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(E) Calculations pursuant to subsection (D)(2) must be made on the basis that the property, if taxable, is allowed all applicable property tax exemptions except the exemption allowed under Section 3(g) of Article X of the Constitution of this State and the exemption allowed pursuant to Section 12-37-220B(32) and (34).

(F) With regard to calculation of the fee provided in subsection (D)(2), the inducement agreement may provide for the disposal of property and the replacement of property subject to the fee as follows:

(1)(a) 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.

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

(c) If the investor used any method to compute the fee other than that provided in subsection (D)(2)(a), the fee on the property which was disposed of must be recomputed in accordance with subsection (D)(2)(a) and to the extent that the amount which would have been paid under subsection (D)(2)(a) exceeds the fee actually paid by the investor, the investor must pay the difference with the next fee payment due after the property is disposed of. If the investor used the method provided in subsection (D)(2)(c), the millage rate provided in subsection (D)(2)(c) must be used to calculate the amount which would have been paid under subsection (D)(2)(a).

(d) If there is no provision in the agreement dealing with the disposal of property in accordance with this subsection, the fee remains fixed and no adjustment to the fee is allowed for disposed property.

(2) Any property which is placed in service as a replacement for property which is subject to the fee payment may become part of the fee payment as provided in this item:

(a) Replacement property does not have to serve the same function as the property it is replacing. Replacement property qualifies for fee treatment provided in subsection (D)(2) only up to the original income tax basis of fee property which is being disposed of in the same property tax year. More than one piece of property can replace a single piece of property. To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the property which it is replacing, the excess amount is subject to payments as provided in Section 4-29-60. Replacement property is entitled to the fee payment for the period of time remaining on the twenty-year fee period for the property which it is replacing; provided, however, that where a single piece of

(b) The new replacement property which qualifies for the fee provided in subsection (D)(2) is recorded using its income tax basis, and the fee is calculated using the millage rate and assessment ratio provided on the original fee property. The fee payment for replacement property must be based on subsection (D)(2)(a) or (D)(2)(c), if the investor originally used this method, without regard to present value.

(c) In order to qualify as replacement property, title to the replacement property must be held by the county.

(d) If there is no provision in the inducement agreement dealing with replacement property, any property placed in service after the five-year period, or seven years in the case of a project which has received an extension time period allowed for investments as provided by subsection (C)(2), is subject to the payments required by Section 4-29-60 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.

(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)(c). This millage rate agreement must be executed on the date of the inducement agreement or anytime 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 including, but not limited to, the addition or removal of controlled group members; provided, however, that no such amendment or

(2) No amendment or replacement of an inducement agreement or millage rate agreement may be used to change the millage rate, or discount rate, assessment ratio, or length of the agreement under any such agreement. However, existing inducement agreements which have not yet been implemented by the execution and delivery of a millage rate agreement or a lease purchase agreement, may be amended up to the date of execution and delivery of a millage rate agreement or a lease purchase agreement in the discretion of the governing body.

(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 of a project for those project projects 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 these expenditures are made incurred:

(1) after, or within sixty days before, 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; and

(2) before the end of the applicable five or seven-year period time period for investments 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) Subject to subsection (K), project investment expenditures which are incurred within the applicable time period provided in subsection (I) by an entity whose investments are not being computed in the level of investment for purposes of subsections (B) or (C) shall qualify as investment expenditures subject to the fee in subsection (D)(2) where:

(a) such expenditures are part of the original cost of the property which is transferred, within the applicable time period provided in subsection (I), to one or more other entities which are members of the same controlled group as the transferor entity and whose investments are being computed in the level of investment for purposes of subsections (B) or (C); and

(2) The income tax basis of such property immediately before such transfer must equal the income tax basis of such property immediately after such transfer; provided, however, that to the extent income tax basis of such property immediately after such transfer unintentionally exceeds the income tax basis of such property immediately before such transfer, such excess shall be subject to payments under Section 4-29-60.

(3) The county must agree to any inclusion in the fee of the property described in subsection (J)(1).

