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Indicates Matter Stricken
Indicates New Matter
Indicates Matter Stricken
Indicates New Matter
AMENDED
May 2, 2007
S. 243
S. Printed 5/2/07--H.
Read the first time February 20, 2007.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 46 TO TITLE 11 SO AS TO ESTABLISH THE "SOUTH CAROLINA HYDROGEN INFRASTRUCTURE DEVELOPMENT FUND", TO AUTHORIZE THE SOUTH CAROLINA RESEARCH AUTHORITY TO ADMINISTER SUBGRANTS FOR THE PURPOSE OF PROMOTING THE DEVELOPMENT OF HYDROGEN PRODUCTION, TO ALLOW THE FUND TO RECEIVE DONATIONS, GRANTS, AND OTHER FUNDING AS PROVIDED BY LAW, TO ALLOW A TAXPAYER WHO MAKES A CONTRIBUTION TO THE FUND TO RECEIVE A TAX CREDIT SUBJECT TO CERTAIN LIMITATIONS, TO REQUIRE THE GENERAL ASSEMBLY TO APPROPRIATE A SPECIFIC AMOUNT FROM THE GENERAL FUND OF THE STATE TO THE FUND, AND TO REQUIRE STATE AGENCIES TO CONSIDER PURCHASING EQUIPMENT AND MACHINERY OPERATED BY HYDROGEN OR FUEL CELLS OR BOTH OF THEM; BY ADDING SECTION 12-6-3630 SO AS TO ALLOW A CREDIT AGAINST THE INCOME TAX, LICENSE FEES, OR INSURANCE PREMIUM TAXES FOR QUALIFIED CONTRIBUTIONS MADE TO THE FUND; BY AMENDING SECTION 12-36-2120, AS AMENDED, RELATING TO SALES TAX EXEMPTIONS, SO AS TO ALLOW A SALES TAX EXEMPTION FOR EQUIPMENT OR MACHINERY OPERATED BY HYDROGEN OR FUEL CELLS OR USED TO DISTRIBUTE HYDROGEN AND FOR EQUIPMENT AND MACHINERY USED PREDOMINATELY FOR RESEARCH AND DEVELOPMENT INVOLVING HYDROGEN OR FUEL CELL TECHNOLOGIES, AND TO ALLOW A SALES TAX EXEMPTION FOR BUILDING MATERIALS, MACHINERY, OR EQUIPMENT USED TO CONSTRUCT A NEW OR RENOVATED BUILDING LOCATED IN A RESEARCH DISTRICT.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that:
(1) South Carolina must encourage a vibrant knowledge-based economy and establish a foundation for research and commercialization activities to create higher paying jobs and benefit all South Carolinians;
(2) continuing to nurture a hydrogen and fuel cell cluster in South Carolina's economy, which has already begun with efforts by the state's research universities, is a public purpose that will help to further the state's goal to encourage a knowledge-based economy;
(3) South Carolina considers hydrogen and fuel cell technology, which is an alternative means of electrical power, to be a "fuel of the future" due to its potential to create high-paying jobs for the citizens of the State, its safe uses for stationary, portable, and automotive devices, and its positive environmental impacts;
(4) hydrogen is a clean fuel that is of benefit to citizens because of its renewable sources, nonpolluting characteristics, nonpetroleum basis, and its potential to limit the country's reliance on foreign sources of oil;
(5) the global demand for hydrogen technology is projected to be more than $2.6 trillion in 2021 and the United States market is expected to exceed one trillion dollars and one million jobs before 2020, while the economic potential for South Carolina and surrounding communities is estimated to be 40,000 jobs and a ten billion dollar capital investment in the State by 2020; and
(6) in order to capitalize on this economic opportunity, it is appropriate that the State create an ideal environment for all users and developers of hydrogen and fuel cell technology, including companies, businesses, and consumers, to further the state's goal to create a thriving hydrogen and fuel cell cluster in South Carolina's economy.
SECTION 2. Title 11 of the 1976 Code is amended by adding:
Section 11-46-10. This chapter may be cited as the 'South Carolina Hydrogen Infrastructure Development Act'.
Section 11-46-20. (A) There is established in the State Treasury a separate and distinct fund known as the 'South Carolina Hydrogen Infrastructure Development Fund'. The revenues of the fund must be distributed in the form of grants to the South Carolina Research Authority (authority) and used for the purpose of promoting the development and deployment of hydrogen production, storage, distribution, and dispensing infrastructure and related products and services that enable the growth of hydrogen and fuel cell technologies in the State, either by the authority or a grantee. Unexpended revenues in this fund carry forward into succeeding fiscal years through June 30, 2012, and earnings in this fund must be credited to it.
