A BILL TO BE ENTITLED
AN ACT to establish the rural health care stabilization program; to give counties additional flexibility with regard to the local option sales and use tax without increasing the existing maximum tax rate; and to expand eligibility for utility account funds.
The General Assembly of North Carolina enacts:

part I. rural health care stabilization program
SECTION 1.1.(a)  G.S. 131A‑1 through G.S. 131A‑25 are designated as Article 1 of Chapter 131A of the General Statutes, which is entitled "Health Care Facilities Finance Act."
SECTION 1.1.(b)  The Revisor of Statutes shall change any references in Article 1 of Chapter 131A of the General Statutes from "this Chapter" to "this Article."
SECTION 1.1.(c)  G.S. 113A‑12(3)e. reads as rewritten:
"e.	A health care facility financed pursuant to Article 1 of Chapter 131A of the General Statutes or receiving a certificate of need under Article 9 of Chapter 131E of the General Statutes."
SECTION 1.1.(d)  G.S. 142‑15.16(3) reads as rewritten:
"(3)	State‑supported financing arrangement. – Any financing arrangement that requires payments that are payable, whether directly or indirectly, and whether or not subject to the appropriation of funds for payment, by payments from the General Fund, the Highway Fund, the Highway Trust Fund, or other funds and accounts of the State that are funded from the general revenues and other taxes and fees of the State or State entities. A State‑supported financing arrangement does not include a financing arrangement where bonds or other obligations are issued or incurred to carry out a financing program authorized by the General Assembly under which the bonds or other obligations are payable from moneys derived from specified, limited, nontax sources, such as (i) loan payments made by a non‑State entity receiving the benefit of financing by a State entity (including an "obligor" or "participating institution" within the meaning of Chapter 159D of the General Statutes, a "public agency" or a "nonprofit agency" within the meaning of Article 1 of Chapter 131A of the General Statutes, and similar entities); (ii) revenues of a revenue‑producing enterprise or activity (such as "revenues" within the meaning of Part 4 of Article 1 of Chapter 116 of the General Statutes and "obligated resources" within the meaning of Article 3 of Chapter 116D of the General Statutes); and (iii) loan payments received, loans owned, and other assets of a State entity that are pledged to secure bonds under programs to finance that type of assets and the associated activities (such as mortgage loans under Chapter 122A of the General Statutes and student loans under Article 23 of Chapter 116 of the General Statutes)."
SECTION 1.2.  Chapter 131A of the General Statutes is amended by adding a new Article to read:
"Article 2.
"Rural Health Care Stabilization Program.
"§ 131A‑30.  Definitions.
The following definitions apply in this Article:
(1)	Commission. – The Local Government Commission established pursuant to G.S. 159‑3.
(2)	Eligible hospital. – A health care facility located in a development tier one or development tier two area, as defined in G.S. 143B‑437.08, that is unable to sustain operations for more than three years from the date of application for a loan under the Program.
(3)	Fund. – The Rural Health Care Stabilization Fund established in accordance with this Article.
(4)	Health care facility. – Any one or more buildings, structures, additions, extensions, improvements or other facilities, whether or not located on the same site or sites, machinery, equipment, furnishings, or other real or personal property suitable for health care or medical care.
(5)	Loan. – A sum of money loaned to an applicant with an obligation on the part of the applicant to repay the sum, plus interest, in accordance with a loan agreement.
(6)	Plan. – A hospital stabilization plan developed in accordance with G.S. 131A‑33.
(7)	Program. – The Rural Health Care Stabilization Program established pursuant to this Article.
(8)	Public agency. – Any county, city, town, hospital district, or other political subdivision of the State existing or hereafter created pursuant to the laws of the State authorized to acquire, by lease or otherwise, operate, or maintain health care facilities.
(9)	UNC Health Care. – The University of North Carolina Health Care System established pursuant to G.S. 116‑37.
"§ 131A‑31.  The Rural Health Care Stabilization Program.
(a)	Program Established; Purpose. – There is established the Rural Health Care Stabilization Program to provide loans for the support of eligible hospitals located in rural areas of the State that are in financial crisis due to operation of oversized and outdated facilities and recent changes to the viability of health care delivery in their communities, including the demand for certain patient services and the composition of payer mixes and patient populations. Within the funds available in the Rural Health Care Stabilization Fund, the Program shall provide for loans at below‑market interest rates with structured repayment terms in order for these financially distressed eligible hospitals to transition to sustainable, efficient, and more proportionately sized health care service models in their communities. In meeting this goal, loan funds may be used to finance construction of new health care facilities or to provide for operational costs during this transition period, or both, including while the construction of new health care facilities is undertaken.
