South Carolina Code 12-44-50. Contents of fee agreement; disposal of economic development property; reduction of fee
(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:
Terms Used In South Carolina Code 12-44-50
- Alternative payment method: means fee payments as provided in § 12-44-50(A)(3). See South Carolina Code 12-44-30
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Appraisal: A determination of property value.
- County: means the county or counties in which the project is proposed to be located. See South Carolina Code 12-44-30
- Department: means the South Carolina Department of Revenue. See South Carolina Code 12-44-30
- Economic development property: means each item of real and tangible personal property comprising a project which satisfies the provisions of § 12-44-40(C) and other requirements of this chapter and is subject to a fee agreement. See South Carolina Code 12-44-30
- Enhanced investment: means a project that results in a total investment:
(a) by a single sponsor investing at least one hundred fifty million dollars and creating at least one hundred twenty-five new full-time jobs at the project; provided that the new full-time jobs requirement of this subsection does not apply to a taxpayer who 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;
(b) by a single sponsor investing at least four hundred million dollars; or
(c) that satisfies the requirements of § 11-41-30(2)(a), and for which the Secretary of Commerce has delivered certification pursuant to § 11-41-70(2)(a). See South Carolina Code 12-44-30 - Exemption period: means the period beginning on 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. See South Carolina Code 12-44-30
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Fee: means the amount paid in lieu of ad valorem property tax as provided in the fee agreement. See South Carolina Code 12-44-30
- 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 § 12-44-40. See South Carolina Code 12-44-30
- Personal property: All property that is not real property.
- 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. See South Carolina Code 12-44-30
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Sponsor: means one or more entities which sign the fee agreement with the county and makes the minimum investment, subject to the provisions of § 12-44-40, each of which makes the minimum investment as provided in item (13) and also includes a sponsor affiliate unless the context clearly indicates otherwise. See South Carolina Code 12-44-30
- 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. See South Carolina Code 12-44-30
(a) an assessment ratio of not less than six percent, or four percent for those projects qualifying under the enhanced investment definition;
(b) a millage rate that is, either:
(i) fixed for the life of the fee; or
(ii) 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 real property is constructed for the fee or is purchased in an arm’s length transaction, 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. The county and the sponsor or sponsor affiliate may instead provide in the fee agreement or any amendment thereto that any real property subject to the fee shall be reported at its fair market value for ad valorem property taxes as determined by appraisal as if such property were not subject to the fee; provided, the department may not undertake such an appraisal more than once every five years;
(ii) 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 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 subsection (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), Article X of the Constitution of this State and the exemption allowed pursuant to § 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, 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 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.
(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 § 12-54-25.