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"Local and Job Development Incentives Pass S.C. General Assembly" - Nexsen Pruet's Tushar Chikhliker part of SCEDA Legislative Team to secure expanded economic development credits

October 11, 2018

Columbia Business Monthly, Metro Columbia CEO, Sumter CEO and SCEDA's Official Blog covered the October 3, 2018 announcement of the South Carolina Economic Developers' Association bill (SCEDA bill, S.1043) passing the South Carolina General Assembly. 

According to the organization, the SCEDA bill "expands the scope of job development credits pertaining to professional jobs" passed the Legislature this week.  This legislation was a partnership with the SC Department of Agriculture, as it also includes language to incentivize agribusiness in South Carolina. Tushar Chikhliker, leader of Nexsen Pruet's economic development team, played a major role in the facilitation of the SCEDA bill as the Legislative Committee chair when the bill was written and introduced. 

Coverage excerpt: 

On Wednesday, October 3, the South Carolina House of Representatives overrode the veto of the SCEDA bill, S.1043, with a vote of 112-4. Passage of this bill shows the true team effort that SCEDA represents.

These important enhancements will add another arrow into our economic developers’ quiver when it comes to attracting professional jobs to South Carolina and supporting our local agriculture industry,” said Mark Warner, SCCED, SCEDA president and vice president of business development and marketing at Davis & Floyd. “We are grateful for the action of our South Carolina lawmakers and economic development professionals across our state who answered our call to action.”

Continued:

This is the culmination of years of collaboration by our state’s economic development sectors – both public and private – to respond to the ever-changing competitive landscape as we work to further diversify our state’s already robust economy,” said Tushar Chikhliker, SCEDA’s past Legislative Committee chair and an economic development lawyer at Nexsen Pruet.


Highlights of the SCEDA bill:

Incentives for Professional Services / Office Jobs

For professional services/office jobs, the changes below will encourage South Carolina to excel in all areas of economic development.

  • Makes modifications to the State’s primary discretionary incentive, Job Development Credits (JDCs), for professional services/office jobs.
  • Reduces job and wage thresholds applicable to qualified service-related facilities (QSRF) for the highest three tiers:
    • 125 jobs (down from 175) at a single location;
    • 100 jobs (down from 150) at a single location comprised of a building that has been vacant for at least 12 consecutive months; and
    • 75 jobs (down from 100) at a single location that pay more than 1½ times the lower of the state per capita income or per capita income in that county.
  • Allows businesses engaged in legal, accounting, banking, or investment services to apply for JDCs. (Per the discretion of the Coordinating Council).
  • Allows businesses engaged in retail sales to apply for JDCs as long as retail sales are not actually conducted at the facility.  (Per the discretion of the Coordinating Council).
  • Suggests the Coordinating Council consider these factors in making a determination for qualification:
    • The percentage of the businesses’ annual gross receipts derived from outside of South Carolina for the previous 12 months and such percentage must not be less than 75%;
    • The nature and the wages of the new jobs created;
    • The capital investment of the project; and
    • The potential for expansion or growth of the business or industry.

 

Details of the economic incentive enhancements include:

Incentives for Agriculture Operations
  • Provides a tax credit program for agribusinesses that is mirrored after the Port Tax Credit Program.
  • Allows an agribusiness operation or agricultural packaging operation that increases purchases that are certified as South Carolina grown by a minimum of 15% in a year to claim an income tax credit or employee withholding credit in an amount determined by the Coordinating Council.
  • Products must be approved by the SC Dept. of Agriculture as Certified SC Grown.
  • Maximum amount phased in over a four-year period:
    • 2017 – $500,000
    • 2018 – $1,000,000
    • 2019 – $1,500,000
    • 2020 – $2,000,000
  • The Coordinating Council has sole discretion in allocating the credits.
  • The base year total dollar purchases that are certified as South Carolina grown must exceed $100,000 for a taxpayer to be eligible.
  • The tax credit sunsets after 10 years. It will need to be reauthorized through legislation if the General Assembly would like to continue the program.
  • A taxpayer may not be awarded a tax credit under this program in excess of $100,000 in any tax year.

Nexsen Pruet's Burnie Maybank helped to shape the agricultural portion of the bill. 


Tushar Chikhliker focuses his practice on economic development and public finance where he assists his clients in negotiating and implementing financial transactions aimed at sparking new success, or bolstering established success, in the South Carolina communities where they choose to invest. He is the leader of Nexsen Pruet's economic development practice and can be reached at tushar@nexsenpruet.com.

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