Indicates Matter Stricken

Indicates New Matter

Amended

May 07, 2024

S. 1017

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

S. Printed 05/07/24--H.

Read the first time March 26, 2024

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statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill requires a nonprofit housing corporation, or its instrumentality to have an annual certification of its percentage of ownership from DOR to receive the property tax exemption pursuant to  12-37-220(B)(11). DOR must prescribe the forms by which the nonprofit corporation or its instrumentality may provide the certification requirements. DOR anticipates being able to manage the responsibilities outlined in this bill with minimal expense that can be managed within existing appropriations.

Local Revenue

This bill amends  12-37-220(B)(11), which was last amended by Act 145 of 2020, to specify that the property tax exemption for properties owned by nonprofit housing corporations or their instrumentalities that are devoted to providing housing to low or very low-income residents must be proportionate to the nonprofit housing corporation's percentage of direct or indirect economic ownership in the property. This does not apply if the nonprofit housing corporation's ownership interest exceeds 50 percent. Additionally, this does not apply if all of the units in the qualifying property are devoted to providing housing to residents who qualify as low-income under Revenue Procedure 96-32. Further, if the qualifying property is within a zip code in a metropolitan area that uses HUD's SAFMR, low income is expanded to residents who do not exceed 130 percent of the very low-income limit. If these criteria are met, then the property tax exemption is 100 percent. The change applies beginning in tax year 2025. For information, DOR indicates that currently 2,393 exemptions are allowed pursuant to  12-37-220(B)(11)(e).

We contacted the South Carolina Association of Counties, MASC, and all counties to determine the potential impact of this bill. The counties of Charleston and Horry provided a response as well as MASC. Charleston County estimates this bill will add $748,000 in assessed value back to the assessment roll, assuming the owners do not change all their units to low-income housing units. Horry County expressed concern about establishing that the housing is used for low-income residents. Additionally, MASC anticipates this bill may have a greater impact on property tax in York County as it is the only county where a property is within a zip code in a metropolitan area that uses HUD's SAFMR. As the requirement for the 100 percent property tax exemption is then based on 130 percent of the very low-income limit more properties in York may be granted the 100 percent property tax exemption relative to other areas within the state but the exemption will likely still apply to fewer properties than are currently exempt.

Based on the responses received, RFA anticipates this bill will result in an undetermined increase in local property tax revenue statewide beginning in FY 2025-26, depending upon the number of properties that will see a smaller percentage of the property being exempt due to the ownership percentage of the nonprofit corporation.

Additionally, this bill specifies that agricultural property may not be annexed by a municipality without the express written consent of the owner of the property. Municipalities' property taxes include only those properties within municipal boundaries. Based on a response provided by MASC, this provision will have a minimal impact for municipalities as the majority of annexations within the state are by the 100 percent method, requiring a petition signed by 100 percent of the property owners of the property to be annexed.

Introduced on February 1, 2024

State Expenditure

This bill requires a nonprofit housing corporation, or its instrumentality to have an annual certification of its percentage of ownership from DOR to receive the property tax exemption pursuant to  12-37-220(B)(11). DOR must prescribe the forms by which the nonprofit corporation or its instrumentality may provide the certification requirements. DOR anticipates being able to manage the responsibilities outlined in this bill with minimal expense that can be managed within existing appropriations.

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

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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.

    Amend Title To Conform

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