A BILL TO BE ENTITLED
AN ACT providing FOR THE FINANCING OF CAPITAL FACILITIES FOR THE STATE, AUTHORIZING THE ISSUANCE OF SPECIAL INDEBTEDNESS FOR REPAIR AND RENOVATIONS, TO REFINANCE TWO PRISONS, and to finance the construction of a new psychiatric hospital, authorizing the issuance of special obligation bonds for the construction of a new psychiatric HOSPITAL, AND expanding the purposes for which counties and municipalities may use special obligation bonds, and amending related general laws.
The General Assembly of North Carolina enacts:
TABLE OF CONTENTS
PART I.	SPECIAL INDEBTEDNESS
PART II.	REPAIR AND RENOVATIONS
PART III.	CORRECTIONAL FACILITIES ACQUISITION
PART IV.	PSYCHIATRIC HOSPITAL CONSTRUCTION
PART V.	SPECIAL OBLIGATION HOSPITAL BONDS
PART VI.	GENERAL PROVISIONS FOR PSYCHIATRIC HOSPITAL
PART VII.	LOCAL GOVERNMENT SPECIAL OBLIGATION BONDS
PART VIII. GENERAL PROVISIONS

PART I.	SPECIAL INDEBTEDNESS
SECTION 1.1.  Chapter 142 of the General Statutes is amended by adding a new Article to read:
"Article 8.
"State Capital Facilities Finance Act.
"§ 142‑60.  Short title.
This Article may be cited as the State Capital Facilities Finance Act.
"§ 142‑61.  Findings and purpose. 
The General Assembly finds as follows:
(1)	There is a continuing need for capital facilities for the State, many of which will continue to be provided on a "pay‑as‑you‑go" basis by direct appropriations.
(2)	The State will also continue to provide capital facilities through the issuance of general obligation bonds.
(3)	There is a need, however, for the use of alternative financing methods, such as authorized in this Article, to facilitate the providing of capital facilities when circumstances and conditions warrant the providing of capital facilities through financing methods in addition to direct appropriations and the issuance of general obligation bonds.
(4)	The use of these alternative financing methods as authorized in this Article will provide financing flexibility to the State and permit the State to take advantage of changing financial and economic environments.
"§ 142‑62.  Definitions.
The following definitions apply in this Article:
(1)	Bonded indebtedness. – Limited obligation bonds and bond anticipation notes, including refunding bonds and notes, authorized to be issued under this Article.
(2)	Bonds or notes. – Limited obligation bonds and notes authorized to be issued under this Article.
(3)	Capital facility. – Any one or more of the following:
a.	Any one or more buildings, utilities, structures, or other facilities or property developments, including streets and landscaping, and the acquisition of equipment, machinery, and furnishings in connection with these items.
b.	Additions, extensions, enlargements, renovations, and improvements to existing buildings, utilities, structures, or other facilities or property developments, including streets and landscaping.
c.	Land or an interest in land.
d.	Other infrastructure.
e.	Furniture, fixtures, equipment, vehicles, machinery, and similar items.
(4)	Certificates of participation. – Certificates or other instruments delivered by a special corporation evidencing the assignment of proportionate undivided interests in rights to receive payments pursuant to a financing contract.
(5)	Certificates of participation indebtedness. – Financing contract indebtedness incurred by the State under a plan of finance in which a special corporation obtains funds to pay the cost of a capital facility to be financed through the delivery by the special corporation of certificates of participation.
(6)	Cost. – Any of the following in financing the cost of capital facilities as authorized by this Article:
a.	The cost of constructing, reconstructing, renovating, repairing, enlarging, acquiring, and improving capital facilities, including the acquisition of land, rights-of-way, easements, franchises, equipment, machinery, furnishings, and other interests in real or personal property acquired or used in connection with a capital facility.
b.	The cost of engineering, architectural, and other consulting services.
c.	The cost of providing personnel to ensure effective management of capital facilities.
d.	Finance charges, reserves for debt service, and other types of reserves required pursuant to the terms of any special indebtedness or related documents, interest before and during construction or acquisition of a capital facility and, if considered advisable by the State Treasurer, for a period not exceeding two years after the estimated date of completion of construction or acquisition.
e.	Administrative expenses and charges.
f.	The cost of bond insurance, investment contracts, credit enhancement facilities and liquidity facilities, interest rate swap agreements or other derivative products, financial and legal consultants, and related costs of the incurrence or issuance of special indebtedness.
g.	The cost of reimbursing the State, a State agency, or a special corporation for any payments made for any cost described in this subdivision.
h.	Any other costs and expenses necessary or incidental to the purposes of this Article.
(7)	Credit facility. – An agreement that:
a.	Is entered into by the State with a bank, savings and loan association, or other banking institution, an insurance company, reinsurance company, surety company or other insurance institution, a corporation, investment banking firm or other investment institution, or any financial institution or other similar provider of a credit facility, which provider may be located within or without the United States of America; and
b.	Provides for prompt payment of all or any part of the principal or purchase price (whether at maturity, presentment or tender for purchase, redemption, or acceleration), redemption premium, if any, and interest with respect to any special indebtedness payable on demand or tender by the owner in consideration of the State agreeing to repay the provider of the credit facility in accordance with the terms and provisions of the agreement.
(8)	Department of Administration. – The North Carolina Department of Administration created by Article 36 of Chapter 143 of the General Statutes, or if the Department is abolished or otherwise divested of its functions under this Article, the public body succeeding it in its principal functions or upon which are conferred by law the rights, powers, and duties given by this Article to the Department.
(9)	Financing contract. – A contract entered into pursuant to this Article to finance capital facilities and constituting a lease‑purchase contract, installment purchase contract, or other similar type installment financing contract. The term does not include, however, a contract that meets any one of the following conditions:
a.	It constitutes an operating lease under generally accepted accounting principles.
b.	It provides for the payment under the contract over its full term, including periods that may be added to the original term through the exercise of options to renew or extend, of an aggregate principal amount of not in excess of five thousand dollars ($5,000) or any greater amount that may be established by the Council of State, if the Council of State determines (i) the aggregate amount to be paid under these contracts will not have a significant impact on the State budgetary process or the economy of the State and (ii) the change will lessen the administrative burden on the State.
c.	It is executed and provides for the making of all payments under the contract, including payment to be made during any period that may be added to the original term through the exercise of options to renew or extend, in the same fiscal year.
(10)	Financing contract indebtedness. – Indebtedness incurred pursuant to a financing contract, including certificates of participation indebtedness.
(11)	Fiscal period. – A fiscal biennium or a fiscal year of the fiscal biennium.
(12)	Fiscal year. – The fiscal year of the State beginning on July 1 of one calendar year and ending on June 30 of the next calendar year.
(13)	Limited obligation bond. – A limited obligation bond issued pursuant to G.S. 142-68 and payable and secured as provided in G.S. 142-69.
(14)	Par formula. – A provision or formula adopted by the State to provide for the adjustment, from time to time, of the interest rate or rates borne or provided for by any special indebtedness, including any of the following:
a.	A provision providing for an adjustment so that the purchase price of special indebtedness in the open market would be as close to par as possible.
b.	A provision providing for an adjustment based upon a percentage or percentages of a prime rate or base rate, which percentages may vary or be applied for different periods of time.
c.	Any provision that the State Treasurer determines is consistent with this Article and will not materially and adversely affect the financial position of the State and the marketing of special indebtedness at a reasonable interest cost to the State.
(15)	Person. – An individual, a firm, a partnership, an association, a corporation, a limited liability company, or any other organization or group acting as a unit.