(K)(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; and

(c) Property which has been placed in service in South Carolina and subject to South Carolina property taxes which is purchased in a transaction other than between any of the entities specified in Section 267(b) of the Internal Revenue Code, as defined under Chapter 7 6 of Title 12 as of the time of the transfer, may qualify for the fee provided the fee-paying entity invests at least an additional eighty-five forty-five million dollars in the project.

(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.

(L)(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

(2) For a project 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 manner provided for by the agreement establishing the industrial development park.

(3) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes may use a portion of this revenue for the purposes outlined in Section 4-29-68 without the requirement of issuing special source revenue bonds or the requirements of Section 4-29-68(A)(4).

(M) As a directly foreseeable result of negotiating the fee, gross revenue of a school district in which a project is located in any year a fee negotiated pursuant to this section is paid, may not be less than gross revenues of the district in the year before the first year for which a fee in lieu of taxes is paid. In negotiating the fee, the parties shall assume that the formulas for the distribution of state aid at the time of the execution of the inducement agreement must remain unchanged for the duration of the lease agreement.

(N) 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).

(2) Except for transfers pursuant to subsections (P) or (Q), no transfer of a fee interest or entity interest may be undertaken:

(a) until twenty-four months after the project has been placed in service, or relevant portion thereof in the case of a project placed in service in more than one year; or

(b) within twenty-four months after a prior transfer of the fee interest or entity interest to be transferred.

Provided, however, the running of such applicable twenty-four month period shall be suspended for any period during which a transferor's (under subsection (O)(2)(a)) or transferee's (under subsection (O)(2)(b)) risk of loss with respect to the fee interest or entity interest to be transferred is in fact substantially diminished by:

(i) the holding by any entity of a contractual right to require any transfer of such interest by an entity which is not a member of the transferor's (under subsection (O)(2)(a)) or transferee's (under subsection (O)(2)(b)) controlled group;

(iii) a short sale or any similar transaction with respect to the interest which is undertaken by the transferor (under subsection (O)(2)(a)) or transferee (under subsection (O)(2)(b)) which is not a member of any such transferee's or transferor's controlled group.

A single entity, or two or more entities which are members of a controlled group, may enter into any lending, financing, security or similar arrangement, or succession of such arrangements, with any financing entity, concerning all or part of a project and may enter into any sale-leaseback arrangement, including without limitation, an assignment, a sublease, or similar arrangement, or succession of such arrangements, with one or more financing entities, concerning all or part of a project, regardless of the identity of the income tax owner of the property which is subject to the fee payment under subsection (D)(2). Even though income tax basis is changed for income tax purposes, neither the original transfer to the financing entity nor the later transfer from the financing entity back to the original transferor or members of its controlled group, pursuant to terms in the sale-leaseback agreement, affects the amount of the fee due.

(3) All transfers undertaken with respect to the project to effect a financing of fee interests or entity interests authorized under subsection (O)(1) must meet the following requirements:

(a) The county must approve such transfer within six months prior to the transfer. The Department of Revenue and Taxation must receive notification in writing within sixty days after the transfer of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement will not adversely affect the fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a year or portion of a year up to a maximum penalty of one hundred twenty thousand dollars.

(b) The Department of Revenue and Taxation must receive notification in writing of the identity of each transferee and other information required by the Department of Revenue and Taxation within thirty days after the transfer becomes effective. The Department of Revenue and Taxation may extend the thirty-day period upon written request. Failure to meet this notice requirement will not adversely the fee, but a penalty may be assessed by the Department of Revenue and Taxation for late notification for up to ten thousand dollars a month or portion of

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

(4) All transfers of fee interests authorized under subsection (O)(1) must meet the following additional requirements:

(a) The transferor must pay the county any present value fee differential (as defined under subsection (O)(5) within ninety days after the transfer. Failure to make this payment will result in interest and penalties computed in the same manner and amounts applicable to property tax.

(b) Each transferee must agree to be bound by the applicable agreements constituting the fee arrangement as to that portion of the project to which the transfer relates.

