Could counties share only the revenue from new property in a joint industrial park while excluding revenue from pre-existing property added to the park?

Plain-English summary

South Carolina Revenue Ruling 97-19 said counties forming a joint industrial or business park could not share only the revenue from new projects while reserving all revenue from pre-existing property for the county where that property sat.

The state constitution and Section 4-1-170 required the written park agreement to allocate the park's revenue between participating counties by percentage. The Department read those provisions as covering the revenue of the park as a whole, not separate allocations for selected properties. Therefore, if an existing fee-in-lieu property was placed inside the park, every participating county had to receive its agreed percentage of the revenue generated by that property along with all other park revenue.

The ruling identified two ways to account for a pre-existing project without carving its revenue out of the park formula. The counties could adjust their overall percentage shares to reflect the existing property's contribution. Alternatively, if the existing facility could be separated from a planned expansion, they could leave the existing facility outside the park and include only the expansion.

The Department also warned that transferring existing fee-in-lieu property into a park could change distributions to municipalities, school districts, and other political subdivisions. Existing bonds, debt limits, and other statutory payment protections had to be considered before the transfer; in some circumstances, the property should remain outside the park unless the relevant obligations could be protected or renegotiated.

Common questions

Q: Could a park agreement exclude one existing property's revenue from sharing? No. The ruling said each county had to receive a percentage of total park revenue, rather than a share calculated property by property.

Q: Could the counties give the host county a larger percentage because it had already developed the property? Yes. The ruling said pre-existing fee property could be considered when the counties set or adjusted their percentage shares of overall park revenue.

Q: Could the original facility stay outside while a new expansion entered the park? Yes, if the existing facility could be delineated from the expansion.

Q: Why did bond obligations matter? A political subdivision might have issued bonds in reliance on revenue from the existing fee-in-lieu property. The ruling said the subdivision had to continue receiving the protected share and warned that an incompatible park transfer could jeopardize bond status or impair contracts.

Citations and references

• S.C. Constitution art. VIII, § 13(D) (joint industrial or business parks)
• S.C. Code Ann. § 4-1-170 (written agreements and percentage allocation of park revenue)
• S.C. Code Ann. §§ 4-12-30(K), 4-29-67(L), and 12-44-80 (fee-in-lieu distributions inside and outside a park)
• S.C. Code Ann. §§ 4-29-60 and 4-29-68 (school-district fees and bond-related provisions discussed)
• S.C. Attorney General Opinions 93-55 and 90-29 (relied upon by the ruling)

Subject

ALLOCATION OF REVENUES RECEIVED FROM A PROPERTY LOCATED IN A JOINT COUNTY INDUSTRIAL OR BUSINESS PARK (PARK)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR97-19.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING # 97-19

SUBJECT:

ALLOCATION OF REVENUES RECEIVED FROM A PROPERTY
LOCATED IN A JOINT COUNTY INDUSTRIAL OR BUSINESS
PARK (PARK)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCES:

S.C. Constitution, Article VIII, Section 13(D)
S.C. Code Ann. Section 4-1-170 (Supp. 1996)
S.C. Code Ann. Section 4-12-20 (Supp. 1996)
S.C. Code Ann. Section 4-12-30(K)(1) (Supp. 1996)
S.C. Code Ann. Section 4-12-30(K)(2) (Supp. 1996)
S.C. Code Ann. Section 4-29-67(L)(1) (Supp. 1996)
S.C. Code Ann. Section 4-29-67(L)(2) (Supp. 1996)
S.C. Code Ann. Section 4-29-68

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1996)
SC Revenue Procedure #97-8

SCOPE:

A Revenue Ruling is the Department of Revenue's official advisory
opinion of how laws administered by the Department are to be applied
to a specific issue or a specific set of facts, and is provided as guidance
for all persons or a particular group. It is valid and remains in effect
until superseded or modified by a change in the statute or regulations
or a subsequent court decision, Revenue Ruling or Revenue Procedure.

