Tax Study Committee — Columbia, SC
Date: 2021-09-23
Time: 14:00

COLUMBIA TAX STUDY COMMITTEE MEETING AGENDA
 THURSDAY, SEPTEMBER 23, 2021


The Columbia Tax Study Committee will conduct a meeting on Thursday, September 23, 2021 at
2:00 p.m. using video conferencing technology. The meeting will be streamed online at
www.columbiasc.gov. For questions regarding the meeting, please contact the City Clerk at
(803)545-3045 or cityclerk@columbiasc.gov.

 The Honorable Tameika Isaac Devine, At-Large  The Honorable Howard E. Duvall, Jr., At-Large
 The Honorable Daniel J. Rickenmann, District IV

CALL TO ORDER

1. Opening Remarks and Introductions - The Honorable Howard E. Duvall, Jr.

PRESENTATIONS

2. Review of the City of Columbia Property Tax Capacity Analysis

  Stephen J.K. Walters, Ph.D., Chief Economist, Maryland Public Policy Institute

  James B. London, Ph.D., President, London & Associates

  Holley Ulbrich, Ph.D., Professor Emerita of Economics at Clemson University

COMMITTEE DISCUSSION
ADJOURNMENT




 Page 1 of 1

COLUMBIA TAX STUDY COMMITTEE MEETING AGENDA
 THURSDAY, SEPTEMBER 23, 2021


The Columbia Tax Study Committee will conduct a meeting on Thursday, September 23, 2021 at
2:00 p.m. using video conferencing technology. The meeting will be streamed online at
www.columbiasc.gov. For questions regarding the meeting, please contact the City Clerk at
(803)545-3045 or cityclerk@columbiasc.gov.

 The Honorable Tameika Isaac Devine, At-Large  The Honorable Howard E. Duvall, Jr., At-Large
 The Honorable Daniel J. Rickenmann, District IV

CALL TO ORDER
COMMITTEE DISCUSSION

1. Opening Remarks and Introductions - The Honorable Howard E. Duvall, Jr.

2. Review of the City of Columbia Property Tax Capacity Analysis

  Stephen J.K. Walters, Ph.D., Chief Economist, Maryland Public Policy Institute

  James B. London, Ph.D., President, London & Associates

  Holley Ulbrich, Ph.D., Professor Emerita of Economics at Clemson University

ADJOURNMENT




 Page 1 of 1
 1




MEETING DATE: September 23, 2021

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Opening Remarks and Introductions - The Honorable Howard
 E. Duvall, Jr.
FUNDING SOURCE &
ORIGINAL BUDGET:




Updated: 9/17/2021 9:21 AM Page 1
 Packet Pg. 2
 2




MEETING DATE: September 23, 2021

DEPARTMENT: City Clerk

FROM: Erika Hammond, City Clerk

SUBJECT: Review of the City of Columbia Property Tax Capacity
 Analysis
FUNDING SOURCE &
ORIGINAL BUDGET:

PURPOSE:
Stephen J.K. Walters, Ph.D., Chief Economist, Maryland Public Policy Institute
James B. London, Ph.D., President, London & Associates
Holley Ulbrich, Ph.D., Professor Emerita of Economics at Clemson University


ATTACHMENTS:
  City of Columbia Property Tax Study Presentation-2020-06-FINAL (PDF)
  SC Property Tax Study 8.21.2020 FINAL (PDF)




Updated: 9/16/2021 12:55 PM Page 1
 Packet Pg. 3
 June 2020

 FINAL Property Tax



 Capacity Analysis

 City of Columbia




 1
 2.a
Packet Pg. 4

 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
Tax Rates, 2019 Introduction
 587.1
 566.2 Economic Growth
 Since 2010, South Carolina has grown more rapidly than
 424.9
 the nation. Its compounded annual GDP growth rate
 301.1 366.2 356
 412.4 since 2010 is 8th fastest among states.* Columbia, has
 241.1
 202.9 witnessed slower growth than other cities in SC.
  154.7
 127.2 83.2
  59.8 67.8 119.5 Slow Development and High Taxes
  86.6 93.8 85.3 100.6
 34.3 Many local leaders lament the slower growth in
Charleston Columbia Greenville Lexington Rock Hill Columbia. The excessively high combined property tax

 City County School rates of the city, county and school districts have
 emerged to the forefront of the discussion of causes.
 This study examines this relationship between growth
 and property taxes.

 *Gross domestic product (GDP) by state: All industry total (Compound annual growth rate between any two periods), 2010 – 2018. US Bureau of Economic Analysis. Online: https://www.bea.gov/data/gdp 22
 Packet Pg. 5
 2.a




Continuous Loop High




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
The City of Columbia currently finds
itself caught in a continuous loop of high Tax
 Rates
property tax rates that lead to slower
growth and poor property valuations. In
turn, these result in smaller tax
revenues, prompting leaders to increase
tax rates, which further deters growth
and depresses valuations.




 Lower Low
 Tax Growth &
 Revenues Valuations
 3
 Packet Pg. 6
 2.a




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
Agenda
Causes
What is driving Columbia’s property tax rate
so high?



Effects
How does the high property tax rate affect
the City?



Solutions
How can we lay the groundwork for
Columbia’s growth?

 4
 Packet Pg. 7
 Causes



 Why might Columbia’s property tax be so high?




 5
 2.a
Packet Pg. 8

 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




 Four Possible Causes…




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 …of high property tax rates within the City.




 one two three four
 More Tax-Exempt Lower Property Fewer Other Greater Spending
 Property Valuations Revenue Sources Levels

 If the City has more tax- If property valuations in the If other revenue sources (ex.– If the City spends more
 exempt property than other City are lower than other sales tax, licenses, fees) are than other municipalities, it
cities, it would require a higher municipalities, it would not used as much by the City would require higher
  tax rate on the remaining require higher tax rates to as in other cities, it would revenue levels, likely in the
 taxable property to generate generate the same level of require higher property tax form of higher property tax.
 the same level of revenues. revenues. rates to generate revenues.


 6
 Packet Pg. 9
 1




 Does Columbia have more




 tax-exempt property?

 7
Packet Pg. 10 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




2019 Tax-Exempt Property by Parcels, Value and Acreage




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Columbia Greenville Rock Hill


 7.81% 7.22% 6.76%
 Fully Exempt Parcels Fully Exempt Parcels Fully Exempt Parcels


 24.51%* 7.67%* N/A
 Fully Exempt Market Value Fully Exempt Market Value Fully Exempt Market Value


 35.10% 25.83% 25.76%
 Fully Exempt Acreage** Fully Exempt Acreage Fully Exempt Acreage


  Notes: *Under SC law, accurate valuation of exempt land is not required. Thus, values are not considered accurate for valuation purposes. **Does not include Fort Jackson, which accounts for 51,883 acres (or 62.9% of Columbia’s area). Sources: Assessor’s Offices of Richland , Greenville, and York County.

 8
 Packet Pg. 11
 2.a



 2012 Governing Study vs. South Carolina Cities




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Taxable Parcels Per Capita Exempt Parcels (Percentage of Total Parcels)
 Columbia has slightly more taxable parcels per capita (0.32) than the city As a percentage of all real property, Columbia has more fully exempt parcels
 average of 0.31. than the average of 5.3% across all cities.
 .0 40


 0.37 0.35
 .9 0%




 7.8%
 0.32 7.2%
 6.8%
 .8 0%


 .0 35




 0.31
 .7 0%




 .0 30




 .6 0%




 .0 25




 .5 0%
 5.5%
 .0 20




 .4 0%




 .0 15



 .3 0%




 .0 10

 .2 0%




 .0 05
 .1 0%




 .0 0%
 .0 0




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 Exempt Parcels Per Capita Exempt Value (Percentage of Total Value)
 Columbia has significantly more fully exempt parcels at 0.267 per capita, far Columbia has slightly less than the average of 25.2% of FMV tied up in fully
 above the average of 0.018 across all cities. exempt parcels. SC does not require accurate valuation of exempt properties.
 .0 03 50 45 .0 %




 0.0285
 0.0267
 40 .0 %




 0.0257
 .0 03 0




 24.5%
 35 .0 %




 .0 02 50




 30 .0 %




 0.019 25.2%
 .0 02 0

 25 .0 %




 20 .0 %

 .0 01 50




 15 .0 %




 7.7%
 .0 01 0




 10 .0 %




 .0 0 50



 .5 0%




 .0 0 0 .0 0%




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 9
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 Packet Pg. 12
Sources: “Property Tax Exemption Data for U.S. Cities.” Governing.com. From article dated November, 2012: “Tax-Exempt Properties Rise as Cities Cope with Shrinking Tax Bases.” Online: https://www.governing.com/gov- data/finance/tax-exempt-property-values-totals-for-cities.html. 2019 data from assessor’s Offices of Richland , Greenville, and York County.
 2.a




 An Overview of Tax-Exempt Properties in the City of Columbia




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Within the Columbia city limits, 7.8% of parcels are fully tax-exempt. Records indicate this makes up 24.5% of market value, although these values are
 recognized as inaccurate, due to SC law not requiring exempt properties to be appraised. The City of Columbia and associated development corporations
 combined make up 638 of the fully exempt parcels (17.9%).



 City of Columbia Real Property Parcels and Value, 2019 Tax-Exempt Entity Parcels Value*

 22,727 City of Columbia 560 $223M
 Colleges & Universities 358 $1,197M
 20 ,0 0




 19,011 Columbia Housing Auth 536 $80M
 Development Corps 78 $9M
 Hospitals 88 $266M
 15 ,0 0
 Individuals 534 $101M
 Lexington County 4 $1M
 Other Municipalities 1 $0M
 10 ,0 0 Not for Profits 288 $131M
 Other 57 $88M
 $5,442M 3,568 $3,438M Religious Organizations 771 $351M
 $4,898M
 ,5 0 0




 (7.8%) (24.5%) Richland County 63 $117M
 School Districts 62 $149M
 356 $246M Schools, Private 21 $13M
 0



 Special Purpose Entity 18 $35M
 Owner-Occupied Commercial (6%) Other Fully Tax-Exempt State of South Carolina 115 $597M
 (4%)
 United States 14 $81M
 Parcels Value* Total 3,568 $3,438M
Notes: *Under SC law, accurate valuation of exempt land is not required. Thus, values are not considered accurate for valuation purposes. Sources: Assessor’s Office of Richland County. 10
 Packet Pg. 13
 2.a




1. Columbia has slightly more tax-exempt parcels




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 (both per capita and as a % of all parcels) among
 both SC and national cities. It also has more tax- What is the impact of
 exempt acreage among SC peers. exempt properties?
 Tax-exempt entities are not necessarily a detriment to

2. The City has more taxable parcels per capita
 among national cities, although it has fewer
 local tax revenues or its economy. Prisma Health is the
 largest employer in Columbia, with the University of
 South Carolina next, followed by many state agencies
 among SC peers. This may partially reflect and Fort Jackson. In addition to providing jobs, they
 Columbia’s higher population density and/or spur follow-on development that is taxable, such as
 lower home-ownership rate among SC peers. private physician offices and outpatient facilities,
 student housing (those subject to the full tax rate), and
 government-related private industry. A detailed study


3.
 of the economic impact would be required to
 Exempt properties, alone, are not the primary
 understand by how much tax revenues from this
 force (1) impacting the ability to raise revenues additional private, taxable development offsets the
 through property taxation or (2) driving the high untaxed property of the entity itself.
 tax rates faced by properties in the City.


 11
 Packet Pg. 14
 2




 Does Columbia have lower




 property valuations?

 12
Packet Pg. 15 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




 Total property value is lower in Richland County, driven by




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 lower average valuations and slower growth
 Assessed Value Per Capita, 2018 Average Value Per Unit, 2018 Value Growth, 2010 - 2018
 $16,468
 25 .0 %




 $9,782
 $1 ,8 0 0




 $1 ,0 0 0




 $1 ,6 0 0




 19.8%
  $9 ,0 0




 $1 ,4 0 0 20 .0 %




  $8 ,0 0
 $1 ,2 0 0




 $1 ,0 0 0 15 .0 %


  $7 ,0 0




 $8,009 10.8% 11.1%
  $6 ,0 0
 $8 ,0 0




 $6,993 $6,861
 $5,033 $5,138 $6 ,0 0
 $5,736 10 .0 %
 8.2%
  $5 ,0 0




 $4,518
 $4,073 $4 ,0 0




  $4 ,0 0


 3.4%
 $523 $676 $546 $532 $537
 .5 0%
 $2 ,0 0




  $3 ,0 0




 $0




 Richland Charleston Greenville Lexington York County
 County County County County
  $2 ,0 0 .0 0%




 Richland Charleston Greenville Lexington York County Richland Charleston Greenville Lexington York County
 County County County County Real Property* Personal Property* County County County County




 Lower Total Value Per Capita Lower Value Per Unit Slower Growth in Value
 Richland County has the lowest value of The average value of properties in Richland The growth of assessed value has
 total assessed property per person. County is, generally, lower than peers. significant lagged peer counties.


*Real property units include owner-occupied, commercial/rental, and agricultural. Personal property units include motor vehicles, water and aircraft.
Source: School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 - 2018. (online: https://dor.sc.gov/lgs/reports-school-index). 13
 Packet Pg. 16
 2.a




  Since 2010, Richland County property value growth has




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
  been slower across most property types
 217%
 171%

  Assessed Property Value Growth, 2010– 2018 121%

 75%
 62% 64%
 65%
 53%
 55% 47%
 42% 45% 42%
 45%
 35% 34% 34% 36%
 35% 33%
 27% 24% 26%
 24%22% 23%
 25% 19% 21% 19%
 15% 16%
 15% 12%
 8% 7%
 5% 2% 1%
 -5%
 -3%
  -15%
 -12% -17%
  -25% -18%
 Owner-Occupied Commercial/Rental Motor Vehicles Business Personal Utility/Railroad/ Pipeline Manufacturing Fee-in-Lieu & Indus. Park


 Richland Charleston Greenville Lexington York



Except for Motor Vehicles and Utility, Richland County lagged peer counties in assessed value growth across all property types. 4 of 5 counties had declines
in manufacturing value, partially due to the rapid growth in Fee-in-Lieu and Industrial Park value, as entities increasingly use the tax-advantaged designation.

Source: School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 - 2018. (online: https://dor.sc.gov/lgs/reports-school-index). 14
 Packet Pg. 17
 2.a




Richland County Values




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
Owner-Occupied Parcels $1 ,4 0 M
 Charleston County $1,343M
 +42.3%
 $4 0 K




 $3 80 K
 Lexington County
 $535M
 +21.5%
 $944M
 $1 ,2 0 M


 $3 60 K
 $6 0 M


 $1 60 K




 $1 ,0 0 M $3 40 K $440M
 $343K
Units
 $3 20 K $5 0 M


 $8 0 M




 +26.4%
 $1 50 K




 $3 0 K




 $6 0 M




 $148K
 $2 80 K
 $4 0 M




 $4 0 M




 $272K +13.5%
 $2 60 K
 $1 40 K




County Total Units Growth Since 2010 $2 0 M


 $2 40 K


 $3 0 M




 2018 # % $0 M $2 20 K




 2010 2011 2012 2013 2014 2015 2016 2017 2018
 $1 30 K




Richland County 98,459 +3,094 3.2% $130K
 $2 0 M




 Richland District 1 43,824 -1,848 -4.0% Greenville County $998M $1 0 M
 $1 20 K




 +23.9%
 $2 20 K




 Richland District 2 39,055 +3,354 9.4% $805M
 $1 ,0 0 M
 $2 10 K




 $0 M $1 10 K




 Lexington District 5 15,580 +1,588 11.3%
 $2 0 K




 2010 2011 2012 2013 2014 2015 2016 2017 2018
 $8 0 M


 $1 90 K




Charleston County 97,788 +10,887 12.5%
 $1 80 K




 $182K
 $6 0 M




 $1 70 K




Greenville County 136,978 +8,558 6.7% +16.2% Richland County
 $1 60 K




 $4 0 M




 $157K $613M
 $1 50 K




Lexington County 90,426 +5,962 7.1% $2 0 M
 $1 40 K




 $1 30 K
 $601M
 $7 0 M




 +1.9%
 $1 80 K




York County 75,695 +9,392 14.2% $0 M $1 20 K

 $6 0 M




 $1 70 K




 2010 2011 2012 2013 2014 2015 2016 2017 2018
 $5 0 M




Richland County experienced substantially lower growth in housing York County $549M
 $1 60 K




 +35.3%
 $2 20 K




units than all its peer counties. Richland District 1 actually saw a $158K
 $4 0 M




 $156K
 $6 0 M


 $2 10 K




 $406M
 $1 50 K




 -1.3%
 $2 0 K




decline in units, losing 1,848 owner-occupied parcels from the tax
 $5 0 M


 $3 0 M




 $1 90 K




 $4 0 M




rolls between 2010 and 2018, as they were either converted to
 $1 80 K $1 40 K




 $181K
 $2 0 M



 $1 70 K




 $3 0 M




rental properties or absorbed by a non-profit entity (i.e.- CHA). The +18.5%
 $1 60 K




 $1 30 K




 $2 0 M $1 0 M
 $1 50 K




 $153K
slow growth in housing units combined with the decrease in average
 $1 40 K




 $1 0 M




 $1 30 K $0 M $1 20 K




valuation, left the county with just 1.9% growth in assessed value $0 M $1 20 K



 2010 2011 2012 2013 2014 2015 2016 2017 2018
 2010 2011 2012 2013 2014 2015 2016 2017 2018
over the period, a decline of 11.5% when accounting for inflation.
 Total Assessed Value Average Value
 15
 Packet Pg. 18
 2.a




Richland County Values




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
Commercial/Rental Parcels $2 ,5 0 M
 Charleston County $1,957M
 +32.6%
 $4 0 K




 $3 80 K
 Lexington County
 $331M
 +8.3%
 $1 40 K




 $1,476M $306M
 $3 40 M

 $2 ,0 0 M


 $3 60 K




 $1 30 K




 $3 40 K



 $3 20 M




 $1 ,5 0 M




Units $335K
 $3 20 K



 $1 20 K




 $3 0 M




 +20.9%
 $3 0 K




 $1 ,0 0 M




 $2 80 K $1 10 K




 $112K
 $2 80 M




 $277K
 $2 60 K




County Total Units Growth Since 2010
 $5 0 M




 $2 40 K
 $2 60 M +20.5% $1 0 K




 2018 # % $0 M $2 20 K




 $9 0K




 2010 2011 2012 2013 2014 2015 2016 2017 2018 $93K
 $2 40 M




Richland County 62,049 -33 -0.1% $2 20 M
 $8 0K




 Richland District 1 40,461 +628 1.6% $1 ,0 0 M
 Greenville County $840M $2 20 K




 +27.1%
 $7 0K
 $2 0 M




 Richland District 2 16,997 -693 -3.9% $9 0 M
 $2 10 K




 $661M
 $1 80 M $6 0K




 Lexington District 5 4,591 +32 0.7%
 $2 0 K




 $8 0 M




 $1 90 K


 2010 2011 2012 2013 2014 2015 2016 2017 2018

Charleston County 97,327 +8,641 9.7%
 $7 0 M


 $1 80 K




 $6 0 M $1 70 K




Greenville County 84,191 +1,018 1.2% $166K Richland County
 $1 60 K


 $5 0 M




 $555M
 $1 50 K




Lexington County 49,323 -5,571 -10.1% +25.6%
 $4 0 M




 +11.7%
 $1 40 K $6 0 M $1 80 K




 $497M
 $3 0 M


 $1 30 K




York County 43,937 -1,342 -3.0% $132K
 $2 0 M $1 20 K
 $5 50 M $1 70 K




 2010 2011 2012 2013 2014 2015 2016 2017 2018
 $5 0 M $1 60 K




The number of commercial, rental, second home and other parcels York County $334M $4 50 M $1 50 K




 +24.4%
 $1 80 K




declined in all counties since 2010 except Charleston and Greenville. $3 50 M




 $4 0 M
 $149K $1 40 K




 $268M +11.8%
 $1 60 K




In Richland County, the decline was entirely due to the reduction in $3 0 M




 $133K
 $1 40 K $3 50 M $1 30 K




parcels from the tax rolls in Richland District 2, as they either $2 50 M




 $1 20 K




 $127K
 $3 0 M $1 20 K




converted to owner-occupied parcels or generally failed to grow. $2 0 M




 +28.2%
 $1 0 K




 $2 50 M $1 10 K




Units in Richland 1 and Lexington 5 both grew, albeit at low rates. $99K
 $1 50 M
 $8 0K




 $2 0 M $1 0 K




Growth in average value per parcel in Richland County also lagged, $1 0 M $6 0K



 2010 2011 2012 2013 2014 2015 2016 2017 2018
 2010 2011 2012 2013 2014 2015 2016 2017 2018
only growing 11.8% versus over 20% for all other areas.
 Total Assessed Value Average Value
 16
 Packet Pg. 19
 2.a




Act 388 Depresses Valuations




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
& Drives Higher Tax Rates YoY Growth in Home Price Index by
 Metropolitan Statistical Area (MSA),
Richland County’s 2014 property reassessment was an unfortunate product of poor timing in a 2013 - 2019
bad economy. The Columbia MSA lagged both Greenville and Charleston MSAs in home price
 12 %




rebound coming out of the Great Recession, yet reappraised property a year early than the
other two. This timing, combined with Act 388’s 15% valuation increase limit, resulted in 10 %




overall valuation reductions and the county not being able to capture the real estate price
rebound once it did arrive. Further, it requires higher tax rates to make up for lost revenue
due to depressed appraisals.
 8%




 Richland County Average Property Valuations, 2010-18 6%




$1 65 K




 $159K $160K $160K
 $158K
 4%


$1 60 K




 $156K
 $152K
$1 5 K




$1 50 K

 $148K $149K 2%




 $146K $145K
$1 45 K
 $143K
 $140K
 -1 %




 $137K
$1 40 K




 $135K $136K
$1 35 K
 $133K $134K $134K -3 %




 20 13
 20 Q1
 13
 20 Q2
 13
 20 Q3
 13
 20 Q4
 14
 20 Q1
 14 :
 :
 :
 :
 :
 :
 20 Q2
 14
 20 Q3
 14
 20 Q4
 15
 20 Q1
 15
 20 Q2
 15
 20 Q3
 15 :
 :
 :
 :
 :
 :
$1 30 K
 20 Q4
 16
 20 Q1
 16
 20 Q2
 16
 20 Q3
 16
 20 Q4
 17
 20 Q1
 17 :
 :
 :
 :
 :
 :
 20 Q2
 17
 20 Q3
 17
 20 Q4
 18
 20 Q1
 18
 20 Q2
 18
 20 Q3
 18 :
 :
 :
 :
 :
 :
 20 Q4
 19
 20 Q1
 19
 20 Q2
 19 :
 :
 :Q 3

$1 25 K




$1 20 K




 2010 2011 2012 2013 2014 2015 2016 2017 2018 Charleston MSA Greenville MSA Columbia MSA
 Commercial/Rental Properties Owner-Occupied Properties


Source: School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 - 2018. (online: https://dor.sc.gov/lgs/reports-school-index). U.S. Federal Housing Finance Agency, All-Transactions House Price Index for South Carolina. 17
 Packet Pg. 20
 3




 Does Columbia rely on




 fewer other revenues?



 18
Packet Pg. 21 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




 Lower property tax revenues drive higher




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 alternative revenue sources
 Per Capita Property Tax
 Revenues by Entity, FY 2019 The City of Columbia and Richland County raise less per capita from property taxes. In FY2019, the City
 collected $275 per capita from property tax versus Charleston ($904), Greenville ($1,103) and Rock Hill ($386).
$1 ,2 0




 $1,103
 City of Columbia Revenues by Source, FY2019
$1 ,0 0




 Property taxes
 $904
 Local option sales tax
 Hospitality and admission taxes
  $8 0




 14% 19% Accommodations tax
 Tourism development fee
  $6 0




 1% Liquor permit fee
 Licenses and permits
 5% Franchise fees
  $4 0
 $383
 $328
 $386 1% Intergovernmental revenue
 $309
 Charges for services
 $275
 $238 7% 11% Fines and forfeitures
 $199
 Federal government
  $2 0




 State government
 $0



 9% 7%
 County government
 Promotions
 Charleston Columbia Greenville Lexington Rock Hill

 2% Private grants
 6% 2% Interest
 Rental income
 City (Per Capita) County (Per Capita)
 15% Other

 19
 Sources: City of Columbia Comprehensive Annual Financial Report, 2019. ( https://www.columbiasc.net/financial-reporting/cafrs) Packet Pg. 22
 4




 Does Columbia spend




 more than other cities?



