South Carolina law provides several methods to finance the costs of capital improvements associated with residential, commercial, industrial, and mixed-use developments. Often called “public-private partnerships” these financings require the cooperation of local governments with private developers or industries in order to achieve mutually beneficial goals for the public sector and the private sector. Special Source Revenue Bonds (“SSRBs”) are secured by and payable from fee-in-lieu of tax payments (“FILOT Payments”) made by property owners located in a multi-county business or industrial park. Unless the property owner has qualified for and negotiated a reduced FILOT Payment for the capital investment represented by its facility in the park, the FILOT Payment will be in the same amount as ordinary property taxes would have been if the property were not located in the park.
As the result of being in the park, the expenditure of FILOT Payments is subject to the discretion of the county so long as it is applied and distributed as set forth in the park agreement. Consequently, all or any portion of the FILOT Payments can be pledged and applied to pay debt service on the SSRBs.
SSRBs must be used to fund infrastructure serving the issuer of the bonds or for improved or unimproved real estate and personal property, including machinery and equipment, used in the operation of a manufacturing or commercial enterprise in order to enhance the economic development of the issuer. Municipalities, counties, and special purpose districts can issue SSRBs.
Unlike TIF districts, multi-county business parks can be created without the need to obtain property owner consent. They may only be created by county councils, not city councils, and it does, however, require the cooperation of a contiguous county in order to form one. In addition, the contiguous county is entitled to receive a negotiated portion of all fee-in-lieu of tax payments made with respect to property located in the park. The consent of the municipality must be obtained to include any property located within the corporate limits in a park.
As with other economic development incentives, special source revenue bonds are often combined with FILOTs, industrial revenue bonds, and state jobs and other tax credits. Our attorneys can assist you with combining the appropriate incentives for your project.