Question:
Can an agreement between two counties establishing a joint industrial or business park 1 [hereinafter
park] pursuant to S.C. Code Ann. Section 4-1-170 (Supp. 1996) provide that only revenues from
new properties attracted to the park after such park is formed will be shared between the two
counties and that revenues from pre-existing properties, located in the county where the park is
established and incorporated into the park, will not be shared?
1

A joint industrial or business park sometimes is referred to as a multi-county industrial park. The terms
are interchangeable.

1

Conclusion:
No. All revenue generated by a joint industrial park must be shared between the participating
counties; revenue from pre-existing property incorporated within the park must not be excluded
from such distribution.
Facts:
County A plans to establish a joint industrial or business park pursuant to S.C. Code Ann.
Section 4-1-170 with neighboring County B. ABC is currently operating a facility in County A
under a fee-in-lieu of property taxes and is considering a substantial expansion at this location.
In order to induce ABC to locate the new investment in County A, and to otherwise establish a
regional industrial recruitment effort, County A and County B desire to form a joint industrial or
business park through the execution of a joint industrial or business park agreement.
County A and County B desire to share the revenues and expenses associated with the joint
development of a park for their regional industrial recruitment effort. However, they wish to
exclude County B from sharing in any revenue generated by pre-existing fee-in-lieu of tax
property, like ABC’s initial investment, which may be incorporated into the park, since County
B played no part in the recruitment or development of this property. Is such an agreement
providing for this type of sharing of revenues possible in establishing the park?
Discussion:
Article VIII, Section 13(D) of the S.C. Constitution provides:
Counties may jointly develop an industrial or business park with other counties within the
geographical boundaries of one or more of the member counties. The area comprising the
parks and all property having a situs therein is exempt from all ad valorem taxation. The
owners or lessees of any property situated in the park shall pay an amount equivalent to the
property taxes or other in-lieu-of payments that would have been due and payable except
for the exemption herein provided. The participating counties shall reduce the agreement to
develop and share expenses and revenues of the park to a written instrument which is
binding on all participating counties.
This Constitutional provision recognizes that property subject to a fee-in-lieu of property taxes
as well as other existing facilities may be incorporated into a newly formed joint industrial or
business park. See also Op. Atty. Gen. No. 93-55, September 7, 1993, which recognized that
pre-existing properties could be incorporated into a joint industrial or business park.
In implementing Section 13(D) of Article VIII of the S.C. Constitution, the South Carolina
legislature has provided in S.C. Code Ann. Section 4-1-170 that:
By written agreement, counties may develop jointly an industrial or business park with
other counties within the geographical boundaries of one or more of the member counties as
provided in Section 13 of Article VIII of the Constitution of this State. The written
agreement entered into by the participating counties must include provisions which:

2

(1) address sharing expenses of the park;
(2) specify by percentage the revenue [of the park] to be allocated to each county;
(3) specify the manner in which revenue must be distributed to each of the taxing entities
within each of the participating counties.
Section 4-1-170 thus provides that the agreement by participating counties setting up a park
specify “by percentage” the revenue of the park to be allocated to each county. The S.C.
Constitution also speaks to the “revenues of the park.” Neither contemplates or allows for an
agreement involving the sharing of revenues from individual properties or projects within the
park. As previously noted by the Attorney General:
The purpose of the constitutional and statutory provisions for establishing industrial parks is
to allow the joint development of a park between participating counties. Counties which
are not sharing in the revenues and expenses of the park are not participating in the park’s
development and, therefore, could not be parties to the agreement.
Op. Atty. Gen. No. 93-55 of September 7, 1993. (Emphasis added).
Therefore, each county must receive a percentage of the revenue generated by the park, not of
revenue generated by individual properties within the park.
That is not to say that revenues that are generated by pre-existing fee-in-lieu of property tax
properties incorporated in such a park cannot be taken into consideration in deciding the
applicable percentage of park revenue that goes to each county. They can be considered by
increasing or decreasing the percentage of the park revenue distributed to the individual
participating counties. However, the revenue generated by a pre-existing fee property
incorporated into a park cannot be segregated and allocated to one county. Each county gets a
percentage of the overall revenue generated by all property within the park.
Additionally, if the existing facility can be delineated from the expansion, the pre-existing
facility currently under a fee-in-lieu arrangement could be left outside of any park and only the
expansion included in the park. This solution would accomplish the result sought by allowing
the county where the fee-in-lieu property resides to retain all the revenues generated by the
project since that property would not be incorporated into the park. See Op. Atty. Gen. No. 9355 of September 7, 1993.
Of course the revenues, obtained from a fee-in-lieu property, which is not in a joint industrial
park, must be distributed as mandated by Section 4-12-30(K)(1), Section 4-29-67(L)(1), or
Section 12-44-80(A). These sections provide:
For a project not located in an industrial development park as defined in Section 4-1-170,
distribution of the fee-in-lieu of taxes on the project must be made in the same manner and
proportion that the millage levied for school and other purposes would be distributed if the
property were taxable . . . . (Emphasis added.)