 20
Packet Pg. 23 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




School revenues per capita exceed peers




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
and state average, driving higher tax rates School District Tax Millage Rates, 2019
The three school districts within the City of Columbia tend to raise higher levels of revenues per pupil than
peer districts, except Charleston, and the state average. In particular, Richland 1 raises a higher level of local 500.0
revenues via property taxes. Higher revenues, combined with lower property values, drive Midlands school
 450.0 435.7
district tax millage rates higher. 412.4
 400.0
 104.0
  Per Pupil Revenues, 2018-19 90.0
 350.0 332.3 330.5
  $2 ,0 0 0




 $18,768 $18,504 300.0 75.4 64.0
 $1,600 $1,499 247.4
 250.0
 $14,650 $14,387 $14,189 52.0 202.9
 $4,679 $13,601 200.0
  $1 ,5 0 0




 $5,779 $879 $1,024 $642 $12,647
 $1,217 $12,169 52.1 154.7
 $917 331.7 322.4
 $976 150.0 28.0
 256.9 266.5
  $1 ,0 0 0



 $7,422 $7,057 $7,177
 $6,249 100.0 195.4
 $6,551 $5,961 150.8
 126.7
 $12,326 50.0
 $5 ,0 0
 $11,389
 0.0
 $6,349 $6,307 $6,371 $6,134 $5,179 $5,233 2 1 xin gt
 3 ville on
 Rich xin on 5 York st
 la gt on Rich ee n ar le
 $0
 nd la nd 1 Gr Ch
 Le Le
 Richland 1 Charleston Lexington 5 Richland 2 Lexington 1 State Average York 3 Greenville
 School Operations School Debt
 Local Revenues State Revenues Federal Revenues


Source: “Revenue Per Pupil Report by School District for 2019-20 Excluding Bond Revenue.” South Carolina Revenue and Fiscal Affairs Office (RFA). Revised 9/30/19. 21
 Packet Pg. 24
 2.a




 Columbia & Richland revenues per capita




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Municipalities,
 combined versus other city/county pairs
 counties and
 Combined, Columbia and Richland net slightly higher levels of revenues per capita than other city/county
 special purpose peers except Charleston. Of note, while Richland County has fairly consistently used bond revenue throughout
 districts operate 2010 to 2018, bond issuance was particularly high in 2018, sending overall revenues upward.

 together, providing
 services in concert
 to residents. Thus,
 revenue and
 Per Capita Revenues, City and County Combined, FY2019
 spending must be
 evaluated across $3,641
 $4 ,0 0




 all entities
 $3 ,5 0




 $2,886
 combined, as the $2,564
 $3 ,0 0




 $1,937
 manner in which
 $2 ,5 0




 $1,415
 $2 ,0 0



 $1,723
 each provides $1 ,5 0



 $2,096
 services is $1,071
 $1,704
 $1 ,0 0




 structured $1,471
 $5 0




 $469 $652
 differently across $0




 Charleston / Charleston Co Greenville / Greenville Co Columbia / Richland Co Rock Hill /
 regions. York Co

 County Revenues City Revenues

Source: City data from individual Comprehensive Annual Financial Report, 2019. Counties from FY 2018 Local Government Finance Report: Fiscal Years 2009-10 to 2017-8. South Carolina Revenue and Fiscal Affairs Office (RFA). November 2019. (Online: http://rfa.sc.gov/econ/localgovt) 22
 Packet Pg. 25
 2.a




 City & County Millage Rates, 2019




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 City of Columbia City of Charleston City of Greenville Town of Lexington City of Rock Hill

Municipal* 93.8 86.6 85.3 34.29 100.6

County** 127.15 59.8 67.8 119.503 83.5
 General Operations 86.55 44.7 48.1 87.868 59.1
 County Operations*** 59.9 44.7 46.3 25.274 29.2
 Landfill / Solid Waste 3.4 1.8 7.877
 Law Enforcement / Sheriff 34.354 26.1
 Fire & Fire Bonds 22.75 20.363
 Neighborhood Redevelopment 0.5
 Solicitor 3.8
 Bonds, Debt & Capital Expenditures 13.5 6.1 1.4 3.8 13.3
 County Bonds 10 6.1 1.2 3.8 10.4
 Certificates of Participation 0.2
 Capital Projects Reserve Fund 2.9
 Capital Replacement 3.5
 Technical Colleges 5.7 2.9 5.3 4.353 3.7
 Technical College Operations 5.7 1.9 5.3 2.956 3.7
 Technical College Bonds 1 1.397
 Cultural & Recreation 20.1 6.1 10.6 22.982 7.4
 Library 17.2 8.5 6.18 4.8
 Art Museum 1.6
 Greenville Memorial Auditorium 0.5
 Riverbanks Zoo & Zoo Bonds 2.4 1.0
 Park & Recreation Commission Operating 4.3 12.202
 Park & Recreation Commission Bonds 1.8 3.6
 Cultural & Heritage Commission 2.6
 Conservation Commission 0.5
 Health 1.3 0.0 2.4 0.5 0.0
 Mental Health 1.3
 Indigent Care 0.5
 Charity Hopitalization 2.4

Grand Total 220.95 146.4 153.1 153.8 184.1
Sources: Individual County Millage Reports. SC Association of Counties Property Tax Rates Report, 2019. Notes: *Rock Hill has a special landscape levy for a portion of its district. **Includes all county-level millages levied within city limits. It is not included in the grand total. ***General county 23
operations vary across counties. Some include specific services (fire, law, etc.) separately. Includes an additional 4.7 mills reported on the 2019 Greenville County Millage Sheet but not in the SC Association of Counties Property Tax Report. Packet Pg. 26
 2.a




Continuous Loop High




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
The City of Columbia currently finds
itself caught in a continuous loop of high Tax
 Rates
property tax rates that lead to slower
growth and poor property valuations. In
turn, these result in smaller tax
revenues, prompting leaders to increase
tax rates, which further deters growth
and depresses valuations.




 Lower Low
 Tax Growth &
 Revenues Valuations
 24
 Packet Pg. 27
 2.a




 Tax Revenue Growth by Component, 2010 – 2018




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 $3 5M




 +$29.0M


 The Continuous
 Owner-
 $3 0M




 Occupied $2 5M 21.2%
 Housing +$18.0M +$18.9M
 $2 0M




 +$16.4M +$17.7M
 $1 5M




 $1 0M
 52.4% 31.1%
 34.2%
 92.5%
 43.4%
 Loop Played
 Out
 48.2% 42.8% 31.8%
 26.4%
 $5 M




 20.8% 23.0% 24.8%
 $0 M
 12.8%
 -5.3%
 Charleston Greenville Lexington Richland York
 -$ 5M




 Tax revenue increases result from one of three factors:
 1. Increase in housing/commercial units
 +$24.5M 2. Increase in average value per unit
 3. Increase in tax (millage) rates.
  Commercial $2 2M




 25.1%
  & Rental
  Units $1 7M




 +$14.0M
 +$10.8M Due to Richland County’s relatively stagnant unit
 $1 2M

 52.2% +$4.4M
 28.8% 67.7% +$6.7M growth and average valuation, the percentage of tax
 $7 M




 56.2% 51.5% revenue growth attributable to tax rate increases was:
 24.7% 67.5%
 $2 M 102.8% 32.5% 55.2% • 92.5% for owner-occupied housing
 -$ 4M
 3.6% -59.1% -0.2% -6.6% • 67.7% for commercial and rental properties.
 Charleston Greenville Lexington Richland York



 Unit Growth Value Growth Millage Rate Growth
 25
Source: Author’s calculations based on School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 - 2018. (online: https://dor.sc.gov/lgs/reports-school-index). Packet Pg. 28
 2.a




 Property Tax Rate Growth




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 By Taxing Entity, 2010 - 2019




 Municipalities Counties School Districts


City Millage Rate County Millage Rate School Millage Rate
 2010 2019 Growth 2010 2019 Growth 2010 2019 Growth

Columbia 98.1 93.8 -4.4% Richland 102.8 127.15 23.7% Richland 1 288.4 330.5 14.6%
 9.5% 9.9% Richland 2 343.3 435.7 26.9%
Charleston 79.1 86.6 Charleston 54.4 59.8
 Charleston 126.6 154.7 22.2%
Greenville 85.4 85.3 -0.1% Greenville 61.2 67.8 10.8%
 Greenville 157.8 202.9 28.6%
Lexington 35.14 34.29 -2.4% Lexington 107.98 119.50 10.7%
 Lexington 1 326.7 412.4 26.2%
Rock Hill 102.6 100.6 -1.9% York 66 83.5 26.5%
 York 3 223.4 247.4 10.7
 26
 %
 Packet Pg. 29
 Effects



 How do high property taxes impact the region?




 27
Packet Pg. 30 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




Population




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Charleston County City of Charleston Greenville County City of Greenville

 +17.2% +14.0% +15.6% +18.9%
Slower Growth, 2010 - 2018 411K 524K
 4 2
 0 5 4
 0




 7 3

 1 4
 0


 4 1
 0



 5 2
 0
 7 1



 4 0




 138K
 1 3
 5




 71K
 6 9

 5 0
 3 9
 0




 6 7


 3 8
 0


 4 8
 0
 1 3
 0


 6 5




 453K
 3 7
 0




 351K
 4 6
 0
 6 3

 3 6
 0




 City of Columbia
 1 2
 5




 6 1
 3 5
 0
 4 4
 0




 5 9
 3 4
 0
 1 2
 0




 59K
 4 2
 0




 121K
 5 7
 3 3
 0




 Columbia is the second largest city in South Carolina, 3 2
 0




 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
 1 1
 5 4 0




 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
 5 5




 behind Charleston. Its population has grown slower,
 Lexington County Town of Lexington
 however, than comparison cities, having experienced a +13.4% +16.2% Richland County City of Columbia
 299K
 more recent decline beginning in 2016. 3 0 2 3




 415,759 131,674
 +7.8% +0.7%
 2 9
 0 2 2




 2 8
 0
 22K 2 1




 263K
 2 7
 0 2 0




 Richland County
 2 6
 0 1 9




 4 4
 0 1 4
 0




 19K
 2 5
 0 1 8




 416K
 Richland County is the second largest county in the
 4 2
 0



 2 4
 0 1 7
 1 3
 8




 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
 386K
 4 0




 state, behind Greenville County. Its population has York County City of Rock Hill
 3 8
 0
 1 3
 6




 grown slower than comparison counties and slower +23.9% +12.2% 3 6
 0
 1 3
 4




 than the state growth rate of 11.1% between 2010 2 8
 0
 281K 7 8 3 4
 0 1 3
 2




 and 2019.
 7 6




 3 2
 0




 132K 1 3
 0




 131K
 7 4




 75K
 2 6
 0




 7 2 3 0




 227K
 2 4
 0
 1 2
 8


 7 0




 2 8
 0




 6 8
 2 2
 0




 1 2
 6




 6 6 2 6
 0




 67K
 2 0




 6 4




 2 4
 0 1 2
 4




 1 8
 0 6 2




 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019




 Sources: Annual Estimates of the Resident Population for Counties, Cities and Towns: April 1, 2010 to July 1, 2019. US Census Bureau. Online: https://www.census.gov/data/tables/time-series/demo/popest/2010s-total-cities-and-towns.html and https://www.census.gov/newsroom/press-
 kits/2020/pop-estimates-county-metro.html.
 28
 Packet Pg. 31
 2.a




 Charlotte (SC)
 380,513




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 +63.9% Myrtle Beach
 115,936
 +13.2%




 Columbia Prime Age
 319,902
 +2.5% Population

 Charleston
 Greenville 317,340
United States +1.0%
 341,672 +15.4%
 +33.7%
South Carolina +3.5%
 29
 Packet Pg. 32
 2.a




 Employment & Wages




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Slower Growth Since 2010
 Columbia Charleston Greenville Lexington Rock Hill

Education (City)
% with Bachelor’s Degree or Higher
(% of persons 25+, 2014–2018)
 42.9% 52.0% 48.3% 42.5% 29.4%
% with High School Diploma or Higher
(% of persons 25+, 2014–2018)
 88.9% 94.6% 90.0% 92.8% 88.0%
Employment (City)
Labor Force Participation
(% of persons 16+, 2014–2018)
 57.0% 63.5% 69.1% 66.5% 66.5%
Total Employment (2019) 60,476 73,046 35,585 9,806 35,335
% Growth (2010–2018) +13.1% +21.2% +24.2% +23.8% +12.7%
Employment (MSA) Columbia MSA Charleston-North Charleston MSA Greenville-Anderson-Mauldin MSA Columbia MSA Charlotte-Concord-Gastonia MSA


Total Employment (2019) 401,100 366,000 424,900 401,100 1,206,100
% Growth (2010–2019) +15.9% +27.3% +19.9% +15.9% +26.4%
Wages (MSA) Columbia MSA Charleston-North Charleston MSA Greenville-Anderson-Mauldin MSA Columbia MSA Charlotte-Concord-Gastonia MSA


Average Hourly Earnings (2019) $23.77 $27.21 $24.51 $23.77 $29.58
% Growth (2010–2019) +22.3% +30.9% +17.2% +22.3% +27.6%
Sources: Education table data (unless otherwise specified): US Census Quick Facts, 2019. Online: https://www.census.gov/quickfacts/fact/table/US/PST045219. Bureau of Labor Statistics, Local Area Unemployment Statistics. Online: https://www.bls.gov/lau/. American Community Survey 5-year
estimates (2014 – 2018). US Census Bureau. Online: https://www.census.gov/programs-surveys/acs/. Bureau of Labor Statistics, Current Employment Statistics. Online: https://www.bls.gov/sae/
 30
 Packet Pg. 33
 2.a




 Business & Economy




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Slower Growth Since 2010
 Columbia Charleston Greenville Lexington Rock Hill

Businesses (County) Richland County Charleston County Greenville County Lexington County York County

Total Private Firms (2018) 9,935 15,618 14,187 6,572 5,830
% Growth (2010–2018) 16.0% 37.1% 20.6% 21.2% 35.4%
GDP (County) Richland County Charleston County Greenville County Lexington County York County

Total Private Industry (2018) $20,065M $25,351M $27,939M $10,210M $10,374M
Total Government $6,135M $6,062M $2,967M $2,058 $1,075

% Private Growth (2010–2018) 34.5% 62.9% 45.4% 48.8% 53.9%
% Government Growth 23.0% 33.8% 40.2% 54.5% 35.3%
Industry (City)
% Employment by Industry Sector Educational Services Health Care & Social Assistance Health Care & Social Assistance Health Care & Social Assistance Manufacturing
(2018) 14.3% 15.4% 14.1% 12.8% 15.0%

 Health Care & Social Assistance Accommodation & Food Services Manufacturing Educational Services Retail Trade
 12.5% 11.7% 11.8% 12.2% 12.9%
 Professional, Scientific, & Technical Professional, Scientific, & Technical
 Retail Trade Finance & Insurance Health Care & Social Assistance
 Services Services
 11.5% 9.4% 12.0%
 11.3% 10.8%
 Accommodation & Food Services Educational Services Educational Services Public Administration Accommodation & Food Services
 11.2% 9.8% 10.5% 9.1% 9.8%
 Finance & Insurance Retail Trade Accommodation & Food Services Manufacturing Educational Services
 7.6% 9.7% 9.4% 8.4% 8.3%


Sources: Quarterly Census of Employment and Wages, Bureau of Labor Statistics. Online: https://www.bls.gov/cew. Gross domestic product (GDP) by county and metropolitan area, Bureau of Economic Analysis. Online: https://www.bea.gov/data/gdp/gdp-county-metro-and-other-areas.
American Community Survey 5-year estimates (2014 – 2018). US Census Bureau. Online: https://www.census.gov/programs-surveys/acs/. Bureau of Labor Statistics, Current Employment Statistics. Online: https://www.bls.gov/sae/ 31
 Packet Pg. 34
 Solutions




 How can we lay the groundwork for sustainable growth?




 32
Packet Pg. 35 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




 Four Steps in a Solution…




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 …to support sustained future growth in the City of Columbia and surrounding region.




 one two three four
 Make Property Tax Coordinate School Identify & Implement Actively Petition the
 Rates Competitive System Finances Competitive Efficiencies General Assembly

Long-term, sustained renewal The economic and Columbia and Richland County Act 388’s 15% limitation
 providing opportunity for all demographic synergy are more reliant on other fees creates artificially depressed
residents requires a property across the city and county and taxes, many of which are valuations, reducing City
  tax rate competitive with region is not reflected in generally higher than peer revenues and further increasing
 surrounding municipalities. school revenues. counties and further increase the tax rates on other properties to
 cost of doing business. make up for the deficit.


 33
 Packet Pg. 36
 1




 Make commercial property




 tax rates competitive.

 34
Packet Pg. 37 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




1. Make commercial
 Long-term, sustained local renewal providing opportunity for all
 residents requires a combined city, county and school property




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 tax rate competitive with other urban areas in the state. (For

property tax rates
 example, a 48% reduction is required to be on par with
 Charleston; 33% for Greenville; 18% for Rock Hill). Selective tax
 breaks for specific developers has not and will not fuel the

competitive.
 broad-based, continued growth the City needs. Instead, it will
 continue to drive greater imbalance in tax rates between a few
 select properties and all others, while not delivering on the
 promise of new jobs, rising wages, and increasing future
 development.
Options Change will require a coordinated effort between both City and
 County entities, including a joint agreement on (1) targeted
1 Create Commercial Property Exemption competitive tax rates, (2) a relatively quick phase-in period
 (approximately 5 years), (3) the pace of rate reduction over a
 Develop special legislation to phase in a property tax phase-in period, and (4) a limitation on spending during the
 exemption to all 6% properties, effectively reducing phase-in period.
 assessment rate to 5% (or 4%, or some other target)
 across the county. Tax revenues from new
 development would fund exemption increases. Significantly high combined city,
 county and school property tax
 rates are causing a crisis of
2 City-wide Multi-County Industrial Park
 disinvestment, which can be seen
 Establish a City (or County)-wide MCIP at a targeted
 in declining population, slow
 millage rate. All new development would receive the
 income and job growth, and
 MCIP rate, and all tax proceeds would immediately
 fund millage rate reductions for all existing properties. depressed asset valuation.
 35
 Packet Pg. 38
 2.a




Property Tax on a $40M Commercial Building (Thousands of US$)
 Why is this important? #1




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 $1,271
  $1 ,6 0 K




  $1 ,4 0 K
 $1,359
 $225.1 $82.3
 $1,036
 To encourage development in high-property tax
  $1 ,2 0 K




  $1 ,0 0 K



 $854
 $241.4
 $652
 $878.8 $636 $204.7 $989.8
 areas, counties and municipalities across the
 $8 0 K




 $6 0 K

 $207.8
 $593.8
 $4 0 K




 $371.3
 $487.0 state have historically provided large, selective
 $305.2
 tax breaks through FILOTs, MCIPs and SSRCs, in
 $286.8
 $2 0 K




 $143.5 $162.7 $200.4
 -$70.8
 $0 K




 -$137.6

 the hopes that it will encourage follow-on
 -$ 20 0K




 City of CoC 50% SSRC City of City of Town of City of Rock Hill
 Columbia Charleston Greenville Lexington

 County School Municipal LOST
 investment and create local jobs and income.



 1 2 3 4
 Discounted Tax Rates Unequal Treatment of Job and Income Creation Fails to Produce Follow-
  Lower Than Peer Cities Businesses & Citizens Not Guaranteed On Investment
 Breaks for select entities drives Employment and income vary by Smaller, new business will be
 The current selective 50% tax
 unequal treatment and depresses business. Industries like manu- deterred as they face the same high
 breaks result in tax rates less than
 growth and start-ups, particularly facturing produce numerous high- tax that prevented their larger
 all other peer cities, including
 among smaller, local businesses. paying jobs for local residents, while counterparts from developing in
 Charleston.
 a number of others do not. the first place.
 36
 Packet Pg. 39
 2




 Coordinate school system




 finances.

 37
Packet Pg. 40 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




2. Coordinate school Many families live in owner-occupied housing in RSD2 but work




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 in commercial properties in RSD1, reflecting economic synergy

system finances. across the region that is not reflected in school revenues. Act
 388 allows NO school operating revenues from owner-occupied
 housing, yet an outsized level from commercial. As a result,

 • RSD2 has excessively high property tax rates that are driving
 away commercial investment. Further, its per-pupil revenues
 are 5.8% higher than state average.

 • RSD1 has shrinking pupils and school sizes but has not
School System Finance reduced its school tax rate to reflect such, resulting in total
 revenue levels 38% higher than state average.
Optimization Options

1 Develop Cooperative Financial
 The changing dynamics of Richland County
 Approach
 school systems work against each other.
 Develop a cooperative financial approach
 Richland School District 2 is gaining pupils
 between Richland County school districts
 to help counteract the disproportionate
 and owner-occupied housing, while losing
 and negative impact associated with commercial property. Conversely, as
 geographic variations in residential growth Richland School District 1 is losing pupils
 in the county. and owner-occupied housing, while gaining
 commercial property.

 38
 Packet Pg. 41
 2.a




#2
 Why is this important? Pupil Count, 2010 - 2020




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 • RSD2 is gaining pupils and owner-occupied housing units which, due to Act 2 ,9
 0 0 0
 -4.4% +14.9% 27,929
 388, provide no revenue to support the new growth. 2 ,7
 0 0 0




 • Conversely, RSD1 is losing pupils and owner-occupied housing, as it either 24,293
 23,177
 2 ,5
 0 0 0




 converts to commercial/rental or to non-profit. Due to Act 388, conversion 2 ,3
 0 0 0
 22,154
 to commercial/rental increases school operating taxes, even though it 2 ,1
 0 0 0




 results in fewer pupils. 1 ,9
 0 0 0




 • RSD2 is losing commercial property, as it either converts to owner-occupied 1 ,7
 0 0 0




 or ceases to grow. 1 ,5
 0 0 0




 2010 2020 2010 2020
 • Both districts earn more revenues than their peer districts and the state Richland District 1 Richland District 2
 average, particularly RSD1 owing to the outsized level of local revenues.



 Property Unit Growth, 2010 - 2018 Per Pupil Revenues, 2018-19
 $0




 +1.6% $18,768
 $1 ,5 0 $0




 +9.4%
 $4 ,0 0

 $2 ,0 0 0



 $0




 $1,600
 $0



 $7 50




 $0
 $3 ,0 0




 +628 $14,387 $13,601
 $0




 $0
 $0




 +3,354 $5,779
 $1 ,5 0 0




 Federal $1,024
 $2 ,0 0




 $1,217
 $0
 $0




 -$ 75 0




 State
 $1 ,0 0




 -1,848
 $0


 $0




 $1 ,0 0 0




 $7,057 $6,249
 Local
 -$ ,1 50 0 $0



 $0




 -693
 $0




 $0




 -4.0% $11,389
 -$ ,2 25 0

 -$ ,1 0 0




 -3.9%
 $0




 $0
 $5 ,0 0




 -$ ,3 0 0 $0
 -$ ,2 0 0 $0




 $6,307 $6,134
 Owner- Commercial/ Owner- Commercial/
 Occupied Rental Occupied Rental $0




 Richland District 1 Richland District 2 Richland District 1 Richland District 2 State Average


 Sources: “Revenue Per Pupil Report by School District for 2019-20 Excluding Bond Revenue.” South Carolina Revenue and Fiscal Affairs Office (RFA). Revised 9/30/19. School District Detailed Index of Taxpaying Ability dataset, Tax Years 2010 - 2018. (online: 39
 https://dor.sc.gov/lgs/reports-school-index). Packet Pg. 42
 3




 Identify and implement




 competitive efficiencies.


 40
Packet Pg. 43 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




3. Identify & implement




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 The City and County have limited capacity to increase

competitive efficiencies. revenues through other fees and taxes. Combined, Columbia
 and Richland net higher levels of revenues per capita than
 other city/county peers except Charleston. School districts
 within the City also mirror that pattern. Efficiencies that
Options reduce expenditures can be used to lower property and other
 taxes to rates that promote development, drive valuation and
 generate further tax revenues.
1 Identify Cost Efficiencies
 Conduct a City and County efficiency study to identify
 areas to merge overlapping services, target service fees
 to those who use them, and make services less expensive.

2 Identify Operations Efficiencies The depressed revenue from property
 Reexamine City and County operations processes with
 taxes in Columbia and Richland
 an eye toward modernization of systems and County have made the City and
 processes to streamline and reduce long-term costs. County more reliant on other fees
 and taxes, many of which are
3 Create Pro-Development Processes generally higher than peer counties
 and further increase the cost of
 Remodel permitting, zoning, licensing, etc. processes
 with urban development best practices that are doing business, depressing growth
 transparent, increase taxable parcels, provide quick even more.
 and predictable action, and encourage growth. 41
 Packet Pg. 44
 2.a




 City & County Property Tax Rates, 2019 Why is this important? #3




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 25 .0 0




 221.0
 20 .0 0 183.8 In addition to a higher property tax, Richland and Columbia also have
 146.4 153.1 153.8 combined sales, accommodations and hospitality taxes that are higher
 127.2
 83.2 than all peers except Charleston. Business license fees (for most
 15 .0 0




 59.8 67.8
 10 .0 0




 119.5 businesses) are significantly higher than Lexington and Rock Hill and can
 100.6 exceed both Charleston and Greenville, dependent upon business type and
 50 .0




 86.6 93.8 85.3
 34.3 size. Further, non-municipal areas in Greenville, Lexington and York do not
 have business license fees. Additional fee and tax increases would further
 .0 0




 Charleston Columbia Greenville Lexington Rock Hill
 increase the cost of doing business and depress growth.
 City County



Municipality Charleston Columbia (RSD1 / RSD2) Greenville Lexington Rock Hill
Property Tax Millage Rate 301.1 551.45 / 656.65 356.0 566.2 431.5
 $32 + $1.55 per $1K in $42.35 + $1.80 per $1K in $80 + $1.67 per $1K in $20 + $1.00 per $1K in $25 + $0.90 per $1K in
Business License Rate*
 gross receipts > $2K gross receipts > $5K gross receipts > $2K gross receipts > $2K gross receipts > $2K
Local Accommodations Tax 2% 3% - - 3%
Hospitality Tax 2% 2% 2% - 2%
County Charleston Richland Greenville Lexington York
Local Option Sales Tax 1% 1% - - -
Other Sales Tax 2% 1% - 1% 1%
Local Accommodations Tax* 2% - 3% 3% -
 $30 + $1.15 per $1K in $26 + $1.20 per $1K in gross
Business License Rate** - - -
 gross receipts > $2K receipts > $2K
Licenses & Permits Revenue Per Capita $36.94 $41.03 $25.85 $21.58 $30.89
Service Revenue & Charges Per Capita $161.46 $138.27 $99.38 $73.54 $40.50
Bonds & Leases Revenue Per Capita $257.51 $612.45 - - -
Property Tax Per Capita $382.96 $238.24 $198.86 $327.55 $308.77
 42
Sources: Fees & Rates: SC Association of Counties. Online: https://www.sccounties.org/research- information/local-taxes-fees-and-licenses. Business license Fees at individual City and County websites. Packet Pg. 45
 4




 Actively petition the




 General Assembly.




 43
Packet Pg. 46 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.a




4. Actively petition the The 15% limitation on property appraisal increases of Act 388




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 causes further increases in millage rates on all properties to

General Assembly. make up for the artificially depressed valuations created by the
 law. This tax burden falls more heavily on owners of newer and
 more recently sold properties.

