special source revenue bonds or the requirements of Section 4-29-68(A)(4) by providing a credit against the fee due from the sponsor. A direct payment of cash may not be made to a sponsor pursuant to these provisions.
(4) Misallocations of the distribution of the fee-in-lieu of taxes on the project pursuant to this chapter may be corrected by adjusting later distributions, but these adjustments must be made in the same fiscal year as the misallocations. To the extent distributions are made improperly in prior years, a claim for adjustment must be made within one year of the distribution.
(M) As a directly foreseeable result of negotiating the fee, gross revenue of a school district in which a project is located in any year a fee negotiated pursuant to this section is paid may not be less than gross revenues of the district in the year before the first year for which a fee in lieu of taxes is paid. In negotiating the fee, the parties shall assume that the formulas for the distribution of state aid at the time of the execution of the inducement agreement must remain unchanged for the duration of the lease agreement.
(N) 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). Provided, however, that the computation of bonded indebtedness limitation is subject to the requirements of Section 4-29-68(E).
(O)(1) An interest in an inducement agreement, millage rate agreement, and lease agreement, and property to which the these agreement agreements relates relate, may be transferred to another entity at any time. Notwithstanding another provision of this chapter, an equity interest in an a investor sponsor or investor sponsor affiliate with an interest in any inducement agreement, millage rate agreement, or lease agreement may be transferred to another entity or person at any time. To the extent an agreement is transferred, the transferee assumes the current basis the sponsor has in the property subject to the fee for purposes of calculating the fee.
(2) An A investor sponsor or investor affiliate county may enter into a lending, financing, security, lease, or similar arrangement, or succession of such arrangements, with a financing entity, concerning all or part of a project and may enter into a sale-leaseback arrangement including, without limitation, a sale-leaseback arrangement, equipment lease build-to-suit-lease, synthetic lease, Nordic lease, defeased tax benefit, transfer lease, an assignment, a sublease, or similar arrangement, or succession of such arrangements, with one or more financing entities, concerning all or part of a project, regardless of the identity of the income tax owner of the property which is subject to the fee payment pursuant to subsection (D)(2). Even though income tax basis is changed for income tax purposes, neither the original transfer to the financing entity nor the later transfer from the financing entity back to the original investor or investor affiliate sponsor pursuant to terms in the sale-leaseback agreement, affects the amount of the fee due.
(3) A transfer undertaken with respect to the other project projects to effect a financing authorized by subsection (O) must meet the following requirements:
(a) The Department of Revenue department and the county must shall receive written notification, within sixty days after the transfer, of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement does not affect adversely the fee, but a penalty up to ten thousand dollars a year or portion of a year up to a maximum penalty of one hundred twenty fifty thousand dollars may be assessed by the department for late notification.
(b) If the financing entity is the income tax owner of property, either:(i) the financing entity is primarily liable for the fee as to that portion of the project to which the transfer relates with the original transferor sponsor remaining secondarily liable for the payment of the fee; or (ii) the original transferor sponsor must agree agrees to continue to be primarily liable for the payment of the fee as to that portion of the project to which the transfer relates.
(4) Before an investor A sponsor may transfer an inducement agreement, millage rate agreement, lease agreement, or the assets subject to the lease agreement, if it must obtain obtains the prior approval, or subsequent ratification, of the county with which it entered into the original agreement. That approval is not required in connection with transfers to investor sponsor affiliates or other financing-related transfers.
(P) An inducement agreement, a millage rate agreement, or a lease agreement, or the rights of an a investor sponsor or investor sponsor affiliate pursuant to that agreement including, without limitation, the availability of the subsection (D)(2) fee, may not be affected adversely if the bonds issued pursuant to that agreement are purchased by one or more of the entities that are or become investor or investor sponsor or sponsor affiliates.
(Q) Except as provided in subsection (B)(4)(a), If an investor if a sponsor fails to make the minimum investment required by subsection (D)(2) or an investment under subsection (D)(4) if applicable, within the time provided in subsection (C)(2), then the investor sponsor is entitled to the benefits of Chapter 12 of this title if and to the extent allowed pursuant to an applicable agreement between the investor sponsor and the county, and if the requirements of subsection (B)(4)(a) are satisfied. Otherwise, the fee provided in subsection (D)(2) or (D)(4) is no longer available and the investor sponsor must make the payments due pursuant to Section 4-29-60 for the remainder of the lease period.
(R) The minimum amount of the initial 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.
(S)(1) The investor sponsor shall file the returns, contracts, and other information that may be required by the Department of Revenue department.
(2) Fee payments, and returns showing investments and calculating fee payments, are due at the same time as property tax payments and property tax returns would be due if the property were owned by the investor or investor affiliate sponsor obligated to make the fee payments and file such returns.
(3) Failure to make a timely fee payment and file required returns results in penalties being assessed as if the payment or return were a property tax payment or return.
(4) The Department of Revenue department may issue rulings and promulgate regulations 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, apply to this section, and, for purposes of that application, the fee is considered a property tax. Sections 12-54-20, 12-54-80, and 12-54-155 do not apply to this section.
(6) Within thirty days of the date of execution of an inducement or lease agreement, a copy of the agreement must be filed with the Department of Revenue department and the county auditor and the county assessor for every county in which the project is located. If the project is located in a multicounty an industrial development park, the agreements must be filed with the auditors and assessors for all counties participating in the multicounty industrial development park.