(16)	Special corporation. – Either of the following:
a.	A nonprofit corporation created under Chapter 55A of the General Statutes for the purpose of facilitating the incurrence of certificates of participation indebtedness by the State under this Article.
b.	A private corporation or other entity issuing certificates of participation pursuant to this Article.
(17)	Special indebtedness. – Financing contract indebtedness and bonded indebtedness issued or incurred pursuant to this Article.
(18)	State. – The State of North Carolina, including any State agency.
(19)	State agency. – Any agency, institution, board, commission, bureau, council, department, division, officer, or employee of the State. The term does not include counties, municipal corporations, political subdivisions, local boards of education, or other local public bodies.
(20)	State Treasurer. – The incumbent Treasurer, from time to time, of the State.
"§ 142‑63.  Authorization of special indebtedness; General Assembly approval.
The State may incur or issue special indebtedness subject to the terms and conditions provided in this Article for the purpose of financing the cost of capital facilities that meet one of the following conditions:
(1)	The General Assembly has enacted legislation describing the capital facility and authorizing its financing by the incurrence or issuance of special indebtedness up to a specific maximum amount.
(2)	The General Assembly has enacted legislation authorizing the incurrence or issuance of special indebtedness up to a specific maximum amount for a specific category of capital facilities, and the capital facility meets all of the conditions set in that legislation.
"§ 142‑64.  Procedure for incurrence or issuance of special indebtedness. 
(a)	Notice and Certificate. – Whenever the State or a State agency intends to use special indebtedness to finance capital facilities, it shall notify the Department of Administration. If the Department of Administration intends for the State to use special indebtedness to finance the capital facilities, it shall provide written notice to the Treasurer advising the Treasurer of its intent. The Treasurer may require a preliminary conference with the Department of Administration to consider the proposed financing.
After the filing of the notice and after any preliminary conference, the State Treasurer shall consult with the Office of State Budget and Management as to the revenues expected by that Office to be available to pay all sums to come due on the special indebtedness during its term. If, after consulting with the Office of State Budget and Management, the State Treasurer determines by written certificate that it may be desirable to use special indebtedness to finance the capital facilities, the Department of Administration shall request the Council of State to give its preliminary approval of the use of special indebtedness to finance the capital facilities. The Department of Administration must promptly file copies of the notice and certificate required by this subsection with the Governor and the Council of State.
(b)	Preliminary Approval. – The Council of State, upon receipt of the notice and certificate required by subsection (a) of this section, shall adopt a resolution granting or denying preliminary approval of the financing. A resolution granting preliminary approval may include any other terms, conditions, and restrictions the Council of State considers appropriate and not inconsistent with the provisions of this Article.
(c)	Final Approval. – Before any special indebtedness may be incurred or issued pursuant to this Article, the Council of State must authorize the indebtedness by resolution, either as part of or separate from the resolution required by subsection (b) of this section. The resolution must do all of the following:
(1)	Authorize the providing of a particular capital facility or, in general terms, the types or classifications of capital facilities to be provided.
(2)	Set the aggregate principal amount or maximum principal amount of the special indebtedness authorized.
(3)	Set the maturity or maximum maturity of the special indebtedness authorized.
(4)	Set the rate, rates, or maximum rate of interest, which may be fixed or vary over a period of time, of the special indebtedness authorized.
(5)	Include any other conditions or matters not inconsistent with the provisions of this Article in the discretion of the Council of State, which may include the adoption or approvals as may be authorized in G.S. 142‑68 and G.S. 142‑69.
(d)	Oversight by Treasurer. – No special indebtedness shall be incurred or issued without the prior written approval of the State Treasurer as provided in this subsection, which is in addition to the certificate given by the State Treasurer pursuant to subsection (a) of this section. In determining whether to approve the proposed financing, the State Treasurer may consider any factors the State Treasurer considers relevant in order to find and determine all of the following:
(1)	The amounts to become due under the special indebtedness, including the interest component or rate, are adequate and not excessive for the purpose proposed.
(2)	The increase, if any, in State revenues, including taxes, necessary to pay the sums to become due under the special indebtedness, is not excessive.
(3)	The special indebtedness can be incurred or issued on terms desirable to the State.
(e)	Designation of Facilities. – If the Council of State authorized in general terms the types or classifications of capital facilities to be financed, then the particular capital facilities and the principal amount of special indebtedness to be incurred or issued for each particular capital facility shall be determined by the Department of Administration after considering any factors it considers relevant in order to determine that the particular capital facility to be provided is desirable for the efficient operation of the State and its agencies and is in the best interests of the State.
(f)	Type of Debt and Security. – In the absence of a determination by the Council of State, the State Treasurer, after consultation with the Department of Administration, shall determine the specific security offered and whether the special indebtedness to be issued or incurred shall be financing contract indebtedness, certificates of participation indebtedness, bonded indebtedness, or some combination of these.
(g)	Administration. – The State Treasurer, after consultation with the Department of Administration, shall develop appropriate documents for use under this Article. The State Treasurer shall employ and designate the financial consultants, fiduciaries and other agents, underwriters, and bond attorneys to be associated with the incurrence or issuance of special indebtedness pursuant to this Article.
(h)	Report to Joint Legislative Commission. – After all the requirements for approval and oversight provided in this section have been met, and at least five days before the issuance or incurrence of the special indebtedness, the State Treasurer must report to the Joint Legislative Commission on Governmental Operations. This report must include the details of the proposed special indebtedness, including the capital facilities to be financed by the indebtedness, the amount of the proposed indebtedness, the type of indebtedness to be issued or incurred, and any other information required by the Commission.
"§ 142‑65.  Security; other requirements.
(a)	Security. – In order to secure (i) lease or installment payments to be made to the lessor, seller, or other person advancing moneys or providing financing under a financing contract, (ii) payment of the principal of and interest on bonded indebtedness, or (iii) payment obligations of the State to the provider of bond insurance, a credit facility, a liquidity facility, or a derivative agreement, special indebtedness may create any combination of the following:
(1)	A lien on or security interest in one or more, all, or any part of the capital facilities to be financed by the special indebtedness.
(2)	If the special indebtedness is to finance construction of improvements on real property, a lien on or security interest in all or any part of the land on which the improvements are to be located.
(3)	If the special indebtedness is to finance renovations or improvements to existing facilities or the installation of fixtures in existing facilities, a lien on or security interest in one or more, all, or any part of the facilities.
(b)	Value of Security; Multiple Liens. – The estimated value of the property subject to the lien or security interest need not bear any particular relationship to the principal amount of the special indebtedness or other obligation it secures. This Article does not limit the right of the State to grant multiple liens or security interests in a capital facility or other property to the extent not otherwise limited by the terms of any special indebtedness.
(c)	Governor's Budget. – Documentation relating to any special indebtedness may include provisions requesting the Governor to submit in the Governor’s budget proposal or any amendments or supplements to the budget proposed appropriations necessary to make the payments required by the special indebtedness. 
(d)	Source of Repayment. – The payment of amounts payable by the State under special indebtedness or any related documents during any fiscal period shall be limited to funds appropriated for that purpose by the General Assembly in its discretion. 
(e)	No Deficiency Judgment or Pledge. – No deficiency judgment may be rendered against the State in any action for breach of any obligation under special indebtedness or any related documents. The taxing power of the State is not and may not be pledged directly or indirectly to secure any moneys due under special indebtedness or any related documents. In the event that the General Assembly does not appropriate sums sufficient to make payments required under any special indebtedness or any related documents, the net proceeds received from the sale or other disposition of the property subject to the lien or security interest shall be applied to satisfy these payment obligations in accordance with the deed of trust, security agreement, or other documentation relating to the lien or security interest. These net proceeds are appropriated for the purpose of making these payments. Any net proceeds in excess of the amount required to satisfy the obligations of the State under any special indebtedness  or any related documents shall be paid to the State Treasurer for deposit to the General Fund. 