 The long-term effect of the devaluation in real estate prices is
 exacerbated and will persist eternally due to Act 388.
State Law Options

 1 Full Repeal of Act 388 Act 388 of 2006 limited property
 Petition for the full repeal of Act 388, enabling valuation increases to 15% every 5
 accurate appraisals and broad-based equalization of years (unless the property is sold),
 school operating taxes across all property types.
 1. creating unequal tax burdens
 2 Partial Repeal of 15% Valuation Limit among those who own the same
 type of property;
 Option 2 modifies Option 1 to only petition for the
 repeal of Act 388’s 15% appraisal limitation. 2. requiring higher millage rates to
 make up for lost revenue due to
 depressed appraisals; and
 3 One-Time Waiver for Accurate Appraisal
 3. permanently preventing counties
 Petition for a one-time waiver to accurately appraise
 all Richland County properties and apply all resulting from being able to make up for
 revenue increases to corresponding millage rate declines in property values
 decreases (net revenue-neutral). 44
 Packet Pg. 47
 2.a




#4
 Why is this important? Number of Parcels by Taxable Value to Fair Market Value




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 Ratio (for parcels with <100% Ratio)
 4,500 100%

 In tax year 2019, 31.6% of City of Columbia parcels (residential
 4,000 90%
 and commercial with no tax exemptions) have a Taxable Value
 (TV) less than the Fair Market Value (FMV). The majority of parcels 3,500
 80%

 have a very high TV to FMV ratio, trailing off with very few low TV 70%
 3,000
 to FMV ratio. A significant part of this gap between TV and FMV is a
 60%
 result of the 15% valuation limitation of Act 388 as well as the ATI 2,500

 Exemption. 50%
 2,000
 40%

 1,500
 30%


 Act 388 15% Valuation 1,000
 20%



 Limitation Issues
 500 10%


 0 0%


 (97.9%, 99.5%] (94.7%, 96.3%] (96.3%, 97.9%] (88.3%, 89.9%] (83.5%, 85.1%] (81.9%, 83.5%] (80.3%, 81.9%] (70.7%, 72.3%] (75.5%, 77.1%] (61.1%, 62.7%] (77.1%, 78.7%] (67.5%, 69.1%] (64.3%, 65.9%] (56.3%, 57.9%] (46.7%, 48.3%] (49.9%, 51.5%] (48.3%, 49.9%] (43.5%, 45.1%] (41.9%, 43.5%] (45.1%, 46.7%] (40.3%, 41.9%] (22.7%, 24.3%] (35.5%, 37.1%] (27.5%, 29.1%] (21.1%, 22.7%] (19.5%, 21.1%] (9.9%, 11.5%] (1.9%, 3.5%]
 (14.7%, 16.3%] (13.1%, 14.7%]
 (5.1%, 6.7%] (6.7%, 8.3%]
 Creates Inequality Causes Increase in Prevents
 Among Landowners Millage Rates on all Recoupment of
 Those who recently properties to make up Valuation Declines



 31.6% $541M
 bought a property will for artificially Counties and
 face significantly depressed valuations, municipalities cannot
 higher property taxes more heavily falling on fully recoup lost taxes
 than their neighbors owners of newer and due to economic
 who have owned their more recently sold declines in property Percent of Columbia. Gap between
 property for a longer properties. values, even when properties with Taxable Taxable Value and Fair
 Value < Fair Market Value Market Value
 period of time. they rebound.
 Source: Assessor’s Office of Richland County. 45
 Packet Pg. 48
 2.a




 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
The Road Forward
 Real change requires a collaborative
 effort of data-driven, well-thought out
 solutions that can be implemented in
 phases gradually over a period 5+ years.


 46
 Packet Pg. 49
 June 2020

 Property Tax City of

 Capacity Analysis
 Columbia



 Thank you!




 47
Packet Pg. 50 2.a
 Attachment: City of Columbia Property Tax Study Presentation-2020-06-FINAL (7003 : City of Columbia Property Tax Structure)
 2.b




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 A DEEP DIVE ON
  SOUTH CAROLINA’S
 PROPERTY TAX SYSTEM
C O M P L E X , I N E Q U I TA B L E A N D U N C O M P E T I T I V E

 Volume 1




 Packet Pg. 51
 2.b




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)




© 2020 Lincoln Institute of Land Policy
 113 Brattle Street
 Cambridge, MA 02138
 (617) 661-3016
 Lincolninst.edu




 Packet Pg. 52
 2.b




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
About SC Chamber Foundation: The mission of the Foundation is to advance the long-term
welfare of South Carolina and her citizens by identifying, researching and analyzing factors that
are key to improving the business climate, workforce readiness, and quality of life in the Palmetto
State. The Foundation is affiliated with the South Carolina Chamber of Commerce, which strives
to make South Carolina the best place in the nation to live, work, and do business.

About SC Realtors: South Carolina REALTORS® (SCR), the largest professional trade association
in the state, serves as the voice of real estate for more than 23,000 members involved in all
aspects of the residential and commercial real estate industries. REALTOR® is a registered
trademark that identifies a professional in real estate who subscribes to a strict code of ethics
as a member of SCR and the National Association of REALTORS®.

About the Lincoln Institute of Land Policy: The Lincoln Institute seeks to improve quality of
life through the effective use, taxation, and stewardship of land. A nonprofit private operating
foundation whose origins date back to 1946, the Lincoln Institute researches and recommends
creative approaches to land as a solution to economic, social, and environmental changes.
Through education, training, publications, and events, we integrate theory and practice to inform
public policy decisions worldwide.




 Packet Pg. 53
Packet Pg. 54 2.b
 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 2.b




 A DEEP DIVE ON




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
  SOUTH CAROLINA’S
 PROPERTY TAX SYSTEM
C O M P L E X , I N E Q U I TA B L E A N D U N C O M P E T I T I V E




  1
 Volume 1 summarizes the chapters in Volume 2. Volume 1 also includes key findings, the executive summary, and policy options. Some material,
  such as the definitions section, appears in both volumes.




 1
 Packet Pg. 55
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




KEY FINDINGS
 TABLE OF CONTENTS

 Key Findings..................................................................................................................................................4




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Executive Summary.....................................................................................................................................6

 Policy Options............................................................................................................................................ 15

 Summaries of Chapters:. ......................................................................................................................... 10


 Chapter 1: Introduction and Overview of South Carolina’s Property Tax System. ............ 21


 Chapter 2: Property Tax Assessment Practices in South Carolina.......................................... 33


 Chapter 3: Who Bears the Burden of the Property Tax and the Impact of Act 388............ 42



 Chapter 4: Effects of Act 388 on School Budgets. ...................................................................... 49



 Chapter 5: Property Tax Abatements, Focusing on FILOTs. ..................................................... 59



 Chapter 6: Nonprofit and Governmental Properties Exempt from Real Property Taxes..... 67


 Definitions. ................................................................................................................................................. 75

 References. ................................................................................................................................................. 78
 Individuals Interviewed. .......................................................................................................................... 86

 Authors........................................................................................................................................................ 88

 Reviewers.................................................................................................................................................... 88




 2
 Packet Pg. 56
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 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
South Carolina’s Property Tax System

 KEY FINDINGS




 Robert Mills House, Photo Courtesy of Experience Columbia




 Packet Pg. 57
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




KEY FINDINGS
 Key Findings

 South Carolina’s property tax system is an outlier compared to the rest of the United States.
 For example:




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 • South Carolina is the only state in the country which exempts primary homeowners
 		 from paying property taxes to fund school operating costs.

 • The effective property tax rate for a median value home in Charleston ranks 51st
 		 lowest among the largest cities in each of the 50 states and the District of Columbia.2
 		 (Effective property tax rate is equal to property taxes paid divided by property value.
 		 A property owner paying $1,000 in property taxes on a $100,000 home faces an
 		 effective property tax rate of 1%.)

 • Manufacturing in Charleston, South Carolina faces the 4th highest effective property
 		 tax rate among the largest cities in each of the 50 states and the District of Columbia.
 		 (This does not take fees in lieu of taxes into account.)

 • The ratio of the effective property tax rate for apartments to that for primary home
 		 owners is over three. This means that apartments are taxed at over three times the
 		 rate of primary homes. This is the highest apartment-homestead differential in
 		 the country.


 South Carolina’s disparate effective property tax rates are both unfair and inefficient.


 • The differential between the effective property tax rates for primary residential
 		 and other residential property is so great that assessment offices must devote
 		 considerable resources to prevent fraud since the prospect of a dramatically lower
 		 tax bill can tempt property owners to dishonestly report residential property as their
 		 primary home.

 • Because of the high effective property tax rates on manufacturing, South Carolina uses
 		 FILOTs and other tax abatements to level the playing field and make South Carolina
 		 more attractive as a business location. But FILOT deals are uncertain, time consuming,
 		 and entail legal expenses. Also, FILOTs are only available for companies making 		
 		 substantial new capital investments.




 2
 Charleston is currently the most populous city in South Carolina. That is the reason that we report the effective property tax rate for Charleston
 in our most recent national data on effective property tax rates.




 4
 Packet Pg. 58
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 KEY FINDINGS
  • The fact that primary homeowners do not pay property taxes to operate schools is 		
		 unfair in two respects. Homeowners are the primary beneficiaries of school spending,
		 so it is fair that they should help pay to operate schools. Second, homeowners typically
		 have higher incomes than renters. South Carolina taxes apartments the same as 		
		 commercial property so renters are paying taxes at an effective rate three times higher




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
		 than homeowners.

South Carolina’s property tax lacks transparency because of fragmented property tax
administration, inconsistent language, and varying land use codes.

  • Assessment authority is divided among assessors, auditors, and the Department of 		
		 Revenue. No single entity holds the entire property tax roll for a county.

  • The term “taxable value” means different things in different counties. This is not the
		 only instance of inconsistent language.

  • Each county has different land use codes. For example, York County has 23 land use
		 codes and Horry County has 225 land use codes.

  • Many counties do not use separate land use codes for properties subject to different
		 assessment ratios. For example, in Greenville County one land use code includes both
		 primary residential property (assessed at 4 percent) and other residential property
		 (assessed at 6 percent).




 5
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 Executive Summary
 This report concludes that South Carolina’s property tax system is complex, nontransparent,
 unfair, and inefficient. South Carolina’s Act 388 passed in 2006 with the aim of providing
 property tax relief to certain homeowners. However, by shifting greater property tax burdens




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 from homeowners to businesses and renters, it increased the disparity in property tax rates
 and made South Carolina’s property tax system more of an outlier compared to the rest of
 the U.S.

 The property tax is an important revenue source in South Carolina, raising $5.8 billion per
 year (U.S. Census). Property tax collections have fluctuated since 2002 because of policy
 changes and economic cycles but have consistently comprised 14 to 15 percent of South
 Carolina state and local general revenues, both before and after the enactment of Act 388.
 Real per capita property tax revenue growth has slowed since the passage of Act 388. The
 average rate of growth before 2007 was 2.9 percent; between 2009 and 2016, it was just
 1.6 percent (figure ES.1).


 Figure ES. 1 South Carolina Real Per Capita State and Local Property Tax Revenue, 1977-2016




6
 Packet Pg. 60
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




About half of South Carolina’s property tax dollars are used to fund schools and since Act
388, most of the property tax revenue for schools is paid by businesses. County governments,
which administer the property tax, typically receive only about twenty percent of total
property tax revenue. In the ten focus counties listed below, about a quarter of property
taxes collected goes to counties, 22 percent goes to municipalities, and 53 percent goes to




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
schools. Nationally, just over half of local property taxes collected fund K-12 education; the
rest is split between counties, municipalities, and special taxing districts (U.S. Department of
Education 2018 and U.S. Census via Significant Features of the Property Tax).

South Carolina’s share of property tax revenue allocated to schools is close to the U.S.
average, but it is the only state in which homeowners’ primary residences are fully exempt
from property taxes for school operating costs. Consequently, non-homestead properties,
such as commercial, industrial, and apartment properties, bear a disproportionate share of the
school property tax burden.

Annual reports for seven of our focus counties reported their largest taxpayers; in six of these
seven counties the largest tax bill in the county belonged to an energy/utility company. The
top ten taxpayers in these counties accounted for 3 to over 17 percent of the total assessed
value in each county.

Act 388 of 2006 made five major changes to South Carolina’s property tax system and its
system for financing elementary and secondary schools:

 1) It exempted homeowners’ primary residences from property taxes for school
 operating costs and raised the sales tax by one penny. This tax swap decreased
 reliance on a stable tax source and increased reliance on a less stable tax source.
 2) During the first year, the state fully reimbursed school districts for their loss in
 property tax revenue. After the first year, reimbursements were required to grow at
 the rate of population growth plus inflation.
 3) If the penny sales tax was insufficient to pay the reimbursements to local school
 districts, funding from the state’s general fund must cover the shortfall.
 4) Act 388 imposed a limit on the amount that appraised value—the starting point for
 calculating property taxes—can increase in any five-year period. Growth in appraised
 value is capped at 15 percent over five years, unless a property is sold. When a
 property is resold, it is reappraised at market value.
 5) The act set a millage cap that keeps localities from raising their property tax rates (or
 millage rates) at a higher rate than the increase in the consumer price index adjusted
 for population growth.




 7
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 This study looks at property tax assessment practices, tax burden effects of Act 388, school
 budget effects of Act 388, property tax abatement policies, and treatment of tax-exempt
 nonprofit and government properties. The research reveals that South Carolina’s complex
 property tax system is neither equitable nor competitive. Act 388 has directly contributed
 to the imbalance; South Carolina has one of the lowest effective tax rates in the nation on




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 owner-occupied residential properties and one of the highest effective tax rates in the nation
 on manufacturers. South Carolina manufacturers pay property taxes at an effective rate over
 four times higher than the rate on primary residences (figure ES.2).




 Figure ES. 2 Effective Tax Rates by Property Type, 2018


 2.500%




 2.000%




 1.500%




 1.000%




 0.500%




 0.000%
 Industrial: $1 Million Commercial: $1 Million Apartment: $600,000 Homestead: Median


 Charleston, SC Rate US Rate Charlotte, NC rate Atlanta, GA Rate

 Source: Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence 2019
 Note: Median home values vary across states. The median home value for Charleston was $344,600; the median home value in Charlotte was
 $215,500; and the median home value in Atlanta was $299,400.




8
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




Data and Methodology
This report relies on analysis of previously unexamined data sets by Lincoln Institute staff
and distinguished scholars; an extensive review of relevant reports; and in-person or phone
interviews with South Carolina assessors, auditors, economic development officials, school




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
officials, realtors, public finance experts, and taxpayers.
To put South Carolina’s property tax system in context, this study compares it to property
tax systems in five other states: North Carolina, Georgia, Florida, Tennessee, and Virginia. In
order to evaluate the local effect of the state’s property tax structure and Act 388, this study
examines ten diverse South Carolina counties: Allendale, Charleston, Edgefield, Florence,
Greenville, Horry, Orangeburg, Richland, Sumter, and York. This group of counties, which
range in size, geography, and economic status, are referred to as focus counties. The focus
counties encompass rural and urban counties from all over the state with varying income
levels and rates of economic growth.
An important measure of property tax burden that appears throughout this report is effective
property tax rate (ETR)—property tax liability divided by market value of property.

 Tax Payment
 Effective Tax Rate (ETR) =
 Market Value

Thus, a homeowner who pays $1,000 in property taxes on a home valued at $100,000 faces
an effective property tax rate of 1 percent.
One primary source for comparing effective tax rates is the 50-State Property Tax Comparison
Study, an annual report by the Lincoln Institute of Land Policy and the Minnesota Center
for Fiscal Excellence. That study calculates effective property tax rates for the largest city in
each state. It also reports rates, ratios, and rankings for homestead, commercial, apartment,
and industrial classes of property with a range of values. The study relies on rankings of the
largest cities in each of the 50 states and Washington D.C. to compare South Carolina to
other states. The 50-state report ranks 53 cities, including two cities each in Illinois and New
York since property tax policies in Chicago and New York City are very different from the
rest of the state. This data source is important because it provides a comparison of South
Carolina’s property tax policy to other states and provides a snapshot of South Carolina’s
property tax policy over time.
Chapter 2 describes a second key data set. It consists of data on the composition of the
property tax base in the focus counties and sales files for selected counties. Data on the
composition of the property tax base was used to generate information on tax shifting from
primary residential property to utility and other types of property. The sales files were used
to measure the quality of property tax assessment and how it changed over the five-year
reevaluation cycle.
A third critical data set was the data set on appraised values and tax payments from
CoreLogic, the premier supplier of U.S. parcel level real estate data. Data were available on
1,086,577 parcels in the ten focus counties. When matched with the assessor data used for
Chapter 2, analysts were able to identify properties benefiting from the assessment cap. This
data set also allowed further investigation of tax shifting and differences in effective property
tax rates, with an emphasis on residential and commercial property.

 9
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 Chapter 1: Introduction and Overview of South Carolina’s Property Tax System

 Upon examination of the principles of a sound tax system—equity, efficiency, stability,
 and transparency—this study finds South Carolina’s property tax system falls short. It is
 complex, inequitable, inefficient, lacks transparency, and it disproportionately burdens private




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 enterprise. South Carolina’s method for calculating the property tax illustrates the complexity
 and inequities of its system. Properties are subject to assessment ratios that set taxable value
 at some proportion of market value, which varies depending on the type of property. Business
 properties are subject to higher rates than owner-occupied residential properties. Tax liability
 is calculated by multiplying assessed value by total millage rate (sum of county, municipal,
 school district, and special district taxes). Because primary residences are exempt from most
 school taxes, which are the largest portion of the millage rate, taxes are not applied uniformly.
 Businesses (commercial, manufacturing, and rental housing) are paying much higher effective
 tax rates.

 Act 388 of 2006 contributed to the disparity between taxes levied on businesses and primary
 residences by exempting owner-occupied homes from paying property taxes for school
 operating costs. Policies enacted after Act 388 have attempted to address equity issues
 but have instead added to the complexity of the system. The outcome is a convoluted
 system that creates wide disparities between effective tax rates on primary residences
 and businesses.

 Chapter 1 findings:

 (1) South Carolina’s property tax system is an outlier among the 50 states:

 • Charleston, South Carolina, ranks fourth in the nation among the most populous
 cities in each state for the effective property tax rate on manufacturing. Additional
 evidence presented in the report indicates that this high effective property tax rate
 on manufacturing is typical of the state as a whole and typical of the largest cities
 in each of the focus counties. (Estimates of effective property tax rates do not
 take into account the state’s extensive use of fees in lieu of taxes (FILOTs) to
 promote economic development.)
 • South Carolina is one of only two states that systematically taxes industrial 		
 property at a higher rate than commercial property (the other state is Wyoming).
 • South Carolina is the only state that does not levy property taxes on primary 		
 residences for the purpose of financing school operating costs.
 • Charleston, South Carolina, ranks fifty-first (first being the highest rate) in the 		
 nation among the most populous cities in each state and the District of Columbia
 for effective property tax rate on median valued homesteads.
 • Charleston, South Carolina, ranks first in the nation (first being the highest) among
 the most populous cities in each state for the ratio of effective property tax rate for
 apartments compared to owner-occupied homes.




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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 (2) Act 388, passed in 2006, made South Carolina’s property tax more of an outlier:

 • Before Act 388, commercial property in South Carolina was taxed at just over
 		 twice the rate of primary residences. Since then, commercial property has
 		 been taxed at a rate at least three times higher than homestead property.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 • Before Act 388, apartment property was taxed at just over twice the rate of
 		 primary residences. Since then, apartment property has been taxed at a rate
 		 that is at least three times higher than the homestead rate.



Chapter 2: Property Tax Assessment Practices in South Carolina

Researchers contacted assessors from each of the focus counties and visited or interviewed
many of them. When possible, they obtained and analyzed county property sales files. In
South Carolina, the process of valuing property for the purpose of levying the property
tax is divided among three different entities: county assessors, county auditors, and the
Department of Revenue. There is no single entity responsible for the complete property
tax roll for an individual county. South Carolina has a five-year assessment cycle (although
in some instances counties can use a six-year cycle). In addition, when property is sold, it is
revalued at market value. This practice, referred to as assessable transfer of interest (ATI), is
required and defined by Act 388.

Chapter 2 findings:

 (1) Assessment practices and methods between counties are inconsistent
 • No two counties used the same land use codes.
 • Counties use important property tax terms inconsistently, which makes comparison
 between counties difficult and reduces the transparency of the property tax.
 (2) Assessment quality measures for estimating fair market value of residential properties
 are generally consistent with recognized professional standards.
 (3) Assessment quality measures for valuing vacant commercial properties are mixed and
 less consistent with recognized professional standards.
 (4) The five-year revaluation cycle undermines the equity of the property tax.


Chapter 3: Who Bears the Burden of the Property Tax and the Impact of Act 388

We obtained a parcel-level data set from Core Logic, the premier supplier of U.S. parcel level
real estate data, for our ten focus counties. Our analysis was limited because of missing data
for some counties, the ten different property tax classification systems used in the focus
counties, and the difficulty or impossibility of determining which categories of residential
property were primary residential in some counties. We were able to analyze the effect of the
assessment cap enacted as part of Act 388 for eight of the ten focus counties. That cap limits
an increase in appraised market value to no more than 15 percent over a five-year period.
We were able to estimate effective property tax rates by various categories of residential and
commercial property for ten counties. We were able to estimate tax shifting from residential
to commercial property for seven counties.


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 Chapter 3 findings:

 (1) The assessment cap has not had a significant impact on the tax base to date.
 However, the small minority of properties benefiting from the cap receive significant
 reductions in their appraised value and thus in tax payments.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 (2) The effective tax rates for commercial properties for Edgefield County, Richland
 County, and York County is at least two and a half times that for residential properties.
 (3) We identified substantial tax shifting from residential to commercial taxpayers for
 these counties in 2018: Allendale, Edgefield, Florence, Horry, Orangeburg, Richland,
 and York.

 Chapter 4: Effects of Act 388 on School Budgets

 Researchers examined twenty school districts in the ten focus counties to determine how
 school district budgets have changed since Act 388. They also examined various measures of
 student achievement.

 Chapter 4 findings:

 (1) Beginning in 2008, the year after Act 388 was implemented, at least half of the twenty
 school districts experienced slower growth in property tax revenue and total revenue
 per pupil.
 (2) Thirteen school districts experienced slower growth in instructional expenditure per
 pupil since 2008, and only one district experienced faster growth in instructional
 expenditure per pupil.
 (3) Six school districts experienced slower growth in total expenditure per pupil since
 2008.
 (4) School districts in fast-growing counties were more likely to have a statistically
 significant decline in their total revenue per pupil after 2008.
 (5) Rock Hill School District (York 3) experienced declines in property tax revenue, total
 revenue per pupil, instructional expenditure per pupil, and total expenditure per pupil
 growth since 2008.

 Chapter 5: Property Tax Abatements, Focusing on FILOTs

 South Carolina’s effective business property tax rates are high relative to those of South
 Carolina homesteads and high relative to effective business property tax rates in other
 states. Property tax exemptions and abatements make it possible for South Carolina county
 governments to improve South Carolina’s competitive position to some extent by reducing
 the property tax liability of firms that make new investments and create jobs in the state.




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There is no comprehensive data on the use and benefits of the various types of property tax
exemptions and abatements. Our phone interviews with individuals working in the economic
development and property tax administrative fields in South Carolina, as well as preliminary
data in county, school district, and municipal comprehensive annual financial reports (CAFRs)
suggested that the most widely used and important property tax incentive for business is




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
fees in lieu of taxes (FILOT), sometimes combined with Special Source Revenue Credits or
Multicounty Industrial Park incentives.

In 2015, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 77
in order to provide more transparency around tax abatements. The first GASB tax abatement
filings in South Carolina were in 2017. We were able to obtain GASB 77 data of varying
quality for county governments and school districts for most of the ten focus counties.

Chapter 5 findings:

 (1) Reported value of property tax abatements ranged widely from $89,000 for Edgefield
 County to $67 million for Greenville County. When property taxes abatements were
 compared to total property taxes levied, the abatements for two counties exceeded
 10 percent of total property taxes.
 (2) The use of FILOTs has grown significantly over time. According to Department of
 Revenue data, the amount of property assessed under FILOT programs grew from a
 little more than $400 million in 1997 to $1.4 billion in 2016. According to the best
 information available, the value of property under FILOT programs actually surpassed
 the assessed value of manufacturing properties in 2008.
 (3) South Carolina has a disproportionately high number of jobs in the manufacturing
 sector compared to other industry sectors and has experienced declines in
 manufacturing employment that closely correspond to declines in comparison states.




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 Chapter 6: Nonprofit and Government Properties Exempt from Real Property Taxes in South
 Carolina

 The final chapter of the study considers nonprofit and governmental properties exempt from
 real property taxes. The report looks at property tax treatment of government and nonprofit




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 property across the United States and examines South Carolina’s laws in that context.

 Under South Carolina law, properties that are exempt from property taxes are also exempt
 from the assessing process, which limits the availability of usable data. Based on data that
 are available, some municipalities have a substantial percentage of land that is tax exempt.
 For example, a Clemson dissertation reported that more than 40 percent of the land area in
 Columbia, North Charleston, Rock Hill, and Sumter is exempt from the property tax. These
 figures do not include acreage used by the federal government.
 Although qualifying nonprofits are exempt from the property tax in all 50 states, in some
 states certain nonprofits make voluntary contributions to local governments to help pay
 for services received, such as police and fire protection. These voluntary contributions are
 typically known as payments in lieu of taxes (PILOTs). The most recent comprehensive survey
 of PILOTs across the United States found that PILOT programs have been implemented by at
 least 218 localities in at least 28 states from 2000 to 2012.

 One city in South Carolina, Greenwood, has a viable PILOT program in place. Under
 Greenwood’s PILOT program, four nonprofits voluntarily contribute approximately $200,000
 per year towards the cost of city services.

 Chapter 6 findings:

 (1) Data on the importance of the nonprofit exemption is difficult to find because the
 state does not track exempt property and county assessors are not required to track
 or appraise exempt parcels.
 (2) Private research suggests large shares of nonprofit property in our focus counties.
 According to estimates, more than 40 percent of land is exempt in the cities of
 Columbia, North Charleston, Rock Hill, and Sumter.
 (3) The research identified only one South Carolina municipality that collects PILOT
 contributions. Neighboring states have more PILOT activity than South Carolina.




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 Policy Options

The following policy recommendations are the result of analysis contained in the report’s
six chapters. The objective is to improve the equity, efficiency, and transparency of South
Carolina’s property tax system.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
The reform options described in this chapter range from fundamental changes to South
Carolina’s property tax system to smaller changes that would improve a broken system.
Each option includes an explanation of advantages and disadvantages. This section notes
other states that have enacted similar reforms. Volume 2 of this report provides a lengthy
description of policy details in some cases.