(7) The department, for good cause, may allow additional time for filing of returns required under this section. The request for an extension may be granted only if the request is filed with the department on or before the date the return is due. However, the extension must not exceed sixty days from the date the return is due. The department shall develop applicable forms and procedures for handling and processing extension requests. An extension may not be granted to a taxpayer sponsor who has been granted an extension for a previous period and has not fulfilled the requirements of the previous period.
(8) To the extent a form or return is filed with the department, the sponsor must file a copy of the form or return with the county auditor, assessor, and treasurer of the county or counties in which the project is physically located. To the extent requested, the county auditor of the county in which the project is physically located shall make these forms and returns available to any county auditor of a county participating in an industrial development park in which the project is located.
(T) Except as otherwise expressly provided in subsection (C)(2), a loss of fee benefits pursuant to this section is prospective only from the date of noncompliance and, subject to subsection (Q), only with respect to that portion of the project to which the noncompliance relates; except that the loss of fee benefits may not result in the recovery from the investor and investor affiliate sponsor of fee payments for more than:
(1) three years from the date a return concerning the fee is filed for the time period during which the noncompliance occurs. A showing of bad faith noncompliance increases the three-year period to a ten-year period; or
(2) ten years if a return is not filed for the time period during which the noncompliance occurs.
(U) Section 4-29-65 does not apply to this section. All references in this section to taxes mean South Carolina taxes unless otherwise expressly stated.
(V)(1) Notwithstanding another provision of this section, in the case of a project consisting of a qualified recycling facility the annual fee is available for no more than thirty years, and for those projects constructed or placed in service during a period of more than one year, the annual fee is available for a maximum of thirty-seven forty years.
(2) Notwithstanding another provision of this section, for a qualified recycling facility, the assessment ratio must be at least three percent.
(3) Any machinery and equipment foundations, port facilities, or railroad track systems used, or to be used, for a qualified recycling facility is considered tangible personal property.
(4) Notwithstanding subsections (F) and (I) of this section, the total costs of all investments made for a qualified recycling facility are eligible for fee payments as provided in this section.
(5) For purposes of fees that may be due on undeveloped property for which title has been transferred to the county by or for the owner or operator of a qualified recycling facility, the assessment ratio is three percent.
(6) Notwithstanding subsection (D)(2)(b) of this section, in the case of a qualified recycling facility, net present value calculations performed pursuant to that subsection must use a discount rate equivalent to the yield in effect for new or existing United States Treasury bonds of similar maturity as published on any day selected by the investor sponsor during the year in which assets are placed into service or in which the inducement agreement is executed.
(7) As used in this subsection, 'qualified recycling facility' and 'investment' have the meaning provided in Section 12-7-1275(A).
(W)(1) All agreements entered into pursuant to this section must include as the first portion of the document a recapitulation of the remaining contents of the document which includes, but is not limited to, the following:
(a) the legal name of each party to the agreement;
(b) the county and street address of the project and property to be subject to the agreement;
(c) the minimum investment agreed upon;
(d) the length and term of the agreement;
(e) the assessment ratio applicable for each year of the agreement;
(f) the millage rate applicable for each year of the agreement;
(g) a schedule showing the amount of the fee and its calculation for each year of the agreement;
(h) a schedule showing the amount to be distributed annually to each of the affected taxing entities;
(i) a statement answering the following questions:
(i) Is the project to be located in a multi-county park formed pursuant to Chapter 29 of Title 4?;
(ii) Is disposal of property subject to the fee allowed?;
(iii) Will special source revenue bonds be issued or credits for infrastructure investment be allowed in connection with this project?;
(iv) Will payment amounts be modified using a net present value calculation?; and
(v) Do replacement property provisions apply?
(j) any other feature or aspect of the agreement which may affect the calculation of subitems (g) and (h) of this item;
(k) a description of the effect upon the schedules required by subitems (g) and (h) of this item of any feature covered by subitems (i) and (j) not reflected in the schedules for subitems (g) and (h);
(l) which party or parties to the agreement are responsible for updating any information contained in the summary document.
(2) The auditor shall prepare a bill for each installment of the fee according to the schedule set forth in subitem (1)(g) or as modified pursuant to subitem (1)(j), (k), or (l) and that payment must be distributed to the affected taxing entities according to the schedule in subitem (1)(g) or as modified pursuant to subitem (1)(j), (k), or (l).
(3) The county and the sponsor and sponsor affiliates may agree to waive any or all of the items described in this subsection."
B. Section 4-29-10(9), (10), and (11) of the 1976 Code, as added by Act 89 of 2001 are further amended to read:
"(9) 'Investor' means one or more entities that sign the inducement agreement with the county and also includes an investor affiliate unless the context clearly indicates otherwise.
(10) 'Investor affiliate' means an entity that joins with, or is an affiliate of, an investor and that participates in the investment in, or financing of, a project.
(11) 'Business' means a single entity or two or more entities if they meet the qualifications of Section 4-12-30."
C. The provisions of SECTION 2 above are effective as of January 1, 2003; except that these provisions may not impair applicable rights under agreements or other writing with respect to which such effective dates would constitute an impairment of contractual rights under applicable law. Without limiting the generality of the preceding sentence, (i) for those projects which have been granted a two-year extension of time to complete the project and that two-year period has not expired, the sponsor may at any time during the two-year extension request an additional three years to complete the project, and (ii) the county and the sponsor may agree to waive the provisions of subsection (W) under any agreement whenever executed.