(B) The General Assembly must not appropriate more than a total of fifteen million dollars in grants as provided for in Section 11-46-30(B). Grants may not be made after June 30, 2012. Revenues remaining in the fund after that date, regardless of source, lapse to the General Fund of the State.
(C) The authority shall implement and manage the application for grants. The authority shall administer the fund and provide grants for any purpose that furthers the creation of a sustainable foundation upon which a hydrogen economy may develop across the State including, but not limited to, a demonstration project, pilot project, and the purchase of machinery and equipment. The authority may charge an applicant a maximum of three percent of the administrative costs for managing the grant process. The authority, upon consultation with the South Carolina Hydrogen and Fuel Cell Alliance, the University of South Carolina's Fuel Cell Center of Excellence, Clemson University, South Carolina State University's Clyburn Transportation Center, the Savannah River National Laboratory, the Center for Hydrogen Research, the Medical University of South Carolina, and the Columbia Innovation Center, shall establish guidelines for the application for and approval of grants, including specific objectives that an applicant must meet to receive a grant. The executive committee of the authority has the ultimate authority to determine any matter relating to the fund and to the application of fund proceeds including, but not limited to, the approval of grants.
(D) Grants distributed from the fund are subject to the procurement procedures followed by the authority.
(E) Appropriations made to the fund pursuant to Section 11-46-30(B) may be distributed as grants only to the extent that there is a dollar-for-dollar match, in cash or in kind, from a source other than the State. However, the executive committee of the authority, based on the merits of a grant proposal and its projected economic benefit, may reduce or eliminate the matching requirement on a case-by-case basis.
(F) The authority shall make and implement all final decisions concerning any matter provided for in this chapter; however, a grant must not be made to the authority without approval by the Secretary of Commerce.
Section 11-46-30. (A) The South Carolina Hydrogen Infrastructure Development Fund may receive donations, grants, and any other funding as provided by law. A taxpayer making a contribution to the fund is allowed a tax credit provided pursuant to Section 12-6-3630.
(B) The General Assembly shall appropriate from the general fund of the State the following minimum amounts to the South Carolina Hydrogen Infrastructure Development Fund in the fiscal years indicated:
(1) seven million dollars for fiscal year 2007-2008;
(2) five million dollars for fiscal year 2008-2009;
(3) three million dollars for fiscal year 2009-2010.
Section 11-46-40. The South Carolina Research Authority shall submit an annual report to the Governor and the General Assembly containing at a minimum the following:
(1) the total amount of monies placed in the fund in a fiscal year and the total amount of monies granted from the fund in a fiscal year;
(2) a list of the applicants that received grants and the applicant's stated objectives;
(3) an audit of the activities conducted by the applicants;
(4) the monies used by the authority for administration and management and the percentage of each grant used for administration and management;
(5) the progress achieved by the authority and the fund in creating a sustainable foundation upon which a hydrogen economy may develop across the State; and
(6) the certified gross profits earned by grant recipients provided pursuant to Section 11-46-60.
Section 11-46-50. Each state agency head shall require the agency's procurement officer, or other state employee authorized to purchase equipment or machinery for the agency, to consider purchasing equipment or machinery operated by hydrogen or fuel cells, or both of them, if available and cost-effective.
Section 11-46-60. Two percent of the gross profits derived from the sale of hydrogen and fuel cell products or services developed by a grant recipient, organized and operating as a for-profit business entity, must be annually remitted to the fund through June 30, 2012, until the full amount of the original grant has been repaid to the fund. Thereafter, if the full amount of the original grant has not been repaid, two percent of the gross profits must be annually remitted to the State Treasurer and transferred to the general fund of the State until repaid. The Department of Revenue shall promulgate regulations to determine and certify gross profits.
Section 11-46-70. The authority or a nonprofit affiliate designated by the authority may implement the provisions of this chapter. A designated nonprofit affiliate shall establish a separate and distinct fund. Monies provided to the affiliate fund must be subject to the same conditions and requirements provided by law that apply to a fund established by the authority. Grants from the affiliate fund must be made with the consent of the executive committee of the authority. The provisions of this chapter and Section 12-6-3630 apply to the affiliate fund."
SECTION 3. Article 25, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-3630. (A) For taxable years beginning after 2007, and before 2012, a taxpayer is allowed a credit against the income tax imposed pursuant to Chapter 6 or 11 of this title, license fees imposed pursuant to Chapter 20 of this title, or insurance premium tax imposed pursuant to Chapter 7, Title 38, or a combination of them, for a qualified contribution made by a taxpayer to the South Carolina Hydrogen Infrastructure Development Fund established pursuant to Chapter 46, Title 11. A contribution is not a qualified contribution if it is subject to a condition or limitation regarding the use of the contribution.
