A BILL TO BE ENTITLED
AN ACT TO AUTHORIZE THE STATE TO USE FINANCING CONTRACTS IN ACQUIRING PROPERTY THROUGH THE pARKS AND RECREATION TRUST FUND AND THE NATURAL HERITAGE TRUST FUND.
The General Assembly of North Carolina enacts:
SECTION 1. Chapter 113 of the General Statutes is amended by adding a new Article to read:
"Article 5B.
"Financing Contracts for Parks, Recreation, and Natural Heritage.
"§ 113‑77.15. Purpose.
The State is authorized to enter into financing contracts as provided in this Article for the following purposes:
(1)	To finance the cost of capital projects for the State Parks System, repairs and renovations of park facilities, and land acquisition for the State Parks System, pursuant to G.S. 113‑44.15(b)(1).
(2)	To finance the costs of acquiring land for parks, recreation, and preservation of natural heritage pursuant to G.S. 113‑77.9(b).
"§ 113‑77.16. Definitions.
The following definitions apply in this Article:
(1)	Certificates of participation. – Certificates or other instruments delivered by a special corporation as provided in this Article evidencing the assignment of proportionate and undivided interests in the rights to receive installment payments to be made by the State pursuant to a financing contract.
(2)	Cost. – The term includes all of the following, without limiting or restricting any proper definition of this term in financing the cost of a project as authorized by this Article:
a.	The cost of acquiring, constructing, and equipping a project, including the acquisition of rights‑of‑way, easements, franchises, equipment, furnishings, 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 as may be required.
c.	Finance charges, reserves for installment payments and interest prior to and during construction and, if considered advisable by the State Treasurer, for a period not exceeding two years after the estimated date of completion of construction.
d.	Administrative expenses and charges.
e.	The cost of bond insurance, credit and liquidity facilities, interest rate swap and other derivative agreements, financial and legal consultants, and related costs of financing the project or delivering and selling certificates of participation, to the extent and as determined by the State Treasurer.
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 Article.
(3)	Credit facility. – An agreement that meets both of the following conditions:
a.	It 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.
b.	It 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 financing contract or certificates of participation 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)	Department of Administration. – The North Carolina Department of Administration, created by Article 36 of Chapter 143 of the General Statutes, or should the Department of Administration be 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 of Administration.
(5)	Financing contract. – An installment financing contract entered into pursuant to the provisions of this Article to finance the cost of a project.
(6)	Project. – Any of the following:
a.	Capital projects for the State Parks System, repairs and renovations of park facilities, and land acquisition for the State Parks System, authorized by G.S. 113‑44.15(b)(1).
b.	Land acquisition for parks, recreation, and preservation of natural heritage pursuant to G.S. 113‑77.9(b).
(7)	Special corporation. – A nonprofit corporation created under Chapter 55A of the General Statutes or a successor statute for the purpose of delivering any certificates of participation provided by this Article.
(8)	State. – The State of North Carolina.
"§ 113‑77.17. Authorization of financing contracts.
(a)	The State, with the prior approval of the Council of State and the State Treasurer as provided in this Article, is authorized to execute and deliver financing contracts in order to provide funds to the Department of Administration and the Department of Environment and Natural Resources to be used, together with any other available funds, to pay the costs of projects. The aggregate annual principal and interest payments to be made in any year on financing contracts entered into pursuant to this Article may not exceed ten million dollars ($10,000,000).
"§ 113‑77.18. Approval required.
(a)	A financing contract may not be entered into pursuant to this Article unless prior to entering into the financing contract the following conditions are met:
(1)	The Council of State, by resolution, approves the execution and delivery of the financing contract, which resolution shall set forth all of the following:
a.	The not to exceed term or final maturity of the financing contract.
b.	The not to exceed interest rate or rates (or the equivalent thereof) with respect to the financing contract.
c.	The appropriate officers of the State to execute and deliver the financing contract and all other documentation relating to it.
d.	Any other matters as the Council of State may determine.
(2)	The State Treasurer approves the financing contract and all other documentation related to it, including any deed of trust, security agreement, trust agreement, derivative agreement, or credit facility.
(b)	In determining whether to approve a financing contract, the State Treasurer may consider any factors the State Treasurer considers relevant in order to find and determine all of the following:
(1)	The principal amount to be advanced to the State under the financing contract is adequate and not excessive for the purpose of paying the cost of the project.
(2)	The increase, if any, in State revenues necessary to pay the sums to become due under the financing contract is not excessive.
(3)	The financing contract can be entered into on terms desirable to the State.
(4)	In the case of delivery of certificates of participation, the sale of certificates of participation will not have an adverse effect upon any scheduled or proposed sale of obligations of the State or any State agency or of any unit of local government in the State.
"§ 113‑77.19. Security.
(a)	In order to secure the performance by the State of its obligations under a financing contract, the State may grant a lien on, or security interest in, all or any part of the project financed, the land upon which the project is or will be located, or both.
(b)	No deficiency judgment may be rendered against the State or any agency, department, or commission of the State in any action for breach of any obligation contained in a financing contract entered into under this Article or contained in any other related documentation, and the taxing power of the State or any agency, department, or commission of the State is not and may not be pledged directly or indirectly to secure any moneys due under a financing contract authorized by this Article. In the event that the General Assembly does not appropriate funds sufficient to make payments required under the financing contract, the net proceeds received from the sale, lease, or other disposition of the project or the site, or a portion of the project or the site, subject to a lien or security interest created pursuant to subsection (a) of this section shall be applied to satisfy the payment obligations in accordance with the deed of trust, security agreement, or other documentation creating 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 a financing contract or any other related documentation shall be paid to the State Treasurer for deposit to the Parks and Recreation Trust Fund established pursuant to G.S. 113‑44.15, the Natural Heritage Trust Fund established pursuant to G.S. 113‑77.7, the General Fund, or any combination of these, as appropriate, based on the source of payments made under the financing contract secured by the property disposed of, as conclusively determined by the Secretary of the Department of Environment and Natural Resources.
