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Bill Number: 2960 Ratification Number: 287 Act Number 200 Introducing Body: House Subject: Tax increment financing for redevelopment projects
(A200, R287, H2960)
AN ACT TO AMEND SECTIONS 31-6-40, 31-6-70, 31-6-80, 31-6-100, AND 31-6-110, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO TAX INCREMENT FINANCING FOR REDEVELOPMENT PROJECTS, SO AS TO PROVIDE THAT ALL REFERENCES IN CHAPTER 6 OF TITLE 31 TO "OBLIGATIONS" ARE CONSIDERED TO INCLUDE THOSE OBLIGATIONS A MUNICIPALITY MAY ISSUE TO REFUND, IN WHOLE OR IN PART, OBLIGATIONS IT HAS PREVIOUSLY ISSUED UNDER THE AUTHORITY OF THE CHAPTER; CHANGE THE BASE YEAR FOR CALCULATING THE INCREMENT FROM THE YEAR AFTER THE BONDS ARE ISSUED TO THE YEAR IN WHICH THE PLAN IS ADOPTED BY THE MUNICIPALITY BUT NOT TO EXCEED A FIVE-YEAR PERIOD AFTER THE ADOPTION OF THE ORDINANCE, PROVIDE THAT WHEN BONDS HAVE BEEN RETIRED AND REDEVELOPMENT PROJECT COSTS ARE PAID OR BUDGETED ALL FUNDS REMAINING IN THE SPECIAL TAX ALLOCATION FUND MUST BE PAID TO THE TAXING DISTRICTS, PROVIDE THAT IF BONDS HAVE NOT BEEN ISSUED WITHIN THE FIVE-YEAR PERIOD, THE REDEVELOPMENT PROJECT AREA DESIGNATION IS TERMINATED; REQUIRE THAT THE MAXIMUM ESTIMATED TERM OF BONDS BE STATED IN A NOTICE OF A PUBLIC HEARING, ADD A CONDITION THAT A TAXING DISTRICT IS CONSIDERED TO HAVE CONSENTED TO THE REDEVELOPMENT PLAN IF THE ACTUAL TERM OF OBLIGATIONS ISSUED IS EQUAL TO OR LESS THAN THE TERM STATED IN THE NOTICE OF PUBLIC HEARING, PROVIDE THAT NO CONSENT IS REQUIRED OF ANY TAXING DISTRICT IF THE TERM OF ADDITIONAL REFUNDING BONDS IS NOT GREATER THAN THE LATTER OF FIFTEEN YEARS FROM THE DATE OF THE INITIAL OR REFUNDING BONDS OR THE REMAINING TERM OF THE BONDS, ADD TO THE LIST OF ALTERATIONS WHICH MUST BE APPROVED BY ORDINANCE THE MAXIMUM TERM OF MATURITY OF OBLIGATIONS TO BE ISSUED UNDER THE PLAN; SUBSTITUTE THE COUNTY AUDITOR FOR THE COUNTY ASSESSOR AS THE PROPER OFFICIAL TO CERTIFY THE ASSESSED VALUE OF THE PROPERTY WITHIN THE REDEVELOPMENT PROJECT; AND AUTHORIZE A MUNICIPALITY TO AVAIL ITSELF OF ANY POWERS GRANTED UNDER PROVISIONS OF LAW WHICH PROVIDE FOR THE FINANCING OF WATER AND SEWER SYSTEMS INSTEAD OF AUTHORIZING THE REVENUES FROM THESE SYSTEMS TO BE PLEDGED TO SECURE THE BONDS ISSUED UNDER THE PROVISIONS OF CHAPTER 6 OF TITLE 31 (TAX INCREMENT FINANCING LAW).
Be it enacted by the General Assembly of the State of South Carolina:
Reference to obligations
SECTION 1. The fifth paragraph of Section 31-6-40 of the 1976 Code is amended to read:
"A municipality also may issue its obligations to refund in whole or in part obligations previously issued by the municipality under the authority of this chapter, whether at or prior to maturity and all references in this chapter to 'obligations' are considered to include these refunding obligations."