Property Tax Structure
Reduce Disparities in Effective Tax Rates

The state’s current schedule of assessment ratios and the primary homeowners’ exemption
from paying school operating costs (sometimes called the O & M exemption), create a wide
variation in effective property tax rates.3 Manufacturing properties and utilities that don’t
participate in FILOTs are taxed at the highest rate (10.5 percent assessment ratio), other
commercial properties are taxed at 6 percent and primary residences are taxed at the lowest
rate (4 percent assessment ratio plus the exemption from property taxes for school operating
costs). This wide variation in tax burdens makes the state’s property tax system unfair,
uncompetitive, and administratively complex. There are various ways to reduce the disparity
in effective property tax rates. Some approaches are more feasible than others.

Two methods to fix the disparity in assessment ratios are: (1) a 2/3 vote of the legislature
to directly change assessment ratios or (2) enacting legislation (similar to what the General
Assembly did in 2015) adding a special exemption to adjust effective assessment ratios in
the manufacturing sector. Legislation exempting 14.3 percent of manufacturing property
from property taxation (phased in over six years) enacted in 2015 will eventually reduce the
effective assessment ratio for manufacturing property not receiving FILOTs to 9 percent from
its original 10.5 percent.

The Simplest Approach: Lower Assessment Ratios through Exemptions

Ideally, the effective property tax assessment rate on manufacturing property should
eventually be lowered to 6 percent. This proposed exemption would apply to any
manufacturing property that does not participate in a FILOT program. Because most
manufacturing properties are already participating in a FILOT, the proposed exemption would
have less of financial effect than it might otherwise. Adjusting the assessment rate using
exemptions is the easiest property tax reform to implement. The manufacturing sector is
taxed and collections are made at the state level, through the South Carolina Department of
Revenue. Legislatively enabled exemptions also occur at this level of government. Changing
assessment ratios directly through a supermajority vote of the legislature would be the most
transparent option. Changing the effective assessment ratio through a “back door” exemption
is more complex and less transparent but requires only a majority vote of the legislature.


3
 O & M stands for operations and maintenance

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 Lowering the assessment ratio for the manufacturing sector would make South Carolina more
 competitive with other states in its property tax treatment. A lower effective property tax rate
 would be provided instead of FILOTs, which would reduce the number of FILOTs, saving both
 county governments and businesses the time and expense of negotiating FILOT terms.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 A similar approach could be applied to utilities, which also are subject to the 10.5 percent
 assessment ratio, but which were not included in the 2015 phase-down legislation described
 above.

 Residential renters, who typically have lower incomes than homeowners, pay property
 taxes as part of their rent. Renters are disadvantaged relative to primary homeowners in
 two ways. The assessment ratio for rental property is 50 percent higher at 6 percent versus
 owner-occupied homes at 4 percent. Renters or secondary homeowners do not receive the
 exemption from school operating millage. The legislature could consider two options to
 address this inequity: a supermajority legislative change reducing the assessment ratio for
 residential rental property to 4 percent or enacting a special exemption for residential rental
 property to reduce its effective assessment rate from 6 percent to closer to 4 percent.

 A similar approach could be applied to residential property that is neither primary residential
 nor rental property so that all residential property is effectively assessed at 4 percent.

 This option has the advantage of making South Carolina less of an outlier, compared to other
 states, in its property tax treatment of residential rental property. This change would improve
 equity, because it would remove a regressive feature of South Carolina’s property tax since
 charging renters more than homeowners levies lower taxes on high income families than
 low income families. If all residential property were assessed at 4 percent, this option would
 make it easier for counties to administer the property tax because it eliminates the need to
 certify whether housing is primary residential or not. A disadvantage of this option is that
 it requires a two-thirds vote of the legislature or the legislature’s approval of an additional
 special exemption, which would not improve the transparency of South Carolina’s property
 tax system.

 Between 1997 and 2002, the State of Minnesota implemented property tax reforms that
 significantly reduced disparities in effective property tax rates. See Volume 2, Chapter 1,
 Appendix D for a discussion of this history.

 The Elephant in the Room: Act 388

 Exempting primary homeowners from paying property taxes for school operating costs
 through property taxes makes South Carolina unique in the nation. The O & M exemption
 should be phased out and replaced with a state-funded circuit breaker, which provides
 selective property tax relief to those who truly need it. A circuit breaker is a property tax relief
 program that provides households with direct property tax relief that increases as household
 income declines for a given property tax bill. The best circuit breakers include homeowners
 and renters of all ages.

 Phasing out the O & M exemption has the advantage that it would improve the equity
 of South Carolina’s property tax system. The O & M exemption is unfair because primary



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homeowners, who benefit the most from schools, do not pay property taxes to operate
the schools. Homeowners who cannot certify their home as their primary residence do
not qualify for the O & M exemption. Also, rental property is not eligible for the O & M
exemption. One advantage of this option is that circuit breakers are the best method to
direct property tax relief to where it is most needed. Another advantage of changing the O &




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
M exemption is that it would reduce the costs of administering the property tax. Currently,
each county must maintain staff to certify primary residence status and reduce fraud. A major
disadvantage of this option is that it is politically difficult to repeal property tax relief once it
has passed. Voters are very reluctant to reverse property tax relief in any form.

If phasing out the O & M exemption is not possible, an alternative policy would be to cap
the amount of property value entitled to the exemption. This would improve equity between
homeowners and renters but add additional property tax revenue mostly in high wealth
districts.

Replace O&M Millage for all Property Types with a State Education Property Tax

Passage of a state education property tax could be used to fund schools in a way that does
not exacerbate disparities in funding. It can narrow the range of effective property tax rates
as follows. Currently, only primary homeowners are exempt from paying property taxes for
school operating costs. This exemption could be extended to all property types at the same
time a state education property tax is enacted. It would provide additional funding for schools
from a broader tax base and narrow the differential in effective property tax rates at the
same time.

Enacting a state education property tax would provide equalized funding based on student
head count rather than zip code and allow the entire education system to enjoy the benefits
of economic growth as opposed to one district. A disadvantage of this option is that it adds
an additional state property tax and requires voter support. However, it should be easier
to enact a new tax whose goal is to make the system fairer and whose revenue is targeted
for education. For comparison, see Volume 2, Chapter 1, Appendix E for a description of
Michigan’s state education property tax.
An alternative to a state education property tax could be an equivalent required local millage
for school operating costs. The advantage of this option would be that it gives more control
over funding to local governments. A disadvantage of this alternative is that it would make
it more difficult to redistribute this additional property tax revenue from wealthy to poor
school districts.

Repeal the Assessment Cap

Although the research concluded that only a small fraction of properties is subject to the
assessment cap (the requirement that appraised value of property not increase more than
15 percent over 5 years), this could be partly because the assessment cap has not had
time to demonstrate its long-term effects. Shortly after enactment of Act 388, the country
experienced the Great Recession, a time when one would expect property values to be falling
instead of rising.




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KEY FINDINGS
 Although assessment caps are intended to provide property tax relief, they are perhaps the
 worst mechanism for providing such relief. They primarily benefit property owners whose
 property has gained the most value. Because Act 388 also imposed limitations on increases
 in millage, the assessment cap should not be necessary. Repeal of the assessment cap
 would also allow the ATI to be eliminated as appraised values moved toward a more uniform




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 market value. A disadvantage of repealing the assessment cap is that this would require an
 amendment to the constitution.

 The experiences of Minnesota, Idaho, Oregon, Montana, and Cook County, Illinois
 demonstrate that repealing an assessment cap is achievable. These states and county
 successfully lifted restrictions on property tax assessments. See Volume 2, Chapter 3,
 Appendix D for a description of the assessment caps in these jurisdictions, their successful
 repeal efforts, and potential lessons for South Carolina.

 Property Tax Administration
 Revalue Property More Frequently

 The general property revaluation cycle is five years (sometimes six). The South Carolina code
 requires each county to “appraise and equalize all properties under its jurisdiction” every five
 years. There are at least two ways that the state could revalue property more frequently. The
 state could adopt a shorter revaluation cycle, perhaps two or three years. Alternatively, the
 state could forgo shortening the revaluation cycle, but impose other requirements for keeping
 appraised values current, such as using sales ratio studies to trigger reappraisal, if necessary,
 as Tennessee does. This would require annual, rather than every five-year, ratio studies. Either
 reform would move the state closer to best practices recommended by the International
 Association of Assessing Officers (IAAO 2010).

 Adopting either of these reforms would improve the equity of the property tax. This analysis
 concludes that a five-year revaluation cycle, with no mechanism for updating appraised values
 within the revaluation cycle, leads to both horizontal and vertical inequities. A disadvantage
 of this option is that it would require the state to provide guidance and transitional assistance
 to assessors as they adapt to a new system. It could also require additional assessment staff.


 Provide Guidance to Assessors to Help Make the Property Tax More Uniform
 and Transparent


 We found that no two county assessors among the focus counties use the same land use
 codes. There should be one general framework for land use codes, and it should follow the
 general framework in the Constitution. There is confusion regarding terms that are critical
 to South Carolina’s current property tax structure. For example, the assessment cap dictates
 that the assessment ratio applies not to fair market value but rather to property tax value.
 Although “property tax value” is South Carolina Code’s name for a limited or capped value,
 few property tax professionals use that term. The publication of a well-written, widely
 available manual for assessors, along with additional guidance and oversight from the




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Department of Revenue, could solve this challenging problem. In addition, the Department of
Revenue could require commercial businesses to provide income and expense information for
the purposes of the property assessment process. This could help alleviate the issue, found in
this analysis, that assessment quality is worse for commercial properties than for residential
properties.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
In general, South Carolina could look to the models of some of its neighboring states or to
the various property tax standards published by the International Association of Assessing
Officers for potential improvements to the various features of its system of property tax
administration, ranging from assessment standards and use of sales ratio studies to property
tax appeals. See the appendix to Chapter 2, Volume 2 for a case study of property tax
administration in Tennessee which notes some of that state’s exemplary features which South
Carolina may choose to consider.

This option has the potential advantage that it might not require legislation and would make
South Carolina’s property tax more transparent and easier to administer. A disadvantage of
this option is that it would require additional resources.

Enhance Transparency on Property Tax Abatements

The current system of property tax abatements in South Carolina is opaque. Fortunately,
the advent of the GASB 77 requirement to report revenue not collected due to property
tax abatements in comprehensive annual financial reports is an excellent opportunity to
increase transparency. Currently, the available information is inconsistent and sometimes
contradictory. The state could encourage compliance with GASB 77 and provide guidance so
that reports by counties, school districts, and municipalities are more consistent.

It is important for the general public to understand the costs of property tax abatements so
they can weigh the benefits against the costs. Otherwise, the escalating use of property tax
abatements may inadvertently narrow the tax base, shift property tax liability to others, and
produce little economic benefit. This is the major argument in favor of enhanced transparency
for property tax abatements. A counterargument is that these reporting measures require
additional staff time.
Provide Guidance on PILOT Programs to Local Governments Bearing a Disproportionate
Burden from Tax-Exempt Property

Certain localities are disproportionately affected by the presence of tax-exempt state
government or nonprofit property. The property tax burden is shifted to remaining taxpayers
who do not qualify for tax exemption. The state should provide guidance so that localities can
opt to create PILOT (payments-in-lieu of taxes) programs whereby nonprofits can voluntarily
subsidize the public services they benefit from. The state could also help or encourage local
governments to value tax-exempt property. The first step in alleviating any disproportionate
burden from tax-exempt property is to be able to estimate the extent of that burden. The
South Carolina statute which explicitly exempts tax exempt property from the assessment
process may be an impediment to that valuation exercise.




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KEY FINDINGS
 An argument in favor of providing guidance for voluntary PILOT programs is that they
 have worked in other parts of the country (for example, in Boston) and work in at least one
 municipality in South Carolina. An argument against this approach is that it does not provide
 compensation for the tax base loss due to state-owned government property.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)




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 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Summary of
 Chapter 1:

INTRODUCTION AND OVERVIEW
 OF
 SOUTH CAROLINA’S
 PROPERTY TAX SYSTEM




 By Daphne A. Kenyon, Ph.D. and Bethany P. Paquin




 Packet Pg. 75
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 Introduction
 South Carolina has a property tax system that is unique among the 50 states. As this report
 will show, South Carolina’s property tax system is complex, nontransparent, inequitable, and
 noncompetitive. Act 388 passed in 2006 with the ostensible aim of providing property tax




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 relief to homeowners, but it has exacerbated the problems with South Carolina’s property tax
 system.

CHAPTER 1
 This introductory chapter first presents criteria for a good tax system. Next, it provides
 an overview of the South Carolina property tax system and Act 388. The third section will
 describe revisions to the property tax since Act 388. The next section discusses outcomes of
 Act 388 and South Carolina’s property tax system, paying special attention to effective tax
 rates. Some of the data illustrate how the property tax has changed since Act 388 went into
 effect. The final section notes some of the ways that South Carolina’s property tax system is
 an outlier among the 50 states.

 This analysis includes data from 10 focus counties: Allendale, Charleston, Edgefield, Florence,
 Greenville, Horry, Orangeburg, Richland, Sumter, and York (Figure 1.1). These counties vary
 in size, geography, and economic status to provide a representative cross-section of South
 Carolina’s property tax systems.4

 Figure 1.1

 Map of Focus Counties




 Volume 2 provides a description and comparison of these ten focus counties.
 4


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 Criteria for a Good Tax System
Studies of state and local tax systems traditionally present underlying principles of sound
tax policy as a guide for tax policy choices. South Carolina policymakers should evaluate any
reform proposals in the context of these principles.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Equity


 CHAPTER 1
Equity or fairness is fundamental to sound tax policy. Two theories of tax fairness, the benefit
principle and the ability-to-pay principle, present distinct approaches to equity. The benefit
principle ties equity to benefits received. The ability-to-pay principle ties equity to each
taxpayer’s financial resources. The terms horizontal equity and vertical equity describe two
components of the ability to pay principle. Horizontal equity implies that taxpayers in similar
situations face similar tax liability. Vertical equity implies that taxpayers in dissimilar situations
face dissimilar tax liability (Cordes 2005 and Ebel 1990). In other words, equitable tax systems
impose higher tax rates on taxpayers with more income and wealth and similar tax rates on
taxpayers with similar resources.

Efficiency

An efficient revenue system is marked by neutrality. An efficient tax minimizes unintended
interference with markets by avoiding policies that alter personal or business behaviors and
decisions. In aiming for neutrality, governments should favor policies that uniformly apply low
rates to a broad base (Ebel 1990). Efficient systems also minimize the costs of administering
and complying with tax systems for governments and taxpayers.

Stability

Tax revenues rise and fall to varying degrees as economic conditions fluctuate. The more
stable a tax or system of taxes is, the steadier the revenue stream will be in times of economic
change (Almy, Dornfest, and Kenyon 2008).

Transparency

A tax is transparent when information on the process of taxation is publicly available, the tax
is understandable, and all information is disclosed. Taxpayers should clearly understand what
is taxed (the tax base), what they must pay, and when a tax is payable.




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 Overview of South Carolina Property Taxes and Act 388
 South Carolina’s Property Tax System

 The method by which South Carolina’s tax bills are calculated reveals the complexities of
 the state’s property tax system. In very basic terms, a South Carolina property tax bill is




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 determined in three steps:


CHAPTER 1
 (1) The property is valued at its fair market value (also known as appraised value).
 (2) The property is assigned an assessment ratio. South Carolina has a property tax
 classification system under which different types of property are taxed at different
 ratios of assessed value (Table 1.1). Primary residences and private agriculture receive
 the lowest assessment ratio—4 percent—while manufacturing, utility, and personal
 property receive the highest assessment ratio—10.5 percent.5 The fair market value
 is multiplied by the assessment ratio to produce the assessed value. The assessment
 ratio for primary residences in South Carolina is 4 percent, so a homeowner’s primary
 residence valued at $100,000 would be assigned an assessed value of $4,000.
 (3) Assessed value is multiplied by the total millage rate to derive the property tax bill.
 The total millage rate is the sum of the tax rates of the county, municipality, school
 district, and other taxing entities.


 Table 1.1 Constitutional Assessment Ratios by Class of Property

 Property Classification Tax Rate (%)
 Owner-Occupied 4.0
 Agricultural (Private) 4.0
 Agricultural (Corporate) 6.0
 Commercial/Rental 6.0
 Personal Property (Vehicles) 6.0
 Other Personal Property 10.5
 Manufacturing 10.5
 Utility 10.5
 Business Personal 10.5
 Motor Carrier 9.5
 Source: South Carolina State Constitution




 Throughout this report “owner-occupied” will mean the same as “primary residence.” Definitions of these terms and others can be found in the
 5

 Definitions section at the end of the report.


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Table 1.2 presents a simplified property tax bill calculation for two South Carolina residential
properties, both with a fair market value of $150,000. The owner-occupied residence has an
assessment ratio of 4 percent while the rental property has an assessment ratio of 6 percent.
Even if the two properties are in the same taxing jurisdiction, they will not face the same
total millage rate because the owner-occupied property is exempt from millage for school




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
operating costs. So, in this stylized example, the total millage rate for the owner-occupied


 CHAPTER 1
primary residence is 0.2022 and the millage rate for the rental property is 0.4590. As of result
of varying assessment ratios and the school exemption, these two properties with identical
market values face two very different tax rates and tax bills. The tax on the rental property of
$4,131 is three-and-a-half times that of the owner-occupied property ($1,213).



Table 1.2 Comparison of Tax Bills for Two South Carolina Residential Properties


 Owner-Occupied Rental
Fair Market Value $150,000 $150,000
Assessment Ratio 4% 6%
Assessed Value $6,000 $9,000
Millage Rate 0.2022 0.459
Property Taxes $1,213 $4,131
Effective Tax Rate 0.81% 2.75%
Source: Author’s calculation
Note: Owner-occupied primary residences have an assessment ratio of 4.0% and rental property has
an assessment ratio of 6.0%. Owner-occupied property is exempt from property taxes for school
operating costs so is subject to a lower millage rate.

Differentially high taxation of rental property compared to primary residential property is
inequitable for two reasons. First, homeowners typically have higher incomes than renters.
Thus, the differentially heavy taxation of renters fails the ability to pay principle. Second,
homeowners are the primary beneficiaries of school spending. Thus, exempting primary
residences from paying for school operating costs fails the benefit principle.




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 Act 388

 Act 388, passed in 2006, limited property tax revenue in three major ways:

 • It eliminated property tax liability on primary residences for school operating costs
 		 known as the “O & M” (operation and maintenance) exemption. Homeowners are still




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 		 liable for property taxes for school debt service. Since Act 388, non-homestead property


CHAPTER 1
 		 owners bear the burden of school operating costs funded by property taxes. Act
 		 388 raised the sales tax one percentage point to offset the revenue loss, mandating
 		 state reimbursement of local government tax loss.

 • It placed a 15 percent cap on the growth of appraised value of property tax over a five-
 		 year period unless the property is sold (assessable transfer of interest or ATI). If a
 		 property is sold, it is revalued at its fair market value.

 • It placed a cap on the rate of growth of jurisdiction-specific property tax rates. The
 		 maximum millage cap limits increases in local millage rates for operating purposes.
 		 Under the law, a locality may not increase its millage rate by more than the increase
 		 in the consumer price index plus its population growth percentage in the previous year
 		(Significant Features of the Property Tax).


 Revisions to South Carolina’s Property Tax System Post-Act 388
 Since enactment of Act 388, South Carolina adopted a number of legislative or administrative
 “patches” to its property tax system. We make no attempt to provide a comprehensive list of
 these revisions but try to highlight some of the most important ones.

 • The fees in lieu of taxes (FILOTs) program, which reduces property tax liabilities of firms
 		 that make new investment and create jobs in the state, predates Act 388, but the use of
 		 FILOTs has expanded considerably since Act 388 was enacted. Nominally, industrial
 		 property is assessed at 10.5 percent while commercial property is assessed at 6 percent.
 		 Under the FILOT program, industrial property is able to obtain an assessment rate of 6
 		 percent, and sometimes 4 percent, as well as other property tax relief. The FILOT
 		 program is further discussed in Chapter 5.

 • Recent legislation used a phase-in scheme to exempt 14.3 percent of manufacturing
 		 property from property taxation and effectively reduce the effective assessment rate
 		 on manufacturing property to 9 percent. This statutory change is targeted at
 		 investments that are not eligible for FILOTs. Although the stated assessment ratio
 		 applying to utilities, like manufacturing, is 10.5 percent, utilities were not included in
 		 this legislation.




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  • When property is sold, South Carolina’s ATI law requires that it be reassessed at market
		 value. Because of the state’s 5-year revaluation cycle, this means that recently sold
		 property can be valued much higher than similar property that has not been recently
		 sold. There is a special exemption of 25 percent of market value for properties assessed
		 at a 6 percent rate that would otherwise qualify as ATIs. However, the property owner




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
		 must apply to receive this exemption and apparently some taxpayers are unaware of


 CHAPTER 1
		 this provision.



These changes to the property tax system attempt to reduce the differentially heavy property
tax burden on manufacturing and commercial property. However, each of these revisions
can be considered “patches” as they increase the complexity of the property tax system and
reduce its transparency.



 South Carolina’s Property Tax is Characterized by Disparate Tax Rates


Effective Tax Rates

An effective tax rate compares the tax paid (tax liability) to the value of the property on
which the tax is levied (tax base). Another way to think of effective tax rate is the tax bill as a
percent of the property’s market value.

Much of the analysis in this chapter relies on an annual report examining the property tax
by category of property for the largest city in each state (Lincoln Institute of Land Policy and
Minnesota Center for Fiscal Excellence 2019).6 This data source reports effective property
tax rates for cities within states, and not for states as a whole. Nevertheless, for many states,
examining the property tax in the largest city in the state, as these data do, provides a
reasonable measure of the property tax burden for the state as a whole.




6
 In addition to published estimates, the staff of the Minnesota Center for Fiscal Excellence calculated some additional estimates for the purposes
of this report.


 27
 Packet Pg. 81
 2.b


 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 Figure 1.2 Effective Tax Rates by Property Type, 2018


 2.5%




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 2.0%




CHAPTER 1
 1.5%




 1.0%




 0.5%




 0.0%
 Indu strial: $1 Million Commercial: $1 Million Apartment: $600,000 Homestead: Median

 Charleston, SC Rate US Rate Charlotte, NC rate Atlanta, GA Rate

 Source: Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence 2019
 Note: Median home values vary across states. The median home value for Charleston was $344,600; the median home value in
 Charlotte was $215,500; and the median home value in Atlanta was $299,400.



 Charleston, South Carolina has an effective tax rate for industrial property that is extremely
 high compared to the U.S. average and its counterpart cities in neighboring North Carolina
 and Georgia (Figure 1.2). Charleston’s commercial and apartment effective tax rates are close
 to the U.S. average but higher than its neighbors. Its homestead effective tax rate is very low
 compared both to the U.S. average and its neighbors.

 Commercial-to-homestead, apartment-to-homestead, and industrial-to-homestead ratios
 of effective property tax rates show the disparity in tax rates for different property classes.
 Some states, like North Carolina, tax all property at the same rate. Therefore Charlotte, North
 Carolina’s commercial-to-homestead ratio and apartment-to-homestead ratios both equal
 1. It is not unusual to tax either apartment or commercial property at a higher rate than
 homestead property as seen in Florida, Georgia, and Tennessee. However, it is unusual to
 tax apartment or commercial property three times higher than homestead property as South
 Carolina does.

 Effective tax rates can vary within a property category like industrial. For the United States
 as a whole, industrial properties valued at $100,000 are typically taxed at a somewhat lower
 rate than those properties valued at $25 million. Charleston’s effective property tax rate
 for industrial property consistently ranks fourth among the largest cities in each of the 50



 28
 Packet Pg. 82
 2.b


 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




states (very high). Its effective tax rate for commercial properties ranks from twenty-fourth
to twenty-seventh (about average), its effective tax rate for apartments ranks nineteenth
(somewhat above average) and its effective tax rate for residential ranks either fiftieth or fifty-
first (very low).




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
County Effective Property Tax Rate Comparison



 CHAPTER 1
The annual report of the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal
Excellence reports effective tax rates for selected cities. One might wonder whether effective
property tax rates reported for Charleston (now the most populous city in South Carolina)
or Columbia (which used to be the most populous city in South Carolina) are representative
of the state as a whole. Therefore, special calculations done by the staff of the Minnesota
Center for Fiscal Excellence present information on ratios of effective property tax rates for
the largest city in each of the ten focus counties.


Ratios of effective tax rates for commercial, apartment, or industrial property to homestead
property vary among the largest city in each county, however, in all of the 10 focus counties,
commercial and apartment property is taxed at an effective rate two-and-a-half to five
times higher than homestead property; industrial property is taxed at an effective rate four-
and-a-half to nine times higher than homestead property (Figure 1.3). Since South Carolina
taxes apartments at the same rate as commercial properties, the effective tax rate ratios of
commercial and apartment property to homestead rates are identical.

 Figure 1.3 ETR Ratios for Largest City in 10 Focus Counties


10.0
 9.265
 9.0
 8.487

 8.0


 7.0 6.781
 6.504

 6.0 5.715
 5.415
 5.115
 4.940 4.886
 5.0 4.759 4.799
 4.481

 4.0 3.716 3.687

 3.119
 2.795 2.921
 3.0 2.792 2.742
 2.561


 2.0


 1.0


 0.0
 Allendale Charles ton Edgefield Florence Greenville Myrtle Orangeburg Columbia Sumter Rock Hill
 Beach (Richland (York
 (Horry County) County)
 County)
 Commercial - Homestead ETR Apartment- Homested ETR Industrial - Homestead ETR
 Source: Minnesota Center for Fiscal Excellence



 29
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 Changes in Effective Tax Rates since Act 388

 In 2002, commercial property in Columbia, South Carolina, was taxed at just over twice the
 rate of homestead property. In 2007, after the passage of Act 388, commercial property was
 taxed at nearly four times the rate of homestead property (Figure 1.4). Although the ratio




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 of commercial-to-homestead effective tax rates has varied from 2007 to 2018, post-388
 commercial property has been taxed at a rate at least three times higher than the residential


CHAPTER 1
 tax rate.




 Apartment to homestead ratios of effective tax rates show a similar trend. In 2002, apartment
 property in South Carolina was taxed at just over twice the rate of homestead property. In
 2007, after the passage of Act 388, apartment property was taxed at nearly four times the
 rate of homestead property. Although the ratio of apartment-to-homestead effective tax
 rates has varied from 2007 to 2018, post Act 388 with the exception of 2010, apartment
 property has been taxed at a rate at least three and a half times higher than the residential
 tax rate.