(b)	Administration. – UNC Health Care shall administer the Program and has the following duties and responsibilities:
(1)	Establishing an application period and a process for submitting an application for a loan under this Program.
(2)	Assessing Plans submitted by an applicant for a loan under the Program.
(3)	Evaluating an applicant's ability to repay the loan under the proposed Plan.
(4)	Submitting recommendations to the Commission on whether an applicant should receive a loan under the Program.
(5)	Negotiating the terms of a proposed loan agreement.
(6)	Determining the security interests necessary to enforce repayment of the loan.
(7)	Implementing approved loan agreements, including monitoring repayment and collection.
(8)	Any other duties and responsibilities necessary to the implementation of the Program and enforcement of the loan agreements under the Program.
(c)	Exclusion. – UNC Health Care cannot apply for a loan under this Program and cannot be a partner in a partnership that applies for a loan under this Program. The Commission cannot approve an application for a loan if the issuance of the loan would result in a material, direct financial benefit to UNC Health Care at the time the application and Plan are submitted to the Commission for its approval.
(d)	Rules. – UNC Health Care is authorized to adopt any rules necessary for implementation of the Program.
"§ 131A‑32.  The Rural Health Care Stabilization Fund.
The Rural Health Care Stabilization Fund is created as a nonreverting special fund in the Office of State Budget and Management. The Fund shall operate as a revolving fund consisting of funds appropriated to, or otherwise received by, the Rural Health Care Stabilization Program and all funds received as repayment of the principal of or interest on a loan made from the Fund. The State Treasurer is the custodian of the Fund and shall invest its assets in accordance with G.S. 147‑69.2 and G.S. 147‑69.3. Moneys in the Fund shall only be used for loans made pursuant to this Article.
"§ 131A‑33.  Application for loan evaluation.
(a)	Application and Plan. – A public agency, an owner of a health care facility, or a partnership including one or more of those entities may apply for a loan under the Program to benefit an eligible hospital. To apply for a loan, an applicant must develop a hospital stabilization plan and submit the Plan with its application to UNC Health Care during the application period. The Plan shall include, at a minimum, any proposed changes in governance or ownership for the eligible hospital and the eligible hospital's financial projections, including a plan for repayment by the applicant of the requested loan and other sources of funds projected for support of the eligible hospital, such as local or federal funds. An applicant shall submit to UNC Health Care any additional information requested by UNC Health Care to enable it to determine whether to recommend the application to the Local Government Commission for approval.
(b)	Evaluation. – UNC Health Care shall evaluate each Plan submitted to determine whether the applicant's Plan demonstrates a financially sustainable health care service model for the community in which the eligible hospital is located. UNC Health Care may also assist an applicant with revisions to its Plan, including negotiating loan terms. Upon conclusion of its review of an application, UNC Health Care shall notify the applicant and the Commission of its recommendation on whether to approve or disapprove a loan application. If more than one applicant applies during an application period, UNC Health Care may assign a priority order for approval of applications when submitting its recommendations to the Commission and reasons for the assigned order of priority.
(c)	Disapproval of Application. – If UNC Health Care disapproves a loan application, the applicant may engage a disinterested and qualified third party approved by the Commission to evaluate the applicant's Plan to determine if the applicant demonstrates a financially sustainable health care service model for the community in which the eligible hospital is located. The applicant may seek Commission approval of the loan based on the written evaluation of its Plan by the third party.
"§ 131A‑34.  Commission approval for loan.
(a)	Approval Required. – UNC Health Care shall not award a loan under the Program unless the Commission approves it. If the Commission enters an order denying the loan, the proceedings under this Article shall be at an end.
(b)	Conflict of Interest. – UNC Health Care must disclose to the Commission any potential conflict of interest in its review of an application and Plan. The Commission cannot approve a loan if the issuance of the loan would result in a material, direct financial benefit to UNC Health Care at the time the application and Plan are submitted to the Commission for its approval.
