A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING SECTION 6-1-200 SO AS TO AUTHORIZE COMMUNITY DEVELOPMENT CORPORATIONS, TO DEFINE TERMS, TO ESTABLISH LENDING AUTHORITY, CONDITIONS AND LIMITATIONS, AND EXEMPTIONS, AND TO PROVIDE A SUNSET CLAUSE.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Article 1, Chapter 1, Title 6 of the S.C. Code is amended by adding:

 

    Section 6-1-200. (A) For purposes of this section:

       (1) "Community Development Corporation" or "CDC" means a nonprofit corporation that:

           (a) is chartered under Chapter 31, Title 33 or the laws of another jurisdiction authorized to do business in this State;

           (b) was created by, or was created at the direction of, a county or municipality of this State pursuant to a formal action of the governing body of that county or municipality; and

           (c) has as its primary mission the economic and community development of a defined geographic service area within this State.

       (2) "Designated service area" means the geographic area described in the CDC's enabling ordinance, resolution, or charter, within which the CDC is authorized to carry out its community development mission.

       (3) "Improvement" means any construction, reconstruction, rehabilitation, repair, renovation, historic preservation, or other physical betterment of real property including, but not limited to, residential, commercial, mixed-use, and community facility improvements.

       (4) "Interest in real property" means any ownership interest, ground lease, conservation easement, deed restriction, option to purchase, right of first refusal, or other legally recognized interest held by the CDC in real property.

       (5) "Qualified borrower" means an individual, partnership, limited liability company, corporation, nonprofit corporation, or other legal entity that proposes to make an improvement to real property located within the CDC's designated service area or on real property in which the CDC holds an interest.

    (B) Subject to the conditions set forth in subsection (C), a CDC may lend money to a qualified borrower for the purpose of financing an improvement to real property located:

       (1) within the CDC's designated service area; or

       (2) on real property in which the CDC holds an interest. Such loans may be made from funds lawfully available to the CDC including, but not limited to, funds received by grant, donation, appropriation, or investment.

    (C) The lending authority granted by this section is subject to the following conditions:

       (1) The CDC must adopt written loan policies and procedures before making any loan under this section. Such policies must address, at minimum: loan application requirements; underwriting standards; interest rate parameters; loan terms; collateral requirements, if any; and default and collection procedures.

       (2) The rate of interest charged on any loan made under this section may not exceed the maximum rate permissible under applicable South Carolina law for similar transactions, or as otherwise authorized by the governing body of the county or municipality that created the CDC.

       (3) No loan made under this section may be used for purposes other than an improvement as defined in subsection (A)(3), and no loan proceeds may be disbursed until the CDC has verified the purpose and location of the proposed improvement.

       (4) The CDC must maintain adequate records of all loans made under this section, including the identity of each borrower, the amounts and terms of each loan, the real property to be improved, and the repayment history. The loan records are subject to inspection by the governing body of the county or municipality that created the CDC upon reasonable notice.

       (5) The CDC must report annually to the governing body of the county or municipality that created it regarding all loan activity conducted under this section, including the aggregate number and dollar amount of loans made, the types of improvements financed, the geographic distribution of loans within the designated service area, and the loan repayment status.

       (6) Nothing in this section should be construed to authorize a CDC to accept deposits from the public, to issue certificates of deposit, or to engage in any activity that would require licensure as a bank, credit union, or other depository institution under state or federal law.

    (D) The making of loans by a CDC in accordance with this section, in furtherance of its nonprofit community development mission and consistent with the conditions set forth in subsection (C), does not constitute engaging in the "business of lending" within the meaning of Chapter 29, Title 34 and does not require the CDC to obtain a license as a supervised lender under Chapter 3, Title 37. This exemption applies only to loans made pursuant to and in compliance with this section.

    (E) The authority granted by this section is cumulative and supplemental to any other authority granted to a CDC by law, ordinance, or its governing documents. Nothing in this section should be construed to limit any power a CDC may otherwise possess or to preempt any applicable federal law.

    (F) The governing body of the county or municipality that created the CDC may by ordinance or resolution:

       (1) establish additional conditions or limitations on the CDC's lending authority under this section beyond those set forth in subsection (C);

       (2) require prior approval by the governing body for loans above a threshold amount to be specified by the governing body; or

       (3) suspend or terminate the CDC's lending authority under this section as to that jurisdiction.

 

SECTION 2.  Unless reauthorized by the General Assembly, the provisions of Section 6-1-180 of the S.C. Code, as added by this act, shall terminate on June 30, 2035, and shall be deemed repealed on that date. The termination of this act shall not affect the validity or enforceability of any loan made pursuant to Section 6-1-180 prior to the date of termination, and all rights and obligations of parties to such loans shall continue in full force and effect notwithstanding termination of this act.

 

SECTION 3.  This act takes effect upon approval by the Governor.

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