Obligations may be issued; conditions
SECTION 2. Section 31-6-70 of the 1976 Code is amended to read:
"Section 31-6-70. A municipality, within five years after the date of adoption of an ordinance providing for approval of a redevelopment plan pursuant to Section 31-6-80, may issue obligations under this chapter to finance the redevelopment project upon adoption of an ordinance providing that:
(1) after the issuance of the obligations; and
(2) after the total equalized assessed valuation of the taxable real property in a redevelopment project area exceeds the certified 'total initial equalized assessed value' established in accordance with Section 31-6-100(B) of all taxable real property in the project area, the ad valorem taxes, if any, arising from the levies upon taxable real property in the project area by taxing districts and tax rates determined in the manner provided in Section 31-6-100(B) each year after the obligations have been issued until obligations issued under this chapter have been retired and redevelopment project costs have been paid must be divided as follows:
(a) That portion of taxes levied upon each taxable lot, block, tract, or parcel of real property which is attributable to the total initial equalized assessed value of all taxable real property in the redevelopment project area must be allocated to and when collected must be paid by the county treasurer to the respective affected taxing districts in the manner required by law in the absence of the adoption of the redevelopment plan; and
(b) That portion, if any, of taxes which is attributable to the increase in the current total equalized assessed valuation of all taxable real property in the redevelopment project area over and above the total initial equalized assessed value of taxable real property in the redevelopment project area must be allocated to and when collected must be paid to the municipality which shall deposit the taxes into a special fund called the special tax allocation fund of the municipality for the purpose of paying redevelopment project costs and obligations incurred in the payment of the costs and obligations. The municipality may pledge in the ordinance the funds in and to be deposited in the special tax allocation fund for the payment of the costs and obligations.
Any ordinance adopted based on acts of the municipality occurring before the effective date of this chapter must incorporate by reference and adopt those prior acts undertaken in accordance with the procedures of this chapter as if they had been undertaken pursuant to this chapter.
When obligations issued under this chapter have been retired and redevelopment project costs incurred under this chapter have been paid or budgeted pursuant to the redevelopment plan, as evidenced by resolution of the governing body of the municipality, all surplus funds then remaining in the special tax allocation fund must be paid by the municipal treasurer to the county treasurer who immediately, after receiving the payment, shall pay the funds to the taxing districts in the redevelopment project area in the same manner and proportion as the most recent distribution by the treasurer to the affected districts of real property taxes from real property in the redevelopment project area.
Upon the payment of all redevelopment project costs, retirement of all obligations of a municipality issued under this chapter, and the distribution of any surplus monies pursuant to this section, the municipality shall adopt an ordinance dissolving the tax allocation fund for the project redevelopment area and terminating the designation of the redevelopment project area as a redevelopment project area for purposes of this chapter. Thereafter, the rates of the taxing districts must be extended and taxes levied, collected, and distributed in the manner applicable in the absence of the adoption of a redevelopment plan and the issuance of obligations under this chapter.
If five years have passed from the time a redevelopment project area is designated and the municipality has not issued obligations under this chapter to finance the redevelopment project, upon the expiration of the five-year term, the municipality shall adopt an ordinance terminating the designation of the redevelopment project area."
Requirements of ordinance
SECTION 3. Section 31-6-80 of the 1976 Code is amended to read:
"Section 31-6-80. Prior to the issuance of any obligations under this chapter, the municipality shall set forth by way of ordinance the following:
(a) a copy of the redevelopment plan containing a statement of the objectives of a municipality with regard to the plan;
(b) a statement indicating the need for and proposed use of the proceeds of the obligations in relationship to the redevelopment plan;
(c) a statement containing the cost estimates of the redevelopment plan and redevelopment project and the projected sources of revenue to be used to meet the costs including estimates of tax increments and the total amount of indebtedness to be incurred;
(d) a list of all real property in the redevelopment project area;
(e) the duration of the redevelopment plan;
(f) a statement of the estimated impact of the redevelopment plan upon the revenues of all taxing districts in which a redevelopment project area is located;
(g) findings that (i) the redevelopment project area is a blighted or conservation area and that private initiatives are unlikely to alleviate these conditions without substantial public assistance, (ii) property values in the area would remain static or decline without public intervention, and (iii) redevelopment is in the interest of the health, safety, and general welfare of the citizens of the municipality.
Before approving any redevelopment plan under this chapter, the governing body of the municipality must hold a public hearing on the redevelopment plan after published notice in a newspaper of general circulation in the county in which the municipality and any taxing district affected by the redevelopment plan is located not less than fifteen days and not more than thirty days prior to the hearing. The notice shall include:
(1) the time and place of the public hearing;
(2) the boundaries of the proposed redevelopment project area;
(3) a notification that all interested persons will be given an opportunity to be heard at the public hearing;
(4) a description of the redevelopment plan and redevelopment project; and
(5) the maximum estimated term of obligations to be issued under the redevelopment plan.
Not less than forty-five days prior to the date set for the public hearing, the municipality shall give notice to all taxing districts of which taxable property is included in the redevelopment project area, and in addition to the other requirements of the notice set forth in the section, the notice shall request each taxing district to submit comments to the municipality concerning the subject matter of the hearing prior to the date of the public hearing.