SECTION 3. A. Chapter 44, Title 12 of the 1976 Code is amended to read:
Section 12-44-10. This act may be cited as the 'Fee in Lieu of Tax Simplification Act of 1997'.
Section 12-44-20. The General Assembly finds that:
(1) With the state's economy being centrally connected, as the wealth-generating capacity of South Carolina's businesses has increased, the state's per capita income also has increased.
(2) Since South Carolina's property tax rates as applied to manufacturing and certain commercial properties are disproportionately higher than those applied to other property in South Carolina, this disparity and the resulting property tax burdens historically have impeded new and expanded business in South Carolina.
(3) Previous General Assemblies have enacted legislation which reduces this disparity and the resulting property tax burden through a complex fee in lieu of tax arrangement that requires a company to transfer title to its property to the county and then lease the property back by paying rent and fees instead of property taxes on the property. The arrangement often includes the issuance of industrial revenue bonds by the county.
(4) The transfer of title and issuance of bonds are expensive, complex, time-consuming, and difficult undertakings for the county, public, and companies to understand and implement. The current rules also make financings more difficult and more expensive. All of these factors act to discourage new investments in South Carolina.
(5) The 'Fee in Lieu of Tax Simplification Act' simplifies the method for obtaining the fee in lieu of tax benefits while maintaining the essential county council approval process.
(6) The 'Fee in Lieu of Tax Simplification Act' makes the fee in lieu of tax incentive more attractive by eliminating the requirement for the issuance of industrial revenue bonds or the transfer of title of property to a county. This simplification facilitates the benefit for the county and the company making the investments.
Section 12-44-30. As used in this chapter:
(1) 'Alternative payment method' means fee payments as provided in Section 12-44-50(A)(3).
(2) 'Commencement date' means the last day of the property tax year during which economic development property is placed in service, except that this date must not be later than the last day of the property tax year which is three years from the year in which the county and the sponsor enter into a fee agreement.
(3) Reserved.
(4)(3) 'County' means the county or counties in which the project is proposed to be located. A project may be located in more than one county, subject to the provisions of Section 12-44-40(G).
(5)(4) 'County council' means the governing body of the county in which the economic development property is located, except as specifically provided by Section 12-44-40(G).
(6)(5) 'Department' means the South Carolina Department of Revenue.
(7)(6) 'Economic development property' means each item of real and tangible personal property comprising a project which satisfies the provisions of Section 12-44-40(C) and other requirements of this chapter and becomes is subject to a fee agreement. That property, other than replacement property qualifying under Section 12-44-60, must be placed in service by the end of the investment period.
(8)(7) 'Enhanced investment' means a project which results in a total investment by a sponsor of:
(a) by a single sponsor of at least two hundred million dollars, which resulting in a total investment of at least four hundred million dollars when added to the previous investments, results in a total investment of at least four hundred million dollars, and which is creating at least two hundred new full-time jobs at the project;
(b) by a single sponsor investing at least four hundred million dollars of property qualifying for the fee and which is creating at least two hundred new full-time jobs at the project. The new full-time jobs requirement of this item does not apply to a taxpayer which paid more than fifty percent of all property taxes actually collected in the county for more than the twenty-five years ending on the date of the agreement;
(c) by a single sponsor investing at least six hundred million dollars in this State; at least four hundred million dollars in a county classified as either least developed or underdeveloped, by a limited liability company and/or one or more of the members or equity holders where a member or equity holder is creating, at a site qualifying for the fee, at least one hundred new full-time jobs with an average annual salary of at least forty thousand dollars within four years of the date of execution of the fee agreement.
(d) at least four hundred million dollars in the building of a project consisting of gas-fired combined-cycle power facility and by a sponsor which creates at least twenty-five full-time jobs as defined in Section 12-6-3360(M) at that facility project and invests an additional five hundred million dollars in this State. The investment must be made by a sponsor which consists of a corporation, its subsidiaries, and its limited liability companies. The new full-time jobs requirement of this subsection does not apply to a taxpayer which paid more than fifty percent of all property taxes actually collected in the county for more than twenty-five years ending on the date of the fee agreement.
(9)(8) 'Exemption period' means the period beginning on the later of the commencement date or the last day of the property tax year in which the fee agreement is entered into the first day of the property tax year after the property tax year in which an applicable piece of economic development property is placed in service and ending on the termination date. For projects which are completed and placed in service during more than one year, the exemption period applies to each year's investment made by a sponsor during the investment period.
(9) 'Fee' means the amount paid in lieu of ad valorem property tax as provided in the fee agreement.
(10) 'Fee agreement' means an agreement between the sponsor and the county obligating the sponsor to pay fees instead of property taxes during the exemption period for each item of economic development property as more particularly described in Section 12-44-40.
(11) 'Inducement resolution' means a resolution of the county setting forth the commitment of the county to enter into a fee agreement.
(12) 'Infrastructure improvement credit' means a credit against the fee as provided by Section 12-44-70.