(B) The credit is equal to twenty-five percent of a qualified contribution made by a taxpayer to the fund. The credit must be used against the taxpayer's liability on income taxes, premium insurance taxes, or license fees after the application of all other credits applicable to the taxpayer's tax liability. Unused credits may be carried forward for ten years after the tax year in which a qualified contribution was made. The credit is nonrefundable.
(C) A taxpayer who claims a credit for a qualified contribution pursuant to this section may not claim a deduction for the same qualified contribution.
(D) A taxpayer who claims a credit pursuant to this section must attach to his tax return a copy of a form provided by the authority identifying the taxpayer's qualified contribution. The Department of Revenue may require from the taxpayer additional information identifying the taxpayer's qualified contribution as it considers appropriate."
SECTION 4. A. Section 12-36-2120 of the 1976 Code, as last amended by Act 386 of 2006, is further amended by adding appropriately numbered items to read:
"( ) any device, equipment, or machinery operated by hydrogen or fuel cells, any device, equipment, or machinery used to generate, produce, or distribute hydrogen and designated specifically for hydrogen applications or for fuel cell applications, and any device, equipment, or machinery used predominantly for the manufacturing of, or research and development involving hydrogen or fuel cell technologies. For purposes of this item:
(1) 'fuel cells' means a device that directly or indirectly creates electricity using hydrogen (or hydrocarbon-rich fuel) and oxygen through an electro-chemical process; and
(2) 'research and development' means laboratory, scientific, or experimental testing and development of hydrogen or fuel cell technologies. Research and development does not include efficiency surveys, management studies, consumer surveys, economic surveys, advertising, or promotion, or research in connection with literary, historical, or similar projects.
( ) any building materials used to construct a new or renovated building or any machinery or equipment located in a research district. However, the amount of the sales tax that would be assessed without the exemption provided by this section must be invested by the taxpayer in hydrogen or fuel cell machinery or equipment located in the same research district within twenty-four months of the purchase of an exempt item.
'Research district' means land owned by the State, a county, or other public entity that is designated as a research district by the University of South Carolina, Clemson University, the Medical University of South Carolina, South Carolina State University, or the Savannah River National Laboratory."
B. This section takes effect October 1, 2007.
SECTION 5. A. Chapter 14, Title 12 of the 1976 Code is amended by adding:
"Section 12-14-80. (A) There is allowed an economic impact zone tax credit pursuant to Section 12-14-60 for qualifying investments made by a manufacturer which:
(1) is engaged in this State in at least one economic impact zone, as defined in Section 12-14-30(1), in an activity or activities listed under the North American Industry Classification System Manual (NAICS) Section 326;
(2) is employing five thousand or more full-time workers in this State and having a total capital investment in this State of not less than eight hundred fifty million dollars; and
(3) invests an additional three hundred fifty million dollars in this State before July 1, 2011.
(B) A taxpayer that qualifies for the tax credit allowed by this section may claim the credit earned pursuant to this section and credits earned pursuant to Section 12-6-3360 in the manner provided pursuant to Sections 12-6-3360 and 12-14-60, or as a credit in an amount equal to not more than fifty percent of the employee's withholding on the taxpayer's quarterly withholding tax returns. To claim the credit against the employee's withholding, the taxpayer must be in compliance with its withholding tax and other taxes due to the State."
B. This act takes effect July 1, 2007, and applies for capital investments placed in service outside of an economic impact zone after June 30, 2007, and for quarterly state withholding returns due on and after that date.
SECTION 6. A. Section 12-36-2120 of the 1976 Code, as last amended by Act 386 of 2006, is further amended by adding an appropriately numbered item at the end to read:
"( ) an amusement park ride and any parts, machinery, and equipment used to assemble, operate, and make up an amusement park ride or performance venue facility located in a qualifying amusement park or theme park and any related or required machinery, equipment, and fixtures located in the same qualifying amusement park or theme park.
(a) To qualify for the exemption, the taxpayer shall meet the investment and job requirements provided in subsubitem (i) of subitem (b) over a five-year period beginning on the date of the taxpayer's first use of this exemption. The taxpayer shall notify the Department of Revenue of its intent to qualify and use this exemption and upon receipt of the notification, the department shall issue an appropriate exemption certificate to the taxpayer to be used for qualifying purposes under this item. Within six months after the fifth anniversary of the taxpayer's first use of this exemption, the taxpayer shall notify the department, in writing, that it has or has not met the investment and job requirements of this item. If the taxpayer fails to meet the investment and job requirements, the taxpayer shall pay to the State the amount of the tax that would have been paid but for this exemption. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for this time period beginning with the taxpayer's first use of this exemption and ending with notice to the department that the taxpayer has or has not met the investment and job requirements of this item.
