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COMMITTEE REPORT
May 17, 2007
H. 3749
Introduced by Reps. W.D. Smith, Mitchell, Kelly, Littlejohn, Mahaffey, Moss, Phillips, Talley and Walker
S. Printed 5/17/07--S. [SEC 5/18/07 3:09 PM]
Read the first time March 22, 2007.
To whom was referred a Bill (H. 3749) to amend Section 12-10-80, as amended, Code of Laws of South Carolina, 1976, relating to job development credits, so as to allow a taxpayer, 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 adding an appropriately numbered SECTION to read:
/ SECTION ___. 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." /
Amend the bill further, as and if amended, by adding an appropriately numbered SECTION to read:
/ SECTION ___. A. Section 12-61-6520(14) of the 1976 Code is amended to read:
"(14) 'Tourism or recreational facility' also means an aquarium or natural history exhibit or museum located within or directly contiguous to an extraordinary retail establishment as defined below. An extraordinary retail establishment is a single store located in South Carolina within two miles of an interstate highway or in a county with at least three and one-half million visitors a year, and it must be a destination retail establishment which attracts at least two million visitors a year with at least thirty-five percent of those visitors traveling at least fifty miles to the establishment. The extraordinary retail establishment must have a capital investment of at least twenty-five million dollars including land, buildings, and site prep preparation costs, and one or more hotels must be built to service the establishments with establishment within three years of occupancy. Only establishments which receive a certificate of occupancy after July 1, 2006, qualify. The Department of Parks, Recreation and Tourism shall determine and annually certify whether a retail establishment meets these criteria and its judgment is conclusive. The extraordinary retail establishment annually must collect and remit at least two million dollars in sales taxes but is not required to collect or remit admission taxes."
B. Section 12-21-6590 of the 1976 Code is amended to read:
"Section 12-21-6590. (A) The Department of Parks, Recreation and Tourism may designate no more than four extraordinary retail establishments as defined in Section 12-21-6520(14), and for purposes of this section, sales taxes must be substituted for admissions taxes wherever admission tax appears in this Tourism Infrastructure Admissions Tax Act. For purposes of this section, additional infrastructure improvements include any aquarium or natural history exhibits or museum located within or directly contiguous to the extraordinary retail establishment which are dedicated to public use and enjoyment under such terms and conditions as may be required by the municipality or county in which they are located. Additional infrastructure improvements shall also include site prep, construction of real or personal property, parking, roadways, ingress and egress, utilities and other expenditures on the extraordinary retail establishment which directly support or service the aquarium or natural history museum or exhibits. The certification application made under this section must be executed by both the extraordinary retail establishment as well as the county or municipality.
(B) Prior to the completion of an extraordinary retail establishment, an entity may request that the county or municipality in which the facility is located provide an application for conditional certification to the Department of Parks, Recreation and Tourism. The Department of Parks, Recreation and Tourism may grant conditional certification to the entity as an extraordinary retail establishment based on reasonable projections that the facility will meet the requirements of Section 12-21-6520(14) within three years of the certificate of occupancy. If the Department of Parks, Recreation and Tourism grants the conditional certification to the entity as an extraordinary retail establishment, it shall forward the approval for conditional certification to the department. The department shall notify the entity and either the county or the municipality, as applicable, of the approval.
An applicant obtaining conditional certification as an extraordinary retail establishment under this section and satisfying the requirements of conditional certification by the dates provided therein, shall be deemed to satisfy all of the requirements of this article pertaining to qualification as an extraordinary retail establishment for the duration of the benefit period. The entity shall be deemed to constitute a major tourism or recreation facility under Section 12-21-6520(12) and shall be entitled to all of the benefits of this article for the duration of the benefit period without any further certification requirements. This subsection shall not be construed to allow an applicant to receive the benefits provided in this article prior to satisfying the requirements of the conditional certification and of Section 12-21-6520(14).
The Department of Parks, Recreation and Tourism shall develop application forms and adopt guidelines governing the conditional certification process." /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT 1/
This bill would reduce general fund income tax revenue by an estimated $24,166 in FY2007-08.
Explanation
This bill would amend Section 12-10-80 allowing a taxpayer that qualifies for job development credits and is located within a multi-county business or industrial park to claim job development credits based upon the lowest job tax credit designation of the counties containing the park if the park is established on a geographical border of adjacent counties and is required to allocate revenues equally among the counties in which it is located. According to representatives from the South Carolina Department of Commerce, there is only one multi-county industrial park that meets the requirements under this provision. Of the two counties in which the multi-county industrial park is located, the county with the lower job tax credit status was designated as "least developed" for tax year 2007, two tiers higher than the designation of the other county in which the multi-county industrial park is located. Under the provisions of this bill, jobs created in this multi-county industrial park could therefore claim one hundred percent of the maximum job development credits rather than seventy percent allowed under current law. Also, according to the Department of Commerce, only one firm planning to locate within this multi-county industrial park received approval for job development credits for 43 new jobs at an average wage of $18.03 per hour in 2006. Under current law, each new job would therefore qualify for the maximum job development credits equal to five percent of the gross wages. Although the company has been approved for the job development credits, the associated new jobs have yet to be created. Under the provisions of this bill, the 43 jobs to be created in the qualifying multi-county industrial park during calendar year 2007 would be eligible for an approximate tax credit of $1,875 per job instead of $1,313 under current law. Multiplying 43 new jobs by a tax credit increase of $562 per job would yield an estimated reduction in general fund income tax revenue of $24,166 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 SECTION 12-10-80, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO JOB DEVELOPMENT CREDITS, SO AS TO ALLOW A TAXPAYER WHO QUALIFIES FOR THE JOB DEVELOPMENT CREDIT AND WHO IS LOCATED IN A MULTI-COUNTY BUSINESS OR INDUSTRIAL PARK TO RECEIVE A CREDIT EQUAL TO THE AMOUNT DESIGNATED TO THE COUNTY WITH THE LOWEST DEVELOPMENT STATUS OF THE COUNTIES CONTAINING THE PARK IN CERTAIN CIRCUMSTANCES.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-10-80 of the 1976 Code, as last amended by Act 386 of 2006, is further amended by adding an appropriately lettered subsection at the end to read:
"( ) A taxpayer who qualifies for the job development credit pursuant to the provisions of this section and who is located in a multi-county business or industrial park jointly established pursuant to Section 13 of Article VIII of the Constitution of this State is allowed a job development credit equal to the amount allowed pursuant to subsection (D) for the designation of the county which has the lowest development status of the counties containing the park if:
(1) the park is developed and established on the geographical boundary of adjacent counties; and
(2) the written agreement, pursuant to Section 4-1-170, requires revenue from the park to be allocated to each county on an equal basis."
SECTION 2. This act takes effect upon the approval by the Governor, and is applicable for tax years beginning after 2007.
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