(13) 'Investment period' means the period beginning sixty days before the county takes action or identifies the project under Section 12-44-40(C) with the first day that economic development property is purchased or acquired and ending five years after the commencement date; except that for a project with an enhanced investment as described above, the period ends eight years after the commencement date. The minimum investment must be completed within five years of the commencement date. For an enhanced investment, the enhanced investment applicable minimum investment and job requirements under Section 12-44-30(7) must be completed within eight years of the commencement date. For those sponsors that, after qualifying for the enhanced investment, have more than five hundred million dollars in capital invested in this State and employ more than one thousand people in this State, the investment period ends ten years after the commencement date. If the sponsor does not anticipate completing the project within this period, the sponsor may apply to the county before the end of the investment period for an extension of time to complete the project. If the county agrees to an extension, it must do so in writing and furnish a copy of the extension to the Department of Revenue department within thirty days of the date the extension was granted. The extension may not exceed five years in which to complete the project. An extension is not allowed for the time period in which the sponsor must meet the minimum investment requirement.
(14) 'Minimum investment' means a project which that results in a total investment by a sponsor of not less than five million dollars within the investment period. If a county has an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years the last twenty-four month period based on data available on the most recent November first, the minimum investment is one million dollars. The department shall designate these reduced investment counties by December thirty-first of each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose fee agreement is signed in the calendar year following the county designation. For all purposes of this chapter, the minimum investment may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program if the Department of Health and Environmental Control certifies completion of the cleanup. If these the amounts under the Brownfield's Voluntary Cleanup Program equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met.
(15) 'Multicounty Industrial development park' means an industrial or business park developed by two or more counties as defined in Section 4-1-170.
(16) 'Project' means land, and buildings, and other improvements on the land, including 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 by a sponsor.
(17) 'Replacement property' means property placed under the fee agreement to replace economic development property previously subject to the fee agreement, as provided in Section 12-44-60.
(18) 'Sponsor' means one or more entities which sign the fee agreement with the county and makes the minimum investment, subject to the provisions of Section 12-44-40, each of which makes the minimum investment as provided in Section 12-44-30(13) and also includes a sponsor affiliate unless the context clearly indicates otherwise. If a project consists of a manufacturing, research and development, corporate office, or distribution facility, as those terms are defined in Section 12-6-3360(M), each sponsor or sponsor affiliate is not required to invest the minimum investment if the total investment at the project exceeds ten million dollars.
(19) 'Sponsor affiliate' means an entity that joins with or is an affiliate, as defined in Section 12-44-130, of a sponsor and that participates in the investment in, or financing of, a project.
(20) 'Termination date' means the date which is the last day of a property tax year which is the nineteenth year following the first property tax year in which an applicable piece of economic development property is placed in service. With respect to a fee agreement involving an enhanced investment, the termination date is the last day of a property tax year which is the twenty-ninth year following the first property tax year in which an applicable piece of economic development property is placed in service. If the fee agreement is terminated in accordance with Section 12-44-140, the termination date is the date the agreement is terminated.
Section 12-44-40. (A) To obtain the benefits provided by this chapter, the sponsor and the county must enter into a fee agreement requiring the payment of the fee described in Section 12-44-50. The county may not enter into a fee agreement unless the county council must adopts adopt an ordinance approving the fee agreement with the sponsor.
(B) If the county and the sponsor enter into a fee agreement, all economic development property is exempt from all ad valorem property taxation imposed by Chapter 37 of Title 12 for the entire exemption period. Upon termination of the exemption period, the property is subject to property taxation in the manner provided by law, unless the property is otherwise exempt.
(C) Subject to the provisions of subsection (D) and the provisions of Section 12-44-110, real or tangible personal property of a sponsor or sponsor affiliate which has been acquired for which expenditures have been incurred by the sponsor or sponsor affiliate and which are used in connection with a project or a portion of it a project, qualifies as economic development property, if the expenditures are incurred or the property is acquired after, or within sixty days before, the county takes action reflecting or identifying the project or proposed project including, but not limited to, the adoption of an inducement or similar resolution by county council and before the end of the investment period.
(D) A county has two years from the date it takes action reflecting or identifying the project, or proposed project, to adopt an inducement resolution if the inducement resolution was not the original county action reflecting or identifying the project or proposed project. Otherwise, expenditures incurred before adoption of the inducement resolution do not qualify as economic development property.
(E) If a fee agreement is not executed within five years after the inducement resolution is adopted by the county council, the real property or tangible personal property of a sponsor and sponsor affiliate for which expenditures have been incurred by the sponsor and sponsor affiliate with respect to the project do not qualify as economic development property.
(F) To be eligible to enter into a fee agreement, the sponsor shall commit to a project which meets the minimum investment level and, with respect to applicable enhanced investments, the total applicable investment and the minimum job creation levels required for an enhanced investment.
(G) The project which is the subject of the fee agreement must be located in a single county or in a multicounty an industrial development park. A project located or on contiguous tracts of land in more than one county but not in an industrial development park, may qualify for the fee if:
(1) the counties agree on the terms of the fee and the distribution of the fee payment;
(2) When a tract crosses a county boundary, all counties in which the tract is located must be parties to the fee agreement, which must provide the manner in which the fee payments must be distributed among the counties and the fee agreement must set a minimum millage rate is provided for in the agreement not lower than the millage rate applicable to the site in the county in which the greatest amount of investment occurs.; and
(3) all counties are parties to all agreements establishing the terms of the fee.
(H)(1) Before undertaking a project The county council shall evaluate projects for classification as economic development property, based on criteria that include, but are not limited to:
(1) the purposes to be accomplished by the project are proper governmental and public purposes;
(2) the anticipated dollar amount and nature of the investment to be made; and
(3) the anticipated costs and benefits to the county.
