GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
H 2
HOUSE BILL 841*
Committee Substitute Favorable 4/29/09
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Short Title: Changes for Bonds Authorized Under ARRTA. |
(Public) |
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Sponsors: |
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Referred to: |
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March 30, 2009
A BILL TO BE ENTITLED
AN ACT to amend the north carolina general statutes to allow the state to take full advantage of the expansion of existing Bond programs and the creation of new bond programs under the american recovery and reinvestment TAX act of 2009 (ARRTA).
The General Assembly of North Carolina enacts:
SECTION 1. Article 34B of Chapter 115C of the General Statutes reads as rewritten:
"Qualified Zone Academy Bonds.Bonds and
Qualified School Construction Bonds.
"§ 115C‑489.5.
Qualified zone academy bonds; bonds and qualified school construction
bonds; findings.
The General Assembly finds:
(1) Section 226 of the Taxpayer Relief Act of 1997, as
codified at 26 U.S.C. § 1397E,26 U.S.C. § 54E, provides funds for
school improvements through taxable qualified zone academy bonds. Ninety‑five
percent (95%) or more of the proceeds of a qualified zone academy bond issue
must be used for a qualified purpose with respect to a qualified zone academy
established by an eligible local education agency.
(2) Partnerships between private entities and local schools are promoted through the use of qualified zone academy bonds. Issuers must certify that they have received written commitments from one or more private entities to make qualified contributions valued at ten percent (10%) of the proceeds of the issue.
(2a) Section 1521, et seq., of the American Recovery and Reinvestment Tax Act of 2009 (ARRTA), enacted as 26 U.S.C. § 54F, provides a new source of funds for construction, rehabilitation, or repair of public school facilities or for acquisition of land for public school facilities through the issuance of qualified school construction bonds.
(3) Eligible taxpayers may receive federal tax credits
for holding the qualified zone academy bonds.bonds or qualified
school construction bonds. It is intended that the qualified zone academy
bonds and qualified school construction bonds be sold at par value a
price so that the tax credits received are instead produce the
economic equivalent of interest that otherwise would have been paid on the
bonds. Therefore, issuers of qualified zone academy bonds or qualified
school construction bonds are obligated to repay the principal amount of
the qualified zone academy bonds or qualified school construction bonds but
need not make interest payments.
(4) Applicable federal law limits the amount of qualified zone academy bonds and qualified school construction bonds that may be issued in North Carolina in a calendar year. The amount of qualified school construction bonds that may be issued in the State is divided between amounts specifically designated for identified local school districts pursuant to ARRTA ("local allocation") and amounts allocated to the entire State for use throughout the State ("statewide allocation").
"§ 115C‑489.6. Administration; consultation; issuance of bonds.
(a) State Board of Education to Administer QZAB
Program. The State Board of Education is designated the State education
agency responsible for administering the qualified zone academy bond program in
North Carolina for the purposes of 26 U.S.C. § 1397E.26 U.S.C. § 54E.
The State Board of Education shall perform all activities required to implement
and carry out the qualified zone activity bond program in North Carolina. Those
activities include:
(a1) Qualified School Construction Bond Program. The State Board of Education is designated the State education agency responsible for administering the statewide allocation of authority to issue qualified school construction bonds under 26 U.S.C. § 54F. The State Board of Education shall perform all activities required to implement and carry out the statewide allocation for the qualified school construction bond program in North Carolina. Those activities include:
(1) Designing an application process under which proposals may be solicited from issuers wishing to issue qualified school construction bonds pursuant to the statewide allocation.
(2) Awarding the State's allocation of total funds among selected applicants and establishing conditions upon the usage of the allocation. These conditions may include:
a. Requiring that the bond proceeds be used for purposes permitted under 26 U.S.C. § 54F.
b. Conditions designed to assure that the allocation is used in a timely manner and that the allocations are made in accordance with the requirements of federal statutes, regulations, and rulings.
(3) Confirming that the terms of any qualified school construction bonds issued in accordance with this program are consistent with the terms of the federal program.
(4) Acting as the State entity designated to receive notice from any local school district that it will not utilize its local allocation so that the unused resource will become part of the statewide allocation. Local school districts receiving a local allocation are hereby directed to coordinate the use of such allocation with the State Board of Education so that any local allocation that will not be used by the local school district becomes eligible for use as part of the statewide allocation.
(b) Assistance. The Department of Public Instruction shall provide the State Board of Education any support it requires in carrying out this section.
(c) Consultation. In reviewing applications and awarding allocations, the State Board of Education shall consult with the Local Government Commission to determine whether a prospective issuer of qualified zone academy bonds or qualified school construction bonds is able to issue or incur marketable obligations.
(d) Issuance of Bonds. Any bonds designated as qualified
zone academy bonds or qualified school construction bonds may be issued
pursuant to the applicable provisions of and in compliance with the Local
Government Bond Act, Article 4 of Chapter 159 of the General Statutes, or
pursuant to the applicable provisions of and in compliance with G.S. 160A‑20,
to the extent authorized by G.S. 153A‑158.1. As provided in G.S. 159‑123(b),
bonds designated as qualified zone academy bonds or qualified school
construction bonds to be issued pursuant to the Local Government Bond Act
may be sold by the Local Government Commission at private sale."