(f)	Nonsubstitution Clause. – A financing contract, issue of bonded indebtedness, or other related document shall not contain a nonsubstitution clause that restricts the right of the State to (i) continue to provide a service or conduct an activity or (ii) replace or provide a substitute for any capital facility.
(g)	Protection of Lender. – Special indebtedness may contain any provisions for protecting and enforcing the rights and remedies of the person advancing moneys or providing financing under a financing contract, the owners of bonded indebtedness, or others to whom the State is obligated under special indebtedness or any related documents as may be reasonable and proper and not in violation of law. These provisions may include covenants setting forth the duties of the State in respect of any of the following:
(1)	The purposes to which the proceeds of special indebtedness may be applied.
(2)	The disposition and application of the revenues of the State, including taxes.
(3)	Insuring, maintaining, and other duties with respect to the capital facilities financed.
(4)	The disposition of any charges and collection of any revenues and administrative charges.
(5)	The terms and conditions of the issuance of additional special indebtedness.
(6)	The custody, safeguarding, investment, and application of all moneys.
(h)	State Property Law Exception. – Chapter 146 of the General Statutes does not apply to any transfer of the State's interest in property authorized by this Article, whether to a deed of trust trustee or other secured party as security for special indebtedness, or to a purchaser of property in connection with a foreclosure or similar conveyance of property to realize upon the security for special indebtedness following the State's default on its obligations under the special indebtedness.
"§ 142‑66.  Financing contract indebtedness. 
(a)	Treasurer Oversight. – Financing contract indebtedness shall not be incurred until all documentation providing for its incurrence has been approved by the State Treasurer, after the State Treasurer has consulted with the Department of Administration.
(b)	Interest Component. – A financing contract may provide for payments under the contract to represent principal and interest components of the cost of the capital facility to be financed, as determined by the State Treasurer.
(c)	Bidding. – Financing contracts may be entered into pursuant to any applicable public or competitive bidding process or any private or negotiated process, to the extent required by applicable law, and if not so required, as may be determined by the Department of Administration after consulting with the State Treasurer.
(d)	Party. – All financing contracts shall be executed on behalf of the State by the State Treasurer or, upon delegation by the State Treasurer after having approved the financing contract, by the Department of Administration.
(e)	Credit Facility. – If the State Treasurer determines that it is in the best interest of the State, the State Treasurer may arrange for the delivery of a credit facility to secure payment under any financing contract. The State Treasurer may also provide that payments by the State representing the interest component of the payments to be made under a financing contract may be calculated based upon a fixed or a variable rate of interest.
(f)	Terms and Conditions. – All other conditions set forth elsewhere in this Article with respect to financing contract indebtedness shall also be satisfied prior to incurring any financing contract indebtedness. To the extent applicable as conclusively determined by the State Treasurer, the provisions of G.S. 142‑69, 142‑70, and 142‑71 apply to financing contract indebtedness.
"§ 142‑67.  Additional requirements for certificates of participation indebtedness.
(a)	Treasurer Oversight. – A financing contract shall not be used in connection with the delivery of certificates of participation by a special corporation until all documentation providing for its use has been approved by the State Treasurer, after the State Treasurer has consulted with the Department of Administration. All documentation providing for the delivery and sale of certificates of participation must be approved by the State Treasurer. 
(b)	Procedure. – The special corporation, if used, shall request the approval of the State Treasurer in writing and shall furnish any information and documentation relating to the delivery and sale of the certificates of participation requested by the State Treasurer. In determining whether to approve the financing in the documentation, the State Treasurer shall consider the factors set forth in G.S. 142‑64(d), as well as the effect of the proposed financing upon any scheduled or proposed sale of debt obligations by the State or a unit of local government in the State.
(c)	Terms; Interest. – Certificates of participation may be sold by the State Treasurer in the manner, either at public or private sale, and for any price or prices that the State Treasurer determines to be in the best interest of the State, and to effect the purposes of this Article, except that the terms of the sale must also be approved by the special corporation. Interest payable with respect to certificates of participation shall accrue at the rate or rates determined by the State Treasurer with the approval of the special corporation.
(d)	Trust Agreement. – Certificates of participation may be delivered pursuant to a trust agreement or similar instrument with a corporate trustee approved by the State Treasurer, and the provisions of G.S. 142‑69(h) apply to the trust agreement or similar instrument to the extent applicable.
(e)	Other Conditions. – All other conditions set forth elsewhere in this Article with respect to certificates of participation indebtedness, including the conditions set forth in G.S. 142‑66, must be satisfied before any certificates of participation indebtedness is incurred.
"§ 142‑68.  Bonded indebtedness.
The State Treasurer is authorized, by and with the consent of the Council of State as provided in this Article, to issue and sell at one time, or from time to time, bonds of the State to be designated "State of North Carolina Limited Obligation Bonds, Series____" or notes of the State as provided in this Article, for the purpose of providing funds, with any other available funds, for the uses authorized in this Article.
"§ 142‑69.  Issuance of limited obligation bonds and notes.
(a)	Terms and Conditions. – Bonds or notes may bear any dates, may be serial or term bonds or notes, or any combination of these, may mature in any amounts and at any times, not exceeding 40 years from their dates, may be payable at any places, either within or without the United States, in any coin or currency of the United States that at the time of payment is legal tender for payment of public and private debts, may bear interest at any rates, which may vary from time to time, and may be made redeemable before maturity, at the option of the State or otherwise as may be provided by the State, at any prices, including a price greater than the face amount of the bonds or notes, and under any terms and conditions, all as may be determined by the State Treasurer, by and with the consent of the Council of State.
(b)	Signatures; Form and Denomination; Registration. – Bonds or notes may be issued in certificated or uncertificated form. If issued in certificated form, bonds or notes shall be signed on behalf of the State by the Governor or shall bear the Governor's facsimile signature, shall be signed by the State Treasurer or shall bear the State Treasurer's facsimile signature, and shall bear the great seal of the State or a facsimile of the seal impressed or imprinted on them. If bonds or notes bear the facsimile signatures of the Governor and the State Treasurer, the bonds or notes shall also bear a manual signature which may be that of a bond registrar, trustee, paying agent, or designated assistant of the State Treasurer. If any officer whose signature or facsimile signature appears on bonds or notes issued under this Article ceases to be that officer before the delivery of the bonds or notes, the signature or facsimile signature shall nevertheless have the same validity for all purposes as if the officer had remained in office until delivery of the bonds or notes. Bonds or notes issued under this Article may bear the facsimile signatures of persons, who at the actual time of the execution of the bonds or notes were the proper officers to sign any bond or note although at the date of the bond or note those persons may not have been officers.
The form and denomination of bonds or notes, including the provisions with respect to registration of the bonds or notes and any system for their registration, shall be as prescribed by the State Treasurer in conformity with this Article.
(c)	Manner of Sale; Expenses. – Subject to the approval by the Council of State as to the manner in which bonds or notes will be offered for sale, whether at public or private sale, whether within or without the United States, and whether by publishing notices in certain newspapers and financial journals, mailing notices, inviting bids by correspondence, negotiating contracts of purchase or otherwise, the State Treasurer is authorized to sell bonds or notes at one time, or from time to time, at any rates of interest, which may vary from time to time, and at any prices, including a price less than the face amount of the bonds or notes, as the State Treasurer may determine. All expenses incurred in the preparation, sale, and issuance of bonds or notes shall be paid by the State Treasurer from the proceeds of bonds or notes or other available moneys.