3

Revenue from property in a joint industrial park may be distributed as the counties agree
pursuant to Sections 4-12-30(K)(2), 4-29-67(L)(2), or 12-44-80(B). These sections provide:
For a project located in an industrial park as defined in Section 4-1-170, distribution of
the fee-in-lieu of taxes on the project must be made in the manner provided for by the
agreement establishing the industrial development park. (Emphasis added.)
If a fee-in-lieu property is included in a park, there is another factor that must be considered.
Because the industrial park agreement specifies how revenue is to be distributed between taxing
entities, the distribution of the fee payment received in-lieu-of taxes may be different from the
distribution of fee-in-lieu payments previously associated with the same property.
A county, municipality, school district or other political subdivision which was receiving
revenues from fee-in-lieu payments may no longer receive the same revenue once the property
becomes part of the park. To the extent that a county or other political subdivision has issued
bonds 2 , relying on revenues generated by fee-in-lieu property now incorporated within a park to
fund such indebtedness, the county or other political subdivision must continue to receive its
proportionate share of the revenues generated by such property expected to be incorporated
within the park. Op. Atty. Gen. No. 93-55 of September 7, 1993; see also S.C. Code Ann.
Sections 4-1-170; 4-29-68(E). “Failure to allow the political subdivision to continue receiving
this amount would jeopardize the political subdivision’s bond status, as well as possibly result in
an impairment of contract for the bondholders.” Op. Atty. Gen. No. 93-55 of September 7,
1993. If the political subdivision cannot continue to receive such payments because of the park
agreement requiring the sharing, by percentage, of park revenue between counties, as mandated
by Section 4-1-170, it may be that such property cannot be transferred into a joint industrial park,
absent a renegotiation of the terms of the bonds with the bondholders allowing such transfer.
Additionally, the county or other political subdivision may have issued general obligation debt
based on the assessed value of the property in question. To the extent that the value of this
property is necessary to permit the outstanding general obligation debt to remain within the debt
limit of the political subdivision, the political subdivision must continue to receive income from
the existing property to the extent that such income represents the value of the property
necessary to remain within the debt limit. Op. Atty. Gen. No. 93-55 of September 7, 1993 3 .
Again, if such cannot be accomplished because of the park agreement mandated by Section 4-1170, such property should not be incorporated within the park.

2

A county, municipality, or special purpose district may have issued special source or other revenue
bonds anticipating making payments from the revenues received from a payment in-lieu-of taxes.
See S.C. Code Ann. Section 4-29-68 (Supp. 1996).
3
Failure to do so may result in a violation of the S.C. Constitution which provides that “general
obligation debt may . . . be incurred by the governing body of each political subdivision: (a) For any
of its corporate purposes in an amount not exceeding eight percent of the assessed value of all
taxable property of such political subdivision . . . .” Article X, Section 14(7) of the S.C. Constitution.
4

There may be other statutory provisions that would affect the amount of fees a taxing entity is
required to receive from revenue generated by a jointly developed industrial park. “For example,
if a park is financed by the Industrial Revenue Bond Act, Section 4-29-60 would require that a
school district receive fees in the same amount as would result from taxes levied on the project.”
Op. Atty. Gen. No. 90-29 of March 14, 1990.
Accordingly, statutory provisions contained in the S.C. Code need to be carefully considered
prior to transferring pre-existing fee-in-lieu property into such a park.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank III, Director

Columbia, South Carolina
December 29
, 19 97

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