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COMMITTEE REPORT
May 11, 2005
H. 3841
Introduced by Reps. Talley, Bowers, Cotty, Clark, Chellis, Martin, Skelton, Davenport, McGee, Altman, Bailey, Brady, Harrison, J. Hines, Leach, Miller, Moody-Lawrence, Phillips, Rice, Scarborough, Scott, W.D. Smith, Young, Jennings, Coleman, Hagood and Pinson
S. Printed 5/11/05--H.
Read the first time April 5, 2005.
To whom was referred a Bill (H. 3841) to amend Title 6, Code of Laws of South Carolina, 1976, relating to local governments, by adding Chapter 34 so as to enact the "South Carolina Retail Facilities Revitalization Act", etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, in SECTION 1, by adding after /Retail/ line 28, page 1, and on line 31, page 1, by adding /or Wholesale/ and by adding after /retail/ on line 35, page 1; line 37, page 1; line 40, page 1; line 42, page 1; line 4, page 2; and line 29, page 2 /or wholesale/.
Amend further, as and if amended, in Section 6-34-30(2) of the 1976 Code, as contained in SECTION 1, by adding after /site/ on line 28, page 2, /of at least one hundred thousand square feet/ and by striking /one hundred thousand/ on line 30, page 2, and inserting /fifty thousand /;
Amend further, as and if amended, by striking /Commerce/ on line 33, page 4, and inserting /Revenue/;
Amend further, as and if amended, by striking subsection (E) of Section 6-34-40 of the 1976 Code, as contained in SECTION 1, which begins on line 40, page 4, in its entirety.
When amended, Chapter 34 of Title 6 of the 1976 Code as contained in SECTION 1 shall read:
Section 6-34-10. This chapter is known and may be cited as the 'South Carolina Retail or Wholesale Facilities Revitalization Act'.
Section 6-34-20. (A) The primary purpose of this chapter is to create a meaningful incentive for the renovation, improvements, and redevelopment of abandoned retail or wholesale facility sites located in South Carolina.
(B) The abandonment of retail or wholesale facility sites has resulted in the disruption of communities and increased the cost to local governments by requiring additional police and fire services due to excessive vacancies. Many abandoned retail or wholesale facility sites pose safety concerns. A public and corporate purpose of the local governments will be served by restoring the retail or wholesale facility sites to a productive asset for the communities and result in increased job opportunities.
(C) There exists in many communities of this State abandoned retail or wholesale facilities. The stable economic and physical development of these areas is endangered by the presence of these abandoned facilities as manifested by progressive and advanced deterioration of structures. As a result of the existence of these abandoned facilities, there is an excessive and disproportionate expenditure of public funds, inadequate public and private investment, unmarketability of property, growth in delinquencies, and crime in the areas together with an abnormal exodus of families and businesses so that the decline of these areas impairs the value of private investments and threatens the sound growth and the tax base of taxing districts in the areas, and threatens the health, safety, morals, and welfare of the public. To remove and alleviate these adverse conditions, it is necessary to encourage private investment and restore and enhance the tax base of the taxing districts in the areas by the redevelopment of these abandoned facilities.
Section 6-34-30. For the purposes of this chapter, unless the context requires otherwise:
(1) 'Abandoned' means that at least eighty percent of the facilities of the eligible site has been continuously closed to business or otherwise nonoperational for a period of at least one year immediately preceding the time at which the determination is to be made.
(2) 'Eligible site' means a shopping center, mall, or free standing site of at least one hundred thousand square feet that is designed for use or has been used primarily as a retail or wholesale sales or service facility having at least one tenant or occupant located in a fifty thousand square foot or larger space therein. To qualify as an eligible site the shopping center, mall, or free standing site must be at least eighty percent abandoned on a square foot basis as required in item (1) above.
(3) 'Local taxing entities' means a county, municipality, school district, special purpose district, and any other entity or district with the power to levy ad valorem property taxes against the eligible site.
