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(C)(1) From the end of the property tax year in which the investor and the county execute an inducement agreement, the investor 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 investor and the county execute the initial lease agreement, the investor has five years in which to complete its investment for purposes of qualifying for this section. If the investor does not anticipate completing the project within five years, the investor may apply to the county before the end of the five year period 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 of Revenue within 30 days of the date the extension was granted. The extension may not exceed two 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 investor and the payment which is due under Section 4-12-20 is subject to interest as provided in Section 12-43-305. Any property placed in service after the five year period, or seven years 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 property taxes as provided in Chapter 37 of Title 12 if the investor has title to the property.

(3) The annual fee provided by subsection (D)(2) is available for no more than 20 years. 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 20 years to a maximum total of 27 years for the fee for a single project which has been granted an extension.

(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, will be subject, before being placed in service, to an annual fee payment as provided in Section 4-12-20.

(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 6 percent, and a fixed millage rate as provided in subsection (G), and a fair market value estimate determined by the South Carolina Department of Revenue as follows:

(i) for real property using the original income tax basis for South Carolina income tax purposes without regard to depreciation (provided, however, if real property is constructed for the fee or is purchased in an arm's length transaction, fair market value will be deemed to equal the original income tax basis, otherwise the Department of Revenue will determine fair market value by appraisal); 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 investor 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 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.

(F)(1) If an investor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property.

(2) Property is disposed of only when it is scrapped or sold in accordance with the lease agreement.

(G)(1) The county and the investor may enter into an agreement to establish the millage rate (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 must be executed on the date of the inducement agreement or any time thereafter up to and including 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 cannot be lower than the cumulative property tax millage rate legally levied by or on behalf of all taxing entities within which the subject property is to be located which is the cumulative rate applicable on the thirtieth day of June preceding the calendar year in which the millage rate agreement is executed. If no millage rate agreement is executed before the date of the initial lease agreement, the millage rate is deemed 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.

(H)(1) Upon agreement of the 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, provided, however, that no such amendment or termination and replacement may take place after the initial lease agreement date.

(2) No amendment or replacement of an inducement agreement or millage rate agreement may be used to change the millage rate under any such agreement.

(I) Any and all investment expenditures made or incurred by any investor in connection with a project (or relevant phase thereof in connection with a project completed and placed in service in more than one year) shall qualify as expenditures subject to the fee in subsection (D)(2), so long as such expenditures are made:

(2) before the end of the applicable five or seven year period referenced in subsection (C)(2) and (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 an inducement or similar resolution by county council; otherwise, only investment expenditures made or incurred by any investor after the date of such inducement agreement in connection with a project shall qualify as expenditures subject to the fee in subsection (D)(2).

(J)(1) Property which has been previously subject to property taxes in South Carolina will not qualify for the fee except as provided in this subsection:

(a) land, excluding improvements thereon, on which a new project will 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 will not be eligible for a fee, even if they are capitalized expenditures, except for modifications to existing real property improvements which constitute an expansion of such improvements.

(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. 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 total taxes for each millage levying entity as a percentage of the total taxes for all such entities determines each entity's relative shares of each year's fee payment for all subsequent years of the agreement.

(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). Provided, however, that the computation of bonded indebtedness limitation is subject to the requirements of Section 4-29-68(E).

(M) An entity subject to the fee may enter into any lending, financing, security or similar arrangement, with any financing entity, concerning all or part of a project, provided that the income tax ownership of the property which is subject to the fee payment under subsection (D)(2) is held, by the time the fee payments relating to such property begin under subsection (D)(2), by the entity subject to the fee.

(N)(1) An entire fee interest may be transferred to another entity which is qualified to enter into a fee agreement under subsection (B)(4)(a). A fee interest is an inducement agreement, millage rate agreement, lease agreement and the entity's entire property interest in the project subject to the fee. Any or all equity interests in a partnership, corporation, association or limited liability company which properly files its South Carolina income tax returns as a partnership or corporation and which has an interest in an inducement agreement, millage rate agreement, and lease agreement (such equity interests collectively and individually referred to as an "entity interest") may be transferred by any entity to any entity, provided that the entity whose entity interest is being transferred holds at least a $10 million investment (based on income tax basis without regard to depreciation) in the project as of the time of the transfer.