SECTION 2. G.S. 143‑433.6 is amended by adding two new subsections to read:
"(c) The General Assembly further finds and determines that section 1400U‑3 of the American Recovery and Reinvestment Tax Act of 2009 (ARRTA) added a new type of exempt facility bond called "recovery zone facility bonds" to be used to finance construction, renovation, and equipping of recovery zone property for use in any trade or business in a recovery zone, all as defined in ARRTA, and a new type of governmental bond called "recovery zone economic development bonds." The ARRTA provides a formula for allocation of authority to issue recovery zone facility bonds and recovery zone economic development bonds to the states, and by which the authority is to be reallocated by the State to counties and large municipalities within the State.
(d) The General Assembly further finds and determines that section 54D of the Internal Revenue Code of 1986, as amended, permits the issuance of tax credit bonds called "qualified energy conservation bonds" (QECBs), the proceeds of which must be used for certain energy conservation purposes enumerated in section 54D of the Internal Revenue Code of 1986, as amended. Section 54D and ARRTA provide a national bond limitation for the issuance of QECBs, and the Treasury Department has allocated that authority among the states. Under section 54D, the United States is required to reallocate the authority to issue QECBs to the counties and large local governments within the states based on population, in accordance with the guidelines provided by the Treasury Department, and to assure that not more than thirty percent (30%) of the QECBs issued in a state are used for private activity bonds, as defined in section 54D of the Internal Revenue Code of 1986, as amended."
SECTION 3. G.S. 143‑433.8 reads as rewritten:
"§ 143‑433.8. Duties.
The Committee shall perform the following duties:
(1) Manage the allocation of private activity bonds,
low‑income housing credits, and qualified public educational
facility bonds bonds, recovery zone facility bonds, recovery zone
economic development bonds, and qualified energy conservation bonds and
receive advice from bond issuers, elected officials, and the General Assembly.
(2) Continue to monitor bond markets, economic development financing trends, school financing trends, housing markets, and tax incentives available to induce events and programs favorable to North Carolina, its cities and counties, and individual citizens.
(3) Continue to study the ways in which North Carolina
can best and most fairly manage and utilize the allocation of private activity
bonds, low‑income housing credits, and qualified public
educational facility bonds.bonds, recovery zone facility bonds,
recovery zone economic development bonds, and qualified energy conservation
bonds.
(4) Report to the Governor, Lieutenant Governor, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, and the Revenue Laws Study Committee as requested and on not less than an annual basis. The annual report is due by November 1 of each year."
SECTION 4. G.S. 143‑433.9(a) reads as rewritten:
"(a) To provide for the orderly and prompt
issuance of private activity bonds and qualified public educational facility
bonds, there are hereby proclaimed bonds the allocation of which is
managed under this Article, the Committee must follow formulas for
allocating the following: (i) the unified volume limitation, (ii) the state
housing credit ceiling, and (iii) the annual aggregate limitation on the
face amount of qualified public educational facility bonds.bonds,
(iv) the limitation on issuance of recovery zone facility bonds, (v) the
limitation on issuance of recovery zone economic development bonds, and (vi)
the limitation on issuance of qualified energy conservation bonds. The
unified volume limitation for all issues of private activity bonds, other than
qualified public educational facility bonds,bonds and recovery zone
facility bonds, in North Carolina shall be considered as a single resource
to be allocated under this Article. The annual aggregate limitation on the face
amount of qualified public educational facility bonds for all issues in North
Carolina shall be considered as a single resource to be allocated under this
Article. The Committee shall issue the following: (i) allocations of the
unified volume limitation, (ii) allocations of the state housing credit
ceiling, and (iii) allocations and reallocations of the aggregate
limitation on the face amount of qualified public educational facility bonds.bonds,
(iv) allocation and reallocation of the authority for issuance of recovery zone
facility bonds allocated to the State, (v) allocation and reallocation of the
authority for issuance of recovery zone economic development bonds allocated to
the State, (vi) allocation and reallocation of authority for issuance of
qualified energy conservation bonds allocated to the State, and (vii)
allocation of other limitations on authority to issue bonds as may be directed
by the Governor. The Committee shall set forth procedures for making such
allocations and in the making of such allocations shall take into consideration
the best interest of the State of North Carolina with regard to the economic
development, school facility needs, energy conservation, green initiatives, and
general prosperity of the people of North Carolina. In making the initial
allocations for recovery zone facility bonds and recovery zone economic
development bonds, the Committee shall follow the formula provided in section
1400U‑1(a)(3) of ARRTA. In making the initial allocation for qualified
energy conservation bonds, the Committee shall follow the guidelines provided
in section 54D of the Internal Revenue Code of 1986, as amended. The
Committee shall make all elective carryforwards of the unused unified volume limitation
and limitation, the annual aggregate limitation on the face amount
of qualified public educational facility bonds on behalf of the State.
bonds, recovery zone facility bonds, qualified energy conservation bonds, and
any other bonds or tax credits over which it has allocation authority on behalf
of the State. The Committee shall monitor the issuance of qualified energy conservation
bonds to ensure that not more than thirty percent (30%) of such bonds are used
for purposes that would be treated as private activity bonds under the Internal
Revenue Code of 1986, as amended. The Committee is authorized to establish a
procedure to monitor whether the initial allocations of recovery zone facility
bonds or recovery zone economic development bonds to counties and large
municipalities pursuant to ARRTA will be utilized, for an allocation that will
not be utilized to be waived by notice to the Committee and for the reallocation
of the waived allocation to other projects that qualify pursuant to ARRTA."