(c)	Considerations. – The Commission shall review UNC Health Care's recommendations, an applicant's Plan, and any other information it may believe to have a bearing on whether the loan should be approved. If UNC Health Care recommended disapproval of a loan, and the applicant has an evaluation prepared by a disinterested and qualified third party approved by the Commission, the Commission may consider the third party's evaluation of the applicant and the applicant's Plan. The Commission may require the applicant and eligible hospital, if different, to provide any of the following information for its consideration:
(1)	Current and historical financial information.
(2)	Whether the undertaking is necessary or expedient.
(3)	Its debt management procedures and policies.
(4)	Whether it is in default in any of its debt service obligations.
(5)	Any other information the Commission may believe to have a bearing on whether the loan should be approved.
(d)	Loan Approval. – The Commission may approve the application if, upon the information and evidence it receives, it finds and determines:
(1)	That the loan is necessary or expedient.
(2)	That the amount proposed is adequate and not excessive for the proposed purpose of the loan.
(3)	That the Plan demonstrates a financially sustainable health care service model for the community in which the eligible hospital is located.
(4)	That the applicant's debt management procedures and policies are good, or that reasonable assurances have been given that its debt will be repaid.
"§ 131A‑35.  Award of loans; terms.
(a)	Award. – Upon approval of the loan by the Commission, UNC Health Care shall execute the terms of the loan agreement. In adopting terms of the loan agreement, UNC Health Care may require changes to the governance structure of the eligible hospital.
(b)	Interest Rate and Maturity. – The interest rate payable on and the maximum maturity of a loan are subject to the following limitations:
(1)	Interest rate. – The interest rate for a loan may not exceed the interest rate obtained by the State on its most recent general obligation bond offering.
(2)	Maturity. – The maturity for a loan may not exceed 20 years.
(c)	Debt Instrument. – UNC Health Care shall execute a debt instrument with the recipient of the loan to evidence the obligation to repay the principal of and interest on the loan awarded under this Article to the State.
"§ 131A‑36.  Annual reports on the Rural Health Care Stabilization Fund.
(a)	Requirement. – UNC Health Care shall publish a report each year on the Rural Health Care Stabilization Fund. The report shall be published by November 1 of each year and cover the preceding fiscal year. UNC Health Care shall make the report available to the public and shall give a copy of the report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division.
(b)	Content. – The report required by this section shall contain the following information concerning the Fund:
(1)	The beginning and ending balance of the Fund for the fiscal year.
(2)	The amount of revenue credited to the Fund during the fiscal year, by source.
(3)	The total amount of loans awarded from the Fund.
(4)	For each loan awarded, the recipient of the award, the amount of the award, the amount of the award that was disbursed, and the amount of the award remaining to be disbursed in a subsequent fiscal year, if applicable."
SECTION 1.3.  G.S. 116‑37 reads as rewritten:
"§ 116‑37.  University of North Carolina Health Care System.
…
(e)	Finances. – The University of North Carolina Health Care System shall be subject to the provisions of the State Budget Act, except for trust funds as provided in G.S. 116‑36.1 and G.S. 116‑37.2. The Chief Executive Officer, subject to the board of directors, shall be responsible for all aspects of budget preparation, budget execution, and expenditure reporting. All operating funds of The University of North Carolina Health Care System may be budgeted and disbursed through special fund codes, maintaining separate auditable accounts for the University of North Carolina Hospitals at Chapel Hill and the clinical patient care programs of the School of Medicine of the University of North Carolina at Chapel Hill. All receipts of The University of North Carolina Health Care System may be deposited directly to the special fund codes, and except for General Fund appropriations, all receipts of the University of North Carolina Hospitals at Chapel Hill may be invested pursuant to G.S. 116‑37.2(h). General Fund appropriations for support of the University of North Carolina Hospitals at Chapel Hill shall be budgeted in a General Fund code under a single purpose, "Contribution to University of North Carolina Hospitals at Chapel Hill Operations" and be transferable to a special fund operating code as receipts. General Fund appropriations for the Rural Health Care Stabilization Program shall be deposited in the Rural Health Care Stabilization Fund pursuant to G.S. 131A‑32 and shall only be used for the purposes set forth in Article 2 of Chapter 131A of the General Statutes.
…
(l)	Rural Health Care Stabilization Program. – The University of North Carolina Health Care System shall administer the Rural Health Care Stabilization Program in accordance with Article 2 of Chapter 131A of the General Statutes in order to further its mission to promote the health and well‑being of the citizens of North Carolina."