(2) All transfers of fee interests or entity interests authorized under subsection (N) must meet the following requirements:

(a) The county must approve such transfer within six months prior to the transfer.

(c) No election under Internal Revenue Code of 1986, as amended, Sections 338 or 754 may be made with respect to the transfer.

(d) Each transferee must agree to be bound by the applicable agreements constituting the fee arrangement.

(e) Any transfer must be for fair market value or result in a carryover basis for income tax purposes. If for income tax purposes, the property begins a new depreciable life for the asset, the property also begins a new depreciable life for purposes of computing the fee. In no event is the time period for receiving the fee extended.

(O) Notwithstanding any other provision of this section to the contrary, if at any time following the period provided in subsection (C)(2), the investment based on income tax basis without regard to depreciation falls below the $10 million minimum investment to which the fee relates, the fee provided in subsection (D)(2) is no longer available and the investor is required to make the payments which are due under 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)(1) The investor shall file the returns, contracts, and other information which may be required by the Department of Revenue.

(2) Fee payments, and returns showing investments 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 obligated to make such fee payments and file such 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 was a property tax payment or return.

(4) The Department of Revenue may issue the rulings and promulgate regulations it determines necessary or appropriate to carry out the purpose of this section.

(6) If the entity subject to the fee fails to make the fee lease payments as provided by the agreements between the entity and the county, upon 90 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.

All references in this section to taxes shall be considered to mean South Carolina taxes unless otherwise expressly stated.

If any provision of this act 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 act which can be given effect without the invalid provision or application, and to this end, the provisions of this act are severable.

(R) Projects with respect to which a lease agreement has been entered into before the effective date of this act are required to use the provisions of Section 4-29-67 of the 1976 South Carolina Code of Laws. Projects with total investments of less than $45 million within the time frame as provided in subsection (C)(2) with respect to which a lease agreement is entered into after December 31, 1995 are required to use the provisions contained in Section 4-12- 30. Those projects in which the total investment is $45 million or more within the time frame provided in subsection (C)(2) have the option of using the provisions contained in Section 4-29-67 or 4-12-30.

SECTION 2. To amend Section 4-29-68, as amended, so as to add the following:

Section 4-29-68. (A) A county or municipality or special purpose district that receives and *retains revenues from a payment in lieu of taxes pursuant to Section 4-29-60, or Section 4-29-67, Section 4-12-20 or Section 4-12-30 may issue special source revenue bonds secured by and payable from all or a part of such revenues, subject to the following terms and conditions:

(1) The issuance of bonds is authorized by a duly adopted ordinance of the governing body of the issuer or, if the issuer is a special purpose district, an ordinance of the county council or councils in the county or counties in which the special purpose district is located, and a resolution of the governing body of the issuer, after a public hearing is held at least fifteen days after notice of the hearing is published in a newspaper of

(2) The bonds are issued solely for the purpose of paying the cost of designing, acquiring, constructing, improving, or expanding the infrastructure serving the issuer in order to enhance the economic development of the issuer and costs of issuance of the bonds. For purposes of this section, infrastructure includes improved and unimproved real property. Bonds issued pursuant to this section to finance the acquisition of real or personal property may be additionally secured by a mortgage of that real or personal property.

(3) The bonds may include amounts for capitalized interest for a period not to extend beyond the later of (a) the date that is three years from the date of issuance of the bonds and (b) the first date on which any ad valorem taxes (including, but not limited to, county or school district taxes) would have been payable on the property (other than unimproved real property) which is the subject of the payment in lieu of taxes.

(4) The issuer may use proceeds of the bonds (including by establishment of a reserve fund to be used) (a) directly for infrastructure owned or controlled by the issuer or (b) to make loans or grants to, or to participate in joint undertakings with, other agencies or political subdivisions of the State that own or control the infrastructure referred to in item (2) of this subsection.

(5) The bonds are, and must state on their face that they are, (a) payable solely from all or a specifically described part of the payments in lieu of taxes received and retained by the issuer under Section 4-29-60, Section 4-29- 67, Section 4-12-20, Section 4-12-30 or Section 13 of Article VIII of the Constitution of this State, (b) not secured by, or in any way entitled to, a pledge of the full faith, credit, or taxing power of the issuer, (c) not an indebtedness of the issuer within the meaning of any state constitutional provision or statutory limitation but are payable solely from a special source that does not include revenues from any tax or license, and (d) not a pecuniary liability of the issuer or a charge against the issuer's general credit or taxing power.

