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COMMITTEE REPORT
April 18, 2007
H. 3015
S. Printed 4/18/07--H.
Read the first time January 9, 2007.
To whom was referred a Bill (H. 3015) to amend the Code of Laws of South Carolina, 1976, by adding Section 28-2-520 so as to provide the option of a property tax credit or state income tax credit, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking item (2), subsection (A) of Section 28-2-520 of the 1976 Code and inserting:
/ (2) condemnor uses the landowner's property to build a sidewalk, trail, bicycle path, or other pedestrian nonvehicular pathway for public use; /
Amend the bill further, as and if amended, in Section 28-2-520 by adding a new subsection (E) to read:
/ (E) Only a county or municipality or an agency, department, or institution of this State with authority to exercise the right of eminent domain may act as a condemner under the provisions of this section. /
When amended Section 28-2-520 shall read:
"Section 28-2-520. (A) A landowner may avoid a condemnation action if the:
(1) landowner's property is otherwise subject to a condemnation action;
(2) condemnor uses the landowner's property to build a sidewalk, trail, bicycle path, or other pedestrian nonvehicular pathway for public use;
(3) landowner agrees to grant the property to the condemnor in exchange for a tax credit as provided in subsection (B), instead of an amount that constitutes just compensation; and
(4) landowner agrees to forgo all compensation from the condemnor, except the value received from the tax credit provided in this section.
(B) The tax credit allowed pursuant to this section is either a property tax credit pursuant to subsection (C) or a state income tax credit pursuant to subsection (D). The tax credit elected by the landowner is irrevocable.
(C) For purposes of this section, a landowner may elect a property tax credit pursuant to subsection (A) to reduce the property tax otherwise due to the condemnor by exempting an amount equal to the fair market value of the subject property. The condemnor shall cause the property to be appraised to determine the fair market value and shall make the appraisal available to the landowner. The property tax credit is allowed against property tax imposed by the condemnor on the real or personal property of the landowner. The credit is a nonrefundable and nontransferable benefit to the landowner originally granting the property. The landowner may carry forward the unused portion of the credit against property taxes for five years. For purposes of generating the credit, a sufficient amount of the fair market value of the subject property is exempt from the assessment of property tax imposed by the condemnor. This exemption does not apply to property taxes imposed by a taxing entity that is not a condemnor for purposes of this section.
(D)(1) For purposes of this section, a landowner may elect a nonrefundable state income tax credit pursuant to subsection (A) to reduce the landowner's state income tax liability by an amount equal to the fair market value of the subject property. The condemnor shall cause the property to be appraised to determine the fair market value and shall make the appraisal available to the landowner. For purposes of this subsection, the condemnor and landowner must submit the appraisal and other evidence verifying the fair market value of the subject property to the governing body of the county in which the property is located. The county governing body, by resolution, shall approve the fair market value attributed to the subject property using guidelines adopted by the South Carolina Department of Revenue. The landowner may carry forward the unused portion of the credit against state income tax liability for five years.
(2) The South Carolina Department of Revenue shall promulgate regulations to verify the fair market value of the subject property for purposes of this subsection.
(E) Only a county or municipality or an agency, department, or institution of this State with authority to exercise the right of eminent domain may act as a condemnor under the provisions of this section."
Renumber sections to conform.
Amend title to conform.
DANIEL T. COOPER for Committee.
REVENUE IMPACT 1/
This bill is expected to reduce general fund revenue by $3,042,000 in FY2007-08.