part ii. local option sales tax flexibility
SECTION 2.1.  Article 46 of Chapter 105 of the General Statutes reads as rewritten:
"Article 46.
"One‑Quarter Cent (1/4¢) or One‑Half Cent (1/2¢) County Sales and Use Tax.
"§ 105‑535.  Short title.
This Article is the One‑Quarter Cent (1/4¢) or One‑Half Cent (1/2¢) County Sales and Use Tax Act.
"§ 105‑536.  Limitations.
This Article applies only to counties that levy the first one‑cent (1¢) sales and use tax under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws, the first one‑half cent (1/2¢) local sales and use tax under Article 40 of this Chapter, and the second one‑half cent (1/2¢) local sales and use tax under Article 42 of this Chapter.
"§ 105‑537.  Levy.
(a)	Authority. – A tax levied under this Article must be approved in a referendum. If the majority of those voting in a referendum held pursuant to this Article vote for the levy of the tax, the board of county commissioners may, by resolution and after 10 days' public notice, levy a local sales and use tax at the applicable rate. The applicable rate must meet all of the following conditions:
(1)	It must be in an increment of one‑fourth percent (1/4%).
(2)	It must be at a rate that, if levied, would not result in a total local sales and use tax rate in the county in excess of the following:
a.	Two and one‑half percent (2 1/2%) if the county is authorized to levy a local sales and use tax under Part 6 of Article 43 of this Chapter.
b.	Two and three‑fourths percent (2 3/4%) if the county is authorized to levy, or is located in a special district authorized to levy, a local sales and use tax under Part 2, Part 4, or Part 5 of Article 43 of this Chapter.
(b)	Vote. – The board of county commissioners may direct the county board of elections to conduct an advisory referendum on the question of whether to levy a local sales and use tax in the county as provided in this Article. The election shall be held in accordance with the procedures of G.S. 163A‑1592, except that the election shall not be held within one year from the date of the last preceding election under this section.
(c)	Ballot Question. – The form of the question to be presented on a ballot for a special election concerning the levy of the tax authorized by this Article shall be:
"[ ] FOR	[ ] AGAINST
Local sales and use tax at the rate of [The applicable rate stated in both words and as a percentage] in addition to all other State and local sales and use taxes to be used for [the applicable use or uses chosen from the options listed in G.S. 105‑538(b)]."
…
"§ 105‑538.  Administration and use of taxes.
(a)	Administration. – The Secretary shall, on a monthly basis, allocate to each taxing county the net proceeds of the tax levied under this Article. If the Secretary collects taxes under this Article in a month and the taxes cannot be identified as being attributable to a particular taxing county, the Secretary must allocate the net proceeds of these taxes among the taxing counties in proportion to the amount of taxes collected in each county under this Article in that month. For purposes of this Article, the term "net proceeds" has the same meaning as defined in G.S. 105‑472.
Except as provided in this Article, the adoption, levy, collection, administration, and repeal of these additional taxes must be in accordance with Article 39 of this Chapter. G.S. 105‑468.1 is an administrative provision that applies to this Article. A tax levied under this Article does not apply to the sales price of food that is exempt from tax pursuant to G.S. 105‑164.13B or to the sales price of a bundled transaction taxable pursuant to G.S. 105‑467(a)(5a). The Secretary shall not divide the amount allocated to a county between the county and the municipalities within the county.
(b)	Use. – A county must use the net proceeds of a tax levied under this Article only for one or more of the following, as indicated on the ballot question presented pursuant to G.S. 105‑537(c):
Use	Ballot Language
Any public purpose	Any public purpose
Public education purposes	Only public education purposes
(c)	Definitions. – For purposes of this section, the following definitions apply:
(1)	Net proceeds. – Defined in G.S. 105‑472.
(2)	Public education purposes. – Any of the following purposes:
a.	Public school capital outlay purposes, as defined in G.S. 115C‑426(f), or to retire any indebtedness incurred by the county for these purposes.
b.	Supplements of classroom teacher salaries. For the purposes of this section, a classroom teacher is an employee of a local board of education employed as a teacher who spends at least seventy percent (70%) of his or her work time in classroom instruction.
c.	Financial support of community colleges, including funds to supplement State financial support of community colleges."
