GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

S	2 

SENATE BILL 1128
Agriculture/Environment/Natural Resources Committee Substitute Adopted 5/20/96

Short Title:  Clean Water Management Fund.	(Public)

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Sponsors:

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Referred to:  Finance.

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May 14, 1996

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH THE CLEAN WATER MANAGEMENT TRUST FUND AND A BOARD OF TRUSTEES TO ADMINISTER THE FUND, TO PROVIDE TAX CREDITS FOR CERTAIN EFFORTS TO CLEAN UP OR PREVENT SURFACE WATER POLLUTION, AND TO PROVIDE THAT A CERTAIN PERCENTAGE OF GENERAL FUND REVERSIONS SHALL BE APPROPRIATED TO FUND THE CLEAN WATER MANAGEMENT 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 13A.
"Clean Water Management Trust Fund.
"§ 113-145.1.  Purpose.
The General Assembly recognizes that a critical need exists in this State to clean up pollution in the State's surface waters and to protect and conserve those waters that are not yet polluted.  The task of cleaning up polluted waters and protecting the State's water resources is multifaceted and requires different approaches that take into account the problems, the type of pollution, the geographical area, and the recognition that the hydrological and ecological values of each resource sought to be upgraded, conserved, and protected are unique.
It is the intent of the General Assembly that moneys from the Fund created under this Article shall be used to help finance projects that specifically address water pollution problems and focus on upgrading surface waters, eliminating pollution, and protecting and conserving unpolluted surface waters.  It is the further intent of the General Assembly that moneys from the Fund also be used to build a network of riparian buffers and greenways for environmental, educational, and recreational benefits.  While the purpose of this Article is to focus on the cleanup and prevention of pollution of the State's surface waters and the establishment of a network of riparian buffers and greenways, the General Assembly believes that the results of these efforts will also be beneficial to wildlife and marine fisheries habitats.
"§ 113-145.2.  Definitions.
As used in this Article:
(1)	Council. – The advisory council for the Clean Water Management Trust Fund.
(2)	Fund. – The Clean Water Management Trust Fund created pursuant to this Article.
(3)	Land. – Real property and any interest in, easement in, or restriction on real property.
(4)	Trustees. – The trustees of the Clean Water Management Trust Fund.
"§ 113-145.3.  Clean Water Management Trust Fund:  established.
(a)	Fund Established. – There is established a Clean Water Management Trust Fund in the State Treasurer's Office that shall be used to finance projects to clean up or prevent surface water pollution in accordance with this Article.
(b)	Fund Earnings, Assets, and Balances. – The  State Treasurer shall hold the Fund separate and apart from all other moneys, funds, and accounts.  Investment earnings credited to the assets of the Fund shall become part of the Fund.  Any balance remaining in the Fund at the end of any fiscal year shall be carried forward in the Fund for the next succeeding fiscal year.  Payments from the Fund shall be made on the warrant of the Chair of the Board of Trustees.
(c)	Fund Purposes. – Moneys from the Fund may be used for any of the following purposes:
(1)	To acquire land for riparian buffers for the purposes of providing environmental protection and establishing a network of riparian greenways for environmental, educational, and recreational uses.
(2)	To acquire conservation easements or other interests in real property for the purpose of protecting and conserving surface waters.
(3)	To coordinate with other public programs involved with lands adjoining water bodies to gain the most public benefit while protecting and improving water quality.
(4)	To restore previously degraded lands to reestablish their ability to protect water quality.
(5)	To repair failing waste treatment systems if: (i)  an application has first been submitted to receive a loan or grant from the Clean Water Revolving Loan and Grant Fund and the application was denied during the latest review cycle; (ii) the repair is a reasonable remedy for resolving an existing waste treatment problem; and (iii) the repair is not for the purpose of expanding the system to accommodate future anticipated growth of a community.  Priority shall be given to economically distressed units of local government.
(6)	To repair and eliminate failing septic tank systems, to eliminate illegal drainage connections, and to expand waste treatment systems if the system is being expanded as a remedy to eliminate failing septic tank systems or illegal drainage connections.  Priority shall be given to economically distressed units of local government.
(7)	To improve stormwater controls and management practices.
(8)	To facilitate planning that targets reductions in surface water pollution.
(9)	To fund operating expenses of the Board of Trustees and its staff.
(d)	Two Percent Limit on Operating and Administrative Expenses. – No more than two percent (2%) of the annual balance of the Fund may be used each year for administrative and operating expenses of the Board of Trustees and its staff.
"§ 113-145.4.  Clean Water Management Trust Fund:  eligibility for grants; matching funds or property requirement.
(a)	Eligible Grant Applicants. – Any of the following are eligible to apply for a grant from the Fund for the purpose of protecting and enhancing water quality:
(1)	A State agency.
(2)	A local government or other political subdivision of the State or a combination of such entities.
(3)	A nonprofit corporation whose primary purpose is the conservation, preservation, and restoration of our State's environmental and natural resources.
