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Frank Davis
Perry MacLennan
Aaron Scheuer
March 2018
HSB Insider's Perspective
By Will Johnson

I recently had the opportunity to speak to several groups about the current state of economic development in South Carolina. In the course of those discussions, I focused on the key criteria that site selection consultants and companies evaluate in making location decisions. Site Selection magazine conducted a survey in the fall of 2017 that identified the top ten criteria, and I recently surveyed over 30 economic development professionals who live in or handle projects in South Carolina to ask how the Palmetto State is faring (using a traditional grading scale, A-F, with 4 points for an A, 3 points for a B, etc.). The top ten location criteria, per Site Selection magazine, and South Carolina's grades on those criteria, per the industry professionals, are as follows:

1. Workforce Skills 2.6
2. Transportation infrastructure 2.2
3. Utilities (cost, reliability) 2.9
4. State and local tax scheme 2.5
5. Land/building prices/supply 3.0
6. Quality of Life 3.6
7. Workforce development 2.5
8. Ease of permitting/regulatory 3.4
9. Incentives 3.4
10. Higher education 3.1

Clearly, we have some significant work to do, particularly on infrastructure and workforce. While our state and local tax structure does not receive high marks, our incentives are highly regarded, and Area Development magazine actually ranked us #1 in the country for incentives. Quality of life scored the highest marks, as industry professionals recognize our low cost of living, excellent climate, and friendly people.
In a couple of my presentations, I polled audience members who are primarily South Carolinians in professional occupations but not full-time economic developers. Interestingly, their rankings on quality of life and ease of permitting/regulatory issues were considerably lower than those of the professionals. Often, we are quick to complain about our own communities or local governments without realizing how favorably we compare to the rest of the country and how good we actually have it.
Facing these challenges head-on, the South Carolina Department of Commerce announced $5.24 billion in capital investment and 18,445 new jobs in 2017, and South Carolina's export sales reached a new level for the eighth consecutive year at over $32 billion. According to the FDI Intelligence 2017 Manufacturing Report, South Carolina was #1 of 50 states by project number, #3 by capital investment, and #4 by job creation. Those statistics are impressive by all accounts and are indicative of the fact that South Carolina is a great place to do business. With a strong business climate and the best people in the business, imagine the success we can realize if we tackle our challenges together in a constructive manner with a long view on investing in South Carolina's future. That possibility leaves me optimistic about what's ahead.
Many State Tax Incentives are Now Taxable

Among the many changes enacted under Tax Cuts and Jobs Act (the Act) last December is a significant change to the treatment of certain incentives offered to corporations by state and local governments. Many incentives that were previously excluded from a recipient's gross income under former § 118 of the Internal Revenue Code as "contributions to capital" are now taxable under the amended § 118, which now provides that the term "contribution to the capital of the taxpayer" does not include "any contribution by any governmental entity or civic group (other than a contribution made by a shareholder as such)."
Contributions to non-corporate entities such as limited liability companies are not subject to § 118.  A complex body of case law and administrative guidance from the Internal Revenue Service addresses the tax implications of contributions to non-corporate entities.  Contact a member of the HSB economic Development team with any questions.
BEA Surveys for Foreign Direct Investment Due May 31, 2018

The Bureau of Economic Analysis conducts a survey every five years of foreign direct investment in the United States, and 2018 is the lucky (or unlucky) year.  Responses are required from all entities meeting the reporting requirements, regardless of whether they have been contacted by the BEA.  There are four forms that apply as follows:
  • Form BE-12A - for majority-owned US affiliates with total assets, sales, or gross operating revenues, or net income of more than $300,000,000 (positive or negative);
  • Form BE-12B - for majority-owned US affiliates with total assets, sales, or gross operating revenues, or net income of more than $60,000,000 (positive or negative), but none of which exceed $300,000,000 (positive or negative) OR minority-owned US affiliates with total assets, sales, or gross operating revenues, or net income of more than $60,000,000 (positive or negative);
  • Form BE-12C - US affiliates with total assets, sales, or gross operating revenues, or net income, of $60,000,000 or less (positive or negative); and
  • Form BE-12D - US affiliates meeting an exemption (foreign ownership less than 10%, merged with another reporting entity, liquidated, or dissolved)
The 2018 BE-12 survey covers all fiscal years ending in 2017.  These forms can be filed online at, and they are due on May 31, 2018.
Failure to file can result in civil penalties of $4,527 to $45,268, and willful failure to file can subject an individual to a fine of up to $10,000 and imprisonment of up to one year. While these penalties may not have been actively enforced, the BEA requirements are pursuant to the US Investment and Trade in Services Survey Act and carry the weight of federal law. We recommend compliance!
Contact a member of the HSB economic development team for assistance.
REMINDER - Manufacturer's Effective Statutory Assessment Ratio

2018 is the first of six years in which the effective reduction to the statutory manufacturing assessment ratio begins to take effect. For non-FILOT manufacturing property, the effective assessment ratio for 2018 is 10.25% rather than 10.5%. Going forward, the effective ratio decreases .25% each year until it reaches 9%. The reduction is technically achieved through an exemption to manufacturing property that produces the intended effective rates.
Calendar-year taxpayers should begin work on annual property tax filings soon, as they are due on April 30. Those taxpayers who have not consulted with legal counsel regarding their returns in recent years should consider a review of the annual filings and most recent bills to ensure that they are minimizing their property tax liability to the maximum extent possible. Contact a member of the HSB economic development team for more information.
UPSTATE Greenville-Anderson-Mauldin Area No. 2 Best Places to Work for Manufacturing

South Carolina's Greenville-Anderson-Mauldin area is the No. 2 best place to work in manufacturing in the country, according to financial technology company SmartAsset. Manufacturing jobs in this area have grown by 37.8%, and recently, wages grew by 14.7%. For more information,
STATE - South Carolina Lands Three Cities in National Geographic Travel's Top 30 Small Cities in the US

National Geographic Travel  has named Charleston, Columbia and Greenville as three of the top 30 small cities in the United States. The authors focused on stories of urban renewal, cities with revitalized Main Streets, and places that pursued policies that generated happiness. For more information, click here
LOWCOUNTRY - Charleston-Berkeley-Dorchester's "Hot" Economy

Charleston metro area remains one of the top "Best Performing Cities" by the annual Milken Institute rankings. Named success stories include software supplier Blackbaud Inc., the Space and Naval Warfare Systems Center, the State Ports Authority, Volvo, Boeing and Mercedes. For more information, click here.
HSB In the Community

Will Johnson recently spoke to the Leadership Columbia Class of 2018 on property taxes and industrial recruitment in Richland and Lexington Counties. He also spoke to South Carolina's county auditors on GASB 77 at the annual SCATT Academy in Columbia on February 8. Rounding out the first quarter, he conducted an economic development incentives simulation exercise for the Leadership South Carolina Class of 2018 in Myrtle Beach in February and presented an update on the state of economic development in South Carolina at the SC Young Bankers Conference in Savannah on March 2.


Gary Morris spoke on financing redevelopment projects to the Midlands Business Leadership Group on February 28. 


Perry MacLennan discussed President Trump's impact on HR laws at the SC Chamber of Commerce's annual HR Conference on March 2. He will also speak on workplace relationships, sexual harassment and the #MeToo movement in the Food & Beverage industry in Charleston, Columbia and Greenville. Visit our website for more information on these upcoming seminars. 

Welcome Baby Girl Land

Please join us in congratulating Philip Land, his wife Beth and big sister Elizabeth on the birth of daughter Sarah Margaret on February 23. | Charleston | Columbia | Florence | Greenville | Myrtle Beach

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