 30
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 Figure 1.5 The Impact of Act 388: Changing Ratios of Effective Property Tax Rates
  8




  7




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
  6




 CHAPTER 1
  5




  4




  3




  2




  1




  0
 Industrial-Homestead Commercial-Homestead Apartment-Homestead
 2005 20 18


Source: Minnesota Center for Fiscal Excellence

Figure 1.5 presents three ratios of effective property tax rates for 2005 and 2018. This clearly
shows that South Carolina’s disparities in effective property tax rates were exacerbated by
enactment of Act 388:

  • Before Act 388, industrial property was taxed at about three and a half times higher
		 than homestead property. After Act 388, industrial property has been taxed at nearly
		 seven times the rate of homestead property.

  • Before Act 388 commercial and apartment property was taxed at over two times
		 the rate of homestead property. After Act 388, commercial and apartment property
		 has been taxed at about three and a half times the rate of homestead property.




 31
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 South Carolina’s Property Tax System is an Outlier
 Both the structure of South Carolina’s property tax system and its outcome make South
 Carolina an outlier among the fifty states.

 South Carolina’s unique policy that fully exempts primary homesteads from property taxes for




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 school operating costs contributes to the high ratios of industrial, apartment, and commercial


CHAPTER 1
 property tax rates compared to homestead property tax rates. Michigan is the only other
 state that exempts primary homesteads from local property taxes for school operating costs.
 However, Michigan imposes a statewide property tax that captures revenue for schools from
 all property classes.

 South Carolina is one of only two states where the property tax system treats commercial
 properties preferentially compared to industrial properties (the other state is Wyoming)
 (Minnesota Center for Fiscal Excellence).

 Charleston ranks fourth highest in the United States with respect to its effective property tax
 rate for industrial property. In contrast, South Carolina’s largest city ranks fifty-first lowest
 with respect to its effective property tax rate on median-valued homes.7 None of South
 Carolina’s neighbors have a pattern of effective tax rates that is skewed in this way.

 South Carolina’s disparate property tax rates are also reflected in various ratios of effective
 tax rates:

 • In 2018, Columbia, South Carolina had the highest ratio of industrial-to-homestead
 		 effective property tax rates in the nation.8 Columbia’s ratio of industrial-to-homestead
 		 effective tax rates has ranked highest in the nation since 2013.

 • Columbia, South Carolina’s commercial-to-homestead ratio of effective tax rates
 		 ranked fourth highest among largest cities in 2018 and has ranked among the top five
 		 highest ratios since 2010.

 • Charleston, South Carolina’s apartment-to-homestead ratio of effective property tax
 		 rates ranked highest among the largest cities in 2018.

 Conclusion
 Data on South Carolina property taxes reveal a complex and unusual system under which
 businesses and apartments bear a proportionally greater share of the property tax than
 owner-occupied residential properties. Taxation of property in the state is subject to
 assessment ratios and exemptions that have led to widely disparate effective tax rates on
 homestead and non-homestead property. South Carolina has the highest-in the nation
 ratio of industrial-to-homestead property tax rates. Its policy for taxing industrial property
 differently from commercial property is highly unusual. The state’s exemption of all primary
 homeowners from school operating taxes is unique among the 50 states and a primary cause
 of South Carolina property tax imbalance. The property tax system lacks the characteristics of
 equity, efficiency, and transparency that are foundational to a sound tax system.
 7
 See Volume 2 for additional comparisons of effective tax rates by property type for South Carolina and comparison states.
 8
 These rankings rank the largest city in each state plus Washington, DC and two additional cities in New York and Chicago. Two cities are used to
 reflect property tax policy in Illinois and New York since Chicago’s and New York City’s property tax systems are significantly different from the
 rest of the state. Since 53 cities are included in total, ranks range from 1 to 53.
 32
 Packet Pg. 86
 2.b




 Summary of
 Chapter 2:




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Property Tax Assessment
 Practices
 in
 South Carolina




 By Michael Bell, Ph.D.




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 Introduction
 Unlike the income or sales tax, the property tax does not have a readily observable base. The
 tax base needs to be estimated, usually by an assessor. Good assessment quality is critical
 for the equity or fairness of the property tax. A good quality assessment system can also help




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 make the property tax more transparent.

 This high-level summary of Chapter 2, Volume 2, provides an overview of the state’s system
 of property tax administration. It also presents the results of an independent evaluation
 of assessment quality in selected counties, with an emphasis on how assessment quality
 changes over the five-year assessment cycle. This summary focuses on real property, not
 personal property.9 It does not discuss the various approaches that South Carolina assessors
 use to value property.



CHAPTER 2
 Structure of South Carolina’s Property Tax Assessment System
 South Carolina’s classified property tax system was discussed in Chapter 1. Table 2.1
 illustrates the different property classifications and their respective assessment ratios and
 also notes the government entity that values each type of property. In South Carolina, the
 valuation task is split between the county assessor, county auditor, and Department of
 Revenue. The county assessor values or appraises most real property (primary residential or
 owner-occupied and commercial/rental). The county auditor appraises personal property
 including vehicles. The Department of Revenue appraises manufacturing, utility, business
 personal, and other specified real property types. Partly because the valuation process is
 divided between three different organizations, no single entity has complete information for
 the property tax roll in any individual county.

 Table 2.1 South Carolina Assessment Ratio and Appraisal by Class of Property, 2018
 Assessment
 Property Classification Appraised By
 Ratio
 Owner-Occupied 4.0 County Assessor
 Agricultural (Private) 4.0 County Assessor
 Agricultural (Corporate) 6.0 County Assessor
 Commercial/Rental 6.0 County Assessor
 Personal Property (Vehicles) 6.0 County Auditor
 Other Personal Property 10.5 County Auditor
 Fee-in-Lieu NA* NA
 Manufacturing 10.5 Department of Revenue
 Utility 10.5 Department of Revenue
 Business Personal 10.5 Department of Revenue
 Motor Carrier 9.5 Department of Revenue
 Source: South Carolina Revenue and Fiscal Affairs Office (2018)
 *Assessment ratios for Fee-in-Lieu are negotiable and vary by agreement. The minimum ratio is 4.0
 percent.
 9
 Real property is all land and the buildings, structures, and improvements on the land. Personal property includes cars, trucks, boats, motorcycles,
 and airplanes. It also includes furniture, fixtures and equipment used by business. Definitions for these terms and others used in this summary are
 34 in a separate section labeled Definitions.
 Packet Pg. 88
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South Carolina law requires counties to revalue property once every five years. Property
valuation should be complete at the end of the fourth year and newly appraised values
implemented in the fifth year. A county can postpone the implementation of new values
resulting from the revaluation by one year.

An important exception to the every-five-year revaluation of property, which was enacted as




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
part of Act 388, is the assessable transfer of interest (ATI). Four pages of details in the South
Carolina code specify types of transfers that do and do not qualify as an ATI. If a transaction
qualifies as an ATI, the assessor must reappraise the property in the year of transfer and
record the new appraisal as the fair market value of the property as of December 31 of that
year.

Act 388 has affected the work of county assessors in two specific ways. First, there is
an increased workload resulting from the requirement to revalue ATIs in the year of the
transaction. Second, local assessors must address a significant increase in the number of

 CHAPTER 2
applications for residency. This arises because primary homeowners have their homes
assessed at 4 percent rather than 6 percent. In addition, they qualify for the exemption of
property taxes for school operating and maintenance expenses. Together these two property
tax features are applicable for primary residences only and provide a tremendous incentive
for homeowners to take advantage of the property tax benefits of residency.

Another change that took place after enactment of Act 388 was the end of annual sales
ratio studies. Because state law requires that “all property must be assessed uniformly and
equitably through the State,” the Department of Revenue is required to perform sales ratio
studies to determine if a county complies with this requirement. Prior to 2008, these sales
ratio studies were performed annually. Since 2008, sales ratio studies have been conducted
only in the year a county performs a reassessment.

 Differences among the Counties in their Assessment Systems
The real estate markets differ from county to county among the ten focus counties. For
example, Allendale County has a relatively stable real estate market, with only seven building
permits issued for new construction in 2018. On the other hand, York County has a relatively
dynamic real estate market, with approximately 7,500 arms-length real estate sales in 2018,
or just over 6 percent of total real estate on the property tax roll.

Property tax assessment systems also differ among the counties. Table 2.2 presents the
number of real property parcels valued by the county assessor in each county. These range




 35
 Packet Pg. 89
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 from 9,000 in Allendale County to 265,000 in Horry County. The table also notes the year of
 the most recent reassessment for each county. Note that counties conduct reassessments in
 different years.

 Table 2.2 Real Property Parcels by County




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Most Recent
 County Number of Real Property Parcels Valued
 Reassessment
 by the Assessor
 Allendale 9,000 2018
 Charleston 195,000 2019
 Edgefield 22,000 2015
 Florence NA NA


CHAPTER 2
 Greenville 205,000 2019
 Horry 265,000 2018
 Orangeburg 65,000 2017
 Richland 170,000 2018
 Sumter 64,000 2015
 York 121,000 2019
 Source: Author’s interviews with assessors.



 It is difficult to compare assessment practices and assessment quality among counties for
 two major reasons. First, the terms used to talk about the property tax and valuation process
 vary across counties. Everyone agrees that the starting point for the valuation process is
 to determine the appraised or fair market value of a property. Because of the 15 percent
 assessment limit, however, the appraised value is not always the starting point to calculate
 the assessed value of a property. For properties subject to the assessment limit there is also a
 capped value which can be referred to as the capped or limited value. The South Carolina code
 refers to this value as the property tax value but this term is rarely used. Sometimes capped
 value is referred to as taxable value. Other times taxable value is used interchangeably with
 assessed value, which is the value the auditor uses to calculate property tax liabilities.

 A further problem is that no two counties use the same list of land use codes. For example,
 Allendale uses 135 land use codes and York County uses 23 land use codes. Their methods
 of classifying properties also differ. Allendale County land use code 100 contains owner-
 occupied residential properties with assessment ratios of 4 percent and land use code 200
 contains non-owner-occupied residential properties with assessment ratios of 6 percent.
 Greenville County, on the other hand, puts both owner-occupied and non-owner-occupied
 residential properties in land use code 1100. This variation among counties in how properties
 are classified is unusual and complicates transparency.




 36
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 Shifting the Property Tax Burden
To compare the composition of the property tax base across the ten focus counties,
information was solicited from the assessor and auditor in each county. They were provided
with a standard template and asked for information on the appraised and assessed value for




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
each land use classification included in the constitution. This exercise was challenging for
some of the reasons given in the section above.

Charleston, Edgefield, Greenville, and Richland counties provided all the information
requested on the composition of the property tax base in 2018. Allendale and York counties
provided assessed value for all property types, but appraised value only for real property.
Horry and Sumter counties provided appraised and assessed values for real properties valued
by the county assessor. Florence and Orangeburg counties did not provide information on the



 CHAPTER 2
composition of their tax base.

The focus of Table 2.3 is the comparison between the share of appraised value and the
corresponding share of assessed value for each land use classification. The differences, when
viewed through the lens of equity and uniformity, indicate whether property taxes paid equal
the share of appraised value.

Table 2.3 Selected Land Use Shares of Appraised and Assessed Values by County, 2018
 PROPERTIES VALUED BY COUNTY ASSESSORS
 Primary Residential Other Residential Commercial
 Appraised Assessed Appraised Assessed Appraised Assessed
 Value (%) Value (%) Value (%) Value (%) Value (%) Value (%)
Allendale NA 14.9 NA 8.4 NA 3.7
Charleston 45.9 33.8 29.8 32.9 17.8 19.7
Edgefield 55.6 41.7 NA* NA* 17.1 19.2
Greenville 54.6 41.6 7.3 8.4 23 26.9
Richland 51.1 42.4 NA* NA* 31.2 38.7
York NA 39.1 NA 8.2 NA 17.4
 PROPERTIES VALUED BY AUDITORS AND DEPARTMENT OF REVENUE
 Vehicles Manufacturing Utilities
 Appraised Assessed Appraised Assessed Appraised Assessed
 Value Value Value Value Value Value
Allendale NA 8.2 NA 30.2 NA 21
Charleston 2.4 5.9 0.2 0.4 1.6 3.1
Edgefield 12.4 13.9 3.3 6.6 5.8 11.4
Greenville 9 11.1 1.8 3.6 1.9 3.7
Richland 8.8 11.8 1.7 3.5 4.3 9.3
York NA 9.7 NA 3 NA 14
Source: Data provided by assessor and/or auditor in each county.
Note: Each value is the percentage of total land use in the county. For example, Primary Residential
property in Allendale is 14.9 percent of total assessed value in the county.
*For Edgefield and Richland Counties “Other Residential” is included with “Commercial.” 37
 Packet Pg. 91
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 Some themes emerge when looking at the data on the composition of the property tax base
 for the four counties providing full information in Table 2.3 (Charleston, Edgefield, Greenville,
 and Richland):

 • The primary residential property share of total assessed value is between 9 and 14




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 		 percentage points lower than its share of total appraised value.
 • The other residential property share of assessed value is between 1 and 3 percentage
 		 points higher than its share of appraised value.
 • The commercial property share (which includes rental residential properties in
 		 Edgefield and Richland Counties) of assessed value is between 2 and 7.5 percentage
 		 points higher than its share of appraised value.
 • The vehicles share of assessed value is between 1.5 and 3.5 percentage points higher
 		 than its share of appraised values.


CHAPTER 2
 • The manufacturing share of assessed value is approximately twice as high as their
 		 share of appraised value.
 • The utility share of assessed value is approximately twice as high as their share of
 		 appraised value.

 The classified property tax system in South Carolina, together with other features of the
 property tax, shifts the burden of financing locally provided goods and services through the
 property tax. This shift is sometimes significant, moving the burden from owner-occupied
 residential properties to non-owner-occupied residential properties as well as commercial,
 manufacturing, and utility properties.

 Quality of Assessment and the Five-Year Cycle
 As part of this project, sales files were requested from each of the 10 focus counties for
 2015 and 2018 to evaluate assessment quality and to consider the effect of the five-year
 assessment cycle on the uniformity and equity of the property tax. The hypothesis is that,
 over five years, markets within a county will change at different rates for different land use
 types and different locations. These market shifts will cause the selling price of a parcel to
 diverge in varying degrees from the estimated fair market value implemented in the first year
 of the five-year cycle.

 To test this hypothesis three standard metrics for measuring assessment quality are computed
 using two years of sales in the reassessment cycle. In the following paragraphs, each of the
 three most commonly used metrics for measuring assessment quality are described in turn.
 Then the quality standard put forth by the International Association of Assessing Officers
 (IAAO) is described. Then data for selected counties displayed in Table 2.4 is described and
 compared to the IAAO standard.

 Measures of Assessment Quality

 The first measure of assessment quality is a measure of the level of appraisal vis-à-vis market
 values. We use the median appraisal/sales ratio. The median of the individual ratios is the




 38
 Packet Pg. 92
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




value in the middle of the ratios when sorted into ascending or descending order. According
to the IAAO Standard on Ratio Studies, the median appraisal/sales ratio should be between
0.9 and 1.1. Table 2.4 reports median appraisal/sales ratios for several counties for 2015 and
2018 in columns two and five.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Table 2.4 Appraisal Outcomes for Properties Providing Sales Files for 2015 and 2018,
by County
 Residential Properties
 2015 2018
 Median Appraisal/ Median Appraisal/
  County Sales Ratio COD PRD Sales Ratio COD PRD
 (1) (2) (3) (4) (5) (6) (7)


 CHAPTER 2
Allendale NA NA NA 0.985 14.65 1.027
Charleston 0.899 11.43 1.007 0.794 13.89 0.999
Greenville 0.941 12.38 1.024 0.783 16.31 1.012
Horry 0.915 13.43 1.026 0.807 13.45 1.009
York 0.937 4.94 1.008 0.96 4.46 1
 Vacant Commercial Properties
Allendale NA NA NA NA NA NA
Charleston NA NA NA NA NA NA
Greenville 0.997 35.52 1.102 0.907 36.69 1.189
Horry 1.205 32.73 1.045 0.933 34.65 1.018
York 0.938 22.27 1.027 0.973 11.75 1.102
Source: Author’s computations based on assessor sales files.
Note: COD is coefficient of dispersion. PRD is price related differential.




In 2015, residential properties in all four counties had median appraisal/sales ratios that were
consistent with IAAO standards. By 2018, however, all of the median appraisal/sales ratios
had declined (except for York County) and were no longer consistent with IAAO standards.
In 2015, commercial properties in Greenville and York Counties had median appraisal/sales
ratios consistent with IAAO standards, but the ratio for Horry County exceeded the standard.
By 2018, the median ratios for Greenville County, Horry County, and York County were all
consistent with IAAO standards.

The second measure of assessment quality is the coefficient of dispersion (COD). This is
a measure of horizontal equity, or the extent that similar properties are treated the same.
IAAO recommends that CODs for residential property range between 5.0 and 15.0. IAAO
recommends that CODs for income-producing, or commercial property, range from 5.0 to
20.0. Table 2.4 reports CODs for several counties for 2015 and 2018 in columns three
and six.


 39
 Packet Pg. 93
 2.b


 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 For all counties, the COD for residential properties is generally consistent with IAAO
 standards. The CODs increased slightly from 2015 to 2018 in all counties except York,
 indicating that the horizontal equity of appraisals had deteriorated somewhat from 2015 to
 2018. In 2015, the COD for vacant commercial property in each county was outside IAAO
 standards (significantly for Greenville County and Horry County). By 2018, the CODs for




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Greenville County and Horry County increased, while the COD for York County decreased
 bringing it into compliance with the IAAO standards.

 The third measure of assessment quality is the price related differential (PRD). This statistical
 measure is used to gauge vertical equity. The PRD tests to see if lower and higher valued
 properties are assessed at the same level. According to IAAO, the PRD should be between
 0.98 and 1.03. A PRD greater than 1 indicates that high value properties are undervalued and
 a PRD less than 1 indicates that low value properties are undervalued. Table 2.4 reports PRDs


CHAPTER 2
 for several counties for 2015 and 2018.

 For residential properties for the five counties reported in the table, the PRDs in 2015 and
 2018 were consistent with IAAO standards. There was no bias in the appraisals in terms
 of vertical equity. The results were mixed for commercial property. For 2015, the PRDs
 in Greenville County and Horry County indicate that low-valued properties tend to be
 overvalued compared with high-valued properties. For York County’s vacant commercial
 property, the PRD was consistent with IAAO standards. By 2018, Horry County’s PRD was in
 compliance with IAAO standards, but neither Greenville County nor York County had PRDs in
 compliance with IAAO standards.

 Residential Assessment Better than Commercial

 For the five county results presented in the table, the assessment quality measures for
 residential properties are generally consistent with IAAO standards of performance in
 2015 and 2018, with the exception of the median appraisal/sales ratios in 2018. For vacant
 commercial properties in 2015 and 2018, the results are mixed and less consistent with IAAO
 standards.

 Assessment Quality Deteriorates over the Five-Year Assessment Cycle
 With respect to assessment quality over the five-year assessment cycle, there is a decline
 across the board in median assessment/sales ratios, some CODs, and some PRDs from 2015
 to 2018. These results suggest that the five-year assessment cycle undermines the equity of
 the property tax.




 40
 Packet Pg. 94
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 SOUTH CAROLINA’S PROPERTY TAX SYSTEM




 Models for Quality Assessment Practices
Chapter 1 in Volume 2 compares South Carolina’s property tax to other states along a number
of dimensions. One of those dimensions is the length of the revaluation cycle. Nationwide,
20 states have laws requiring annual revaluation. Among South Carolina’s comparison




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
states, both Florida and Georgia require annual revaluation for the purposes of property tax
administration. Virginia has revaluation requirements that vary by the size of the jurisdiction,
with cities required to re-value property every two years. Tennessee has a revaluation cycle
that ranges from four to six years but includes other requirements which help keep appraisals
close to market value. For example, counties with a six-year revaluation cycle must update
values if a review in the third year of the cycle finds that the overall level of appraisal is less
than 90 percent of market value. This can be determined because the state is required by
statute to conduct sales ratio studies for each county every two years.


 CHAPTER 2
The International Association of Assessing Officers (IAAO) produces standards on many
aspects of property tax administration and policy. Earlier, this summary of Chapter 2
referenced the IAAO Standard on Ratio Studies. The IAAO Standard on Tax Policy puts forth the
principle of annual assessment. According to that standard:

 …it is necessary to observe and evaluate, but not always to change, the assessment of
 each property each year in order to achieve current market value. It is recommended
 that assessing officers consider establishing regular reappraisal cycles or at least
 appraisal level and uniformity (vertical and horizontal equity) thresholds that trigger
 reappraisal (IAAO 2010, 13).

A third IAAO standard that could provide useful guidelines is the IAAO Standard on Assessment
Appeal (IAAO 2016). As that standard notes, “Assessment appeals are an important component
in the assessment process.” It puts forth sensible advice such as, “Timeliness of decisions is
critical to all involved, especially if the decision is subject to further appeal.”

 Conclusion
Researchers contacted assessors for each of the focus counties and visited and interviewed
many. One data-gathering challenge is that the process of valuing the property tax is divided
among three different entities: county assessors, county auditors, and the Department of
Revenue. As a result, no entity has the complete property tax roll for an individual county.
Another challenge which undermines transparency is that no two counties use the same
land use codes for classifying parcels for appraisal. South Carolina has a five-year assessment
cycle. The analysis found that the five-year assessment cycle undermines the equity of the
property tax. Assessment quality is better for residential properties than it is for commercial
properties.




 41
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 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Summary of
 Chapter 3:


Who Bears the Burden of the
 Property Tax
 and the Impact of Act 388




 By Mark Skidmore, Ph.D. and Camila Alvayay Torrejón




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 Introduction
This chapter makes use of a special parcel-level data set to examine three questions:

  • How does the assessment cap impact equity in property tax burdens among 		




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
		 different types of property and within individual types of property?
  • How do effective property tax rates vary by type of property by county?
  • How much property tax burden has been shifted from residential taxpayers to 		
		 business taxpayers?

Detailed parcel level data on appraised values and tax payments are available from CoreLogic
(2019). CoreLogic is considered to be the premier supplier of U.S. parcel level real estate
data that includes information on last sales date and price, property characteristics, appraised
values, property tax payments, and geographic location.

Using CoreLogic data expands our analysis beyond the counties for which assessors supplied
sales data sets as described in Chapter 2. Some of the same definitional issues which plagued
the analysis in Chapter 2 were apparent in our analysis for this chapter.

For purposes of this evaluation, we define the effective tax rate for each parcel as
 Tax Payment
 . We will use this measure of tax burden throughout the chapter. Effective


 CHAPTER 3
  Appraised Value

tax rates are typically calculated by dividing the total tax liability by the market value.
Where feasible, it is desirable to use actual sales price as the measure of true market value.
However, for purposes of understanding the scope and nature of tax burden for several
counties, use of sales price limits the number of observations to only those parcels that
recently sold. A reasonable substitute is the appraised value calculated by assessors, but
the degree to which appraised value will offer a good estimate of true market value depends
on the quality of assessment. Fortunately, information on assessment quality presented
in chapter 2 of this report indicates that the quality of assessment is reasonably good,
particularly after a reassessment, but more so for residential property than for other property.
The fact that we use appraised value rather than sales value in the calculation of effective
property tax rates should be considered when interpreting our results.

 Information Available for Focus Counties
CoreLogic data provided appraised values, sales prices, and property tax payments for 2018
for most real property in each of our focus counties.
The property categories differed for each of the ten counties. For example, the Horry County
data included nine different categories of residential property; the Sumter County data
included only one category of residential property—residential land. More concerning was
the fact that the data for most of the counties did not include information regarding which
residential property was primary residential and thus eligible for the 4 percent assessment
ratio and the exemption from paying property tax for school operating costs. This makes it
difficult to compare effective property tax rates from county to county.
Although Core Logic data for most counties includes residential, commercial, manufacturing,
farm, and other property categories, some property type data are missing for some counties.
For example, neither the Richland County nor the Edgefield County data includes information
on industrial or manufacturing and the Greenville County data are missing on farm properties.

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 We focus on data on residential and commercial properties partly because together these
 property types account for more than three-fourths of all properties. But, in addition, there
 are some data questions for three other property categories—farmland, manufacturing, and
 utilities. Use value taxation of farmland substantially reduces the tax base of agricultural
 lands. Although CoreLogic provides data on manufacturing properties, the analysis in Chapter




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 2 raises questions about the quality of these data. When we attempted to identify utility
 properties in this data set it became apparent that it was not possible to easily identify a large
 proportion of those properties.

 By using an assessor data set for York County together with Core Logic data, we were
 able to find capped value for most counties. We define capped value as appraised value as
 limited by the assessment cap. We were unable to find capped values in the CoreLogic data
 for Charleston and Orangeburg Counties, so we omitted those counties from the analysis.
 Importantly, we are able to conduct an evaluation for commercial and residential property
 Capped Value
 classes on the ratio of capped value to the appraised value Appraised Value to determine which
 properties enjoy tax relief from the assessment cap and which do not, and if so how much.

 Impact of Assessment Cap
 We estimated that for the eight counties for which we had information on capped value



CHAPTER 3
 (all counties except for Charleston County and Orangeburg County) 26 percent of the
 residential properties benefited from the assessment cap and 31 percent of the commercial
 properties benefited from the assessment cap. The percentage of properties benefiting from
 the cap varied widely. Only 3 percent of commercial properties in Edgefield County and
 only 8 percent of commercial properties in Sumter County benefited from the assessment
 cap. During the past decade Edgefield’s population has grown very modestly and Sumter’s
 population has declined slightly. In comparison, 28 percent of commercial properties in fast-
 growing York County benefited from the assessment cap.

 York County

 York County is in the north-central part of the state. As noted in chapter 1, York County has
 also experienced population growth, leading to modest pressure on real estate prices in some
 parts of the county. Thus, we expected that the assessment cap could have been binding in
 certain areas within York County.

 Table 3.1 includes information for York County residential and commercial property on the
 following: number of parcels, average appraised and capped values, the ratio of capped to
 appraised value, and percent reduction in the tax base.10 Note also that this table includes
 this information for all parcels (top half of the table) as well as for parcels receiving reduced
 tax burdens generated by the assessment cap (bottom half of the table).