SECTION 2.2.  Part 1 of Article 43 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑506.3.  Rate limitation.
A local sales and use tax may only be levied under this Article if the total local sales and use tax rate in the county, including a levy under this Article, is not in excess of the following:
(1)	Two and one‑half percent (2 1/2%) if the county is authorized to levy a local sales and use tax under Part 6 of this Article.
(2)	Two and three‑fourths percent (2 3/4%) if the county is authorized to levy, or is located in a special district authorized to levy, a local sales and use tax under Part 2, Part 4, or Part 5 of this Article."
SECTION 2.3.  G.S. 105‑164.3(4a) reads as rewritten:
"(4a)	Combined general rate. – The sum of all of the following:
a.	The State's general rate of tax set in G.S. 105‑164.4(a).
b.	The sum of the rates of the local sales and use taxes authorized for every county in this State by Article 39 of this Chapter or Chapter 1096 of the 1967 Session Laws, Article 40 of this Chapter, and Article 42 of this Chapter.
c.	One‑half of the maximum rate of tax authorized by Article 46 of this Chapter."
SECTION 2.4.  The additional one‑quarter percent (0.25%) sales and use tax rate allowed by this Part may only be levied on or after October 1, 2020, if the one‑quarter percent (0.25%) levy results in a two and one‑half percent (2.5%) county sales and use tax rate.

part iii. expand eligibility for utility account
SECTION 3.  G.S. 143B‑437.01 reads as rewritten:
"§ 143B‑437.01.  Industrial Development Fund Utility Account.
(a)	Creation and Purpose of Fund. – There is created in the Department of Commerce a special account to be known as the Industrial Development Fund Utility Account ("Utility Account") to provide funds to assist the local government units of the most economically distressed counties in the State in creating jobs. The Department of Commerce shall adopt rules providing for the administration of the program. Those rules shall include the following provisions, which shall apply to each grant from the account:
(1)	The funds shall be used for construction of or improvements to new or existing water, sewer, gas, telecommunications, high‑speed broadband, electrical utility distribution lines or equipment, or transportation infrastructure for existing or new or proposed buildings. To be eligible for funding, the water, gas, telecommunications, high‑speed broadband, electrical utility lines or facilities, or transportation infrastructure shall be located on the site of the building or, if not located on the site, shall be directly related to the operation of the job creation activity. To be eligible for funding, the sewer infrastructure shall be located on the site of the building or, if not located on the site, shall be directly related to the operation of the job creation activity, even if the sewer infrastructure is located in a county other than the county in which the building is located.
(1a)	The funds shall be used for projects located in economically distressed counties except that the Secretary of Commerce may use up to one hundred thousand dollars ($100,000) to provide emergency economic development assistance in any county that is documented to be experiencing a major economic dislocation.
(2)	The funds shall be used by the city and county governments for projects that are reasonably anticipated to result in the creation of new jobs. There shall be no maximum funding amount per new job to be created or per project.
(3)	There shall be no local match requirement if the project is located in a county that has one of the 25 highest rankings under G.S. 143B‑437.08.
…
(6)	The funds shall not be used for any retail, entertainment, or sports projects. The funds shall not be used for any nonmanufacturing project that does not meet the wage standard for the development tier area or zone in which the project is located. There is no wage standard for a development tier one area. If an urban progress zone or an agrarian growth zone is not in a development tier one area, then the wage standard for that zone is an average weekly wage that is at least equal to ninety percent (90%) of the lesser of the average wage for all insured private employers in the State and the average wage for all insured private employers in the county in which the project is located. The wage standard for a development tier two area or a development tier three area is an average weekly wage that is at least equal to one hundred ten percent (110%) of the lesser of the average wage for all insured private employers in the State and ninety percent (90%) of the average wage for all insured private employers in the county in which the project is located.
(7)	Priority for the use of funds shall be given to eligible industries.
(a1)	Definitions. – The following definitions apply in this section:
…
(4)	Economically distressed county. – A county that has one of the 87 highest rankings under G.S. 143B‑437.08.
…
(7)	Major economic dislocation. – The actual or imminent loss of 500 or more manufacturing jobs in the county or of a number of manufacturing jobs equal to at least ten percent (10%) of the existing manufacturing workforce in the county.
…."

part iv. effective date
SECTION 4.  This act is effective when it becomes law.