Indicates Matter Stricken

Indicates New Matter

Committee Report

February 28, 2024

S. 1017

Introduced by Senators M. Johnson, Peeler, Climer and Setzler

S. Printed 02/28/24--S.

Read the first time February 01, 2024

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The committee on Senate Finance

To whom was referred a Bill (S. 1017) to amend the South Carolina Code of Laws by amending Section 12-37-220, relating to property tax exemptions, so as to provide that the exemption for certain property, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass:

HARVEY S. PEELER, JR. for Committee.

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A bill

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 12-37-220, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO PROVIDE THAT THE EXEMPTION FOR CERTAIN PROPERTY OF A NONPROFIT HOUSING CORPORATION ONLY APPLIES TO THE PERCENTAGE OF PROPERTY THAT EQUALS THE CORPORATION'S OWNERSHIP INTEREST IN THE PROPERTY, TO PROVIDE AN EXCEPTION, AND TO PROVIDE CERTAIN CERTIFICATION AND NOTICE REQUIREMENTS; AND BY ADDING SECTION 12-37-160 SO AS TO PROVIDE THAT CERTAIN PROPERTY ASSESSED AS AGRICULTURAL OR RELATED THERETO MAY NOT BE ANNEXED BY A MUNICIPALITY.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1.A.  Section 12-37-220(B)(11) of the S.C. Code is amended to read:

           (a) all property of nonprofit housing corporations devoted exclusively to providing below-cost housing for the aged or for handicapped persons or for both aged and handicapped persons as authorized by Section 202 of the Housing Act of 1959 and regulated in part by 24 CFR Part 885;

           (b) all property of nonprofit housing corporations devoted exclusively to providing below-cost supportive housing for elderly persons or households as authorized by Section 202 of the Housing Act of 1959 as amended under Section 801 of the National Affordable Housing Act of 1990 and regulated in part by 24 CFR Part 889;

           (c) all property of nonprofit housing corporations devoted exclusively to providing below-cost supportive housing for persons with disabilities as authorized by Section 811 of the National Affordable Housing Act of 1990 and regulated in part by 24 CFR Part 890;

           (d) all property of nonprofit housing corporations devoted exclusively to providing rental or cooperative housing and related facilities for elderly or handicapped persons or families of low or moderate income as authorized by Section 515 of Title V of the Housing Act of 1949;

           (e)(i) all property of nonprofit housing corporations or instrumentalities of these corporations when the property is devoted to providing housing to low or very low income residents.  A nonprofit housing corporation or its instrumentality must satisfy the safe harbor provisions of Revenue Procedure 96-32 issued by the Internal Revenue Service for this exemption to apply.  For purposes of this subitem, property of nonprofit housing corporations or instrumentalities of these corporations includes all leasehold interests in property owned by an entity that provides housing accommodations to persons of low or very low income, and in which a wholly owned affiliate or wholly owned instrumentality of a nonprofit housing corporation is the general partner, managing member, or the equivalent.  However, the exemption allowed by this subitem only applies if the property of nonprofit housing corporations or instrumentalities of these corporations satisfies the safe harbor provisions of Revenue Procedure 96-32 issued by the Internal Revenue Service;

               (ii) the exemption allowed by this subitem must be proportionate to the nonprofit housing corporation's percentage of direct or indirect economic ownership in the qualifying property, except that if:

                  (A) the nonprofit housing corporation's percentage of direct or indirect economic ownership interest in the qualifying property exceeds fifty percent; or

                  (B) all of the units in a qualifying property are devoted to providing housing to residents who qualify as low income under Revenue Procedure 96-32, then the exemption allowed by this subitem equals one hundred percent;

               (iii) to claim the exemption allowed by this subitem, the nonprofit housing corporation or its instrumentality must initially certify to the Department of Revenue the nonprofit housing corporation's percentage of direct or indirect economic ownership in the qualifying property and provide a rent roll or other suitable documentation evidencing compliance with the applicable requirements of Revenue Procedure 96-32. Such initial certification must be made by the first penalty date for the property tax year in which the exemption is first claimed on qualifying property. In each subsequent year in which the exemption allowed by this subitem is claimed on qualifying property, the nonprofit housing corporation or its instrumentality must submit an annual certification to the department by October first. The annual certification must provide the current percentage of the nonprofit housing corporation's direct or indirect economic ownership in the qualifying property and current rent roll or other suitable documentation evidencing compliance with the applicable requirements of Revenue Procedure 96-32. The department shall prescribe the forms by which the nonprofit housing corporation or its instrumentality may provide the certifications required by this subitem as well as the penalties for noncompliance;

               (iv) no later than sixty calendar days following the notification to any nonprofit housing corporation or its instrumentality of an approved exemption under this subitem, the department shall also notify the governing bodies of any county and, as applicable, any municipality with jurisdiction over qualifying property receiving an exemption under this subitem;

B. This SECTION takes effect upon approval by the Governor and applies to property tax years beginning after 2024.

SECTION 2.  Article 1, Chapter 37, Title 12 of the S.C. Code is amended by adding:

    Section 12-37-160.     Notwithstanding any other provision of law, any real property upon which items exempt from taxation pursuant to Section 12-37-220(B)(14) are situated or any real property that is assessed pursuant to Section 12-43-220(d), or any real property adjacent to either, may not be annexed by a municipality without the express written agreement of the owner of the real property.

SECTION 3.  This act takes effect upon approval by the Governor.

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