 To estimate the impact of the assessment cap, consider first residential properties and in
 particular primary residence parcels (as noted by “Residential Improved OC” in the table).11



 10
 In York County capped value is referred to as “limited taxable value.” We use the term capped value here to be consistent with the rest of the
 report.
 11
 According to the York database, in 2015 residential properties are divided into several categories: Residential Improved, Residential Improved
 Letter, Residential Improved Occupied, Owner-occupied/No exemptions, and Residential Vacant. Therefore, from the total residential properties
 (90,802), the occupied residential properties, which are also considered primary residential, correspond to 70.2% of the parcels. Recall that
 44 parcels categorized as primary residential are assessed at 4% whereas all other residential properties are assessed at 6%.
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York County’s last reassessment occurred in 2014, taking effect in 2015. Thus, appraised
values were adjusted upward, but capped values were only adjusted to a maximum of 15%
since 2009. The data we consider are for 2018, which reflects the revaluation. The next
reassessment occurred in 2019 and will take effect in 2020; with a robust housing market it
may be that more properties will have an appraised value that is greater than capped value.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
For 2018, note that just 3,454 of 63,395 parcels (about 5.4%) enjoy a lower capped value
relative to appraised value, and thus received lower property tax obligations (see Column 2 in
Table 3.1).

Table 3.1 Estimated Impact of Assessment Cap for Selected York County Property, 2018
 Mean Mean
 Number of Ratio (2)/ % Reduction
 Type of Property Appraised Capped
 Properties (1) (%) in Tax Base
 Value (1) Value (2)
 RESIDENTIAL
 97.3 2.7
 IMPROVED OC 63,395 191,805 186,697
All Properties
 COMMERCIAL
 94.6 5.4
 IMPROVED 3,546 1,101,731 1,042,775
 RESIDENTIAL
 3,454 250,196 156,455 62.5 37.5
 Properties IMPROVED OC


 CHAPTER 3
with Ratio <1 COMMERCIAL
 992 1,067,177 856,435 80.3 19.7
 IMPROVED
Source: These data are a subset of a larger database from CoreLogic, which has property tax informa-
tion for all counties in South Carolina.

In aggregate, capped value is about 97.3% of market value for the primary residential
properties in the county, indicating that the cap reduces taxable base by just 2.7 percent. Of
the group of properties that do have a differential, on average they received a 37.5% lower
tax bill in 2018 as compared to those properties with no benefit. Given that just 5.4% of
properties have a differential between capped value and appraised value, and that capped
value is 97.3% of appraised value overall, we conclude that Act 388 has not resulted in
significant differences in effective tax rates across primary residential properties. However,
it is important to recognize that the relatively few property owners who do benefit from
the cap enjoy substantial tax reductions compared to those who do not. In addition, the
residential properties benefiting from the cap tend to be higher valued properties. As Table
3.1 shows, the average value of all primary residential properties in York County in 2018 was
$191,805 while the average value of primary residential properties benefiting from the cap
was $250,196, about 30 percent higher.

Turning to commercial property, we see that 28% of properties (992 of 3,546) had a
differential between capped value and appraised value. Notice that total capped value was
at 94.6 percent of total appraised value. That is, 5.4 percent of the tax base is lost due to the
cap. So, compared to residential properties, a greater percentage of commercial properties
benefit from the cap and since the taxable base is reduced by a greater percentage,
commercial properties on average benefit more from the cap than do residential properties.

As with residential properties, those properties that did receive protection from the cap
received a large benefit. The assessment cap reduced the tax burden by 19.7 percent, on

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 average, for commercial properties benefiting from the cap. However, unlike the case of
 residential properties, those commercial properties benefiting from the cap were on average
 lower value properties. Commercial properties benefiting from the cap were slightly less
 valuable (3 percent less) than all commercial properties.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Other Counties

 We were able to do a detailed analysis of the impact of the cap on residential and commercial
 properties in Edgefield County and Richland County. The details are presented in Volume 2,
 but the overall conclusions are described here. As in the case of York County, a minority of
 residential and commercial properties benefited from the assessment cap. For both Edgefield
 County and Richland County, a greater benefit accrued to commercial properties than to
 residential properties. Those properties benefiting from the cap received a substantial
 reduction in taxes that ranged from 13.6 percent for residential properties in Edgefield to
 43.5 percent for commercial properties in Edgefield.

 Assessment Caps in Other States

 Our analysis of the effect of assessment caps above is broadly consistent with Haveman
 and Sexton’s (2008) review of 30 years of experience with assessment caps in twenty states
 across the U.S. They conclude that, “Assessment limits benefit those whose property values


CHAPTER 3
 have increased rapidly, with the greatest reductions going to those whose property has risen
 fastest in value. At best, these limits restrict aid to those who have increased property wealth
 and provide no relief to those whose values are stagnant or declining.”

 Although the impact of assessment limits varies depending upon how restrictive the limit is
 (e.g., limiting growth in property values to no more than 2 percent annually will have a greater
 impact than a 10 percent annual limit) and upon the state of the real estate market, Haveman
 and Sexton note some other general problems with assessment limits. They can create
 horizontal inequities in property tax burdens, substantial and unpredictable tax shifts, and
 reduce economic growth.

 Variation in Effective Tax Rates
 York County

 Because we are able to ascertain that the Residential Improved OC class in York County is
 primary residential property, it is useful to compare the estimated effective property tax
 rate for residential property to that for commercial property. As shown in the last column
 of Table 3.2, for all primary residential properties, the effective tax rate was 0.74 and for all
 commercial properties, the effective tax rate was 2.32. This means that commercial property
 in York County is being taxed at over three times the rate applied to primary residential
 property.

 The effective property tax rates for both primary residential and commercial property are
 lower for those properties benefiting from the assessment cap. The average effective tax rate
 for capped primary residential properties is 0.45 and for commercial properties, 2.04. This
 means that commercial property in York County that benefits from the assessment cap is
 being taxed at over four times the rate that applies to primary residential property benefiting
 from the cap.

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Table 3.2 Comparing Effective Tax Rates for Selected York County Property, 2018
 Effective Tax
 Number of Mean Appraised Mean Tax
 Type of Property Rate (3)/(1)
 Properties Value (1) Payment (3)
 (%)




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 RESIDENTIAL
 0.74
 IMPROVED OC 63,395 191,805 1,424
 All Properties
 COMMERCIAL
 2.32
 IMPROVED 3,546 1,101,731 25,505
 RESIDENTIAL
 3,454 250,196 1,119 0.45
  Properties IMPROVED OC
 with Ratio <1 COMMERCIAL
 992 1,067,177 21,791 2.04
 IMPROVED
Source: These data are a subset of a larger database from CoreLogic, which has property tax
information for all counties in South Carolina.

Other Counties

Volume 2 presents detailed data on residential and commercial effective tax rates for both
Edgefield County and Richland County. These data are summarized here. Importantly, it
was possible to identify the category of residential property that was primary residential

 CHAPTER 3
in Edgefield County but not in Richland County. For both counties the effective property
tax rate for commercial property was at least two and a half times higher than for
commercial property.

 Evidence of Tax Shifting
Since we have data on appraised value and taxes paid for residential and commercial
properties in most counties, we can provide evidence of tax shifting from residential to
commercial properties. Since our data are from 2018 and we do not have data from prior
years, we are unable to determine how much tax shifting was caused by Act 388. However,
our data are able to show how much current tax shifting exists.

Table 3.3 compares residential property as a percent of a county’s total appraised value to
residential property as a percent of a county’s total property taxes paid for these counties:
Allendale, Edgefield, Florence, Horry, Orangeburg, Richland, and York. It also compares
commercial property as a percent of a county’s total appraised value to commercial property
as a percent of a county’s total property taxes paid.

If there were no tax shifting, if residential property were 50 percent of appraised value, it would
pay 50 percent of total property taxes. Likewise, with no tax shifting, if commercial property
were 15 percent of total appraised value it would pay 15 percent of total property taxes.




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 Table 3.3 Comparison of Share of Appraised Value to Share of Taxes Paid
 Residential % of Commercial % of
 Appraised Value Taxes Paid Appraised Value Taxes Paid
 Allendale 39 17 12 25
 Edgefield 67 37 10 23




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Florence 51 34 22 50
 Horry 43 31 18 23
 Orangeburg 36 32 11 22
 Richland 55 40 23 30
 York 60 37 19 37
 Source: These data are a subset of a larger database from CoreLogic, which has property tax informa-
 tion for all counties in South Carolina.
 Note: Where possible, “residential” represents primary residential only. Charleston, Greenville, and Sumter
 Counties are omitted because it was not possible to separate primary residential from other residential.


 As Table 3.3 shows, there is considerable tax shifting from residential to commercial
 properties. For example, in Edgefield County residential property accounted for 51 percent
 of appraised value but only 34 percent of property taxes paid. In comparison, in Edgefield
 County commercial property accounted for only 10 percent of total appraised value but 23

CHAPTER 3
 percent of total property taxes paid. Similarly, in York County residential property accounted
 for 60 percent of appraised value compared to 37 percent of property taxes paid; commercial
 property accounted for 19 percent of appraised value, but 37 percent of property taxes paid.
 Where possible, the residential category in Table 3.3 includes primary residential property
 only. Charleston County, Greenville County, and Sumter County are omitted from the table
 because we had information that those counties combined primary residential (subject to a 4
 percent assessment ratio) and other residential property (subject to a 6 percent assessment
 ratio) in the same land use classification.
 Conclusion
 Each county has its own property classification system; there is no common statewide
 property classification standard. It is therefore much more difficult to compare and evaluate
 property tax bases and tax burdens across counties. A valuable policy step would be to create
 a common statewide property classification system.
 Based on information from the counties where we were able to distinguish between capped
 value and appraised value, we see that the assessment cap has not had a significant impact
 on the tax base to date. However, depending on the rate of property price growth in the
 future, it could have a larger effect. Despite not having a large effect on the overall tax base,
 it is clear that a few property owners are receiving significant reductions in tax base and thus
 tax payments from the assessment cap.
 A comparison of effective property tax rates of commercial to residential properties shows
 that the effective property tax rate for commercial properties is at least two and a half times
 that for residential properties. The ability to compare effective property tax rates for each
 county is compromised by the fact that it was not always possible to identify which category
 or categories of property were primary residential. Only primary residential is assessed at
 the lowest assessment ratio (4 percent) and is exempt from paying property taxes for school
 operating costs.
 Although the data set used for this chapter could not identify tax shifting arising from the
 passage of Act 388, it was able to identify substantial tax shifting from residential to commercial
 taxpayers in 2018.
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 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Summary of
 Chapter 4:


 Eff ects of Act 388
on School Budgets




 By John E. Anderson, Ph.D.


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 Introduction
 Like the rest of the United States, South Carolina depends heavily on the property tax to fund
 its schools. Currently about one-third of K–12 school funding in South Carolina comes from
 the local property tax. The focus of this chapter is how Act 388 made significant changes in




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 the property tax that have affected school funding.
 First, Act 388 is summarized. Next, the difficulty of directly estimating the effects of Act
 388 on schools and school funding is explained. Then, data from the National Center for
 Education Statistics is used to describe: (1) changes in state revenue as a percentage of total
 budgets of the twenty school districts within the ten focus counties; and (2) how the budgets
 of those same school districts were affected in the following areas:

 •Property tax revenue
 •Total revenue per pupil
 •Instructional expenditure per pupil
 •Total expenditure per pupil
 Finally, the question of the effect of school spending on student achievement is addressed.


 Summary of Act 388
 Act 388, passed in 2006, drastically altered South Carolina’s property tax system and its
 system for financing elementary and secondary schools.
 Tax Swap
 Act 388 eliminated the property tax on primary residences for all school expenditure, other
 than debt service, and increased the state sales tax from 5 percent to 6 percent. This tax

CHAPTER 4
 swap substantially reduced many homeowners’ property tax obligations. It also decreased
 reliance on a stable tax source (the property tax) and increased reliance on a less stable tax
 source (the sales tax).
 Reimbursement for School Districts
 During the first year of implementation (FY 2007–2008), the state of South Carolina was
 required to reimburse local school districts dollar for dollar for operating-expense monies lost
 after the school property tax was eliminated for owner-occupied homes. As Table 4.1 shows,
 state-funded school property tax relief for primary residences increased by more than $500
 million in that year. After the first year, reimbursements were scheduled to increase at the
 rate of population growth plus inflation. This growth in reimbursement is distributed across
 school districts based on their share of total weighted pupils.
 Relationship of Reimbursement Guarantee to State Budget
 Act 388 stipulated that the additional sales tax penny be placed in the Homestead Exemption
 Fund and used to fund the reimbursements to local school districts. If the sales tax revenue is
 insufficient to cover the required reimbursements, the funds must be taken from the general
 revenue fund. As shown in Chapter 4, Volume 2, the additional sales tax revenue from the
 one cent increase fell short of the required reimbursement in every year from FY2007-2008
 to FY 2018-2019 (South Carolina Board of Economic Advisors).


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Table 4.1 Act 388 Tax Swap, First Year Changes
 Before After
State-Funded Primary Residential Property
 $333.7 million $895.0 million
Tax Relief




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
State Sales Tax 5 percent 6 percent
Sales Tax on Groceries 5 percent 3 percent
Source: Saltzman and Ulbrich 2012

Assessment Cap
Act 388 placed two new limits on the property tax.
The first limit was an assessment cap, the effects of which were analyzed in Chapter 3.
The assessment cap, which passed as a constitutional amendment, limits the growth in fair
market value to 15 percent over a five-year period, unless a property is sold. If the property
is sold, assessors are required to revalue the property at market value (the ATI requirement is
described in Chapter 2). This ATI requirement offsets somewhat the limitation on growth in
property taxation that the assessment cap imposes.
Millage Cap
The second limit on the property tax is a new millage cap. The existing millage cap was
amended to cap growth in millage rates at the rate of inflation plus population growth. It
also changed the requirements for the governing body of a taxing jurisdiction to override the
millage cap. Prior to Act 388 a governing body could exceed the millage cap with a majority
vote. After Act 388, a two-thirds vote is required, and the millage cap can only be lifted for
certain restricted purposes such as a financial emergency.


 Challenges of Estimating the Effect of Act 388 on Schools CHAPTER 4
Unfortunately, for those who are interested in the effect that Act 388 had on schools in
South Carolina, the housing market bubble burst just after Act 388 was implemented, and
the economy fell into recession. The Great Recession, which occurred from December 2007
through June 2009, had major effects on state revenues, state funding of schools, and federal
funding for schools across the United States. It may have also had some impact on property
tax revenues.
Because Act 388 eliminated the obligation for owner-occupied homes to pay property taxes
for school operating costs, falling housing values from 2008 to 2010 were unlikely to have
directly affected school district property tax revenues. However, there were other effects
resulting from the Great Recession. For example, the recession likely drove down market
values for other types of property, which could have reduced property tax receipts. On the
other hand, a national study of the impact of the Great Recession and public education
found that, “the property tax fared much better than other state and local taxes” during that
downturn (Evans, Schwab, and Wagner 2019, 306).
State and local tax revenue in total, however, was heavily impacted, particularly compared
with the two previous recessions. According to Evans, Schwab, and Wagner (2019, 304),
“It was not until eighteen quarters after the start of the recession that state and local tax
revenues returned to pre-recession levels.” One result of the decline in state revenue is that
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 most states cut school funding (Leachman, Masterson and Figueroa 2017). South Carolina
 was no exception. Although the state kept its Act 388 reimbursement commitment, in the
 FY2009 year it cut other K-12 funding by $365 million (Ullrich 2012).
 In addition, the American Recovery and Reinvestment Act (ARRA) of 2009 provided stimulus
 funds for state and local governments from 2008 to 2010. $100 billion of ARRA funding was




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 dedicated for education (Evans, Schwab and Wagner 2019, 317).
 Because of these influencing factors, declines in school district revenue and expenditures
 since 2007 cannot be directly attributed to Act 388. Nevertheless, trends from 2008 to 2016
 compared to those from 2002 to 2007 provide a broad estimate of the effect of Act 388 on
 K–12 school funding.

 State Overview
 Figure 4.1 shows how real (inflation adjusted) total per pupil revenue, property tax revenue
 per pupil, and state revenue per pupil has changed from 1994 to 2017. It is clear that there
 is a break in trend lines from 2007 to 2008. There was a substantial increase in real per pupil
 state revenue, a modest drop in real property tax revenue per pupil, and a modest increase in
 total real per pupil revenue.
 It may be of greater interest to compare trends before and after the year when Act 388 was
 enacted and the Great Recession began to get some idea of how the school finance system
 in South Carolina changed. Total revenue per pupil grew at an average 3.6 percent rate from
 1994 to 2007; from 2008 to 2017 it grew at a 0.2 percent rate. Property tax revenue per
 pupil experienced a similar decline in growth rates—averaging 4 percent per year in the early
 period and 1.2 percent per year in the later period. State revenue per pupil grew at a 3.2
 percent annual rate from 1994 to 2007 and fell at an average annual rate of 0.4 percent from
 2008 to 2017.



CHAPTER 4
 All three revenue measures indicate slower growth in per pupil inflation-adjusted revenue
 after 2008.




 Source: U.S. Census and National Center for Education Statistics percent from 2008 to 2017.
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 State Revenue Shares from 2002-2016, by District
By using data from the National Center for Education Statistics we can compare various
revenue and expenditure trends for individual school districts. Data from the same ten focus
counties identified in Chapter 1 were used, and specific school districts within those counties




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
were examined. Within the focus counties there are twenty school districts. Some counties,
like Charleston, have a single school district. Others, like York, have multiple school districts
(York County currently has four school districts).12

 Table 4.2 State Revenue Shares of School District Budgets, 2002-2016

 State Revenue State Revenue
 State Revenue
 Share Average Share Average % Change State
 School District Share Jump in
 2002-2007 2009-2016 Revenue Shares
 2008 (%)
 (%) (%)
 Allendale 55.4 0.3 51.2 -4.2
 Charleston 34 10.8 29.9 -4.1
 Edgefield 55.7 2.2 51.2 -4.5
 Florence 1 48.9 8.9 51.7 2.8
 Florence 2 52.2 3.3 60.8 8.6
 Florence 3 56.6 4 55.6 -1.0
 Florence 4 55.6 3 47.3 -8.3
 Florence 5 51.8 3.9 57 5.2
 Greenville 44.4 8.8 49.1 4.7



 CHAPTER 4
 Horry 36.9 3.7 34 -2.9
 Orangeburg 3 51.1 0.8 44 -7.1
 Orangeburg 4 51.2 0.8 44 -7.2
 Orangeburg 5 50.3 2.6 46.3 -4.0
 Richland 1 38.9 0.5 31.9 -7.0
 Richland 2 44.1 11.1 48.6 4.5
 Sumter 56 3.9 53.5 -2.5
 York 1 53.6 5.4 50.3 -3.3
 York 2 (Clover) 26.5 10.9 35.7 9.2
 York 3 (Rock Hill) 48.7 8.1 51.4 2.7
 York 4
 41.2 11.8 48 6.8
 (Fort Mill)
 Source: Author’s computations based on NCES data




12
  In two cases, the districts in this analysis have been affected by mergers. First, note that the tables list Orangeburg 3, 4, and 5 districts which
were created from eight districts via consolidation in the 1990s. Hence, there are no Orangeburg 1 and 2 districts listed. As of July 1, 2019,
Orangeburg 3, 4, and 5 merged into one consolidated district. This merger does not affect the analysis in this report, however. Second, the
Sumter district was created in 2011 by merging Sumter 2 and Sumter 17. Data in this report combine Sumter 2 and Sumter 17 for the years prior
to the merger.
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 The first measure we examine is the share of state revenue in the budgets of the twenty
 school districts, shown in Table 4.2. The first column shows the average state share from
 2002 to 2007. It is clear that the state revenue share for most districts is substantial, but that
 the state share also varies considerably from 26.5 percent in York 2 (Clover) School District to
 55.4 in Allandale School District.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 The table shows the state revenue share jump in 2008, but also that the state revenue share
 in 2009 to 2016 was less for most districts than the state revenue share in 2002 to 2007.


 School District Revenue Trends Since 2008, by District
 In order to examine revenue trends since 2008, total property tax revenues, and total revenue
 per pupil were examined. Total revenue per pupil includes property tax revenue, non-property
 tax local revenue, state funding, and federal funding.
 Property tax revenue for the twenty districts within the ten focus counties rose from 2002
 to 2016, generally in the range of 2 to 4 percent per year. Table 4.3 shows the percent
 change in property tax revenue growth since 2008. The column only reports changes that
 are statistically significant.13 These data indicate that Act 388 may have slowed the rate of
 growth in property tax revenue for half of the districts, with a substantial negative effect in
 several districts. For example, property tax revenue in the Charleston School District grew 8.2
 percent less since 2008 compared to 2002 to 2007.
 Total revenue per pupil rose in all focus school districts during the period from 2002 to 2016.
 Increases were generally in the range of 3 to 5 percent per year. Table 4.3 shows the percent
 change in total revenue per pupil since 2008. These data indicate that Act 388 may have had
 the effect of slowing the rate of growth in total revenue per pupil for about half the districts.
 For example, in the York 4 School District (Fort Mill) total revenue per pupil grew by 3 percent


CHAPTER 4
 less since 2008 than it grew from 2002 to 2007.
 We examined the pattern among school districts that experienced slower growth in property
 tax revenue or total revenue per pupil since 2008. The second column of Table 4.3 shows
 the percentage of pupils in each school district that received free or reduced-price lunches.
 This measure is a proxy for the extent of poverty in a school district. In ten school districts,
 100 percent of the students received free or reduced-price lunches. The free and reduced-
 price lunch percentage in other school districts ranged from 18 percent (York 4, the Fort Mill
 School District) to 85 percent (Florence 5 School District). Four districts with 100 percent
 free and reduced-price lunches experienced slower growth in property tax revenue; five
 districts with 100 percent free and reduced-price lunches did not experience significantly
 slower growth in property tax revenue.
 There is no apparent correlation between the extent of poverty in a school district and the
 degree to which property tax revenue slowed after 2008. In addition, there does not appear
 to be a correlation between the extent of poverty in a school district and the degree to which
 total revenue per pupil slowed after 2008.




 13
 Volume 2 describes the methodology for these estimates. If an estimated relationship is statistically significant, we can be highly confident that
 it is caused by something other than chance.



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Table 4.3 also reports the percentage change in student enrollment from 2008 to 2016. There
is a substantial difference in student enrollment growth among these school districts, with
student enrollment growth in York 4 exceeding 73 percent and student enrollment decline in
Allendale School District of almost 30 percent.
There does not appear to be any relationship between enrollment growth and change in




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
property tax revenue from 2008 to 2016. However, it does appear that school districts in
fast-growing counties were more likely to have a statistically significant decline in their total
revenue per pupil after 2008. Seven of the nine districts with growing student enrollment
had slower growth in total revenue per pupil after 2008. This group of school districts with
growing enrollment and statistically significant declines in total revenue per pupil from
2008 to 2016 include: Charleston School District (5.1 percent slower growth after 2008),
Greenville School District (2.4 percent slower growth), and Horry School District (4.1 percent
slower growth.)
There are two likely reasons why school districts in fast-growing counties experienced
slower growth in total revenue per pupil after 2008. First, the millage cap constrained
increases in property tax rates. Second, as Boyd and Fox (2008) describe, the way the O & M
reimbursement is structured disadvantages fast growing districts.




 CHAPTER 4




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 Table 4.3 Change in Rate of Growth in School District Revenue and Expenditures, 2008-2016

 % Change in Revenue % Change in Expenditure
 % of Free Growth Growth
 School and Reduced % Change in
 Property Total Instructional Total




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 District Lunch Enrollment
 Students Tax Revenue Expenditure Expenditure
 Revenue Per Pupil Per Pupil Per Pupil
 Allendale 100 -29.5 * * * *
 Charleston 56 15.9 -8.2 -5.1 -2.5 *
 Edgefield 74 -16.9 -1.8 * * *
 Florence 1 74 6.4 -3.8 -3.4 -4.4 *
 Florence 2 100 -7.4 -4.7 * -3.4 *
 Florence 3 100 -7.0 * -4.2 * -2.8
 Florence 4 100 -30.9 * * * *
 Florence 5 85 -19.1 * * * *
 Greenville 53 8.7 * -2.4 * -7.8
 Horry 65 20.1 -10.2 -4.1 -3.5 *
 Orangeburg 3 100 -17.4 -2.7 -3.6 -3.2 *
 Orangeburg 4 100 -11.9 * -2.9 -2.7 *
 Orangeburg 5 100 -4.7 -3.4 * -4.8 2.3
 Richland 1 100 -2.7 -4.6 -5.1 -5.0 -10.9
 Richland 2 48 18.7 -4.2 -2.3 -2.8 -7
 Sumter 100 -5.3 * * -3.6 -5.1



CHAPTER 4
 York 1 63 0.7 * * -3.3 *
 York 2 (Clover) 32 24.7 * * 2.4 *
 York 3 (Rock
 -2.2 -2.1 -2.5 -6.5
 Hill) 60 2.3
 York 4 (Fort
 -3.0 *
 Mill) 18 73.1 * -2.6
 Sources: U.S. Department of Education, South Carolina Department of Education, Author’s computa-
 tions based on NCES data
 * Not statistically significant at the 5 percent level.


 School District Expenditure Trends Since 2008, by District
 Two expenditure trends that were examined in this study are instructional expenditure per
 pupil and total expenditure per pupil. Total expenditure includes both operating and capital
 expenses.




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Trends for instructional expenditure indicate that all but three districts experienced increasing
trends over the period from 2002 to 2016. The exceptions were the Allendale, Florence
4, and York 2 school districts. Table 4.3 reports how the percent change in instructional
expenditure per pupil changed since 2008. Only statistically significant changes were
reported. These data indicate that Act 388 may have had the effect of slowing the rate of




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
growth in instructional expenditure per pupil for 13 districts. The largest effect was seen in
the Richland 1 School District where instructional expenditure per pupil grew by 5 percent
less beginning in 2008 compared to the period 2002 to 2007. In a single school district, York
2, the percentage change in instructional expenditure per pupil increased beginning in 2008.
For the total expenditure per pupil column, six school districts experienced a statistically
significant decrease in growth after 2008: Florence 3, Greenville, Richland 1, Richland 2,
Sumter, and York 3. A single school district, Orangeburg 5, experienced an increase in the
growth after 2008.
There does not appear to be a correlation between the extent of poverty in a school district
and the degree to which instructional expenditure per pupil or total expenditure per pupil
slowed after 2008. In addition, there does not appear to be a correlation between student
enrollment growth and the degree to which instructional expenditure per pupil or total
expenditure per pupil slowed after 2008.
Three school districts experienced the most consistent declines in measures of revenue and
expenditure growth since 2008. Richland 1, Richland 2, and York 3 all experienced declines
in property tax revenue, total revenue per pupil, instructional expenditure per pupil, and total
expenditure per pupil growth since 2008.