(d)	Application of Proceeds. – The proceeds of any bonds or notes shall be used solely for the purposes for which the bonds or notes were issued and shall be disbursed in the manner and under the restrictions, if any, that the Council of State may provide in the resolution authorizing the issuance of, or in any trust agreement securing, the bonds or notes.
Any additional moneys that may be received by means of a grant or grants from the United States or any agency or department thereof or from any other source to aid in financing the cost of a capital facility may be disbursed, to the extent permitted by the terms of the grant or grants, without regard to any limitations imposed by this Article.
(e)	Notes; Repayment. – By and with the consent of the Council of State, the State Treasurer is authorized to borrow money and to execute and issue notes of the State for the same, but only in any of the following circumstances and under the following conditions:

(1)	For anticipating the sale of bonds, the issuance of which the Council of State has approved, if the State Treasurer considers it advisable to postpone the issuance of the bonds.
(2)	For the payment of interest on or any installment of principal of any bonds then outstanding, if there are not sufficient funds in the State treasury with which to pay the interest or installment of principal as they respectively become due.
(3)	For the renewal of any loan evidenced by notes authorized in this Article.
(4)	For the purposes authorized in this Article.
(5)	For refunding bonds or notes or financing contract indebtedness as authorized in this Article.

Funds derived from the sale of limited obligation bonds or notes may be used in the payment of any bond anticipation notes issued under this Article. Funds provided by the General Assembly for the payment of interest on or principal of bonds shall be used in paying the interest on or principal of any notes and any renewals thereof, the proceeds of which have been used in paying interest on or principal of the bonds.
(f)	Refunding Bonds and Notes. – By and with the consent of the Council of State, the State Treasurer is authorized to issue and sell refunding bonds and notes for the purpose of refunding special indebtedness and to pay the cost of issuance of the refunding bonds or notes. The refunding bonds and notes may be combined with any other issues of State bonds and notes issued pursuant to this Article. Refunding bonds or notes may be issued at any time prior to the final maturity of the debt or obligation to be refunded. The proceeds from the sale of any refunding bonds or notes shall be applied to the immediate payment and retirement of the obligations being refunded or, if not required for the immediate payment of the obligations being refunded, the proceeds shall be deposited in trust to provide for the payment and retirement of the obligations being refunded and to pay any expenses incurred in connection with the refunding. Money in a trust fund may be invested in (i) direct obligations of the United States government, (ii) obligations the principal of and interest on which are guaranteed by the United States government, (iii) to the extent then permitted by law, obligations of any agency or instrumentality of the United States government, or (iv) certificates of deposit issued by a bank or trust company located in the State if the certificates are secured by a pledge of any of the obligations described in (i), (ii), or (iii) above having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. This section does not limit the duration of any deposit in trust for the retirement of obligations being refunded but that have not matured and are not presently redeemable, or if presently redeemable, have not been called for redemption.
 (g)	Security. – Payment of the principal of and the interest on bonds and notes shall be secured as provided in G.S. 142‑65.
(h)	Trust Agreement. – In the discretion of the State Treasurer, any bonds and notes issued under this Article may be secured by a trust agreement or similar instrument between the State and a corporate trustee or by a resolution of the Council of State providing for the appointment of a corporate trustee. The corporate trustee may be, in either case, any trust company or bank that has the powers of a trust company within or without the State. The trust agreement or similar instrument or resolution, hereinafter referred to as "the trust", may provide for security and pledges and assignments that are permitted under this Article and may provide for the granting of a lien or security interest as authorized by G.S. 142‑65. The trust may contain any provisions for protecting and enforcing the rights and remedies of the owners of any bonds or notes issued under the trust that are reasonable and not in violation of law, including covenants setting forth the duties of the State with respect to the purposes for which bond or note proceeds may be applied, the disposition and application of the revenues or assets of the State, the duties of the State with respect to the capital facilities financed, the disposition of any charges and collection of any revenues and administrative charges, the terms and conditions of the issuance of additional bonds and notes, and the custody, safeguarding, investment, and application of all moneys. All bonds and notes issued under this Article pursuant to the same trust shall be equally and ratably secured as provided in the trust, without priority by reasons of number, dates of bonds or notes, execution, or delivery, in accordance with the provisions of this Article and of the trust. The trust may, however, provide that bonds or notes issued pursuant to the trust shall, to the extent and in the manner prescribed in the trust, be subordinated and junior in standing, with respect to the payment of principal and interest and to the security of the payment, to any other bonds or notes issued pursuant to the trust. It is lawful for any bank or trust company that may act as depositary of the proceeds of bonds or notes, revenues, or any other money under this Article to furnish any indemnifying bonds or to pledge any securities that may be required by the State Treasurer. The trust may set out the rights and remedies of the owners of any bonds or notes and of any trustee, and may restrict the individual rights of action by the owners. In addition to the foregoing, the trust may contain any other provisions the State Treasurer considers appropriate for the security of the owners of any bonds or notes. Expenses incurred in carrying out the provisions of the trust may be treated as a part of the cost of any capital facility or as an administrative charge and may be paid from the proceeds of the bonds or notes or from any other available funds.
"§ 142‑70.  Variable rate demand bonds and notes and financing contract indebtedness.
(a)	In fixing the details of special indebtedness, the State Treasurer may make the special indebtedness subject to any of the following conditions:
(1)	It is payable from time to time on demand or tender for purchase by the owner thereof, if a credit facility supports the special indebtedness, unless the State Treasurer specifically determines that a credit facility is not required upon a determination by the State Treasurer that the absence of a credit facility will not materially and adversely affect the financial position of the State or the marketing of the bonds or notes or financing contract indebtedness at a reasonable interest cost to the State.
(2)	It is additionally supported by a credit facility.
(3)	It is subject to redemption or mandatory tender for purchase prior to maturity.
(4)	It bears interest at a rate or rates that may be fixed or may vary over any period of time, as may be provided in the proceedings providing for the issuance or incurrence of the special indebtedness, including any variations that may be permitted pursuant to a par formula.
(5)	It is the subject of a remarketing agreement under which an attempt is made to remarket special indebtedness to new purchasers before its presentment for payment to the provider of the credit facility or to the State.
(b)	If the aggregate principal amount payable by the State under a credit facility is in excess of the aggregate principal amount of special indebtedness secured by the credit facility, whether as a result of the inclusion in the credit facility of a provision for the payment of interest for a limited period of time or the payment of a redemption premium or for any other reason, then the amount of authorized but unissued bonds or notes and financing contract indebtedness during the term of the credit facility shall not be less than the amount of the excess, unless the payment of the excess is otherwise provided for by agreement of the State executed by the State Treasurer.
"§ 142‑71. Other agreements.
The State Treasurer may authorize, execute, obtain or otherwise provide for bond insurance, investment contracts, credit and liquidity facilities, credit enhancement facilities, interest rate swap agreements, and other derivative products, and any other related instruments and matters the State Treasurer determines are desirable in connection with the issuance of special indebtedness. The State Treasurer is authorized to employ and designate any financial consultants, underwriters, fiduciaries, and bond attorneys to be associated with any incurrence or issuance of special indebtedness under this Article as the State Treasurer considers appropriate.
"§ 142‑72. Tax exemption.
Special indebtedness shall at all times be free from taxation by the State or any political subdivision or any of their agencies, excepting estate, inheritance, and gift taxes; income taxes on the gain from the transfer of the indebtedness; and franchise taxes. The interest component of any payments made by the State under special indebtedness, including the interest component of any certificates of participation, is not subject to taxation as to income.