(6) The ordinance authorizing the issuance of the bonds shall specifically describe the portion of the payments in lieu of taxes received and retained by the issuer from which the bonds are payable and by which the bonds are secured.

(7) The bonds may be executed and delivered at any time as a single issue or from time to time as several issues, be in the form and denominations, be of the tenor, be payable in the installments and at the time or times not to exceed the time over which payments in lieu of taxes

(8) The bonds may be sold at public or private sale at the prices and in the manner and from time to time as may be determined by the governing board to be most advantageous, and the governing board may pay, as a part of the costs described in item (2) of this subsection, and out of the bond proceeds, all expenses, premiums, commissions, and expenses which the governing board considers necessary or advantageous in connection with the authorization, sale, and issuance of the bonds.

(9) The ordinance may provide for the issuance, in the future, of further bonds on a parity with those initially issued, but the proceedings may preclude the issuance of bonds or any obligations of any sort secured by a lien prior to the lien of the bond or bonds afterward issued on a parity with the bonds.

(10) Pending the issuance of bonds, bond anticipation notes may be issued, and to the end that a vehicle be provided therefor, the provisions of Section 11-17-10 to Section 11-17-110, as now or hereafter amended, are applicable to the bond anticipatory borrowing.

(11) The ordinance authorizing the issuance of the bonds may contain agreements and provisions customarily contained in the instruments securing revenue or special source bonds as the governing board considers advisable, but the issuer does not have the power to obligate itself to impose or maintain any particular level of tax rates.

(B) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-29- 60, or Section 4-29-67, Section 4-12-20 or Section 4-12-30 may pledge the revenues as additional security for general obligation debt or revenue debt of the issuer if the general obligation debt or revenue debt is issued in accordance with items (1) and (2) of this subsection.

(C) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-29- 60, or Section 4-29-67, Section 4-12-20 or 4-12-30 may pledge the revenues as additional security for general obligation debt or revenue debt of other agencies or political subdivisions of the State referred to in item (4)(b) of this subsection if the pledge is authorized by a duly- adopted ordinance of the governing body of the county or municipality or special purpose district after a public hearing is held at least fifteen days after notice of the hearing is published in a newspaper of general circulation in

(D) Revenues received by a county or municipality or special purpose district which may be pledged or from which bonds may be payable and secured pursuant to this Section 4-29-68 or Section 4-1-175 may be used jointly to pay or secure a single series of bonds.

(E) A political subdivision of this State subject to the limitation of Section 14(7)(a) of Article X of the Constitution of this State pledging pursuant to this section all or a portion of the revenues received and retained by that subdivision from a payment in lieu of taxes to the repayment of any bonds shall not include in the assessed value of taxable property located in the political subdivision for the purposes of calculating the limit imposed by that section of the Constitution any amount representing the value of the property that is the basis of the pledged portion of revenues. If the political subdivision, before pledging revenues pursuant to this section, has included an amount representing the value of a parcel or item of property that is the subject of a payment in lieu of taxes in the assessed value of taxable property located in the political subdivision and has issued general obligation debt within the debt limit calculated on the basis of such assessed value, then it may not pledge pursuant to this section revenues based on the item or parcel of property, to the extent that the amount representing its value is necessary to permit the outstanding general obligation debt within the debt limit of the political subdivision.

(F) A county, municipality, or special purpose district that receives and retains revenues from a payment in lieu of taxes pursuant to Section 4-1-170, 4- 29-60, or 4-29-67 in which these revenues are derived in whole or in part from a redevelopment project area established pursuant to Title 31, Chapter 6 shall allocate these revenues in accordance with the ordinance of the municipality adopted pursuant to Section 31-6-70 as if these revenues remained ad valorem taxes. All taxes collected in the redevelopment project area which are not subject to the ordinance of the municipality adopted pursuant to Section 31-6-70 become payments in lieu of taxes and the portion collected by the municipality may be pledged to

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