 Relationship between School Funding and Student Achievement


 CHAPTER 4
There have been over one hundred studies of the impact of school spending on student
achievement, but that research has produced mixed results. Some of those mixed results arise
because of the difficulty of conducting empirical work in this area. For example, it is difficult
to untangle the impact of school spending from the impact of family background. In addition,
resources that impact student achievement play out over a number of years. That is, an
excellent first grade teacher can set a student on a better path through high school.
Eric Hanushek, one of the most well-known scholars researching the economics of education
concludes that “there is no clear, systematic relationship between resources and student
outcomes” (Hanushek 2015). At the same time, he concludes that improvements in teacher
quality would greatly increase economic growth rates for most states. It is important to note
that data availability and quality of econometric techniques have improved over the years
so one might want to take most seriously some of the more recent studies. One of the most
recent studies in the field finds that increasing per pupil spending in Texas has a positive
impact on test scores, graduation rates, and college enrollment and a negative impact on
dropout rates (Kreisman and Steinberg 2019).
Unfortunately, there is no solid time series that measures student achievement in South
Carolina school districts both before and after Act 388. Chapter 4 in Volume 2 discusses and
presents available data from the South Carolina High School Assessment Program, ACT tests,
the Palmetto Achievement Challenge Test, and the Palmetto Assessment of State Standards.
These achievement indicators present district-by-district measures, but do not provide a time
trend for before and after Act 388.


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 There is one test which enables policy analysts and policy makers to compare educational
 performance in one state compared to another: the National Assessment of Educational
 Progress (NAEP) exam, which is widely known as the Nation’s Report Card. The NAEP is one
 of the most commonly cited measures of educational performance. In 2001, when the No
 Child Left Behind Act was reauthorized, the law mandated that every state participate in NAEP




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 reading and mathematics evaluations for grades four and eight every two years. The various
 available test scores for South Carolina school districts and the NAEP scores for South
 Carolina compared to other states are presented in Volume 2.


 Conclusion
 Since Act 388 was implemented many of the twenty school districts in our ten focus counties
 experienced slower growth in property tax revenue, total revenue per pupil, instructional
 expenditure per pupil, and total expenditure per pupil.
 Half of the twenty school districts experienced slower growth in property tax revenue and
 eleven school districts experienced slower growth in total revenue per pupil. Thirteen school
 districts experienced slower growth in instructional expenditure per pupil since 2008, and six
 districts experienced slower growth in total expenditure per pupil 2008.
 School districts in fast-growing counties were more likely to have a statistically significant
 decline in their total revenue per pupil after 2008. Richland 1, Richland 2, and York 3 (Rock
 Hill) all experienced declines in property tax revenue, total revenue per pupil, instructional
 expenditure per pupil, and total expenditure per pupil growth since 2008.




CHAPTER 4




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 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Summary of
 Chapter 5:


Property Tax Abatements,
 Focusing on FILOTs




 by David Merriman, Ph.D. and Daphne A. Kenyon, Ph.D.
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 Introduction
 As noted previously, South Carolina’s effective business property tax rates are high relative to
 homestead property taxes and neighboring states’ business property taxes. These relatively
 high taxes are largely the product of two factors:




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 (1) South Carolina’s system of classification, which assesses manufacturing and utility parcels
 at 10.5 percent of market value (effectively a bit lower for manufacturing due to recently
 passed legislation), other business properties at 6 percent of market value, and owner-
 occupied homes at 4 percent of market value and;
 (2) Act 388, which exempts the primary residences of homeowners from property taxes for
 school operating costs.
 Together these two factors have the effect of shifting the responsibility for property tax
 payments away from homeowners and toward business—especially manufacturing and
 utilities.
 Certain provisions of South Carolina law make it possible for local governments to level the
 playing field to an extent by reducing the property tax liabilities of firms operating in the
 state. South Carolina has prepared a number of publications that describe the many business
 tax incentives that may be available. This chapter focuses on the most widely used business
 tax abatement, known as a fee-in-lieu of property taxes or FILOT.

 Fees in Lieu of Taxes (FILOTs)
 FILOT agreements make it possible for South Carolina county governments to reduce the
 property tax liability of firms that make new investments and create jobs in the state. In many
 cases, FILOT agreements require payment of a fee in place of the property tax payment
 and effectively reduce the assessment level of new manufacturing (and in some cases
 nonmanufacturing) property to 6 percent. FILOTs can also freeze the property tax millage rate
 for an extended period. Property subject to the fee usually consists of land, improvements to
 land, and/or machinery and equipment (excluding some mobile property) located at a project.
 An in-depth technical description of the rules for FILOT agreements is not included in this
 study since that information is readily available elsewhere.
 A brief nontechnical description is provided for readers that may be unfamiliar with FILOTs
 and similar economic incentive programs. Although there are several flavors of FILOT the
 basic idea behind each of them is similar—a potential investor agrees to make a substantial
 new investment in productive capacity (generally, but not always, manufacturing) in South


CHAPTER 5
 Carolina during a five-year period. The county where the new investment is located signs an
 agreement with the investor that lowers the assessment rate to six percent for a period of up
 to 40 years. The county and the investor may also agree to freeze the property tax millage on
 the new investment at its current level. For very large (so called “super”) investments of $500
 million or more the investment period may be lengthened to eight years, the assessment ratio
 may be lowered to four percent, and there is an added requirement that at least 1,000 jobs
 must be created.
 Such an arrangement can significantly reduce the property tax liability of a firm. For example,
 under a FILOT agreement between York County and Oerlikon Balzers Coating Inc., dated
 March 7, 2016, the investor agreed to invest at least $15 million and create 18 jobs by
 investing in an industrial park located in York County over the five-year period beginning the
 day the agreement was put into effect. The county agreed that the assessment ratio would
 be lowered to 6 percent and the tax rate would be frozen at 391.6 mills for a period of
 30 years.



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To understand the significant benefits of such an agreement, a simplified example is provided.
Assume the entire $15 million investment was committed to a project on the first day the
agreement went into effect, and no further investments were made after that date. Under
existing law, the $15 million investment would be assessed at 10 percent or $1,500,000.14
Applying the tax rate of 391.6 mills the tax liability on the investment would be $587,400. If
the assessment ratio were reduced to just 6 percent the assessed value would be $900,000




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
and, applying the millage rate of 391.6, the tax liability on the investment would be $352,440
saving the company $234,960 as shown in Table 5.1. If we assume that the firm would
achieve these same savings in each year and assume that future savings are discounted at
a rate of five percent the present value of 30 years of savings would be approximately $4
million. Therefore, in this simplified example, the FILOT mechanism has reduced the effective
cost of the initial investment from about $15 million to about $11 million, a reduction of
about 25 percent.

 Table 5.1 Property Tax Calculation Example



 Fee-in-Lieu
 Normal Calculation Calculation
 (Simplified)

 Total Investment $15,000,000 $15,000,000
 Assessment Ratio 10.0% 6%
 Assessed Value $1,500,000 $900,000
 Millage 391.6 391.6
 Tax Due $587,400 $352,440
 Savings Relative to Normal $234,960
 Source: Author’s calculation
Of course, the example is simplified in a number of ways: the investor is unlikely to make the
entire $15 million investment on the day the agreement is culminated. A delay in making the
investment could reduce the investors’ savings. The 5 percent discount rate may be either
too high or too low to represent the real opportunities facing this investor. The frozen millage
rate of 391.6 mills could change over time in the absence of the FILOT and the assumption—


 CHAPTER 5
implicit in this calculation—that it does not, is likely to understate the benefit to the investor.
It is, therefore, difficult to measure precisely the benefits of a FILOT agreement to an investor,
but it is reasonable to suggest that, for many investors, FILOTs may reduce the cost of
investment by as much as 25 percent.


 Estimates of Property Taxes Abated
In 2015, the Governmental Accounting Standards Board issued GASB Statement No. 77
in order to provide more transparency around tax abatements. The first filings by local
governments in South Carolina were expected in late 2017 (Klinger 2017). It is important
to note, though, that not all tax abatements are covered under GASB 77 and the use of tax


 Although the assessment ratio for manufacturing is nominally 10.5 percent, Act 40 of 2017 created a special exemption for manufacturing
14

which reduces the effective assessment ratio, on a phased in schedule from 2018 to 2023. In 2019 the effective assessment ratio for
manufacturing is 10 percent (SC Revenue Ruling #18-13).


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 increment finance (TIF, which is typically a way to earmark funds for dedicated use rather
 than a tax abatement device) is not covered by GASB77. It is also important to note that
 preliminary reporting in local government CAFRs (Comprehensive Annual Financial Reports) is
 spotty. This is the first time that many tax abatement programs throughout the country have
 had any estimates of tax revenue foregone at all.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Table 5.2 Property Tax Abatements, County Governments, 2018

 Property Taxes Total Property Tax Levy Amount Abated as a %
 County
 Abated ($) ($) of Total Property Tax
 Allendale NA NA NA
 Charleston 3,061,712 126,556,746 2.4
 Edgefield 89,073 27,926,438 0.3
 Florence 948,780 34,850,908 2.7
 Greenville 6,699,788 598,191,409 1.1
 Horry 177,567 149,757,000 0.1
 Orangeburg 4,100,000 39,438,463 10.4
 Richland 4,249,673 769,604,459 0.6
 Sumter 3,200,000 28,048,465 11.4
 York 3,433,000 119,500,000 2.9
 Source: County Comprehensive Annual Financial Reports
 See Table 5.2 for reported property tax abatements for nine of the ten focus counties.
 Reported property taxes abated vary widely from $89,000 in Edgefield to $6.7 million in
 Greenville. The table also reports property taxes abated as a percentage of total property
 tax revenue. Again, the percentages vary widely. However, two counties report that 2018
 property taxes abated exceeded 10 percent of total property taxes.
 See Table 5.3 for estimates by school district. Several school districts did not report property
 taxes abated in their CAFRs or annual audit reports, and the reported numbers vary widely.
 However, it is of interest to note that the largest property tax abatement numbers in the
 school district table far exceed the largest property tax abatement numbers in the county
 table. Greenville School District and Charleston School District report over $30 million in


CHAPTER 5
 property taxes abated in 2018. Some, but not all, of the difference in the reported property
 tax abatements for school districts compared to county governments can be explained by the
 fact that school district mills are about twice county government mills in our focus counties
 (South Carolina Association of Counties 2018).




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 Table 5.3 Property Tax Abatements, School Districts, 2018

 County School District Property Taxes Abated ($)
 Allendale Allendale NA




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Charleston Charleston 30,297,939
 Edgefield Edgefield 230,613
 Florence Florence 1 12,839,651
 Florence 2 NA
 Florence 3 NA
 Florence 4 NA
 Florence 5 7874
 Greenville Greenville 37,542,000
 Horry Horry 502,846
 Orangeburg Orangeburg 3 NA
 Orangeburg 4 449,000
 Orangeburg 5 NA
 Richland Richland 1 11,529,903
 Richland 2 9,965,699
 Sumter Sumter 6,000,000
 York York 1 54,832
 York 2 436,000
 York 3 463,976
 York 4 873,198
 Source: School District Annual Audit Reports and Comprehensive Annual Financial Reports

 Growth in Use of FILOTs
FILOT has been a popular tool and the assessed value of property under FILOT has grown


 CHAPTER 5
dramatically over time. Figure 5.1 shows the nominal assessed value of property in South
Carolina that is assessed as manufacturing15 and is assessed under FILOT16.




15
 Non-manufacturing properties are sometimes included in FILOT arrangements. Unfortunately, we were unable to obtain any information about
what share of FILOT properties are manufacturing versus non-manufacturing. Local informants told us that they believed most FILOT properties
are manufacturing.
16
  The South Carolina Department of Revenue (DOR) determines assessments for properties subject to FILOT. The process for determining
such assessments differs in substantial ways from the method of determining assessments for other properties of the same class (usually
manufacturing) and may be related to the fair market value of the property in complex ways. The Appendix A in Chapter 5 in Volume 2 explains
this in more detail.


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 Figure 5.1 Estimated Assessed Values Over Time (in millions of nominal dollars)
 1600



 1400




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 1200



 1000



 800



 600



 400



 200



 0
 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

 Year
 FeeinLieuandJointInd ManufacturingProperty



 Source: South Carolina Department of Revenue and author’s calculations
 As shown in the graph, the assessed value of non-FILOT manufacturing property has fallen
 over time in South Carolina from about $1.1 billion dollars in 1997 to around $700 million
 in 2016 (most recent data available). During the same period, the amount of property
 assessed under FILOT has grown from a little over $400 million dollars in 1997 to more
 than $1.4 billion in 2016. The value of property under FILOT actually surpassed the value of
 manufactured assessed properties in 2008.17



CHAPTER 5
 What Economic Effects Does Growth in FILOTs Have?
 One might ask whether the use of FILOT has led to an improvement in South Carolina’s ability
 to attract and retain economic activity. The FILOT program might be thought of as an attempt
 to counter South Carolina’s relatively unfavorable property tax treatment of manufacturing
 activity. Although it is difficult to isolate a specific factor that is responsible for a state’s
 economic environment, we can provide some relevant information by comparing South
 Carolina’s economic performance to the economic performance of nearby states as follows:
 Florida, Georgia, North Carolina, Tennessee, and Virginia.




 The rate of growth in FILOT assessments was slightly greater after enactment of Act 388. The annual rate of growth from 1997 to 2006 was 6.3
 17

 percent, and from 2007 to 2016 was 6.7 percent.


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The growth of total employment in all the states has been positive but was noticeably slowed
by the recessions that began in 2001 and the great recession that began in 2007. South
Carolina’s total employment grew by about 25 percent between 1997 and 2016. This rate of
growth placed it above Tennessee, about equal with Virginia and North Carolina but below
Florida and Georgia.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
With respect to manufacturing employment specifically, which would be expected to be
most highly related to the use of FILOTs, South Carolina’s manufacturing employment has
fallen like all of the comparison states. Again, South Carolina is in the middle of the pack and
had less relative decline than North Carolina, Virginia, and Tennessee but more decline than
Florida and Georgia.

The bottom line when looking at these figures is that South Carolina’s total and
manufacturing employment performance looks very similar to its neighboring states.
Macroeconomic factors such as recessions and recovery strongly influence all states’
performance. Other factors, including South Carolina’s property tax policy, are apparently
over-ridden by these important and powerful macro-economic trends.

South Carolina has a high share of total employment in the manufacturing sector. Going back
to 1997, the only comparison state with a higher share of employment in manufacturing
was North Carolina. Consistent with national and international trends, all of the comparison
states have seen some decline in the share of employment in manufacturing. The decline in
the share of manufacturing jobs in South Carolina has not been much different from declines
experienced by North Carolina or Tennessee. South Carolina continues to have a larger share
of jobs in manufacturing than other states in the comparison group.

In summary, South Carolina has seen a large increase in FILOT assessments and a large
decline in non-FILOT manufacturing assessments. While South Carolina has seen overall job
gains, this is not extraordinary and is similar to the comparison states. South Carolina has a
disproportionate share of its employment in manufacturing and has experienced declines in
manufacturing employment that closely align with comparison states.

This information on relative job growth in South Carolina and comparison states is consistent
with our hypothesis that FILOTs help the state “level the playing field” compared to the
disadvantage South Carolina would have had if its estimated effective property tax rates were


 CHAPTER 5
not offset by some property tax abatements.




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 Table 5.4 presents some additional information consistent with that hypothesis. In the course
 of one interview with the tax director of a large multistate company that does business in
 Alabama, Georgia, Indiana, North Carolina, and Oklahoma in addition to South Carolina we
 were able to obtain confidential information on that company’s effective property tax rates in
 those states. As noted in the table, once FILOTs and other property tax abatements are taken




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 into account, South Carolina’s effective property tax rate is not out of line with its competitor
 states. South Carolina’s effective property tax rate, taking property tax abatements into
 account, is higher than the rate in Alabama, North Carolina, and Oklahoma, but lower than
 the rate in Georgia, and Indiana.

 Table 5.4 Average Effective Property Tax Rates for a Large Multistate Company

 State
 Average Effective Tax Rate (%)
 South Carolina* 1.42
 Alabama 0.70
 Georgia 1.62
 Indiana 1.63
 North Carolina 1.05
 Oklahoma 1.09
 Source: Confidential
 Note: Effective tax rates are calculated by dividing property taxes by appraised value
 *This includes FILOTs and SSRCs




 Conclusion
 South Carolina’s effective business property tax rates are high relative to homestead property
 and neighboring states’ business property taxes. Fee-in-lieu of property taxes or FILOT makes


CHAPTER 5
 it possible for South Carolina county governments to reduce the property tax liabilities of
 firms that make new investments and create jobs. Because FILOTs are complex and involve
 more than a reduced assessment ratio, the property tax benefits they provide are not very
 transparent. Nevertheless, recent CAFRs provide some information on property tax foregone
 due to FILOT. In 2018, two counties reported property tax abatements exceeding 10
 percent of total property taxes collected. FILOT has grown a great deal in recent years,
 with the assessed value of property under FILOT now surpassing the assessed value of
 manufacturing properties.




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 Summary of




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Chapter 6:



Nonprofit and Governmental
 Properties
 Exempt from Real Property
 Taxes in South Carolina




 By Daphne A. Kenyon, Ph.D. and Semida Munteanu




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 Introduction
 Chapter 6 concerns property that is exempt from property taxation because it is owned by
 government or nonprofits. This chapter looks at policies regarding tax exemption of federal
 and state-owned property but mostly focuses on property owned by nonprofits.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Governments can benefit when nonprofits provide services that might otherwise be
 the government’s responsibility. Conversely, because nonprofits do not pay taxes, the
 cost of public services they consume (such as fire and police protection), falls to other
 property owners. The exemption can alter decisions about where a nonprofit locates and is
 concentrated among land-owning nonprofits. These issues have led to a growing interest
 in nonprofit payments in lieu of taxes (PILOTs). One municipality in South Carolina and
 neighboring states currently use this policy mechanism.
 This chapter first summarizes property tax treatment of government and nonprofit property
 across the United States, and then it briefly describes South Carolina’s policies. After
 describing issues that arise from tax exemption, this chapter explores various policies that
 offset the loss to local governments, including (PILOTs) and payments by state and federal
 governments. We also lay out policy recommendations for nonprofit PILOTs.


 Tax Treatment of Government and Nonprofit Property:
 United States and South Carolina
 Every state in the United States exempts government property and nonprofit property from
 real property taxes. Policies for taxing nonreligious nonprofits vary from state to state. South
 Carolina’s constitution mandates exemption for certain categories of nonprofits and even
 specific organizations. The constitution is unusual in that it authorizes county and municipal
 governments to charge nonprofits fees for fire protection and to collect payments in lieu of
 taxes from nonprofit housing corporations.
 Data on exempt property in South Carolina is difficult to find. In the absence of a centralized
 state database, a 2016 Clemson University dissertation was used (see Table 6.1). It provided
 data on exempt property in the 26 most populous South Carolina municipalities. The
 dissertation was used to analyze the importance of exempt property to South Carolina
 local governments in the focus counties (Keisler 2016). Among the 17 cities included in the
 Keisler analysis that were located in our focus counties, the share of land owned by state
 government, local governments, or nonprofit entities was substantial, exceeding 40 percent
 of all property in four cities. Because South Carolina law does not require assessors to
 appraise tax exempt property, we received no information on the value of exempt property
 from assessors except from Allendale County, the least populous of our focus counties.



CHAPTER 6




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Table 6.1 Percentages of Tax Exempt Land in Select South Carolina Municipalities, 2013*


 Municipality % of Land Property Tax Exempt




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Aiken 23.2
Anderson 15.1
Bluffton 47.5
Cayce 27.1
Charleston 33.5
Clemson 14.6
Columbia 42.3
Conway NA
Easley 17.8
Florence 18.1
Goose Creek 36.4
Greenville 23.8
Greenwood 38.5
Greer 28.8
Hanahan 18.0
Hilton Head Island 16.1
Lexington 15.0
Mauldin 26.2
Mount Pleasant 23.7
Myrtle Beach NA
North Myrtle Beach NA
North Augusta 12.2
North Charleston 43.9
Orangeburg NA
Rock Hill 44.6
Simpsonville 24.0
Spartanburg 26.2
Summerville 18.2


 CHAPTER 6
Sumter 40.6
West Columbia 28.1
Source: Keisler (2016)
*Cities shaded in gray are located in our focus counties. The City of North Charleston is
located in three different counties, including Charleston.




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 Issues Raised by Exemption of Government and Nonprofit Property
 Governments benefit when nonprofits provide services to the public that would otherwise
 be the responsibility of government. The nonprofit exemption can be viewed as a subsidy to
 encourage these activities. However, the property tax is used to fund services that benefit




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 all properties—for example, public safety, fire protection, and street and road maintenance.
 When government and nonprofit properties fail to contribute funding for such services,
 other property owners bear an increased property tax burden. This is particularly problematic
 when a well-funded nonprofit, such as an elite college, is located in a city with many low-
 income residents. It may not seem fair for the low-income renters to pay higher property
 taxes because the college is exempt from property taxation, particularly if the college enrolls
 students from across the country or around the world.

 When the exemption of nonprofits from the real property tax is viewed as a subsidy, one
 can raise questions regarding the efficiency of that subsidy. Because nonprofits are not liable
 for property taxes, they may be more likely to locate to areas where property is expensive,
 such as in city centers. Also, the exemption from real property taxation benefits only those
 nonprofits that own property, such as colleges and hospitals, and not small nonprofits, with
 meager budgets, that are more likely to rent, such as soup kitchens.

 Nonprofits and PILOTs
 To address the issues that arise from nonprofit exemption, some local governments ask
 nonprofits to make voluntary payments in lieu of taxes, commonly referred to as PILOTs. The
 most recent comprehensive survey of PILOTs across the United States found that at least 218
 localities in at least 28 states had received PILOTs from 2000 to 2012 (Langley, Kenyon, and
 Bailin 2012).




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Figure 6.1

Map of States Collecting PILOTS, 2002-2012




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Source: Langley, Kenyon, and Bailin 2012

Although the Northeast is the region with the greatest incidence of PILOTs, as Figure 6.1
shows, South Carolina has one city that receives PILOTs (Greenwood in Greenwood County),
both Georgia and North Carolina have two municipalities that receive PILOTs, and three
localities in Virginia receive PILOTs (see Table 6.2). Nationally, and in the region, colleges,
universities, and hospitals are the types of nonprofits that most often contribute PILOTs;
they are also the types of nonprofits that contribute the greatest percentage of total PILOT
revenue.

To our knowledge Greenwood City is the only municipality in South Carolina that receives


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PILOTs from nonprofits (Cranney 2018). The city enacted a PILOT program in 2011. Currently,
four health-related nonprofits contribute a total of just under $200,000 annually to help fund
city services.18



18
 See Appendix A to Chapter 6 in Volume 2 for a description of how and why Greenwood City enacted a PILOT program in 2011.




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 Table 6.2 PILOT Activity in South Carolina and Comparison States*

 State Locality Nonprofit Sector Revenue ($) Year
 Georgia Decatur Clairemont Oaks Housing 36,500 2018




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Decatur Philips Towers Housing 23,500 2018
 DeKalb
 Emory University Educational 2,500,000 2010
 County Schools
 North
 Davidson Davidson College Educational 45,000 2016
 Carolina
 Davidson The Pines at Davidson Housing 87,561 2012
 Durham Duke University Educational 400,000 2016
 South
 Greenwood Carolina Health Centers Health 9,500 2019
 Carolina
 Greenwood Self Regional Healthcare Health 175,000 2019

 Greenwood Wesley Commons Health 9,500 2019

 Greenwood Greenwood Genetic Center Health 3,000 2019
 Virginia Lexington Washington & Lee University Educational 132,021 2011
 Lexington Virginia Military Institute Educational 35,882 2011
 Lynchburg Westminster Canterbury Housing 52,900 2018
 Winchester Crisis Pregnancy Center Health 516 2011
 Feltneer Community
 Winchester Social Services 180 2011
 Foundation
 French & Indian War
 Winchester Arts/Culture 326 2011
 Foundation
 Winchester Habitat for Humanity Housing 154 2011
 Winchester Our Health Health 3,187 2011
 Winchester Shenandoah Arts Council Arts/Culture 120 2011
 Westminster-Canterbury of
 Winchester Housing 45,876 2011
 Winchester
 Winchester Valley Health System Health 351,865 2011
 Source: Langley, Kenyon, and Bailin (2012)
 *The data in the original source has been updated based on information from city budgets that are
 publicly available.

 While PILOTs provide compensation for revenue lost due to the charitable nonprofit



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 exemption, they are not appropriate for all municipalities and not appropriate for all
 nonprofits. PILOTs are more appropriate for municipalities that are highly reliant on property
 taxes and which have a high share of nonprofit property. PILOTs are best applied to
 nonprofits that: own a large amount of property, are financially secure, and predominantly
 serve clients outside of the municipality where they are located. In any case, municipalities
 and nonprofits should work closely to negotiate PILOT agreements that consider the financial
 constraints of each nonprofit.


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If South Carolina policymakers decide to encourage local governments to adopt PILOT
programs, these are recommendations for establishing programs that are efficient
and equitable:

 • Adopt a systematic, multi-year program.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
  • Establish clear criteria for the type of nonprofits that would be eligible to
		 participate—either by identifying a list of general principles and excluding
		 nonprofits that do not meet them, or by setting a threshold level of appraised
		 value or operating revenue to make a nonprofit eligible for inclusion in
		 the program.

 Since PILOT programs are not recommended for all municipalities, often it is best to
 consider alternatives such as state grants and user fees when seeking the best means of
 compensating for lost revenue:

 • State Grants: Both Connecticut and Rhode Island state governments have long 		
 		 made payments to municipalities to help compensate for exempt property owned
 		 by nonprofit medical and educational institutions. Sometimes these programs are
 		 referred to as GILOTs (grants-in-lieu-of-taxes) to distinguish them from PILOTs paid
 		 by nonprofits.