(I) Before entering into a fee agreement, the county council shall find that:
(1)(a) the project is anticipated to benefit the general public welfare of the locality by providing services, employment, recreation, or other public benefits not otherwise adequately provided locally;
(2)(b) the project gives rise to no pecuniary liability of the county or incorporated municipality or to no a charge against its general credit or taxing power; and
(3)(c) the purposes to be accomplished by the project are proper governmental and public purposes; and (4) the benefits of the project to the public are greater than the costs to the public.
(J)(2) In making the findings of subsections (H) and (I) this subsection, the county council may seek the advice and assistance of the department or the Board of Economic Advisors. The determination and findings must be set forth in an ordinance.
(K)(I) If the governing body of a county council has by contractual agreement provided for a change in fee in lieu of taxes arrangements conditioned on a future legislative enactment, a new enactment does not bind the original parties to the agreement unless the change is ratified by the governing body of the county council.
(L)(J)(1) Upon agreement of the parties, and except as provided in item (2), a fee agreement may be amended or terminated and replaced with regard to all matters, including the addition or removal of sponsors or sponsor affiliates.
(2) An amendment or replacement of a fee agreement may not be used to change lower the millage rate, discount rate, assessment ratio, or length increase the term of the agreement.
Section 12-44-50. (A) A fee agreement must contain the requirement that a fee in lieu of property tax be paid as follows:
(1) During the exemption period, the sponsor shall pay, or be responsible for payment, to the county the annual fee payment in connection with the economic development property which has been placed in service, in an amount not less than the property taxes that would be due on the economic development property if it were taxable but using:
(a) an assessment ratio of not less than six percent, or four percent for those projects qualifying under the if the project involves an enhanced investment, definition an assessment ratio of not less than four percent;
(b) a millage rate as established that is, either:
(i) by the county, which must be a cumulative property tax millage rate legally levied by or on behalf of all millage levying entities within which the project is to be located, that is applicable during the period beginning on the thirtieth day of June preceding the calendar year in which the fee agreement is executed and ending on the date the initial lease agreement is executed fixed for the life of the fee; or
(ii) as provided under subsubitem (i), except that every fifth year the millage rate is allowed to increase or decrease every fifth year in step with the average cumulative actual millage rate applicable to the project based upon the preceding five-year period; and
(c) a fair market value for the economic development property.:
(i) If if real property is constructed for the fee or is purchased in an arm's length transaction, The the fair market value of real property is determined by using the original income tax basis for South Carolina income tax purposes without regard to depreciation, otherwise the property must be reported at its fair market value for ad valorem property taxes as determined by appraisal. The fair market value estimate established for the first year of the fee remains the fair market value of the real property for the life of the fee; but if real property is constructed for the fee or is purchased in an arm's length transaction, fair market value equals the original income tax basis. Otherwise, the department shall determine fair market value by appraisal.
(ii) Fair fair market value for personal property is determined by using the original tax basis for South Carolina income tax purposes less depreciation allowable for property tax purposes, except that the investor sponsor is not entitled to extraordinary obsolescence. and
(d) to establish the millage rate for purposes of subsection (A)(1)(b)(i) or the first five years millage under (A)(1)(b)(ii), the millage rate must be no lower than the cumulative property tax millage rate levied by, or on behalf of, all taxing entities within which the project is located on either:
(i) June thirtieth of the year preceding the calendar year in which the fee agreement is executed; or
(ii) the millage rate in effect on June thirtieth of the calendar year in which the fee agreement is executed.
(2) The fee calculation must be made so 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).
(3) If the project subject to the fee agreement involves an investment of at least forty-five million dollars or more, or any higher minimum established by the county, the county and the sponsor may agree to pay the fees established in subsection (A)(1) based on an alternative payment method yielding a net present value of the fee schedule as calculated in subsection (A)(1) provided the sponsor agrees to a millage rate as established in subsection (A)(1)(b)(i). Net present value calculations must use a discount rate equivalent to the yield in effect for new or existing United States Treasury bonds of similar maturity as published during the month in which the fee agreement is executed. If no yield is available for the month in which the fee agreement is executed, the last published yield for the appropriate maturity available must be used. If there are no bonds of appropriate maturity available, bonds of different maturities may be averaged to obtain the appropriate maturity.
(B)(1) If a sponsor or sponsor affiliate disposes of an item of economic development property, the fee must be reduced by the amount of the fee applicable to that item of economic development property. Economic development property is disposed of only when it is scrapped or sold or it is removed from the project. If it is removed from the project, it is subject to ad valorem property taxes to the extent the property remains in the State. Transactions with respect to items of property described in Section 12-44-120 are not a disposition of property under this subsection.
(2) If the sponsor used an alternative payment method as provided in subsection (A)(3), the fee applicable to the item of property which was disposed of must be recomputed in accordance with subsection (A)(1) and, to the extent that the amount which would have been paid with respect to this item under subsection (A)(1) exceeds the fee actually paid by the sponsor, the sponsor shall pay the difference with the next annual fee payment due after the item of property is disposed of. This amount is subject to interest as provided in Section 12-54-25.