Explanation
This bill would add Section 28-2-520 allowing a state income tax credit, in lieu of just compensation, to landowners for condemned property for the purpose of building public pathways, such as sidewalks, trails, and bicycle paths. A landowner may also choose to take a property tax credit if a local entity condemns the land. According to SCDOT, eleven percent of the land it acquires is through condemnation. Applying SCDOT's 11% condemnation rate to the average 120 miles of public pathways constructed per year, it is estimated that 13 miles of these public pathway miles are acquired through condemnation per year. Based on SCDOT data, we also estimate that it cost $234,000 per mile on average. Multiplying 13 miles by the estimated $234,000 per mile that SCDOT paid for land acquired through condemnation equals approximately $3,042,000 per year. We expect landowners to take the income tax credit. This bill is expected to reduce general fund revenue by an estimated $3,042,000 in FY2007-08.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 28-2-520 SO AS TO PROVIDE THE OPTION OF A PROPERTY TAX CREDIT OR STATE INCOME TAX CREDIT, INSTEAD OF JUST COMPENSATION, FOR THE VALUE OF PROPERTY THAT IS SUBJECT TO A CONDEMNATION ACTION TO A LANDOWNER THAT GRANTS PROPERTY TO A CONDEMNOR FOR THE PURPOSE OF BUILDING A SIDEWALK OR BICYCLE PATH.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that:
(1) it is appropriate to create a meaningful incentive for the construction of bicycle paths and sidewalks in an effort to increase access to healthy lifestyle options and to encourage healthy living for South Carolinians;
(2) local governments have limited options to persuade landowners to grant property for the construction of a sidewalk, trail, bicycle path, or another public pathway and, therefore, must resort to the complicated and lengthy process of condemnation through the exercise of their eminent domain powers; and
(3) it is appropriate to give local governments and landowners the option of avoiding the lengthy condemnation process and, instead, to give them a tax incentive to encourage landowners to grant property for the purpose of building public pathways.
SECTION 2. Chapter 2, Title 28 of the 1976 Code is amended by adding:
"Section 28-2-520. (A) A landowner may avoid a condemnation action if the:
(1) landowner's property is otherwise subject to a condemnation action;
(2) condemnor uses the landowner's property to build a pathway for public use, including, but not limited to, a sidewalk, trail, or bicycle path;
(3) landowner agrees to grant the property to the condemnor in exchange for a tax credit as provided in subsection (B), instead of an amount that constitutes just compensation; and
(4) landowner agrees to forgo all compensation from the condemnor, except the value received from the tax credit provided in this section.
(B) The tax credit allowed pursuant to this section is either a property tax credit pursuant to subsection (C) or a state income tax credit pursuant to subsection (D). The tax credit elected by the landowner is irrevocable.
(C) For purposes of this section, a landowner may elect a property tax credit pursuant to subsection (A) to reduce the property tax otherwise due to the condemnor by exempting an amount equal to the fair market value of the subject property. The condemnor shall cause the property to be appraised to determine the fair market value and shall make the appraisal available to the landowner. The property tax credit is allowed against property tax imposed by the condemnor on the real or personal property of the landowner. The credit is a nonrefundable and nontransferable benefit to the landowner originally granting the property. The landowner may carry forward the unused portion of the credit against property taxes for five years. For purposes of generating the credit, a sufficient amount of the fair market value of the subject property is exempt from the assessment of property tax imposed by the condemnor. This exemption does not apply to property taxes imposed by a taxing entity that is not a condemnor for purposes of this section.
(D)(1) For purposes of this section, a landowner may elect a nonrefundable state income tax credit pursuant to subsection (A) to reduce the landowner's state income tax liability by an amount equal to the fair market value of the subject property. The condemnor shall cause the property to be appraised to determine the fair market value and shall make the appraisal available to the landowner. For purposes of this subsection, the condemnor and landowner must submit the appraisal and other evidence verifying the fair market value of the subject property to the governing body of the county in which the property is located. The county governing body, by resolution, shall approve the fair market value attributed to the subject property using guidelines adopted by the South Carolina Department of Revenue. The landowner may carry forward the unused portion of the credit against state income tax liability for five years.
(2) The South Carolina Department of Revenue shall promulgate regulations to verify the fair market value of the subject property for purposes of this subsection."
SECTION 3. This act takes effect upon approval of the Governor.
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