 • User Fees: Nonprofits are generally exempt from paying property taxes as 		
 		 described previously. However, they are not generally exempt from paying user
 		 fees for services like garbage collection, water, and sewer. Thus, a municipality can
 		 obtain more revenue from the nonprofit sector by shifting the financing of some
 		 services from the property tax to user fees.

 Payments in Lieu of Taxes on State Real Property and Federal Property
State Property

Tax-exempt state property also presents a revenue issue for local governments. There are
various state programs that compensate local governments for the loss of their tax base due
to state ownership of land. The most recent compilations of state PILOT programs across
the United States were completed in 1990 and 1994. They are no longer accessible but were
consolidated and described by the New York State Department of Taxation and Finance
(1996).



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The New York State Department of Taxation reports that at least 22 states had some sort
of state PILOT program in the early 1990s. None of South Carolina’s comparison states had
such a program, but South Carolina was reported to have three state programs compensating
local governments for state-owned property, with an annual cost of approximately $1.5
million (U.S. Advisory Commission on Intergovernmental Relations 1991, 143). Through a web
search we found evidence of current use of state PILOT or PILT programs in Connecticut,
Massachusetts, Michigan, North Dakota, and Vermont.


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 Federal Property

 The last comprehensive examination of payments in lieu of taxes on federal real property
 appears to have been a study by the U.S. Advisory Commission on Intergovernmental
 Relations published in 1981. That study noted that, “Congress has recognized a responsibility




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 to some local governments for making some form of tax or in lieu of payment to account for
 the federal presence, but the result has been the creation of a patchwork of uncoordinated
 and ad hoc special tax payment programs which have developed over the years.” At that time
 there were 57 different federal programs that could be characterized as payment in lieu of tax
 programs. The most commonly known program in the last category is the Payments in Lieu of
 Taxes (PILT) program, managed by the U.S. Department of the Interior (DOI).

 The federal government owns approximately 640 billion acres of land across the United
 States and 95 percent of this land is managed by four agencies: Bureau of Land Management,
 National Park Service, Fish and Wildlife Service within the DOI, and Forest Service within
 the Department of Agriculture (Gorte and Corn 2012, 11). The DOI makes annual PILT
 payments for land managed by these agencies, as well as for federal water projects and some
 military installations. These annual payments are calculated based on a formula that considers
 population, revenue-sharing payments, and the amount of federal land within the local
 government boundaries. In FY2019, the DOI paid South Carolina $845,000 for approximately
 800,000 acres of federal land through a PILT program. Only half of the focus counties
 received funding in 2019 from the PILT program, and the amounts they received were small.
 The focus county receiving the most funding from PILT in 2019 was Charleston, with almost
 $127,000 received.

 Conclusion
 South Carolina does not tax property owned by the federal government, state government,
 religious nonprofits, and most other nonprofits. Because South Carolina does not maintain a
 centralized database of exempt property or require assessors to appraise exempt property,
 we know little about the effect of the exemption on local governments. However, among
 the focus counties, several have cities in which over 40 percent of property is exempt
 from taxation because the property is owned by state government, local government, or
 nonprofits. South Carolina has one municipality that receives payments in lieu of taxes
 from nonprofits. PILOTs, when designed properly, can address some the issues arising from
 nonprofit tax exemption.




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 DEFINITIONS
Ad Valorem Tax— (Latin for “toward value”) A tax imposed on properties in proportion to their
values. The most common are the ad valorem taxes imposed on real and personal property.

Appraised Value—The estimate of the value of a property before application of any fractional




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
assessment ratio.

Assessable Transfer of Interest (ATI) —A transfer of an existing interest in real property that
subjects the real property to reappraisal. For purposes of this definition, an existing interest in
real property includes a life estate interest.
Assessed Property Value—The amount of a property’s value that is subject to be taxed, as
determined by the assessor. To determine the assessed value, the property tax value (PTV) is
multiplied by the appropriate assessment ratio as noted below.

  • Owner-occupied and agricultural properties are assessed at 4 percent of their 		
		 appraised value.

  • Commercial and non-owner-occupied residential properties are assessed at 6 		
		 percent of their appraised value.

  • Manufacturing properties are assessed at 10.5 percent of the appraised value 		
		 (determined by the S.C. Department of Revenue).

Assessment—The official act of discovering, listing, and appraising property, usually by an
assessor.
Assessment Ratio—The ratio applied to the appraised value of property depending on the
use of the property. Assessment ratio qualifications are set forth by state law. Real property
(excluding manufacturing and utility property) is assessed in South Carolina at either a 4
percent or 6 percent ratio.

Capped Value--See Property Tax Value.

Coefficient of Dispersion (COD)—The coefficient of dispersion is commonly used to measure
horizontal uniformity. It calculates the variation in appraisal/sales ratios around the measure
of central tendency by computing the variation of each parcel’s appraisal/sales ratio from the
median ratio and then expressing it as a percent of the median ratio.

Fair Market Value (FMV) —Value as defined by §12-37-930 which states that “All property
must be valued for taxation at its true value in money, which in all cases is the price that the


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property would bring following reasonable exposure to the market, where both the seller and
the buyer are willing, are not acting under compulsion, and are reasonably well informed of
the uses and purposes for which it is adapted and for which it is capable of being used.”




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 Horizontal Equity— Horizontal equity is the principle that people in similar circumstances
 should be treated the same by the tax system. In the context of the property tax, horizontal
 equity means that people with properties of similar value should pay similar property taxes.
 For example, in the context of horizontal equity, if two houses are each valued at $100,000,
 they should pay the same property tax, regardless if one is owner-occupied and the other is




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 non-owner-occupied. (See discussion of Coefficient of Dispersion)

 Market Value—The amount that property can reasonably be expected to sell for on the open
 market with a willing buyer and a willing seller.

 Millage Rate—The number of mills levied in order to meet the budget of a school district,
 county, city, or other political subdivision. One mill equals 1/1000 of a dollar or 1/10 of a
 cent. If the tax rate is 501 mills, multiply .501 by the assessed value to determine the amount
 of property tax due.

 O & M Exemption—The removal of the school operation portion of a primary homeowner’s
 property tax bill. O & M is shorthand for “operations and maintenance.”

 Owner-Occupied—In South Carolina, often used interchangeably with “primary residence.”
 Otherwise, this term means “used as a dwelling by the owner.” Outside of South Carolina,
 “owner-occupied” is not synonymous with “primary residence” or the legal term for primary
 residence which is “domicile.”

 Personal Property—All things other than real estate which have value such as cars, trucks,
 boats, motorcycles, and airplanes. Also, items used in a business such as furniture, fixtures,
 and equipment.

 Price Related Differential (PRD)—A statistic used to measure vertical uniformity of appraisals.
 It is calculated by dividing the mean appraisal/sales ratio by the aggregate ratio for an entire
 group of properties.

 Primary residence---That particular locality where a person is legally deemed to have his or
 her true home or place of abode. A person always has one, and only one, primary residence.
 Primary residence is synonymous with the legal term “domicile.”

 Property Tax Value (PTV) or Capped Value—”Each political subdivision shall value real
 property by a method in which the value of each parcel of real property, adjusted for
 improvements and losses, does not increase more than fifteen percent every five years unless
 an assessable transfer of interest occurs.” Property Tax Value, according to §12-37-3155
 means fair market value as it may be adjusted downward to reflect the limit imposed pursuant
 to Section 12-37-3140(B).




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Reassessment—Process required by state law to determine the change in market value
of property over a certain period of time in order to provide equity among taxpayers.
Reassessment is a revaluation of real estate. Presently South Carolina state law requires each
county to reassess every five years.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Real Property—All land and the buildings, structures, and improvements on that land.

Sales Ratio Study—A study of the relationship between appraised values and sales values.
These studies focus on the level and uniformity of appraisals.

Tax Bill Number—A “Bill Number” identifies an individual tax bill issued for each Tax Year.
The “Bill Number” is used to link the billing and payment records for each tax bill. The “Bill
Number” appears twice on a tax bill: on the third line of the information listed at the top right
corner of the bill, and at the left side of the third line down from the perforation (detach line)
at the bottom of the bill.

Tax Year—The year that the tax bill is received, payable by January 15 of the next year.

TMS (Tax Map System), TMS—The “TMS” number links ownership and map location
information. This information is maintained by the county assessor’s office. This includes “tax
maps” that show all the parcels of land in the county, each labeled with its own TMS number
that links to current ownership information for each parcel.

Vertical Equity—Vertical equity, in the context of the property tax, means that high- and low-
valued properties should be appraised in the same relationship to actual sales prices. To the
extent appraisal/sales ratios for high- and low-valued properties are not the same, vertical
equity is undermined. (See discussion of Price Related Differential.)




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 Uptown. (July). https://www.masc.sc/Pages/newsroom/uptown/July%202017/Tax-Increment-
 Financing-in-South-Carolina.aspx.

 Musgrave, Richard A. 2005. “Fairness in Taxation” in Cordes, Joseph J., Robert D. Ebel, and
 Jane G. Gravelle, eds. 2005. The Encyclopedia of Taxation and Tax Policy. Washington, DC:
 Urban Institute Press.

 New York State Department of Taxation and Finance. 1996. “Compensating Local
 Governments for Loss of Tax Base Due to State Ownership of Land.” (September). https://
 www.tax.ny.gov/research/property/reports/landcomp/section4.htm.

 North Dakota Century Code. 2016. Title 57, Chapter 57-02.1 Payments in Lieu of Real Estate
 Taxes. https://law.justia.com/codes/north-dakota/2016/title-57/chapter-57-02.1/.

 O’Leary, Mary E. 2018. “New Haven Says Dropping PILOT Funds May be a Civil Rights Issue;
 Suit Weighed.” New Haven Register. (March 12).

 Orangeburg County Government. County of Orangeburg, South Carolina Basic Financial
 Statements and Supplementary Information June 30, 2018. https://www.orangeburgcounty.
 org/Downloads/Financedocs/OBCNTY-FinReport_2018.pdf.
82
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Paquin, Bethany. 2015. “Chronicle of the 161-Year History of State-Imposed Property Tax
Limitations.” Working Paper WP15BP1. Cambridge, MA: Lincoln Institute of Land Policy.
(April).

Phillips, Andrew, Caroline Sallee, and Muath Ibaid. 2018. “Total State and Local Business




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Taxes: State-by-State Estimates for Fiscal Year 2017.” Washington, DC: Ernst & Young.

Pitts, David. 2010. “A Historical Analysis of Property Reform Act of 2006.” All Dissertations.
540. https://tigerprints.clemson.edu/all_dissertations/540.

Richland County Government. A Comprehensive Annual Financial Report for the Fiscal Year
Ended June 30, 2018. http://www.richlandcountysc.gov/Portals/0/Departments/Finance/
CAFR/CAFR%20FY2018.pdf.

Salamon, Lester M., Stephanie L. Geller, and S. Wojciech Sokolowski. 2011. “Taxing the
Tax-Exempt Sector—A Growing Danger for Nonprofit Organizations.” Communique No. 21.
Baltimore, MD: Johns Hopkins University for Civil Society Studies.

Saltzman, Ellen W., and Holley H. Ulbrich. 2012. “Act 388 Revisited.” Strom Thurmond Institute
of Government and Public Affairs, Clemson University. (November).

Saltzman, Ellen W., and Holley H. Ulbrich. 2017. “Updating Base Student Cost.” Strom
Thurmond Institute of Government and Public Affairs, Clemson University. (November).

South Carolina Association of Counties. 2018. “South Carolina Property Tax Rates by County,
2018.” (December).

South Carolina Department of Commerce. 2019a. Business Incentives. (June). https://www.
sccommerce.com/sites/default/files/2019-09/BusinessIncentivesBooklet_Web_092019.pdf.

South Carolina Department of Commerce. 2019b. Manufacturing Incentives. (June). https://
www.sccommerce.com/sites/default/files/2019-09/ManufacturingIncentivesBooklet_
Web_092019.pdf.

South Carolina Department of Commerce. 2019c. Service Incentives. (June). https://www.
sccommerce.com/sites/default/files/2019-09/ServiceIncentivesBooklet_Web_092019.pdf.

South Carolina Department of Education. South Carolina High School Assessment Program.
English Language Arts and Mathematics 2013–14 Operational Test Technical Report. https://
ed.sc.gov/tests/tests-files/assessment-information/2013-14-hsap-technical-report/.

South Carolina Department of Education. “The South Carolina ACT Testing Program 2018–
19.”

South Carolina Department of Revenue. Various years. Assessed Property by County. https://
dor.sc.gov/lgs/reports-assessed-property-by-county.

South Carolina Department of Revenue. Various years. Tax Collections by County. https://dor.
sc.gov/lgs/reports-tax-collections-by-county.




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 South Carolina Department of Revenue. 2015. South Carolina Property Tax. https://dor.sc.gov/
 resources-site/publications/Publications/Property_Tax_Guide.pdf.

 South Carolina Department of Revenue. 2019. SC Information Letter #19-2. January 2.
 https://dor.sc.gov/resources-site/lawandpolicy/Advisory%20Opinions/IL19-2.pdf.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 South Carolina Department of Revenue. 2018. South Carolina Tax Incentives for Economic
 Development. (May). https://dor.sc.gov/resourcessite/lawandpolicy/Documents/SC_TIED_
 Complete.pdf.

 South Carolina Office of the Attorney General. 2014. Letter from Anita Smith Fair, Assistant
 Attorney General, to Mark W. Tollison, Greenville County Attorney. (January 15).

 South Carolina Revenue and Fiscal Affairs Office. 2018. South Carolina Revenue Sources and
 Fiscal Impacts.

 South Carolina Revenue and Fiscal Affairs Office. 2016. “Property Tax Review & Analysis
 Requested by House Tax Policy Review Committee.” (September 27).

 State of Connecticut, Office of Policy and Management. 2019. “Colleges (Private) and
 General/Free Standing Chronic Disease Hospitals—Payment in Lieu of Taxes (C & H PILOT).”
 https://portal.ct.gov/OPM/IGPP-MAIN/Grants/PILOT/Colleges-Private-and-GeneralFree-
 Standing-Chronic-Disease-Hospitals.

 State of Connecticut, Office of Policy and Management. Undated. “State-Owned Property—
 Payment in Lieu of Taxes.” https://portal.ct.gov/OPM/IGPP-MAIN/Grants/PILOT/State-
 Owned-Property--Payment-in-Lieu-of-Taxes

 Summers, K. 2019. “The Basics of School Funding.” Michigan Senate Finance Agency.
 (February).

 Sumter County Government. Sumter County South Carolina Basic Financial Statements, June
 30, 2018. http://www.sumtercountysc.org/Sumter%20County%20FY%202018%20Basic%20
 Financial%20Statements.pdf.
 Swords, Peter. 2002. “The Charitable Real Property Tax Exemption as a Tax-Base-Defining
 Provision.” Property-Tax Exemption for Charities, ed. Evelyn Brody, 377–382. Washington, DC:
 Urban Institute Press.

 Tip Strategies and SRS Community Reuse Organization. 2017. “The Savannah River Site:
 Economic Impact and Workforce Transition.” Savannah River Site Community Reuse
 Organization.

 U.S. Advisory Commission on Intergovernmental Relations. 1981. “Payments in Lieu
 of Taxes on Federal Real Property.” In Brief. Washington, DC: Advisory Commission on
 Intergovernmental Relations.

 U.S. Advisory Commission on Intergovernmental Relations. 1991. Significant Features of Fiscal
 Federalism, Vol. 1: Budget Processes and Tax Systems. Washington, DC: Advisory Commission on
 Intergovernmental Relations. (February).



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U.S. Department of Commerce. Bureau of Economic Analysis. Various years. Employment by
Industry. https://www.bea.gov/data/employment/employment-by-industry.

U.S. Department of Education. NCES (National Center for Education Statistics). “Common
Core of Data (CCD).” http://nces.ed.gov/ccd/elsi/.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
U.S. Department of Energy. 2003. “DOE O 143.1—Payments in Lieu of Taxes.” https://www.
directives.doe.gov/directives-documents/100-series/0143.1-BOrder/@@images/file.

U.S. Department of the Interior. Undated. “Payments in Lieu of Taxes.” www.doi.gov/pilt.

U.S. Nuclear Waste Technical Review Board. 2017. “Department of Energy—Managed Spent
Nuclear Fuel at the Savannah River Site.” (December). https://www.nwtrb.gov/docs/default-
source/facts-sheets/doe-snf-fact-sheet---srs.pdf?sfvrsn=4.

Ulbrich, Holley H. 2009. “Assessment Caps and the Point of Sale Provision.” Strom Thurmond
Institute of Government and Public Affairs, Clemson University. (September).

Ulbrich, Holley H. 2010. “School District Organization and Governance in South Carolina.”
Strom Thurmond Institute of Government and Public Affairs, Clemson University. (March).

Ulbrich, Holley H. 2010. “Taxation in South Carolina: Issues and Challenges.” Strom Thurmond
Institute of Government and Public Affairs, Clemson University. (August).

Ulbrich, Holley H. 2014. “South Carolina’s Tax System: Damning with Faint Praise.”
(PowerPoint). Strom Thurmond Institute of Government and Public Affairs, Clemson
University. Presented January 4.

Ulbrich, Holley H. 2014. “Act 388 and the Minimum Guarantee.” Strom Thurmond Institute of
Government and Public Affairs, Clemson University.

Ulbrich, Holley H. 2019. “Education Funding Issues: A Framework for Achievable Reform.”
Prepared for the Senate Education Funding Reform Committee.

Ulbrich, Holley H., and Ellen W. Saltzman. 2009. “Financing Education in South Carolina—A
Citizen’s Guide.” Strom Thurmond Institute of Government and Public Affairs, Clemson
University. (June).

Ulbrich, Holley H., and Ellen W. Saltzman. 2009. “Why Should You Care About the Index of
Taxpaying Ability?” Strom Thurmond Institute of Government and Public Affairs, Clemson
University. (July).

Ulbrich, Holley H., Ellen W. Saltzman, and Catherine E. Watt. 2009. “Options for Anderson
County School Districts.” Strom Thurmond Institute of Government and Public Affairs,
Clemson University. (June).

Ullrich, Laura. 2018. “South Carolina.” Lincoln Institute of Land Policy—State-by-State
Property Tax at a Glance. 2019. https://www.lincolninst.edu/research-data/data-toolkits/
significant-features-property-tax/state-state-property-tax-glance.



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 Ullrich, Laura. 2012. “Act 388: Its Impacts on South Carolina Schools and Communities.”

 University of South Carolina, Aiken. 2011. “The Economic Impact of the Savannah River Site
 on Five Adjacent Counties in South Carolina and Georgia.” The O’Connell Center for Executive
 Development.




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Vermont Agency of Administration. Undated. General Payment in Lieu of Taxes (PILOT).
 https://tax.vermont.gov/municipal-officials/reports/pilot.

 Von Lehe, Jr., John. 2018. “South Carolina Property Tax.” Property Tax Deskbook, Twenty-Third
 Edition. Washington, DC: American Bar Association.

 Walters, Lawrence C. 2015. “The Taxation of Registered Motor Vehicles in Connecticut,”
 Chapter 6, Connecticut Tax Panel, Volume 3, Statement of Final Recommendations Accompanied
 by Staff Study Papers on the Property Tax and Local Revenue Diversification, Connecticut Tax
 Panel Final Report.

 Wren, David. 2018. “SC Governments Give Businesses Millions in Incentives, But the Math is
 Fuzzy.” Post and Courier. (June 30).

 York County Assessor’s Office. 2019. Real estate data, 2018. July 2019.

 York County Government. Comprehensive Annual Financial Report for the Fiscal Year
 Ended June 30, 2018. https://www.yorkcountygov.com/DocumentCenter/View/3538/
 Comprehensive-Annual-Financial-Report-2018.

 Youngman, Joan. 2016. A Good Tax: Legal and Policy Issues for the Property Tax in the United
 States. Cambridge, MA: Lincoln Institute of Land Policy.


 Individuals Interviewed

 Adkins, Deborah, Real Property Services Manager, Greenville Assessor Office
 Barfield, James, Assessor, Sumter County Assessor’s Office
 Berger, Anna, Director of Research and Training, SC Association of Counties
 Boheler, Amy, Auditor, York County Auditor’s Office
 Brown, Ryan, Chief Communications Officer, SC Department of Education
 Christ, Brock, Tax Director, Michelin North America
 Cleland, Meredith, Deputy Director, Government Services Division, SC Department of
 Revenue
 Cone, Thomas, Chief Counsel, SC House of Representatives
 Dawkins, Hunter, Director of Development, Natural Resources Division, Johnson
 Development Associates
 Epps, James, Superintendent, Fort Mill School District
 Farris, Mark, President & CEO, Greenville Area Development Corporation
 Glennon, Toy, Assessor, Charleston County Assessor’s Office
 Hardin, Edgar, Deputy Assessor, York County Assessor’s Office
 Hottel, Donald, Director of Research, SC House of Representatives



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Jantzen, Richard, Assessor, York County Assessor’s Office
Johnston, Robert, Chief Strategy Officer, The InterTech Group
Jolliff, Lisa, Division Manager, Fiscal Analysis, SC Revenue and Fiscal Affairs Office
Kibler, H. Haskell, Asset Manager, Wilson Kibler Commercial Real Estate
Kinsey, Bryan, Assistant Director, Tennessee Comptroller’s Division of Property Assessments




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
Lockwood, David, Executive Vice President and Chief Operating Officer, Colliers International
Ludwig, Benjamin, Director of Community Relations and Economic Development, Southern
 Current
Maybank, Burnet, Tax Attorney, Nexsen Pruet
McDonald, Elizabeth, Assessor, Richland County Assessor’s Office
McLean, James, Assessor, Orangeburg County Assessor’s Office
Miller, Mary Katherine, Property Tax Specialist, SC Revenue and Fiscal Affairs Office
Mishoe, Michelle, FILOT Advisor, Property Division, SC Department of Revenue
Monroe, Cooper, Tax Director, Duke Energy
Morrell, Real Estate Broker, Stephen Cooley Real Estate Group
Paradice, William, Local Government Services Supervisor, Property Division, SC Department
 of Revenue
Parlock, Paul, Senior Tax Consultant, Dominion Energy
Phibbs, Bethany, Executive Director, SC Association of School Administrators
Powell, Allyn, Director of Budget Development, Fiscal Analysis Division, SC Revenue and
 Fiscal Affairs Office
Rhodes, Joshua, Deputy General Counsel, SC Association of Counties
Richardson, Wayne, Deputy Auditor, Richland County Auditor’s Office
Roscoe, Lawrence, Assessor, Horry County Assessor’s Office
Rouse, Harvey, Assessor, Allendale County Assessor’s Office
Ruple, Amelia Furr, Training and Research Coordinator, Local Government Services, SC
 Department of Revenue
Russell, Jean, External Tax Policy Advocate, AT&T
Smith, Sandra, Executive Director, SC Association of School Business Officials
Smoak, Nancy, Lower State Property Field Supervisor, Property Division, SC Department of
 Revenue
Sosebee, Jane, South Carolina President, AT&T
Spinks, Steven, Chief Executive Officer, The Spinx Company
Stokes, Lisa T., Special Projects Coordinator, Local Government Services, SC Department of
 Revenue
Swenson, David, Director, York County Economic Development
Tecklenburg, Peter, Auditor, Charleston Auditor’s Office
Turkopuls, Senior Research Associate, SC Association of Counties
Ulbrich, Holley, Professor Emerita of Economics, Clemson University
Wells, Tigerron, Director of Governmental Affairs, SC Municipal Association
Williams, William, President & and CEO, Economic Development Partnership
Winslow, Timothy, Executive Director-Elect, SC Association of Counties
Yarborough, Jonathan, Director of Governmental Affairs and Economic Development,
 Dominion Energy




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 Authors
 Alvayay Torrejón, Camila, (Skidmore’s co-author) Graduate Research Assistant, Michigan State
 University

 Anderson, John E., Baird Family Professor of Economics, University of Nebraska-Lincoln




 Attachment: SC Property Tax Study 8.21.2020 FINAL (7003 : City of Columbia Property Tax Structure)
 Bell, Michael, President, MEB Associates, Inc.; Research Professor, George Washington
 Institute of Public Policy, George Washington University

 Kenyon, Daphne A., Resident Fellow in Tax Policy, Lincoln Institute of Land Policy

 Merriman, David, James J. Stukel Presidential Professor, Department of Public Administration
 and Institute of Government and Public Affairs, University of Illinois

 Munteanu, Semida, Associate Director of Tax Policy and International Initiatives, Lincoln
 Institute of Land Policy

 Paquin, Bethany P., Senior Research Analyst, Lincoln Institute of Land Policy

 Shute, Alannah M., Research Assistant, Lincoln Institute of Land Policy

 Skidmore, Mark, Professor and Morris Chair in State and Local Government Finance and
 Policy, Michigan State University

 Reviewers

 Bell, Michael, President, MEB Associates, Inc.; Research Professor, George Washington
 Institute of Public Policy, George Washington University

 Harpel, Ellen, Founder and CEO, Smart Incentives

 Langley, Adam, Associate Director of Tax Policy and Data Initiatives, Lincoln Institute of
 Land Policy

 Rakow, Ronald, Fellow, Lincoln Institute of Land Policy; Former Commissioner, City of Boston
 Assessing Department

 Reschovsky, Andrew, Professor Emeritus of Public Affairs and Applied Economics, University
 of Wisconsin-Madison

 Ullrich, Laura, Regional Economist, Federal Reserve Bank of Richmond

 Youngman, Joan, Senior Fellow and Chair, Department of Valuation and Taxation, Lincoln
 Institute of Land Policy




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COLUMBIA TAX STUDY COMMITTEE MEETING MINUTES
 THURSDAY, SEPTEMBER 23, 2021


CALL TO ORDER
 Attendee Name Present Absent Late Arrived
 Tameika Isaac Devine   
 Howard E. Duvall   
 Daniel J. Rickenmann   

1. Opening Remarks and Introductions - The Honorable Howard E. Duvall, Jr.

PRESENTATIONS

2. Review of the City of Columbia Property Tax Capacity Analysis

 Stephen J.K. Walters, Ph.D., Chief Economist, Maryland Public Policy Institute
 James B. London, Ph.D., President, London & Associates
 Holley Ulbrich, Ph.D., Professor Emerita of Economics at Clemson University

COMMITTEE DISCUSSION
ADJOURNMENT
The meeting was closed at 3:25 p.m.
Respectfully submitted:



Erika D. Moore Hammond, CMC
City Clerk




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