Section 12-44-55. (A) All agreements entered into pursuant to this chapter must include as the first portion of the document a recapitulation of the remaining contents of the document which includes, but is not limited to, the following:
(1) the legal name of each party to the agreement;
(2) the county and street address of the project and property to be subject to the agreement;
(3) the minimum investment agreed upon;
(4) the length and term of the agreement;
(5) the assessment ratio applicable for each year of the agreement;
(6) the millage rate applicable for each year of the agreement;
(7) a schedule showing the amount of the fee and its calculation for each year of the agreement;
(8) a schedule showing the amount to be distributed annually to each of the affected taxing entities;
(9) a statement answering the following questions:
(a) Is the project to be located in a multi-county park formed pursuant to Chapter 29 of Title 4?;
(b) Is disposal of property subject to the fee allowed?;
(c) Will special source revenue bonds be issued or credits for infrastructure investment be allowed in connection with this project?;
(d) Will payment amounts be modified using a net present value calculation?; and
(e) Do replacement property provisions apply?
(10) any other feature or aspect of the agreement which may affect the calculation of items (7) and (8) of this subsection;
(11) a description of the effect upon the schedules required by items (7) and (8) of this subsection of any feature covered by items (9) and (10) not reflected in the schedules for items (7) and (8) of this subsection;
(12) which party or parties to the agreement are responsible for updating any information contained in the summary document.
(B) The auditor shall prepare a bill for each installment of the fee according to the schedule set forth in subsection (A)(7) or as modified pursuant to subsection (A)(10), (11), or (12) and that payment must be distributed to the affected taxing entities according to the schedule in subsection (A)(8) or as modified pursuant to subsection (A)(10), (11), or (12).
Section 12-44-60. (A) The fee agreement may provide that property which is placed in service as a replacement for economic development property may become economic development property. This replacement property is not required to serve the same function as the economic development property it is replacing. Replacement property is deemed to replace the oldest property subject to the fee, whether real or personal, which is disposed of in the same property tax year as the replacement property is placed in service. Replacement property qualifies as economic development property only to the extent of the original income tax basis of the economic development property which is being disposed of in the same property tax year. More than one piece of replacement property can replace a single piece of economic development property.
(B) To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the economic development property which it is replacing, the excess amount is subject to annual payments calculated as if the exemption for economic development property were not allowed. Replacement property is entitled to the fee payment for the period of time remaining during the exemption period for the economic development property which it is replacing.
(C) The new replacement property which qualifies for the fee provided in Section 12-44-50 is recorded using its income tax basis, and the fee is calculated using the millage rate and assessment ratio provided on the original economic development property. The fee payment for replacement property must be based on Section 12-44-50(A)(3) if the sponsor originally used an alternative payment method.
Section 12-44-70. (A) If allowed by the fee agreement and subject to any limitations and conditions contained in the fee agreement, a sponsor may take a credit against the fee established in Section 12-44-50(A)(1) and (3) over the term specified in the fee agreement to offset improvement costs, except that a direct payment of cash must not be made to the sponsor:
(1) for a project not located in a an multicounty industrial development park, to the extent that the cumulative credit taken does not exceed the lesser of:
(a) the improvement costs of the project; or
(b) the county's share of fees distributed from the project under Section 12-44-80(A).
A municipality or special purpose district that would otherwise receive a distribution of fee in lieu of taxes under Section 12-44-80(A), may agree to allow to a sponsor a credit against the fee established in Section 12-44-50(A)(1) or (A)(3) in an amount not exceeding the share of the fee in lieu of taxes that would have been distributed to the municipality or special purpose district with respect to the sponsor's project; or
(2) for a project located within a multicounty an industrial development park, to the extent that the cumulative credit taken does not exceed the lesser of:
(a) the improvement costs of the project; or
(b) the county's share total amount of fees the county is entitled to retain under the industrial development park agreement.
(B) For purposes of this section, improvement costs include the cost of designing, acquiring, constructing, improving, or expanding:
(1) the infrastructure serving the issuer project; and
(2) improved and unimproved real property, buildings, and structural components of buildings used in the operation of a manufacturing or commercial enterprise project in order to enhance economic development.
Section 12-44-80. (A) For a project not located in a an multicounty industrial development park, distribution of the fee payments 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 but without regard to exemptions otherwise available to the project pursuant to Section 12-37-220.
(B) For a project located in a an multicounty industrial development park, distribution of the fee payments on the project must be made in the same manner provided for by the agreement between or among counties establishing the multicounty industrial development park.
(C) Misallocations of the distribution of the fee payments on the project pursuant to this chapter may be corrected by adjusting later distributions, but these adjustments must be made in the same fiscal year as the misallocations. To the extent that distributions have been made improperly in previous years, claims for adjustment must be made within one year of the distribution.
Section 12-44-90. (A) The investor sponsor shall file returns, contracts, and other information which may be required by the department.
(B) Fee payments, and returns showing investments and calculating fee payments, are due at the same time as property tax payments and property tax returns are due.
(C) Failure to make a timely fee payment and file required returns results in penalties being assessed as if the payment or return were a property tax payment or return.
(D) The department may issue rulings and promulgate regulations as necessary to carry out the purpose of this section.
(E) The provisions of Chapters 4 and 54 of Title 12, applicable to property taxes, apply to this section, and for purposes of the application, the fee is considered a property tax. Section 12-54-155 does not apply to this section.
(F) The provisions of Chapters 49, 51, and 53 of Title 12 apply to a fee agreement and a fee due under the agreement. For purposes of those chapters, the fee is considered a property tax.