(4) 'Local taxing entity ratio' means that percentage computed by dividing the millage rate of each local taxing entity by the total millage rate for the eligible site.
(5) 'Placed in service' means the date upon which the eligible site is suitable for occupancy for the purposes intended.
(6) 'Rehabilitation expenses' means the expenses incurred in the rehabilitation of the eligible site, excluding the cost of acquiring the eligible site or the cost of personal property maintained at the eligible site.
Section 6-34-40. (A) Subject to the terms and conditions of this chapter, a taxpayer who improves, renovates, or redevelops an eligible site is eligible for one of the following two tax credits:
(1) a credit against real property taxes levied by local taxing entities equal to twenty-five percent of the rehabilitation expenses made to the eligible site times the local taxing entity ratio of each local taxing entity that has consented to the tax credit pursuant to subsection (B) below; or
(2) a credit against any state income taxes imposed equal to twenty-five percent of the rehabilitation expenses.
(B) If the taxpayer elects to receive the credit pursuant to subsection (A)(1) the following provisions shall apply:
(1) The municipality or, if the eligible site is located in an unincorporated area, the county first by resolution shall determine the eligibility of the eligible site and the eligibility of the proposed project seeking the credit. Any proposed project beginning after July 1, 2005, must be approved by a majority vote of the local governing body. The foregoing determinations and the municipality's or county's approval of the eligible site and proposed project must be by ordinance and public hearing. The ordinance shall provide for the credit to be taken as a credit against up to seventy-five percent of the real property taxes due on the site each year not to exceed eight years. Before determining the eligibility of the proposed eligible site, the municipality or county shall make a finding that the credit will not violate any covenant, representation, or warranty in any of its tax increment financing transactions.
(2) Not less than forty-five days before holding the public hearing contemplated in subsection (B)(1), the governing body of the municipality or county shall give notice to all affected local taxing entities where the eligible site is located of its intention to grant a tax credit for an eligible site and the amount of the tax credit proposed to be granted. If a local taxing entity does not file an objection to the tax credit with the municipality or county on or before the date of the public hearing, the local taxing entity is considered to have consented to the tax credit, provided that the actual tax credit granted is equal to or less than the tax credit stated in the notice of public hearing.
(3) The tax credit shall vest in the taxpayer in the tax year when the eligible site is placed in service and may be carried forward, in whole or in part, for up to eight years following that date.
(C) If the taxpayer elects to receive the credit pursuant to subsection (A)(2), the following provisions apply:
(1) The entire credit may not be taken for the taxable year in which the eligible site is placed in service but must be taken in equal installments over a five-year period beginning with the year in which the property is placed in service. Any unused portion of a credit installment may be carried forward for the succeeding five years.
(2) The credit earned pursuant to this subsection by a 'S' corporation owing corporate level income tax must be used first at the entity level. Any remaining credit passes through to each shareholder in a percentage equal to each shareholder's percentage of stock ownership.
(3) The credit earned pursuant to this subsection by a general partnership, limited partnership, limited liability company, or any other entity taxed as a partnership pursuant to Subchapter K of the Internal Revenue Code must be passed through to its partners and may be allocated among any of its partners, including without limitation, an allocation of the entire credit to one partner, in a manner agreed by the partners. As used in this subsection, the term 'partner' means a partner, member, or owner of an interest in the pass through entity, as applicable.
(4) The credit earned pursuant to this subsection is in addition to and does not offset the state historic credit in the event the eligible site also is eligible for the state historic credit.
(D) The taxpayer shall elect the mode of credit pursuant to subsection (A)(1) or subsection (A)(2) by providing written notification of its intent to the South Carolina Department of Revenue prior to the date the eligible site is placed in service; provided, that, if the taxpayer did not obtain the approvals contained in subsection (B) or fails to affirmatively make the election prescribed in this chapter before the date the eligible site is placed in service, the taxpayer is considered to have elected to receive the credit provided in subsection (A)(2) without the need for a written election.