"§ 142‑73. Investment eligibility.
Special indebtedness are securities or obligations in which all of the following may invest, including capital in their control or belonging to them:  public officers, agencies, and public bodies of the State and its political subdivisions; insurance companies, trust companies, investment companies, banks, savings banks, savings and loan associations, credit unions, pension or retirement funds, and other financial institutions engaged in business in the State; and executors, administrators, trustees, and other fiduciaries. Special indebtedness are securities or obligations that may properly and legally be deposited with and received by any officer or agency of the State or political subdivision of the State for any purpose for which the deposit of bonds, notes, or obligations of the State or any political subdivision is now or may later be authorized by law.
"§ 142‑74. Procurement of capital facilities.
The provisions of Articles 3, 3B, 3C, 3D, and 8 of Chapter 143 of the General Statutes and any other laws or rules of the State that relate to the acquisition and construction of State property apply to the financing of capital facilities through the use of special indebtedness pursuant to this Article. This section does not apply to the construction and lease‑purchase, including leases with an option to purchase at the end of the lease term for a nominal sum, of State office buildings pursuant to proposals submitted before the effective date of this Article in response to requests for proposals, to the extent any of those proposals, as they may be supplemented or amended, are approved by the Department of Administration and any of these leases or lease‑purchase agreements are approved by the Council of State in accordance with G.S. 143‑341(4)d2."
SECTION 1.2.  G.S. 143‑341(4) is amended by adding a new sub‑subdivision to read:
"d2.	To purchase or finance the purchase of buildings, utilities, structures, or other facilities or property developments, including streets and landscaping, the acquisition of land, equipment, machinery and furnishings in connection therewith; additions, extensions, enlargements, renovations and improvements to existing buildings, utilities, structures, or other facilities or property developments, including streets and landscaping; land or any interest in land; other infrastructure; furniture, fixtures, equipment, vehicles, machinery and similar items; or any combination of the forgoing, through installment purchase, lease purchase, or other similar type installment financing agreements in the manner and to the extent provided in Article 8 of Chapter 142 of the General Statutes. Any contract entered into or any proceeding instituted contrary to the provisions of this paragraph is voidable in the discretion of the Council of State."
PART II.	REPAIR AND RENOVATIONS
SECTION 2.1.  Repairs and Renovation. – In accordance with G.S. 142‑63, as enacted by this act, this section authorizes the issuance or incurrence of special indebtedness in a maximum aggregate principal amount of one hundred fifty million dollars ($150,000,000) to be used only in accordance with this section for the repair and renovation of State facilities and related infrastructure that are supported from the General Fund. Proceeds of the Repair and Renovation special indebtedness shall be used only for the following types of projects:
(1)	Roof repairs and replacements.
(2)	Structural repairs.
(3)	Repairs and renovations to meet federal and State standards.
(4)	Repairs to electrical, plumbing, and heating, ventilating, and air‑conditioning systems.
(5)	Improvements to meet the requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., as amended.
(6)	Improvements to meet fire safety needs.
(7)	Improvements to existing facilities for energy efficiency.
(8)	Improvements to remove asbestos, lead paint, and other contaminants, including the removal and replacement of underground storage tanks.
(9)	Improvements and renovations to improve use of existing space.
(10)	Historical restoration.
(11)	Improvements to roads, walks, drives, and utilities infrastructure.
(12)	Drainage and landscape improvements.
Proceeds of the Repair and Renovation special indebtedness shall not be used for new construction or the expansion of the footprint of an existing facility unless required in order to comply with federal or State codes or standards.
Proceeds of the Repair and Renovation special indebtedness shall not be used unless the specific use has been approved by an act of the General Assembly or, if the General Assembly is not in session, the State Treasurer has first consulted with the Joint Legislative Commission on Governmental Operations on the specific uses for which the proceeds shall be used.
In addition, the provisions of this section may be changed from time to time by act of the General Assembly.
Notwithstanding this section, whenever an expenditure is required because of an emergency that poses an imminent threat to public health or public safety, and is either the result of a natural disaster, such as a hurricane or a flood, or the result of an accident or an intentional act, such as an explosion or a wreck, the State Treasurer, with the approval of the Governor, may take action under this section without first consulting with the Joint Legislative Commission on Governmental Operations if the action is determined by the Governor to be related to the emergency. The State Treasurer and the Governor shall report to the Commission on any action taken under this paragraph no later than 30 days after taking the action, and shall identify in the report the emergency, the type of action taken, and how it was related to the emergency.
PART III.	CORRECTIONAL FACILITIES ACQUISITION
SECTION 3.1.  Acquisition of Correctional Facilities. – In accordance with G.S. 142‑63, as enacted by this act, this section authorizes the issuance or incurrence of financing contract indebtedness to be used to acquire two correctional facilities located in Pamlico County and Avery County that the State currently leases.
SECTION 3.2.  Pamlico County Correctional Facility. – The State is authorized to acquire the correctional facility located in Pamlico County that the State currently leases from U.S. Corrections Corporation pursuant to the purchase option provision in the lease. Title to these facilities shall be held in the name of the State. The cost of acquiring the Pamlico County correctional facility shall be financed as provided in Article 8 of Chapter 142 of the General Statutes.
SECTION 3.3.  Mountain View Correctional Facility. – The State is authorized to acquire the  Mountain View Correctional Facility located in Avery County that the State currently leases from Correctional Properties Trust pursuant to the purchase option provision in the lease. Title to these facilities shall be held in the name of the State. The cost of acquiring the Mountain View Correctional Facility shall be financed as provided in Article 8 of Chapter 142 of the General Statutes.
SECTION 3.4.  Authorization of Financing Contracts. – The State, with the prior approval of the State Treasurer and Council of State as provided in Article 8 of Chapter 142 of the General Statutes, is authorized to execute and deliver one or more financing contracts in order to provide funds to the State to be used, together with any other available funds, to pay the cost of acquiring either or both of the Pamlico County correctional facility and the Mountain View Correctional Facility described in this Part. Notwithstanding the provisions of G.S. 142‑63, no maximum principal amount is required to be stated in this Part authorizing the issuance or incurrence of financing contract indebtedness for these purposes.
PART IV.	PSYCHIATRIC HOSPITAL CONSTRUCTION
SECTION 4.1.  Construction of Psychiatric Hospital. – In accordance with G.S. 142‑63, as enacted by this act, this section authorizes the issuance or incurrence of financing contract indebtedness in a maximum principal amount of one hundred million dollars ($100,000,000), which amount shall be reduced by the amount of any special obligation bonds issued to finance the project under Part V of this act, to finance the cost of the project described in Section 4.2 of this Part, subject to the limitations described herein. The financing contract indebtedness shall not be incurred prior to July 1, 2004.
SECTION 4.2.  The Project. – The project shall consist of the acquisition, construction, and equipping of an approximately 451,800 square foot, 432‑bed new psychiatric hospital.
SECTION 4.3.  Authorization of Financing Contracts. – The State, with the prior approval of the State Treasurer and Council of State, as provided in Article 8 of Chapter 142 of the General Statutes as enacted by this act, is authorized to execute and deliver one or more financing contracts in order to provide funds to the State to be used, together with other available funds, to pay the cost of the project, provided that the aggregate principal amount shall not exceed one hundred million dollars ($100,000,000), which amount shall be reduced by the amount of any special obligation bonds issued to finance the project under Part V of this act. The State Treasurer may, in his sole discretion, require one or more reports satisfactory to the State Treasurer evidencing the savings expected to be realized from the closure of existing psychiatric hospitals that are to be replaced by the project and the feasibility of the financing of the project.