(G) Within thirty days of the date of execution of a fee agreement, a copy of the fee agreement must be filed with the Department of Revenue department, the county assessor, and the county auditor for the county in which the project is located. If the project is located in a an multicounty industrial development park the fee agreement must be filed with the auditors and assessors for all counties participating in the multicounty industrial development park.
(H) The department, for good cause, may allow additional time for filing of returns required under this chapter. The request for an extension may be granted only if the request is filed with the department on or before the date the return is due. However, the extension must not exceed sixty days from the date the return is due. The department shall develop applicable forms and procedures for handling and processing extension requests. An extension may not be granted to a taxpayer sponsor who has been granted an extension for a previous period and has not fulfilled the requirements of the previous period.
(I) To the extent a form or a return is filed with the department, the sponsor must file a copy of the form or return with the county auditor, assessor, and treasurer of the county or counties in which the project is located. To the extent requested, the county auditor of the county in which the project is physically located shall make these forms and returns available to any county auditor of a county participating in an industrial development park in which the project is located.
Section 12-44-100. (A) A fee agreement may provide that a sponsor who has committed to an enhanced investment or an investment above that required for a minimum investment may continue to receive the benefits of this chapter, even if the sponsor fails to make or maintain the required investment or fails to create the jobs required by the fee agreement, if the sponsor meets the minimum investment. If the sponsor fails to make or maintain the required investment or create the required number of jobs, the fee agreement may not provide for an assessment ratio and an exemption period more favorable than those allowed for the minimum investment.
(B) Notwithstanding the use of the term 'assessment ratio', a sponsor and a county may negotiate a fee agreement using differing assessment ratios for different assessment years or different levels of investment covered by the fee agreement, but the assessment ratio for an assessment year may not be lower than six percent or, if the project involves an enhanced investment, four percent.
(C) The fee agreement may provide that replacement property is not subject to Section 12-44-60 if the sponsor fails to make the level of investment specified in the fee agreement.
Section 12-44-110. Property which previously has been subject to property taxes in South Carolina does not qualify as economic development property, except that:
(1) land, excluding existing improvements on the land, on which a new project is to be located may qualify as economic development property even if it previously has been subject to property taxes in this State;
(2) property which has been subject to property taxes in this State, but which has never been placed in service in this State, may qualify as economic development property;
(3) property which previously has been placed in service in this State and previously has been subject to property taxes in this State which is purchased in a transaction other than between any of the entities specified in Section 267(b) of the Internal Revenue Code, as defined under Chapter 6 of Title 12 as of the time of the transfer, may qualify as economic development property if the sponsor invests at least an additional forty-five million dollars at the project;
(4) repairs, alterations, or modifications to real or personal property, which is not economic development property, are not eligible to be economic development property, even if they are capitalized expenditures, except for modifications which constitute an expansion to existing real property improvements.
Section 12-44-120. (A) An interest in a fee agreement and the economic development property to which the fee agreement relates may be transferred to another entity at any time. Notwithstanding another provision of this chapter, an equity or other interest in an entity with an interest in a fee agreement or the economic development property, or both, to which a fee agreement relates a sponsor may be transferred to another entity or person at any time. To the extent that the fee agreement is transferred, for the purposes of calculating the fee, the transferee assumes the current basis the sponsor has in real or personal property subject to the fee.
(B) A sponsor may enter into lending, financing, security, leasing, or similar arrangements, or succession of such arrangements, with a sponsor affiliate or other financing entity concerning all or part of a project including, without limitation, a sale-leaseback arrangement, equipment lease, build-to-suit lease, synthetic lease, nordic lease, defeased tax benefit, or transfer lease, an assignment, sublease, or similar arrangement, or succession of such arrangements, with one or more financing entities concerning all or part of a project, regardless of the identity of the income tax owner of economic development property. Even though income tax basis is changed for income tax purposes, neither the original transfer to the financing entity nor the later transfer from the financing entity back to the original transferor sponsor, pursuant to terms in the sale-leaseback agreement, affects the amount of the payments fee due under Section 12-44-50.
(C) All transfers undertaken with respect to other projects to effect a financing authorized under this subsection must meet the following requirements:
(1) The department and the county must receive notification, in writing within sixty days after the transfer, of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement does not adversely affect the exemption fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a year or portion of a year, up to a maximum penalty of fifty thousand dollars.
(2) If the sponsor affiliate or other a financing entity is the income tax owner of property, either the financing entity is primarily liable for the payments fee due under Section 12-44-50 as to that portion of the project to which the transfer relates, with the sponsor remaining secondarily liable for the payment, or the sponsor must agree to continue to be primarily liable for the annual payments as to that portion of the project to which the transfer relates.
(D) Before a A sponsor may transfer a fee agreement, or substantially all the economic development property to which the fee agreement relates, if it must obtain obtains the prior approval, or subsequent ratification, of the county with which it entered into the fee agreement. That approval is not required in connection with transfers to sponsor affiliates or other financing-related transfers.