Section 6-34-50. The provisions of Chapter 31 of this title also shall apply to this chapter, except the requirements of Section 6-31-40 which may not apply."
Renumber sections to conform.
Amend title to conform.
ROBERT W. HARRELL, JR. for Committee.
TO AMEND TITLE 6, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO LOCAL GOVERNMENTS, BY ADDING CHAPTER 34 SO AS TO ENACT THE "SOUTH CAROLINA RETAIL FACILITIES REVITALIZATION ACT" INCLUDING PROVISIONS TO PROVIDE PROPERTY TAX CREDITS OR INCOME TAX CREDITS FOR REHABILITATION EXPENSES MADE TO ELIGIBLE SITES WHICH HAVE BEEN USED AS RETAIL SALES OR SERVICE FACILITIES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 6 of the 1976 Code is amended by adding:
Section 6-34-10. This chapter is known and may be cited as the 'South Carolina Retail Facilities Revitalization Act'.
Section 6-34-20. (A) The primary purpose of this chapter is to create a meaningful incentive for the renovation, improvements, and redevelopment of abandoned retail facility sites located in South Carolina.
(B) The abandonment of retail facility sites has resulted in the disruption of communities and increased the cost to local governments by requiring additional police and fire services due to excessive vacancies. Many abandoned retail facility sites pose safety concerns. A public and corporate purpose of the local governments will be served by restoring the retail facility sites to a productive asset for the communities and result in increased job opportunities.
(C) There exists in many communities of this State abandoned retail facilities. The stable economic and physical development of these areas is endangered by the presence of these abandoned facilities as manifested by progressive and advanced deterioration of structures. As a result of the existence of these abandoned facilities, there is an excessive and disproportionate expenditure of public funds, inadequate public and private investment, unmarketability of property, growth in delinquencies, and crime in the areas together with an abnormal exodus of families and businesses so that the decline of these areas impairs the value of private investments and threatens the sound growth and the tax base of taxing districts in the areas, and threatens the health, safety, morals, and welfare of the public. To remove and alleviate these adverse conditions, it is necessary to encourage private investment and restore and enhance the tax base of the taxing districts in the areas by the redevelopment of these abandoned facilities.
Section 6-34-30. For the purposes of this chapter, unless the context requires otherwise:
(1) 'Abandoned' means that at least eighty percent of the facilities of the eligible site has been continuously closed to business or otherwise nonoperational for a period of at least one year immediately preceding the time at which the determination is to be made.
(2) 'Eligible site' means a shopping center, mall, or free standing site that is designed for use or has been used primarily as a retail sales or service facility having at least one tenant or occupant located in a one hundred thousand square foot or larger space therein. To qualify as an eligible site the shopping center, mall, or free standing site must be at least eighty percent abandoned on a square foot basis as required in item (1) above.
(3) 'Local taxing entities' means a county, municipality, school district, special purpose district, and any other entity or district with the power to levy ad valorem property taxes against the eligible site.
(4) 'Local taxing entity ratio' means that percentage computed by dividing the millage rate of each local taxing entity by the total millage rate for the eligible site.
(5) 'Placed in service' means the date upon which the eligible site is suitable for occupancy for the purposes intended.
(6) 'Rehabilitation expenses' means the expenses incurred in the rehabilitation of the eligible site, excluding the cost of acquiring the eligible site or the cost of personal property maintained at the eligible site.
Section 6-34-40. (A) Subject to the terms and conditions of this chapter, a taxpayer who improves, renovates, or redevelops an eligible site is eligible for one of the following two tax credits:
(1) a credit against real property taxes levied by local taxing entities equal to twenty-five percent of the rehabilitation expenses made to the eligible site times the local taxing entity ratio of each local taxing entity that has consented to the tax credit pursuant to subsection (B) below; or
(2) a credit against any state income taxes imposed equal to twenty-five percent of the rehabilitation expenses.
