ECONOMIC DEVELOPMENT UPDATE
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December 2017
HSB Insider's Perspective
By Gary Morris

From an economic development perspective, South Carolina is poised to complete another banner year. In 2017, major manufacturing announcements included BMW, Volvo, Arthrex, and Samsung, among others. Numerous other companies announced new projects or expansions. The pipeline of potential projects remains full at the state and county levels, which will hopefully allow this trend to continue. 
  
It remains difficult for rural areas to attract major projects. However, these rural areas have had great success in landing smaller prospects. These communities continue to invest in product and infrastructure to attract more significant investment. For example, activity along the I-95 corridor has increased significantly, resulting in the development of megasites. Based upon the steps being taken, we believe these rural communities will generate more significant investments in the years to come. 
  
One interesting note is that solar companies appear to target rural areas across the state. These companies bring a different perspective to the rural regions. While the solar farms create very few jobs, the investment side of the equation is substantial. Many of the rural communities are being approached, however, to provide significant property tax relief in order to meet certain cost model parameters established by the companies. From an economic development perspective, the benefits to the rural communities, even with substantial property tax reductions, may very well outweigh the cost. Counties are working to develop parameters for property tax reductions while also addressing decommissioning costs and planning/zoning issues associated with these projects.
  
Commercial real estate activities this past year have also been extensive. In particular, retail development continues at a fast pace, especially in hot markets such as the York-Lancaster region, Greenville-Spartanburg corridor, and the Charleston/Berkeley/Dorchester area. 
  
Based on the activity we are seeing in both the commercial and industrial markets, the prospects for 2018 appear strong. One key variable is the impact of changes in tax law contemplated by the U.S. Congress on economic development growth. Tax reform could have a profound impact on domestic and international companies and could lead to the repatriation of significant cash holdings abroad. At any rate, 2018 should be a very interesting year, and we look forward to continuing to work with our friends and allies throughout South Carolina and beyond.
County Tiers Set for 2018 for Job Tax Credits and Job Development Credits

South Carolina's 46 counties are annually designated as being within one of four "tiers" for job tax credit and job development credit purposes based on a county's unemployment rate and per capita income. The SC Department of Revenue has published the new "tier" designations for South Carolina counties for 2018. The following counties received a new tier designation:


County
2017 Tier 2018 Tier
Aiken
1
2
Anderson 2 1
Berkeley 1 2
Dorchester 2 1
Jasper 3 2
Union 4 3

If a project is considering Anderson, Dorchester, Jasper or Union Counties, contact a member of the HSB Economic Development team to "lock in" the more advantageous 2017 tier designation before December 31, 2017.
 
The following is a complete list of counties and their respective tiers for 2018: 

Tier IV
Tier IV
Tier II
Tier I
Allendale
Bamberg
Barnwell
Chester
Clarendon
Dillon
Hampton
Lee
Marion
Marlboro
Orangeburg
Williamsburg
Abbeville
Calhoun
Cherokee
Chesterfield
Colleton
Darlington
Edgefield
Fairfield
Horry
Laruens
McCormick
Union
Aiken
Berkeley
Florence
Georgetown
Greenwood
Jasper
Kershaw
Lancaster
Oconee
Pickens
Saluda
Sumter
Anderson
Beaufort
Charleston
Dorchester
Greenville
Lexington
Newberry
Richland
Spartanburg
York

Should you have any questions on how job development credits and job tax credits work generally, please contact a member of the HSB Economic Development team.
Per Capita Income Update 

The State's per capita income level is important for certain small business job tax credits. Job tax credits are available for both large and small businesses creating ten or more new jobs, but for small businesses creating two to nine jobs, wage levels are critical. The gross wages of new jobs must be at least 120% of the lower of the applicable county's or state's average per capita income. The most recent county wage levels were reported in SC Information Letter # 17-17 .
Don't Miss January 30, 2018 Deadline for Property Tax Reductions on Property Acquired in 2017

Taxpayers who purchased property in 2017 (or who own property which underwent an "assessable transfer of interest" as defined in the South Carolina Real Property Valuation Reform Act) should consider taking advantage of statutory limitations on property tax increases for property taxed at a 6% assessment ratio. In order to benefit from this limitation, the property owner must provide written notice to the applicable county assessor before January 31 of the year following the transfer.
  
If you think you may qualify and wish to take advantage of this provision, please contact a member of the ED team.
HSB Economic Development Attorney Provides Guidance on GASB 77

Will Johnson provided a Q&A review of GASB 77 in the South Carolina Economic Developers' Association's (SCEDA) October newsletter. Released in August 2015, GASB 77 requires state and local governments to disclose all reductions in tax revenues resulting from tax abatement agreements. The first fiscal year to which GASB 77 applies is July 1, 2016 to June 30, 2017. In the  article, Will discusses the potential impact of GASB 77 on local governments engaged in economic development, what local governments can do to prepare for GASB 77, and how non-governmental people working in the economic development field may be affected by the new reporting requirements. Will also spoke at the NESA Local Developers meeting on GASB 77.
Will Johnson (left) speaking at a recent NESA Local Developers meeting.

Happy Holidays from the HSB Economic Development Team!
www.hsblawfirm.com | Charleston | Columbia | Florence | Greenville | Myrtle Beach

William R. Johnson, Economic Development Group Leader
1201 Main Street, 22nd Floor, Columbia, SC 29201