SECTION 5. G.S. 159‑123(b) reads as rewritten:
"(b) The following classes of bonds may be sold at private sale:
(1) Bonds that a State or federal agency has previously agreed to purchase.
(2) Any bonds for which no legal bid is received within the time allowed for submission of bids.
(3) Revenue bonds, including any refunding bonds issued pursuant to G.S. 159‑84, and special obligation bonds issued pursuant to Chapter 159I of the General Statutes.
(4) Refunding bonds issued pursuant to G.S. 159‑78.
(5) Refunding bonds issued pursuant to G.S. 159‑72 if the Local Government Commission determines that a private sale is in the best interest of the issuing unit.
(6) Bonds designated as qualified zone academy bonds
pursuant to G.S. 115C‑489.6, the ownership of which results
in a tax credit to the owners thereof pursuant to the provisions of the federal
income tax laws, if the Local Government Commission determines that a
private sale is in the best interest of the issuing unit.
(7) Project development financing debt instruments.
(8) General obligation bonds rated below AA grade issued pursuant to the Local Government Bond Act and not described in subdivisions (1) through (7) of this subsection that are sold prior to December 31, 2010."
SECTION 6. G.S. 159C‑3 reads as rewritten:
"§ 159C‑3. Definitions.
The following definitions apply in this Chapter:
(3a) Code. The Internal Revenue Code of 1986, as amended.
(6b) Industrial project. Any industrial or manufacturing factory, mill, assembly plant, or fabricating plant; freight terminal; industrial research, development, or laboratory facility; industrial processing facility; facility used in the manufacturing or production of tangible personal property; facility used in the creation or production of intangible property as described in section 197(d)(1)(C)(iii) of the Code; or distribution facility for industrial or manufactured products.
(15a) Special purpose project. Any structure, equipment, or other facility for any one or more of the following purposes:
m. Facilities that qualify as recovery zone property in connection with the issuance of recovery zone facility bonds pursuant to the American Recovery and Reinvestment Tax Act of 2009."
SECTION 7. G.S. 159C‑6 is amended by adding a new subsection to read:
"(a1) A county or city that receives an allocation to issue recovery zone facility bonds within the meaning of the American Recovery and Reinvestment Tax Act of 2009 to finance recovery zone property may designate any authority as the governmental entity authorized to issue recovery zone facility bonds."
SECTION 8. G.S. 159D‑3 reads as rewritten:
"§ 159D‑3. Definitions.
The following terms, whenever used or referred to in this Article, shall have the following respective meanings, unless a different meaning clearly appears from the context:
(3a) "Code" means the Internal Revenue Code of 1986, as amended.
(13) "Project" shall mean means any
land, equipment or any one or more buildings or other structures, whether or
not on the same site or sites, and any rehabilitation, improvement, renovation
or enlargement of, or any addition to, any building or structure for use as or
in connection with (i) any industrial project for industry which project may
be any project, which may be an industrial or manufacturing factory,
mill, assembly plant or plant, fabricating plant, or freight
terminal, or industrial research, development or laboratory facility
or facility, industrial processing facility for industrial or
manufactured products, a facility used in the manufacturing or production of
tangible personal property, a facility used in the creation or production of
intangible property as described in section 197(d)(1)(C)(iii) of the Code, or a
distribution facility for industrial or manufactured products, or (ii) any
pollution control project for industry which project may be any air pollution
control facility, water pollution control facility, or solid waste disposal
facility in connection with any factory, mill, plant, terminal or facility
described in clause (i) of this subdivision, or (iii) any combination of
projects mentioned in clauses (i) and (ii) of this subdivision. Any project may
include all appurtenances and incidental facilities such as land, headquarters
or office facilities, warehouses, distribution centers, access roads,
sidewalks, utilities, railway sidings, trucking and similar facilities, parking
facilities, landing strips and other facilities for aircraft, waterways, docks,
wharves and other improvements necessary or convenient for the construction,
maintenance and operation of any building or structure, or addition thereto.
. "
SECTION 9. G.S. 159D‑45 is amended by adding a new subsection to read:
"(g) A county or city that receives an allocation to issue recovery zone facility bonds within the meaning of the American Recovery and Reinvestment Tax Act of 2009 to finance recovery zone property may designate the agency as the governmental entity authorized to issue recovery zone facility bonds."
SECTION 10. This act is effective when it becomes law.