(B) If the taxpayer elects to receive the credit pursuant to subsection (A)(1) the following provisions shall apply:
(1) The municipality or, if the eligible site is located in an unincorporated area, the county first by resolution shall determine the eligibility of the eligible site and the eligibility of the proposed project seeking the credit. Any proposed project beginning after July 1, 2005, must be approved by a majority vote of the local governing body. The foregoing determinations and the municipality's or county's approval of the eligible site and proposed project must be by ordinance and public hearing. The ordinance shall provide for the credit to be taken as a credit against up to seventy-five percent of the real property taxes due on the site each year not to exceed eight years. Before determining the eligibility of the proposed eligible site, the municipality or county shall make a finding that the credit will not violate any covenant, representation, or warranty in any of its tax increment financing transactions.
(2) Not less than forty-five days before holding the public hearing contemplated in subsection (B)(1), the governing body of the municipality or county shall give notice to all affected local taxing entities where the eligible site is located of its intention to grant a tax credit for an eligible site and the amount of the tax credit proposed to be granted. If a local taxing entity does not file an objection to the tax credit with the municipality or county on or before the date of the public hearing, the local taxing entity is considered to have consented to the tax credit, provided that the actual tax credit granted is equal to or less than the tax credit stated in the notice of public hearing.
(3) The tax credit shall vest in the taxpayer in the tax year when the eligible site is placed in service and may be carried forward, in whole or in part, for up to eight years following that date.
(C) If the taxpayer elects to receive the credit pursuant to subsection (A)(2), the following provisions apply:
(1) The entire credit may not be taken for the taxable year in which the eligible site is placed in service but must be taken in equal installments over a five-year period beginning with the year in which the property is placed in service. Any unused portion of a credit installment may be carried forward for the succeeding five years.
(2) The credit earned pursuant to this subsection by a 'S' corporation owing corporate level income tax must be used first at the entity level. Any remaining credit passes through to each shareholder in a percentage equal to each shareholder's percentage of stock ownership.
(3) The credit earned pursuant to this subsection by a general partnership, limited partnership, limited liability company, or any other entity taxed as a partnership pursuant to Subchapter K of the Internal Revenue Code must be passed through to its partners and may be allocated among any of its partners, including without limitation, an allocation of the entire credit to one partner, in a manner agreed by the partners. As used in this subsection, the term 'partner' means a partner, member, or owner of an interest in the pass through entity, as applicable.
(4) The credit earned pursuant to this subsection is in addition to and does not offset the state historic credit in the event the eligible site also is eligible for the state historic credit.
(D) The taxpayer shall elect the mode of credit pursuant to subsection (A)(1) or subsection (A)(2) by providing written notification of its intent to the South Carolina Department of Commerce prior to the date the eligible site is placed in service; provided, that, if the taxpayer did not obtain the approvals contained in subsection (B) or fails to affirmatively make the election prescribed in this chapter before the date the eligible site is placed in service, the taxpayer is considered to have elected to receive the credit provided in subsection (A)(2) without the need for a written election.
(E) The governing body of a county or municipality where the site is located by resolution may modify the one hundred thousand square foot eligibility requirement in Section 6-34-30(2) by not more than twenty-five percent.
Section 6-34-50. The provisions of Chapter 31 of this title also shall apply to this chapter, except the requirements of Section 6-31-40 which may not apply.
SECTION 2. Chapter 34 of Title 6 of the 1976 Code, as added by the provisions of Section 1 of this act, is repealed on July 1, 2015.
SECTION 3. (A) Chapter 34 of Title 6 of the 1976 Code takes effect July 1, 2005, and applies for rehabilitation expenses incurred, without regard to the date these expenses were incurred, for eligible sites placed in service on or after July 1, 2005.
(B) Except as otherwise provided, the remainder of this act takes effect upon approval by the Governor.
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