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(iii) If at any time the controlled group, or any former member which has left the controlled group no longer has the minimum five million dollars of investment, without regard to depreciation, that group or former member no longer holding the minimum amount of investment as provided in subsection (B)(3), without regard to depreciation, no longer qualifies for the fee.

(iv) For purposes of this section, `controlled group' or `controlled group of corporations' has the meaning provided under Section 1563(a) of the Internal Revenue Code as defined in Chapter 7 of Title 12 as of the date of the execution of the inducement agreement without regard to amendments or replacements thereof, and without regard to subsection (b) of Section 1563.

(5)(a) Before undertaking a project, the county council or county councils shall find:

(i) that the project is anticipated to benefit the general public welfare of the locality by providing services, employment, recreation or other public benefits not otherwise provided locally;

(ii) that the project gives rise to no pecuniary liability of the county or incorporated municipality or a charge against its general credit or taxing power; and

(iii) unless the terms of an agreement with respect to a project provides that the industry shall maintain the project and carry all proper insurance with respect thereto, the estimated cost of maintaining the project in good repair and keeping it properly insured must be included in the lease payment.

(b) The Board of Economic Advisors shall determine that the purposes to be accomplished by the project are proper governmental and public purposes and that the inducement of the location or expansion of projects within the State is of paramount importance and that the benefits of the project are greater than the costs.

(6) Every financing agreement with respect to a project shall contain an agreement obligating the industry to effect the completion of the project, and obligating the industry to pay an amount under the terms of a lease agreement, which must be sufficient to build up and maintain any reserve considered by the county council or county councils to be advisable in connection with the agreement.

(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 within thirty 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 twenty years. For projects which are completed and placed in

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

(b) Any undeveloped land, title to which is transferred to the county, before being developed and placed in service, is subject to an annual fee payment as provided in Section 4-12-20. The time during which fee payments are made under Section 4-12-20 is not considered part of the maximum periods provided in subsections (C)(2) and (C)(3), and no lease is considered an `initial lease agreement' for purposes of this section until the first day of the calendar year for which a fee payment is due under subsection (D)(2) in connection with the lease.

(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 six percent, and a fixed millage rate as provided in subsection (G), and a fair market value estimate determined by the department as follows:

(i) for real property, using the original income tax basis for South Carolina income tax purposes without regard to depreciation, but if real property is constructed for the fee or is purchased in an arm's length transaction, fair market value is deemed to equal the original income tax basis; otherwise, the department shall 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.

(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.

(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 12-37-220(B)(32) and (34).

(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, a 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, but no such amendment or termination and replacement may take place after the initial lease agreement date.

(I) Investment expenditures made or incurred by any investor in connection with a project, or relevant phase of a project in connection with a project completed and placed in service in more than one year, qualifies as expenditures subject to the fee in subsection (D)(2), so long as these expenditures are made:

(1) after 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 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 the inducement agreement in connection with a project qualifies as expenditures subject to the fee in subsection (D)(2).

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

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

(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.

(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). However, 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) 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. 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, if the entity whose entity interest is being transferred holds at least a five-million-dollar

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

(a) The county must approve the transfer within six months before the transfer.

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

(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, 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 five- million- dollar 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.

(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 the fee payments and file the returns.

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

(5) The provisions of Chapters 4 and 54 of Title 12 applicable to property taxes shall apply to this section; and for purposes of such application, the fee is considered a property tax. Sections 12-54-80 and 12-54-155 do not apply to 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 ninety 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.

(R) All references in this section to taxes must be considered to mean South Carolina taxes unless otherwise expressly stated.

Section 4-12-40. Projects with respect to which a lease agreement has been entered into before the effective date of this chapter are required to use the provisions of Section 4-29-67. Projects with respect to which a lease agreement is entered into after December 31, 1995, are required to use the provisions contained in this chapter. However, those projects in which the total investment exceeds forty-five million dollars within the time provided in subsection (C)(2) have the option of using the provisions contained in Section 4-29-67 or 4-12-30.

Section 4-12-50. If any provision of this chapter 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 chapter which can be given effect without the invalid provision or application, and to this end, the provisions of this chapter are severable."

B. Subsections (A), (B), and (C) of Section 4-29-68 of the 1976 Code, as last amended by Act 123 of 1993, are further amended to read:

"(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

(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.

(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 Section 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

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