(c) The income tax basis of property interests which are subject to the fee in the hands of the transferee immediately after such transfer (i) cannot exceed the original income tax basis of such property without regard to depreciation) in the hands of the transferor and (ii) cannot be less than the income tax bases of such property (taking depreciation into account) in the hands of the transferor immediately before transfer. The fee to be paid under subsection (D) with respect to such transferred property interests for the remaining term of the fee shall be recomputed using the transferee's income tax basis immediately after the transfer; the same millage rate and discount rate used by the transferor; and the fee payment method provided under subsection (D)(2)(a); provided, however, that if the pre-transfer fee payments were made under subsection (D)(2)(c), then post-transfer fee payments must be made under subsection (D)(2)(c), but without any present value method applicable to such payments. Before an investor may transfer an inducement agreement, millage rate agreement, lease agreement or the assets subject to the lease agreement, it must obtain the approval of the county with which it entered into the original inducement agreement, millage rate agreement, or lease agreement. However, no such approval is required in connection with financing-related transfers.

(5) The present value fee differential shall mean the amount by which the fee that would have been paid under subsection (D)(2)(a) with respect to the transferred fee interest until the time of the transfer exceeds

(P) Reserved.

(1) Any interests in an inducement agreement, millage rate agreement, or lease agreement (collectively and individually referred to as a "group fee interest") may be transferred by any entity to:

(a) any corporation which is a member of the same controlled group as the transferring corporation;

(b) any corporation which is a member of the same controlled group as all of the partners comprising the transferring partnership;

(c) any partnership all of the partners of which are members of the same controlled group of which the transferring corporation is a member; and

(d) any partnership all of the partners of which are members of the same controlled group as all of the partners comprising the transferring partnership.

(2) Transfers of group fee interests authorized under subsection (P)(1) must meet the requirements set forth in subsection (O)(3) and (O)(4); provided, however, in connection with subsection (O)(4)(c), to the extent a present value fee payment computation was used by the transferor, the transferee may, if the county agrees, use a fee payment method based on any present value fee payment method provided under subsection (D)(2). In addition, such transfers must involve at least a ten million dollar portion of the project investment or proposed investment (based on income tax basis without regard to depreciation).

(3) Any transfer of an interest in an inducement agreement must include a transfer of a corresponding interest in a millage rate agreement, if any, and lease agreement, if any; any transfer of an interest in a millage rate agreement must include a transfer of a corresponding interest in an inducement agreement, and lease agreement, if any; and any transfer of an interest in a lease agreement must include a transfer of a corresponding interest in an inducement agreement and millage rate agreement.

(4) One or more members of a controlled group, or a partnership all of the partners of which are members of the same controlled group,

(Q) Reserved.

(1) Any or all equity interests in any partnership, corporation, or other association 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, lease agreement, or any or all of the foregoing (such equity interests collectively and individually referred to as a "group entity interest") may be transferred to:

(a) any corporation which is a member of the same controlled group as the corporation in which an interest is being transferred;

(b) any corporation which is a member of the same controlled group as all of the partners comprising the partnership in which an interest is being transferred;

(c) any partnership in which all of the partners are members of the same controlled group as the corporation in which an interest is being transferred; and

(d) any partnership in which all of the partners are members of the same controlled group as all of the partners comprising the partnership in which an interest is being transferred.

(2) Transfers of group entity interests authorized under subsection (Q)(1) must meet the requirements set forth in subsection (O)(3).
(R) For purposes of subsections (O)(1)(a) and (P), and subject to subsection (U), each transferee shall, with respect to a project which is the subject of a transfer, shall be considered to have made amounts of qualified investments represented by the property interest which is subject to the fee and which is transferred, without regard to depreciation.

(S) Reserved.

(1) Notwithstanding anything in subsections (O), (P), and (Q), a single entity, or two or more entities which are members of a controlled group, may enter into any lending, financing, security or similar arrangement, or succession of such arrangements, 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

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