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COMMITTEE REPORT
March 30, 2005
S. 589
Introduced by Senators McConnell, Drummond, Rankin, Land, McGill, Thomas, Moore, Fair, Ryberg, Setzler, Peeler, Reese and Verdin
S. Printed 3/30/05--S.
Read the first time March 3, 2005.
To whom was referred a Bill (S. 589) to amend Article 3, Chapter 43, Title 12, Code of Laws of South Carolina, 1976, relating to county equalization and reassessment, by adding Section 12-43-365, 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, by striking Section 12-43-365 as contained in SECTION 2, page 2, and inserting:
/ Section 12-43-365. (A) The value of tangible personal property and intangible personal property and any income or expense derived from such property, whether directly or indirectly, must not be included in the determination of fair market value of golf course real property for ad valorem tax purposes.
(B) For purposes of this section 'intangible personal property' has the same meaning as 'intangible personal property' as contained in Article X, Section 3(j) of the constitution of this State.
(C) If the fair market value of golf course real property for ad valorem tax purposes is determined pursuant to the capitalized income approach, the taxpayer shall provide income and expense data for golf course rentals, food and beverage services, and pro shop sales on a form designed by the county assessors and golf course owners and approved by the South Carolina Department of Revenue. Any data provided by the taxpayer for this purpose is not public data and may not be disclosed except in the process of a formal appeal involving the subject real property. /
Amend further, page 3, by striking SECTION 3 and inserting:
/ SECTION 3. This act takes effect upon approval by the Governor and the provisions of Section 12-43-365 of the 1976 Code as added by this act apply for the valuation of golf courses for purposes of property tax as golf courses are valued in countywide assessment and equalization programs implemented after 2005. /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT 1/
This bill is not expected to have any impact on state or local revenues. Although the amount of assessed value of some golf courses would be decreased, local governments are expected to adjust their millages to make up for the shortfalls. This bill would change the incidence of local property taxes by reducing the property taxes collected from golf courses by $1.8 million and shifting this amount among the other classes of property.
Explanation
Under current law, most golf courses are assessed using a comparable sales method, cost or replacement method or income capitalization method. Once a value is established, it is multiplied by a 6.0% assessment ratio and then multiplied by the millage rate. This bill would not allow the value of tangible and intangible personal property and any income derived from this property to be included in the determination of fair market value of golf course real property for ad valorem tax purposes. Based on responses from various counties and information in Parks, Recreation and Tourism's Economic Impact of Golf in South Carolina, we estimate this bill will shift $1.8 million of property tax revenue currently received from golf courses to the other classes of property.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.
TO AMEND ARTICLE 3, CHAPTER 43, TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO COUNTY EQUALIZATION AND REASSESSMENT, BY ADDING SECTION 12-43-365, SO AS TO PROVIDE THAT THE VALUE OF TANGIBLE AND INTANGIBLE PERSONAL PROPERTY AND ANY INCOME DERIVED THEREFROM, WHETHER DIRECTLY OR INDIRECTLY, SHALL NOT BE INCLUDED IN THE DETERMINATION OF FAIR MARKET VALUE OF GOLF COURSE REAL PROPERTY FOR AD VALOREM TAX PURPOSES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that:
(1) The golf industry contributes significantly to the economic well-being of this State, particularly in the tourism sector of its economy, and brings with it a much needed infusion of capital and employment, as well as property tax revenues into local governments.
(2) Real and personal property for golf courses is taxable as provided in Article X, Section 1 of the Constitution of South Carolina, 1895.
(3) Pursuant to Article X, Section 2 of the South Carolina Constitution, the General Assembly may prescribe the methods of assessment of property for ad valorem taxation.
(4) Section 12-37-220(A)(10) of the 1976 Code provides that pursuant to Article X, Section 3 of the State Constitution, and subject to Section 12-4-720, "intangible personal property" is exempt from ad valorem taxation.
(5) In arriving at a fair market value determination for golf course real property, the Administrative Law Court in Sea Pines Plantation Co., Inc v. Beaufort Co., 01-ALJ-17-0018-CC, S.C. A.L.J.D. 2002, and The Ocean Course v. Charleston County Assessor, 03-ALJ17-0471-CC, S.C. A.L.C. 2005, clearly states that personal property and the income derived therefrom must be excluded from real estate valuation for ad valorem tax purposes, as in the case of Minnetonka Country Club Ass'n v. County of Hennepin, 1989 Minn. Tax LEXIS 44 (Minn. Tax Ct. April 7, 1989).
(6) The inclusion of personal property and any income derived therefrom in the valuation of golf course real property for ad valorem tax purposes results in double taxation.
(7) Current valuation methods utilized by some assessing entities in South Carolina result in the inclusion of personal property and the income derived therefrom in the valuation of golf course real property for ad valorem tax purposes.
(8) The inclusion of personal property and the income derived therefrom in the valuation of golf course real property for ad valorem tax purposes has been a recurring matter of dispute between golf course owners and assessing entities and has resulted in numerous appeals and increased litigation costs for both the public and private sector.
(9) It is desirable to promote uniformity among the counties and within the industry in the valuation of golf course real property for ad valorem tax purposes.
(10) It is desirable to prevent double taxation in the valuation of personal property.
(11) It is desirable to prevent duplicative litigation.
(12) In order to address these concerns, it is necessary to enact this legislation to clearly state that it is the law of South Carolina that the value of certain personal property, and the income derived therefrom, whether directly or indirectly, is to be excluded from the valuation of golf course real property.
SECTION 2. Article 3, Chapter 43, Title 12 of the 1976 Code is amended by adding:
"Section 12-43-365. The value of tangible and intangible personal property and any income derived therefrom, whether directly or indirectly, shall not be included in the determination of fair market value of golf course real property for ad valorem tax purposes."
SECTION 3. Notwithstanding the provisions of Section 12-43-217 of the 1976 Code, the provisions of this act apply beginning with the taxable year in which this act takes effect.
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