(c)	A financing contract 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 a project financed pursuant to this Article.
(d)	A financing contract may include provisions requesting the Governor to submit in the Governor's budget proposal, or any amendments or supplements to the budget proposal, appropriations necessary to make the payments required under the financing contract.
(e)	A financing contract may contain any provisions for protecting and enforcing the rights and remedies of the entity advancing moneys or providing funds under the financing contract as may be reasonable, proper, and not in violation of law, including covenants setting forth the duties of the State in respect of the purposes to which the funds advanced under the financing contract may be applied and the duties of the State with respect to a project, including, without limitation, provisions relating to insuring and maintaining the project and to the custody, safeguarding, investment, and application of moneys.
(f)	The interest component of the installment payments to be made under a financing contract may be calculated based upon a fixed or variable interest rate or rates as determined by the State Treasurer.
(g)	If the State Treasurer determines that it is in the best interest of the State, the State may enter into, or arrange for the delivery of, a credit facility to secure payment of the installment payments under a financing contract or to secure payment of the purchase price of any certificates of participation delivered as provided in this Article.
(h)	The entity entering into a financing contract with the State and any other professionals providing services relating to the financing contract, including, without limitation, the provider of any credit facility and the underwriter or placement agent for any certificates of participation, shall be selected by the State Treasurer.
"§ 113‑77.20. Source of repayment.
(a)	The payment of amounts payable by the State under a financing contract and other related documentation during any fiscal biennium or fiscal year shall be limited to funds appropriated for that purpose by the General Assembly in its discretion. No provision of this Article and no financing contract shall be construed or interpreted as creating a pledge of the faith and credit of the State or any agency, department, or commission of the State within the meaning of any constitutional debt limitation.
(b)	It is the intent of the General Assembly that the payments due under a financing contract and any other related documentation shall be made from amounts appropriated to and deposited in, pursuant to G.S. 105‑228.30(b), the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund, including investment earnings on these amounts, in each case to the extent the funds may be lawfully applied for this purpose. In the event that funds appropriated to and deposited in the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund, including investment earnings on these amounts, are not sufficient to make these payments, the General Assembly is not obligated to appropriate additional funds necessary to make these payments. The General Assembly may, however, in its discretion, appropriate the additional funds.
(c)	A financing contract entered into pursuant to this Article shall incorporate a statement that sets forth a description of the provisions of subsections (a) and (b) of this section.
(d)	Expenditures during each fiscal biennium or fiscal year from the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund shall be administered by the Department of Environment and Natural Resources in such a manner so as to assure that sufficient amounts shall be available in the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund to make the required payments under financing contracts and any other related documentation.
"§ 113‑77.21. Certificates of participation.
(a)	If certificates of participation are delivered pursuant to this Article, a special corporation shall be created for the purpose of entering into a financing contract and executing and delivering certificates of participation. A single special corporation may be used for one or more certificates of participation financings pursuant to this Article. The special corporation shall furnish to the State Treasurer any information and documentation relating to the delivery and sale of the certificates of participation that the State Treasurer requests.
(b)	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 sale must 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.
(c)	Certificates of participation may be delivered pursuant to a trust agreement or similar instrument with a corporate trustee approved by the State Treasurer. The corporate trustee may be any trust company or bank having the powers of a trust company within or without the State. A trust agreement may (i) provide for security and pledges and assignments with respect to the security as may be permitted under this Article and further provide for the enforcement of any lien or security interest created pursuant to G.S. 113-77.19(a), and (ii) contain any provisions for protecting and enforcing the rights and remedies of the owners of any certificates of participation, not inconsistent with the provisions of this Article, that the State Treasurer considers appropriate.
"§ 113-77.22. Insurance; other agreements.
The State Treasurer may authorize, execute, obtain, or otherwise provide for bond insurance, credit facilities, liquidity facilities, interest rate swap or other derivative agreements, and any other related instruments that the State Treasurer considers desirable in connection with the financing of a project as provided in this Article.
"§ 113-77.23. Tax exemption.
A financing contract entered into under this Article and any certificates of participation relating to it are exempt from taxation by the State or any political subdivision or any of their agencies, excepting estate, inheritance or gift taxes, income taxes on the gain from the transfer of the financing contract or certificates of participation, and franchise taxes. The interest component of the installment payments made by the State under the financing contract, including the interest component of any certificates of participation, is not subject to taxation as income.
"§ 113-77.24. Procurement of capital facilities.
The provisions of Articles 3, 3B, 3C, 3D, and 8 of Chapter 143 of the General Statutes and all other laws and rules of the State that relate to the acquisition and construction of State property apply to the financing of projects through the use of financing contracts pursuant to this Article."
SECTION 2.(a) The foregoing sections of this act provide an additional and alternative method for the doing of the things authorized by the act, are supplemental and additional to powers conferred by other laws, and do not derogate any powers now existing.
SECTION 2.(b) References in this act to specific sections or Chapters of the General Statutes are intended to be references to those sections or Chapters as amended and as they may be amended from time to time by the General Assembly.
SECTION 2.(c) This act, being necessary for the health and welfare of the people of the State, shall be liberally construed to effect its purposes.
SECTION 2.(d) If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.
SECTION 3.  This act is effective when it becomes law.