(b) For purposes of this item:
(i) 'Qualifying amusement park or theme park' means a park that is constructed and operated by a taxpayer who makes a capital investment of at least two hundred fifty million dollars at a single site and creates at least two hundred fifty full-time jobs and five hundred part-time or seasonal jobs.
(ii) 'Related or required machinery, equipment, and fixtures' means an ancillary apparatus used for or in conjunction with an amusement park ride or performance venue facility, or both, including, but not limited to, any foundation, safety fencing and equipment, ticketing, monitoring device, computer equipment, lighting, music equipment, stage, queue area, housing for a ride, electrical equipment, power transformers, and signage.
(iii) 'Performance venue facility' means a facility for a live performance, nonlive performance, including any animatronics and computer-generated performance, and firework, laser, or other pyrotechnic show.
(iv) 'Taxpayer' means a single taxpayer or, collectively, a group of one or more affiliated taxpayers. An 'affiliated taxpayer' means a person or entity related to the taxpayer that is subject to common operating control and that is operated as part of the same system or enterprise. The taxpayer is not required to own a majority of the voting stock of the affiliate."
B. Notwithstanding the general effective date of this act, subsection A. of this section takes effect on the first day of the month succeeding the month in which this act is approved by the Governor.
SECTION 7. Section 13-17-40(B)(1) of the 1976 Code, as last amended by Act 319 of 2006, is further amended to read:
"(1) The President of Clemson University, President of the Medical University of South Carolina, President of the University of South Carolina at Columbia, the Governor or his designee, the Chairman of the House Ways and Means Committee's designee, the Chairman of the Senate Finance Committee's designee, and the chairman of the board of trustees shall serve as the executive committee of the board of trustees. The executive committee has all powers and authority of the board of trustees. The board shall have an advisory role only and shall advise the executive committee of the actions recommended by the board."
SECTION 8. A. Section 11-45-30(10) and (15) of the 1976 Code, as last amended by Act 125 of 2005, is further amended to read:
"(10) 'Lender' means a banking institution subject to the income tax on banks under Chapter 11 of Title 12, an insurance company subject to a state premium tax liability under pursuant to Chapter 7 of Title 38, a captive insurance company regulated under pursuant to Chapter 90 of Title 38, a utility regulated under pursuant to Title 58, or any other person approved by the authority pursuant to guidelines and regulations established by the authority pursuant to Section 11-45-100 a financial institution with proven experience in state-based venture capital transactions.
(15) 'Designated investor group' means any a person who enters into a designated investor contract with the authority pursuant to Section 11-45-50.
(16) 'Interest' means interest on the outstanding balance owed or owing to a lender by a designated investor group under such calculations, terms, or conditions as determined by the authority, provided that the method of calculating interest may be included in the tax credit certificates to the extent that the authority considers the information necessary or appropriate."
B. Section 11-45-50(B)(1) of the 1976 Code, as last amended by Act 125 of 2005, is further amended to read:
"(1) Each designated investor group selected pursuant to subsection (A)(3) of this section shall enter into a designated investor contract with the authority, which designated investor contract shall must contain those any investment guidelines and those other terms and conditions as the authority may deem considers necessary, advisable, or appropriate.
C. Section 11-45-55(B) of the 1976 Code, as last amended by Act 125 of 2005, is further amended to read:
"(B) The authority shall issue tax credit certificates to each lender contemporaneously with each loan made pursuant to this chapter in accordance with any guidelines and regulations established by the authority pursuant to Section 11-45-100. These guidelines and regulations shall relate to and govern, among other things, The tax credit certificates must describe procedures for the issuance, transfer and redemption of the certificates, and related tax credits. These certificates shall state also must describe the amounts, year, and conditions for redemption of the tax credits reflected on the certificates. Once a loan is made by a lender, the certificate issued to the lender shall be binding on the authority and this State and may not be modified, terminated, or rescinded."
D. Section 11-45-70(2)(a) of the 1976 Code, as last amended by Act 125 of 2005, is further amended to read:
"(a) While each designated investor group shall give preference to investors, otherwise qualified, that agree to maintain either a headquarters or an office staffed by an investment professional in South Carolina, investments may be made with investors not principally located in South Carolina; provided, that if the investors are otherwise qualified under pursuant to this chapter and, together with related companies, have other venture capital investments in South Carolina or in South Carolina based companies or can provide evidence to the authority of prior investments in South Carolina or South Carolina based companies at least equal to the total amount of monies placed with that investor by the designated investor group."
SECTION 9. Except as otherwise provided elsewhere in this act, this act takes effect upon approval by the Governor.
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