PART V. SPECIAL OBLIGATION HOSPITAL BONDS
SECTION 5.1.  Title. – This Part shall be known and may be cited as the "Special Obligation Hospital Bonds Act of 2002."  References in this Part to "this act" mean this Part.
SECTION 5.2.  Definitions. – The following definitions apply in this act:
(1)	Bonds. – Special obligation bonds issued by the State pursuant to this act.
(2)	Cost. – Any of the following, without limiting or restricting any proper definition of this term in financing the cost of the project as authorized by this act:
a.	The cost of acquiring, constructing, and equipping the project, including the acquisition of rights‑of‑way, easements, equipment, furnishings, land, and other interests in real or personal property acquired or used in connection with the project.
b.	The cost of engineering, architectural, and other consulting services in connection with the project as may be required.
c.	Finance charges, reserves for debt service, and other types of reserves required pursuant to the terms of the trust agreement or resolution or related documents, interest before and during construction or acquisition of the project and, if considered advisable by the State Treasurer, for a period not exceeding two years after the estimated date of completion of construction or acquisition.
d.	Administrative expenses and charges.
e.	The cost of bond insurance, investment contracts, credit and liquidity facilities, interest rate swap agreements or other derivative products, financial and legal consultants, and related costs of the incurrence or issuance of the bonds.
f.	The cost of reimbursing the State for any payments made for any cost described above.
g.	Any other costs and expenses necessary or incidental to the purposes of this act.
(3)	Credit facility. – An agreement that:
a.	Is entered into by the State with a bank, savings and loan association, or other banking institution, an insurance company, reinsurance company, surety company or other insurance institution, a corporation, investment banking firm or other investment institution, or any financial institution or other similar provider of a credit facility, which provider may be located within or without the United States of America; and
b.	Provides for prompt payment of all or any part of the principal or purchase price (whether at maturity, presentment or tender for purchase, redemption, or acceleration), redemption premium, if any, and interest with respect to the bonds payable on demand or tender by the owner in consideration of the State agreeing to repay the provider of the credit facility in accordance with the terms and provisions of the agreement.
(4)	Fiscal year. – The fiscal year of the State beginning on July 1 of one calendar year and ending on June 30 of the next calendar year.
(5)	Par formula. – A provision or formula adopted by the State to provide for the adjustment, from time to time, of the interest rate or rates borne or provided for by any bonds including any of the following:
a.	A provision providing for an adjustment so that the purchase price of the bonds in the open market would be as close to par as possible.
b.	A provision providing for an adjustment based upon a percentage or percentages of a prime rate or base rate, which percentages may vary or be applied for different periods of time.
c.	Any provision that the State Treasurer determines is consistent with this act and will not materially and adversely affect the financial position of the State and the marketing of the bonds at a reasonable interest cost to the State.
(6)	Pledged revenues. – Pledged revenues shall consist of any or all of the following:
a.	The Medicaid and Medicare reimbursements received by the State and allocated for depreciation expense of the project, plus the Medicaid and Medicare reimbursements received by the State and allocated for interest on the debt used to finance the project.
b.	The funds deposited with the Department of State Treasurer as nontax revenue associated with Disproportionate Share Payments from State institutions for mental disease that are collected pursuant to Title XIX of the Social Security Act, 42 U.S.C. 1396r‑4, as amended.
c.	The revenues generated by the project.
(7)	Project. – The acquisition, construction, and equipping of an approximately 451,800 square foot, 432‑bed new psychiatric hospital.
(8)	State. – The State of North Carolina, including any State agency.
(9)	State agency. – Any State agency, institution, board, commission, bureau, council, department, division, officer, or employee of the State. The term does not include counties, municipal corporations, political subdivisions, local boards of education, or other local public bodies.
(10)	State Treasurer or Treasurer. – The incumbent Treasurer, from time to time, of the State.
(11)	Trust agreement. – Any trust agreement or similar instrument or agreement authorizing and securing bonds issued under this act.
SECTION 5.3.  Authorization. – The State Treasurer may, by and with the consent of the Council of State, issue and sell special obligation bonds of the State to pay the cost of the project, in a total principal amount not to exceed one hundred million dollars ($100,000,000), which maximum principal amount shall be reduced by the amount of any special indebtedness incurred for the project under Part IV of this act. The principal of, premium, if any, and interest on the bonds shall be payable solely from the pledged revenues in accordance with the terms of the resolution or trust agreement authorizing and securing the bonds. The State Treasurer may, in his sole discretion, require one or more reports satisfactory to the State Treasurer evidencing the savings expected to be realized from the closure of existing psychiatric hospitals that are to be replaced by the project and the feasibility of the financing of the project.
SECTION 5.4.  Terms and Conditions. – The bonds may be issued, from time to time, in one or more series, but in no event prior to July 1, 2004. The bonds shall be dated, and may be made redeemable before maturity at the option of the State at any price or prices and upon any terms and conditions, as may be determined by the State Treasurer at the time of the sale of the bonds. The bonds also may be made payable, from time to time, on demand or tender for purchase by the owner upon any terms and conditions as may be determined by the State Treasurer. The bonds shall bear interest at any rate or rates (whether fixed or variable, or any combination thereof, and including, without limitation, any variations as may be permitted pursuant to a par formula) as may be determined by the State Treasurer. Bonds shall mature at any time or times not exceeding 40 years from their date or dates, as may be determined by the Council of State, subject to the limitations provided in this act. The Council of State shall determine the form and manner of execution of the bond, and shall fix the denominations and the places of payment of principal and interest, which may be any bank or trust company within or without the State. If an officer whose signature or facsimile of whose signature appears on any bond ceases to be that officer before the delivery of the bonds, the signature or facsimile is nevertheless valid for all purposes as if the officer had remained in office until the delivery. The Council of State may also provide for the authentication of the bonds by a trustee or fiscal agent. The Council of State may also provide for any other terms, conditions, or matters not inconsistent with the provisions of this act.
Bonds may be sold in any manner, either at public or private sale, and for any price as the State Treasurer determines to be for the best interests of the State and to effectuate best the purposes of this act, as long as the sale has been approved by the Council of State. The State Treasurer may authorize, execute, obtain, or otherwise provide for bond insurance, investment agreements, credit and liquidity facilities, interest rate swap agreements, and other derivative products, and any other related instruments as the State Treasurer determines are desirable in connection with the issuance of bonds under this act. The State Treasurer is authorized to employ and designate any financial consultants, underwriters, and bond attorneys to be associated with any bond issue under this act. The proceeds of any bonds shall be used solely for the purposes for which they are issued and shall be disbursed in any manner and under any restrictions the Council of State may provide in the resolution authorizing the issuance of, or any trust agreement securing, the bonds.
Except as otherwise expressly provided in this act, bonds may be issued under this act without obtaining the consent of any department, division, commission, board, body, bureau, or agency of the State, and without any other proceedings or the happening of any conditions or things other than those proceedings, conditions, or things that are specifically required by this act and the provisions of the resolution authorizing the issuance of, or any trust agreement securing, the bonds.
SECTION 5.5.  Trust Agreement or Resolution. – Any bonds issued under the provisions of this act may be secured by a trust agreement by and between the State and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the State. The resolution or trust agreement authorizing and securing the bonds shall, subject to the limitations set forth in this act, specify the pledged revenues and shall pledge or assign the pledged revenues to pay the principal of, premium, if any, or interest on the bonds in the manner provided by this act. The resolution or trust agreement may contain any provisions for protecting and enforcing the rights and remedies of the holders of any bonds as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the State in relation to the purposes to which bond proceeds may be applied, the disposition or pledging of the pledged revenues, the terms and conditions for the issuance of additional bonds, and the custody, safeguarding, and application of all moneys.
