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COMMITTEE REPORT
March 30, 2000
H. 3750
Introduced by Reps. Walker, Allison, Altman, Bailey, Barfield, Barrett, Battle, Beck, H. Brown, Campsen, Carnell, Cato, Chellis, Cooper, Cotty, Dantzler, Davenport, Easterday, Edge, Fleming, Gilham, Hamilton, Harrell, Harris, Harrison, Harvin, Haskins, Hawkins, Hinson, Jennings, Keegan, Kelley, Kennedy, Kirsh, Klauber, Knotts, Koon, Lanford, Law, Leach, Limehouse, Littlejohn, Loftis, Martin, Mason, McCraw, McGee, M. McLeod, W. McLeod, Meacham-Richardson, Miller, Neilson, Phillips, Quinn, Rhoad, Rice, Riser, Robinson, Rodgers, Sandifer, Scott, Seithel, Sharpe, Simrill, D. Smith, R. Smith, Stille, Stuart, Taylor, Townsend, Tripp, Trotter, Vaughn, Webb, Whatley, Wilder, Wilkins, Witherspoon, Woodrum, Young-Brickell and Lucas
S. Printed 3/30/00--H.
Read the first time March 17, 1999.
To whom was referred a Bill (H. 3750), to amend Section 12-43-224, Code of Laws of South Carolina, 1976, relating to the multiple lot discount allowed for purposes of property tax valuation when undeveloped acreage is surveyed into individual residential lots, 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, in Section 12-43-224, as contained in SECTION 1, page 2, line 23, by striking / the date and inserting:
/ midnight December thirty-first of the tax year in which /
Amend further, as and if amended, page 2, by striking SECTION 2 and inserting:
/ SECTION 2. Upon approval by the Governor, this act is effective for property tax years beginning after 1999. /
Renumber sections to conform.
Amend totals and title to conform.
ROBERT W. HARRELL, JR., for Committee.
REVENUE IMPACT1
This bill would have no impact on state revenues. Local revenues would decrease by an estimated $20,000,000 if local governments do not adjust their millage to make up for the lost property tax revenue. In order to make up the lost revenue from lots currently receiving the multiple lot discount allowed by Section 12-43-224, the average millage rate would need to increase by an estimated 1.5 mils.
Explanation
Under current law, when undeveloped acreage is surveyed into subdivision lots and the conditional or final plat is recorded, the county assessor re-appraises each lot as an individual property. This action normally increases the taxes on the property because most undeveloped acreage is currently taxed based on its agricultural use value and when it is subdivided it is normally reclassified as commercial property. After re-appraisal, the county assessor discounts the gross actual market value of the developer's lot holdings by approximately 20%-30%. This bill deletes the discount provision and would keep the market value for property tax purposes of the lots and residences constructed at their undeveloped acreage value until the lot is sold or the residence is certified for occupancy. By making this change, the counties will not be able to apply the higher tax rate after subdivision which could cause a loss of property tax revenue to the counties. This impact is based on data from a survey of county assessors conducted by the Department of Revenue. The ten counties responding to the survey accounted for over 20% of all agricultural use property statewide.
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, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND SECTION 12-43-224, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE MULTIPLE LOT DISCOUNT ALLOWED FOR PURPOSES OF PROPERTY TAX VALUATION WHEN UNDEVELOPED ACREAGE IS SURVEYED INTO INDIVIDUAL RESIDENTIAL LOTS, SO AS TO DELETE THE DISCOUNT PROVISION AND PROVIDE THAT THE VALUE OF THESE LOTS AND ANY IMPROVEMENTS IS DEEMED TO BE ITS UNDEVELOPED VALUE UNTIL THE SOONER OF THE DATE THE LOT IS SOLD OR THE RESIDENCE CONSTRUCTED THEREON IS CERTIFIED FOR OCCUPANCY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-43-224 of the 1976 Code is amended to read:
"Section 12-43-224. Notwithstanding the requirement that real property is required by law to be appraised at fair market value for ad valorem tax purposes, when undeveloped acreage is surveyed into subdivision lots and the conditional or final plat is recorded with the appropriate county official, the county assessor shall appraise each lot as an individual property and then discount his gross actual market value estimate of the developer's lot holdings under the following conditions:
1. The discount rate shall include only:
(a) typical interest rate as charged by developers within the county to purchasers of lots when the purchase is financed by the developer or, in the absence of financing by the developer, the typical interest rate charged by local savings & loan institutions for mortgages on new homes.
(b) the effective tax rate for the tax district that the lots are located in.
2. The developer has ten or more unsold lots within the homogeneous area on the December 31 tax control date.
3. The assessor shall determine a reasonable number of years for the developer to sell the platted lots, however the estimate shall not exceed seven years.
Each of these components shall be based on identifiable factors in determining "The Present Worth of Future Benefits" based on the discounting process.
Platted lots shall not come within the provisions of this section unless the owners of such real property or their agents make written application therefore on or before May 1st of the tax year in which the multiple lot ownership discounted value is claimed.
The application for the discounted value shall be made to the assessor of the county in which the real property is located, upon forms provided by the county and approved by the commission and a failure to so apply shall constitute a waiver of the discounted value for that year market value for property tax purposes of the lots and residences constructed thereon shall continue to be their value as undeveloped acreage until the date the lot is sold or the residence is certified for occupancy, whichever occurs first."
SECTION 2. Upon approval by the Governor, this act is effective for property tax years beginning after 1998.
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