Section 12-44-130. (A) To Except as otherwise provided in Section 12-44-30(18), to be eligible for the fee, a sponsor and each sponsor affiliate must invest the minimum investment as defined in Section 12-44-30(14). For an enhanced investment pursuant to Section 12-44-30(8), a single sponsor must make the investment, unless otherwise provided in that section. The county and the sponsors who are part of the fee agreement may agree that investments by other sponsors or sponsor affiliates within the investment period qualify for the payment fee regardless of whether the sponsor or sponsor affiliate was part of the fee agreement, except that each new sponsor affiliate must invest at least the minimum investment or the enhanced investment if applicable in the project, unless the project is a manufacturing, research and development corporate office, or distribution facility as provided in Section 12-44-30(18). To qualify for the exemption fee, the other sponsors or sponsor affiliates must be approved specifically by the county and must agree to be bound by agreements with the county relating to the exemption fee. These sponsors sponsor affiliates are not bound by agreements, or portions of agreements, which to the extent the agreements do not affect the county. The investments pursuant to this subsection must be at the sponsor's project. The fee agreement may provide for a process for approval of sponsor affiliates.
(B) The department and the county must be notified in writing of all sponsors or sponsor affiliates which have investments subject to the fee exemption before or within sixty ninety days after the execution of the fee agreement covering the investment by the sponsor or sponsor affiliate end of the calendar year during which the project, or a phase of it, was placed in service. The department may extend the sixty-day ninety-day period upon written request. Failure to meet this notice requirement does not affect adversely the exemption fee, but a penalty may be assessed by the department for late notification of up to in an amount of ten thousand dollars a month or portion of a month, with the total penalty not to exceed one hundred twenty fifty thousand dollars.
Section 12-44-140. (A) The county and the sponsor may agree to terminate the fee agreement at any time. From the date of termination, all economic development property is subject to ad valorem taxation as imposed by law. If the sponsor used an alternative payment method, the sponsor shall pay to the county at the time of termination an additional fee payment equal to the difference between the total amount of the fee payments that would have been made with respect to the economic development property by the sponsor if the standard fee calculation under Section 12-44-50(A)(1) had been used and the total amount of fee payments actually made by the sponsor. This amount is subject to interest as provided in Section 12-54-25.
(B) Except as provided in Section 12-44-100(A), A a fee agreement is automatically terminated if the sponsor fails to satisfy the minimum investment level provided in Section 12-44-30(14) within the investment period or otherwise fails to meet the applicable minimum investment or job creation requirements of a fee agreement to qualify for the benefits of this chapter provided in Section 12-44-30(8). If the fee agreement is terminated under this subsection, all economic development property is subject, as of the commencement date, to ad valorem property taxation as imposed by law. At the time of termination, the sponsor shall pay to the county an additional fee equal to the difference between the total amount of property taxes that would have been paid by the sponsor had the project been taxable, taking into account exemptions from property taxes that would have been available to the sponsor, and the total amount of fee payments actually made by the sponsor. This additional amount is subject to interest as provided in Section 12-54-25.
(C) If at any time a sponsor or sponsor affiliate no longer has the minimum level of investment as provided in subsection 12-44-30(14), without regard to depreciation, that sponsor or sponsor affiliate no longer qualifies for the fee. If the sponsor qualifies for the enhanced investment, the sponsor must maintain the applicable level of investment, without regard to depreciation. If the sponsor fails to maintain the applicable level of investment in Section 12-44-30(8), it no longer qualifies for the fee unless the provisions of Section 12-44-100 apply.
(D) To the extent necessary to determine if a sponsor or sponsor affiliate has met its minimum investment requirements, any statute of limitations that might apply pursuant to Section 12-54-85 is suspended for all sponsors and sponsor affiliates and the department or the county may seek to collect any amounts that may be the due pursuant to this section.
Section 12-44-150. Projects to which a fee agreement applies 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).
Section 12-44-160. If all or part of this chapter is determined to be unconstitutional or otherwise illegal by a court of competent jurisdiction, a sponsor has one hundred eighty days from the date of the determination to transfer title to economic development property to the county and have it qualify for a fee in lieu of taxes pursuant to Chapter 12 of Title 4 or Section 4-29-67.
Section 12-44-170. (A) Economic development property as defined in Section 12-44-30(7) may include property placed in service for property tax purposes after the effective date of this act.
(B) An entity with property subject to an existing fee in lieu of property taxes arrangement under Article 1, Chapter 12, Title 4 of the 1976 Code or Section 4-29-67 of the 1976 Code, or which has acquired or will acquire property pursuant to an inducement resolution, may elect, with the consent of the applicable county, to transfer property from the prior arrangement to the fee arrangements provided by this chapter and that property must be considered automatically economic development property as defined in Section 12-44-30(7) subject to:
(1) a continuation of the same fee payments required under the existing lease agreement;
(2) a continuation of the same fee in lieu of tax payments only for the time required for payments under the existing lease agreement;
(3) a carryover of minimum investment or employment requirements of the existing arrangements to the new fee arrangement; and
(4) appropriate agreements and amendments between the sponsor and the county entered into continuing the provisions and limitations of the prior agreement.
The entity and the governing body of the county may enter into a new fee agreement reflecting the appropriate handling of the transition with due regard to appropriate cancellation or amendment of existing financing arrangements."
B. The provisions of SECTION 3 are effective as of January 1, 2003. For those projects that have been granted a two-year extension of time to complete the project and the two-year period has expired, the sponsor may request an additional three years to complete the project notwithstanding the provisions of Section 4-12-30(C)(2).
SECTION 4. This act takes effect upon approval by the Governor.
This web page was last updated on Monday, December 7, 2009 at 10:35 A.M.