Any resolution or trust agreement may restrict the individual right of action by an individual owner of bonds. In addition to the foregoing, any resolution or trust agreement may contain any other provisions as the Council of State considers reasonable and proper for the security of the holders of any bonds. Expenses incurred by the State in carrying out the provisions of the resolution or trust agreement may be paid from the pledged revenues as provided for in the resolution or trust agreement.
SECTION 5.6.  Pledge of Revenues; Limited Obligations. – The State is authorized to pledge the pledged revenues to the payment of the principal of, premium, if any, and interest on bonds issued under this act as they become due and payable, and to create and maintain any reserves therefor, and to fulfill the terms of any agreements made with the holders of bonds issued under this act. Notwithstanding the foregoing, any pledged revenues not required to pay the principal of, premium, if any, and interest on the bonds secured by the pledged revenues as they become due and payable, or to create and maintain any reserves for them, or to fulfill the terms of any agreements made with the holders of the bond issued under this act, shall be available to the State for expenditure for any lawful purpose, subject to the terms and provisions of any resolution or trust agreement authorizing and securing the bonds.
Any pledge of the pledged revenues made by the State under the provisions of this act shall be set forth in the resolution or trust agreement authorizing the issuance of the bonds. The pledge of these pledged revenues made by the State shall be valid and binding from the time when the pledge is made. All pledged revenues so pledged and thereafter received by the State are immediately subject to the lien of the pledge without any physical delivery or further act, and the lien of the pledge is valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the State, irrespective of whether the parties have notice of the lien. The resolution or trust agreement by which a pledge is created need not be filed or recorded except in the records of the Council of State.
All bonds issued under this act shall be equally and ratably secured by a pledge, charge, and lien upon the pledged revenues pledged to the payment of those bonds, without priority by reason of number, or of dates of bonds, execution, or delivery, in accordance with the provisions of this act and of the resolution or trust agreement authorizing and securing the bonds; except that the State may provide in the resolution or trust agreement that the bonds shall, to the extent and in the manner prescribed in the resolution or trust agreement, be subordinated and junior in standing with respect to the payment of principal of, premium, if any, and interest on any other bonds.
All bonds issued under this act shall be special obligations of the State. The principal of, premium, if any, and interest on the bonds shall not be payable from the general funds of the State, nor shall they constitute a legal or equitable pledge, charge, lien or encumbrance upon any of its property or upon any of its income, receipts, or revenues, except the pledged revenues. Neither the credit nor the taxing power of the State is pledged for the payment of the principal of, premium, if any, or interest on the bonds, and no holder of bonds has the right to compel the exercise of the taxing power by the State or the forfeiture of any of its property in connection with any default on the bonds, except for the pledged revenues. Every bond issued under this act shall recite in substance that the principal of, premium, if any, and interest on the bond is payable solely from the pledged revenues and that the State is not obligated to pay the principal, premium, or interest, except from these pledged revenues so pledged.
SECTION 5.7.  Agreement of the State. – The State pledges to and agrees with the holders of any bonds by the State pursuant to this act that as long as any of the bonds are outstanding and unpaid, the State will not limit or alter the rights vested in the State at the time of issuance of the bonds to collect and apply the pledged revenues in the manner provided in the resolution or trust agreement authorizing and securing the bonds to pay the principal of, premium, if any, and interest on the bonds as they become due and payable, and to create and maintain any reserves for payment, and to fulfill the terms of any agreements made with the holders of the bonds. The State will not in any way impair the rights and remedies of the holders of the bonds until the bonds and all costs and expenses in connection with any action or proceedings by or on behalf of the holders of the bonds, are fully paid, met, and discharged.
SECTION 5.8.  Trust Funds. – Notwithstanding any other provisions of law to the contrary, all moneys received pursuant to the authority of this act, including proceeds of the bonds and the pledged revenues, are trust funds to be held and applied solely as provided in this act. The resolution authorizing the issuance of, or any trust agreement securing any bonds issued under this act may provide that any of these moneys may be temporarily invested pending their disbursement and shall provide that any officer with whom, or any bank or trust company with which, the moneys are deposited shall act as trustee of the moneys and shall hold and apply them for the purposes of this act, subject to any limitations this act and the resolution or trust agreement provide. These moneys may be invested in any investment authorized by law for investment of trust funds held by the State Treasurer.
SECTION 5.9.  Remedies. – Any holder of bonds issued under the provisions of this act, and the trustee under any resolution or trust agreement authorizing and securing the bonds, except to the extent the rights given in this act may be restricted by the resolution or trust agreement, may, either at law or in equity, by suit, action, mandamus, or other proceeding, protect and enforce any and all rights under the laws of the State or granted under this act or under the resolution or trust agreement, or under any other contract executed by the Council of State or the State Treasurer pursuant to this act, and may enforce and compel the performance of all duties required by this act or by the resolution or trust agreement to be performed by the State or by any officer of the State.
SECTION 5.10.  Investment Securities. – All bonds and interest coupons appertaining to them issued under this act are investment securities within the meaning of and for all the purposes of Article 8 of Chapter 25 of the General Statutes, whether or not they are of the form and character as to be investment securities under that act, subject only to the provisions of the bonds pertaining to registration.
SECTION 5.11.  Bonds Eligible for Investment. – Bonds issued under the provisions of this act are securities or obligations in which all of the following may invest, including capital in their control or belonging to them:  public officers, agencies, and public bodies of the State and its political subdivisions; insurance companies, trust companies, investment companies, banks, savings banks, savings and loan associations, credit unions, pension or retirement funds, and other financial institutions engaged in business in the State; and executors, administrators, trustees, and other fiduciaries. Bonds issued under the provisions of this act are securities or obligations that may properly and legally be deposited with and received by any officer or agency of the State or political subdivision of the State for any purpose for which the deposit of bonds, notes, or obligations of the State or any political subdivision is now or may later be authorized by law.
SECTION 5.12.  Refunding Bonds. – By and with the consent of the Council of State, the State Treasurer is authorized to issue and sell refunding bonds for the purpose of refunding any bonds issued under this act and then outstanding, including payment of any redemption premium on them and any interest accrued or to accrue to the date of redemption of the refunded bonds. Refunding bonds may be issued at any time prior to the final maturity of the debt or obligation to be refunded. The principal of, premium, if any, and interest on the refunding bonds shall be payable solely from funds provided under this act for payment of bonds.
The proceeds from the sale of any refunding bonds shall be applied to the immediate payment and retirement of the obligations being refunded or, if not required for the immediate payment of the obligations being refunded, the proceeds shall be deposited in trust to provide for the payment and retirement of the obligations being refunded and to pay any expenses incurred in connection with the refunding. Money in a trust fund may be invested in (i) direct obligations of the United States government, (ii) obligations the principal of and interest on which are guaranteed by the United States government, (iii) to the extent then permitted by law, obligations of any agency or instrumentality of the United States government, or (iv) certificates of deposit issued by a bank or trust company located in the State if the certificates are secured by a pledge of the obligations described in (i), (ii), or (iii) above having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. This section does not limit the duration of any deposit in trust for the retirement of obligations being refunded but that have not matured and are not presently redeemable, or if presently redeemable, have not been called for redemption.
The issuance of refunding bonds, their maturities and other details, the rights of their holders, and the rights, duties, and obligations of the State in respect of them shall be governed by the provisions of this act that relate to the issuance of bonds, insofar as those provisions are appropriate.