If a taxing district does not file an objection to the redevelopment plan at or prior to the date of the public hearing, the taxing district is considered to have consented to the redevelopment plan and the issuance of obligations under this chapter to finance the redevelopment project, provided that the actual term of obligations issued is equal to or less than the term stated in the notice of public hearing. The municipality may issue obligations to finance the redevelopment project if less than all taxing districts consent to the redevelopment plan. The tax increment for a taxing district that does not consent to the redevelopment plan must not be included in the special tax allocation fund after the first fifteen years after the initial issuance of obligations to finance such plan. No consent is required of any taxing district if the term of the proposed initial obligations is fifteen years or less or, in the case of any additional or refunding obligations, if the term of the obligations is not greater than the later of (a) fifteen years from the date of issuance of the initial or refunded obligations or (b) the remaining term of the initial or refunded obligations.
Prior to the adoption of an ordinance approving a redevelopment plan pursuant to Section 31-6-80, changes may be made in the redevelopment plan which do not alter the exterior boundaries or do not substantially affect the general land use established in the plan or substantially change the nature of the redevelopment project, without further hearing or notice, provided that notice of the changes is given by mail to each affected taxing district and by publication in a newspaper or newspapers of general circulation within the taxing districts not less than ten days prior to the adoption of the changes by ordinance. Notice of the adoption of the ordinance must be published by the municipality in a newspaper having general circulation in the affected taxing districts. Any interested party may, within twenty days after the date of publication of the notice of adoption of the redevelopment plan, but not afterwards, challenge the validity of such adoption by action de novo in the court of common pleas in the county in which the redevelopment plan is located.
After adoption of an ordinance approving a redevelopment plan, any alteration in the exterior boundaries, general land uses established pursuant to the redevelopment plan, maximum term of maturity of obligations to be issued under the plan, or nature of the redevelopment project must be approved by ordinance of the municipality in accordance with the procedures provided in this chapter for the initial approval of a redevelopment project and designation of a redevelopment project area."
Auditor to ascertain value
SECTION 4. Section 31-6-100 of the 1976 Code is amended to read:
"Section 31-6-100. (A) If a municipality by ordinance approves a redevelopment plan pursuant to Section 31-6-80, the auditor of the county in which the municipality is situated, immediately after adoption of the ordinance pursuant to Section 31-6-80, must, upon request of the municipality, determine and certify:
(1) the most recently ascertained equalized assessed value of all taxable real property within the redevelopment project area, as of the date of adoption of the ordinance adopted pursuant to Section 31-6-80, which value is the 'initial equalized assessed value' of the property; and
(2) the total equalized assessed value of all taxable real property within the redevelopment project area and certifying the amount as the 'total initial equalized assessed value' of the taxable real property within the redevelopment project area.
(B) After the county auditor has certified the total initial equalized assessed value of the taxable real property in the area, then in respect to every taxing district containing a redevelopment project area, the county auditor or any other official required by law to ascertain the amount of the equalized assessed value of all taxable property within the district for the purpose of computing the rate percent of tax to be extended upon taxable property within such district, shall in every year that obligations are outstanding for redevelopment projects in the redevelopment area ascertain the amount of value of taxable property in a project redevelopment area by including in the amount the certified total initial equalized assessed value of all taxable real property in the area in lieu of the equalized assessed value of all taxable real property in the area. The rate percent of tax determined must be extended to the current equalized assessed value of all property in the redevelopment project area in the same manner as the rate percent of tax is extended to all other taxable property in the taxing district. The method of extending taxes established under this section terminates when the municipality adopts an ordinance dissolving the special tax allocation fund for the redevelopment project."
SECTION 5. Section 31-6-110 of the 1976 Code is amended to read:
"Section 31-6-110. Revenues received by the municipality from any property, building, or facility owned by the municipality or any agency or authority established by the municipality in the redevelopment project area may be used to pay redevelopment project costs or reduce outstanding obligations of the municipality incurred under this chapter for redevelopment project costs. If the obligations are used to finance the extension or expansion of a system as defined in Section 6-21-40 in the redevelopment project area, all or a portion of the revenues of the system, whether or not located entirely within the redevelopment project area, including the revenues of the redevelopment project, may be pledged to secure the obligations issued under this chapter. The municipality is fully empowered to use any of the powers granted by either or both of the provisions of Chapter 17 of Title 6 (The Revenue Bond Refinancing Act of 1937) or the provisions of Chapter 21 of Title 6 (Revenue Bond Act for Utilities). In exercising the powers conferred by the provisions, the municipality may make any pledges and covenants authorized by any provision of those chapters. The municipality may place the revenues in the special tax allocation fund or a separate fund which must be held by the municipality or financial institution designated by the municipality. Revenue received by the municipality from the sale or other disposition of real property acquired by the municipality with the proceeds of obligations issued under the provisions of this chapter must be deposited by the municipality in the special tax allocation fund or a separate fund which must be held by the municipality or financial institution designated by the municipality. Proceeds of grants may be pledged by the municipality and deposited in the special tax allocation fund or a separate fund."
SECTION 6. This act takes effect upon approval by the Governor.