SECTION 5.13.  Officers and Employees Not Liable. – No member of the Council of State or officer or employee of the State shall be subject to any personal liability or accountability by reason of the execution or issuance of any bonds under this act.
SECTION 5.14.  Tax exemption. – Any bonds issued by the State under the provisions of this act shall at all times be free from taxation by the State or any political subdivision or any of their agencies, excepting estate, inheritance,  and gift taxes; income taxes on the gain from the transfer of the bonds; and franchise taxes. Interest on the bonds is not subject to taxation as income.
PART VI.	GENERAL PROVISIONS FOR PSYCHIATRIC HOSPITAL
SECTION 6.1.  The Secretary of Health and Human Services shall maintain all existing educational and research programs in psychiatry and psychology conducted by the University of North Carolina School of Medicine at Dorothea Dix Hospital, unless the programs are otherwise modified by the University of North Carolina School of Medicine.  The University of North Carolina School of Medicine shall retain authority over all educational and research programs in psychiatry and psychology conducted at the new psychiatric hospital authorized under this act.  The Secretary shall consult with the University of North Carolina School of Medicine in programmatic, operational, and facility planning of the new psychiatric hospital to ensure appropriate patient treatment and continuation of educational and research programs conducted by the University of North Carolina School of Medicine.
SECTION 6.2.  Part 3 of Article 8 of Chapter 153A of the General Statutes is amended by adding the following new section to read:
"§ 153A-178.  Disposition of county property for a State psychiatric hospital.
When the Secretary of Health and Human Services selects a county for the location of the new State psychiatric hospital as authorized by law, the county selected for the location of the new State psychiatric hospital shall have the power under the general law to acquire real and personal property and convey it to the State under G.S. 160A-24 or other applicable law for use as a psychiatric hospital. The county may acquire the property by eminent domain, and such power under this section is supplementary to any other power the county may have to take property by eminent domain.'
SECTION 6.3.  G.S. 143‑15.3D is amended by adding the following new subsection to read:
"(c)	Notwithstanding G.S. 143-18, any nonrecurring savings in State appropriations realized from the closure of Dorothea Dix Hospital and John Umstead Hospital that are in excess of the cost of operating and maintaining the new State psychiatric hospital shall not revert to the General Fund but shall be placed in the Trust Fund and shall be used for the purposes authorized in this section. Notwithstanding G.S. 143-18, recurring savings realized from the closure of Dorothea Dix Hospital and John Umstead Hospital shall not revert to the General Fund but shall be retained by the Department of Health and Human Services and used for the purposes of subsections (b)(2) and (b)(3) of this section and for the repayment of debt service on financing contract indebtedness authorized pursuant to Article 8 of Chapter 142 of the General Statutes for the construction of a new State psychiatric hospital."
SECTION 6.4.(a)  Dorothea Dix Hospital Property Study Commission. – If the State-owned real property encompassing the Dorothea Dix Hospital campus is not transferred to another State agency or agencies prior to the sale of any or all of the property to a nongovernmental entity, options for such sale shall be considered by the Dorothea Dix Hospital Property Study Commission. The Commission shall make recommendations on the options for sale of the property to the Joint Legislative Commission on Governmental Operations prior to any sale of any or all parts of the property.
SECTION 6.4.(b)  Creation and Membership. – There is hereby created the Dorothea Dix Hospital Property Study Commission. The Commission shall consist of nine members, four of which shall be appointed by the President Pro Tempore of the Senate and four of which shall be appointed by the Speaker of the House of Representatives. The Secretary of Health and Human Services shall serve as an ex officio member of the Commission.
PART VII. LOCAL GOVERNMENT SPECIAL OBLIGATION BONDS
SECTION 7.1.  G.S. 159I‑30(a) reads as rewritten:
"(a)	Authorization. – Any unit of local government may borrow money for the purpose of financing or refinancing its cost of the acquisition or construction of a project and may issue special obligation bonds and notes, including bond anticipation notes and renewal notes, pursuant to the provisions of this section and the applicable provisions of this Chapter for this purpose. "
SECTION 7.2.  G.S. 159I‑30(g) reads as rewritten:
"(g)	Definitions. –  The following definitions apply in this section:
(1)	Credit facility. – An agreement entered into by the unit with a bank, a savings and loan association, or another banking institution; an insurance company, a reinsurance company, a surety company, or another insurance  institution; a corporation, an investment banking  firm, or another investment  institution; or any financial institution, providing for prompt payment of all or any part of the principal, or purchase price (whether at maturity, presentment, or tender for purchase, redemption, or acceleration), redemption premium, if any, and interest on any bonds or notes payable on demand or tender by the owner, in consideration of the unit agreeing to repay the provider of the credit facility in accordance with the terms and provisions of the agreement; the provider of any credit facility may be located either within or without the United States of America.
(2)	Par formula. – Any provision or formula adopted by the unit to provide for the adjustment, from time to time of the interest rate or rates borne by any bonds or notes including:
a.	A provision providing for such adjustment so that the purchase price of such bonds or notes in the open market would be as close to par as possible;
b.	A provision providing for such adjustment based upon a percentage or percentages of a prime rate or base rate, which percentage or percentages may vary or be applied for different periods of time; or
c.	Any other provision as the unit may determine to be consistent with this section and the applicable provisions of this Chapter and does not materially and adversely affect the financial position of the unit and the marketing of the bonds or notes at a reasonable interest cost to the unit.
(3)	Project. – Any of the following:
a.	A project as defined in G.S. 159I‑3.
b.	Any of the following as defined in S.L. 1998‑132: water supply systems, water conservation projects, water reuse projects, wastewater collection systems, and wastewater treatment works.
c.	With respect to a county, any project or purpose authorized or described in G.S. 159‑48(b) or (c). 
d.	With respect to a city, any project or purpose authorized or described in G.S. 159‑48(b) or (d).
(g1)	Credit Facility. – The obligation of a unit of local government under a credit facility to repay any drawing thereunder may be made payable and otherwise secured, to the extent applicable, as provided in this section."
SECTION 7.3.  G.S. 160A‑543 reads as rewritten:
"§ 160A‑543.  Bonds authorized.
A city may  incur debt under general law to finance services, facilities or functions provided within a service district. If a proposed general obligation bond issue is required by law to be submitted to and approved by the voters of the city, and if the proceeds of the proposed bond issue are to be used in connection with a service that is or, if the bond issue is approved, will be provided only for one or more service districts or at a higher level in service districts than city wide, the proposed bond issue must be approved concurrently by a majority of those voting throughout the entire city and by a majority of the total of those voting in all of the affected or to be affected service districts."
PART VIII.	GENERAL PROVISIONS
SECTION 8.1. Interpretation of Act. (a)  Additional Method. – This act provides an additional and alternative method for the doing of the things authorized by this act and shall be regarded as supplemental and additional to powers conferred by other laws. Except where expressly provided, this act shall not be regarded as in derogation of any powers now existing. The authority granted in this act is in addition to other laws now or hereinafter enacted authorizing the State to issue or incur indebtedness.
SECTION 8.1.(b)  Statutory References. – References in this act to specific sections or Chapters of the General Statutes are intended to be references to those sections or Chapters as they may be amended, from time to time, by the General Assembly.
SECTION 8.1.(c)  Liberal Construction. – This act, being necessary for the health and welfare of the people of the State, shall be liberally construed to effect its purposes.
SECTION 8.1.(d)  Severability. – If any provision of this act or its application to any person or circumstance is held invalid, that invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.
SECTION 8.2.  Effective Date. – This act is effective when it becomes law.