(b)	Grant Matching Requirement. – The Board of Trustees shall establish matching requirements for grants awarded under this Article.  The Board of Trustees may require a match of up to twenty percent (20%) of the amount of the grant awarded.  This requirement may be satisfied by the donation of land to a public or private nonprofit conservation organization as approved by the Board of Trustees.  The Board of Trustees may also waive the requirement to match a grant pursuant to guidelines adopted by the Board of Trustees.
"§ 113-145.5.  Clean Water Management Trust Fund: Board of Trustees established; membership qualifications; vacancies; meetings and meeting facilities.
(a)	Board of Trustees Established. – There is established the Clean Water Management Trust Fund Board of Trustees.  The Clean Water Management Trust Fund Board of Trustees shall be independent, but for administrative purposes shall be located under the Department of Environment, Health, and Natural Resources.
(b)	Membership. – The Clean Water Management Trust Fund Board of Trustees  shall be composed of 18 members. Six members shall be appointed by the Governor, six by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120-121, and six by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120-121.  The office of Trustee is declared to be an office that may be held concurrently with any other executive or appointive office, under the authority of Article VI, Section 9, of the North Carolina Constitution.
Persons appointed shall be knowledgeable in one of the following areas:
(1)	Acquisition and management of natural areas.
(2)	Conservation and restoration of water quality.
(3)	Wildlife and fisheries habitats and resources.
(4)	Environmental management.
(c)	Initial Appointments. – Each appointing officer shall designate two of the officer's initial appointments to serve a two-year term, two to serve a four-year term, and two to serve a six-year term. Thereafter, all appointments shall be for four years, subject to reappointment. All initial appointments shall be made on or before January 1, 1997. The Governor shall appoint one Trustee to serve as Chair of the Board.
(d)	Vacancies. – If a vacancy occurs, other than by the expiration of term, of a member subject to appointment by the General Assembly upon the recommendation of the Speaker of the House of Representatives or the President Pro Tempore of the Senate, the vacancy shall be filled in accordance with G.S. 120-122.  All other vacancies shall be filled by the appointing official in the original manner.
(e)	Frequency of Meetings. – The Trustees shall meet at least twice each year and may hold special meetings at the call of the Chair or a majority of the members.
(f)	Per Diem and Expenses. – The Trustees shall receive the per diem allowed for other members of boards and commissions of the State as fixed in the Biennial Appropriations Act, and, in addition, the Trustees shall receive subsistence and travel expenses as fixed by statute for such purposes. Travel and subsistence expenses shall be allowed while going to or from any place of meeting or when on official business. Per diem payments shall include necessary time spent in traveling to and from their places of residence to any meeting place or while traveling on official business when authorized by the Chair.  Per diem, subsistence, and travel expenses of the Trustees shall be paid from the Fund.
(g)	Meeting Facilities. – The Secretary of the Department of Environment, Health, and Natural Resources shall provide meeting facilities for the Board of Trustees and its staff as requested by the Chair.
"§ 113-145.6.  Clean Water Management Trust Fund Board of Trustees:  powers and duties.
(a)	Allocate Grant Funds. – The Trustees shall allocate moneys from the Fund as grants.  A grant may be awarded only for a project or activity that satisfies the criteria and furthers the purposes of this Article.
(b)	Develop Grant Criteria. – The Trustees shall develop criteria for awarding grants under this Article.  The criteria developed shall include consideration of the following:
(1)	The significant enhancement and conservation of water quality in the State.
(2)	The objectives of the basinwide management plans for the State's river basins and watersheds.
(3)	The promotion of regional integrated ecological networks insofar as they affect water quality.
(4)	The specific areas targeted as being environmentally sensitive.
(5)	The geographic distribution of funds as appropriate.
(6)	The preservation of water resources with significant recreational or economic value and uses.
(7)	The development of a network of riparian buffer-greenways bordering and connecting the State's waterways that will serve environmental, educational, and recreational uses.
(c)	Develop Additional Guidelines. – The Trustees may develop guidelines in addition to the grant criteria consistent with and as necessary to implement this Article.
"§ 113-145.7.  Clean Water Management Trust Fund:  Executive Director and staff.
The Clean Water Management Trust Fund Board of Trustees, as soon as practicable after its organization, shall select and appoint a competent person in accordance with this section as Executive Director of the Clean Water Management Trust Fund Board of Trustees.  The Executive Director shall be charged with the supervision of all activities under the jurisdiction of the Trustees and shall serve as the chief administrative officer of the Trustees.  Subject to the approval of the Trustees and the Director of the Budget, the Executive Director may employ such clerical and other assistants as may be deemed necessary.
The person selected as Executive Director shall have had training and experience in conservation, protection, and management of surface water resources. The salary of the Executive Director shall be fixed by the Trustees, and the Executive Director shall be allowed actual expenses incurred while on official duties away from resident headquarters.  The Executive Director's salary and expenses shall be paid from the Clean Water Management Trust Fund subject to the provisions of the Executive Budget Act.  The term of office of the Executive Director shall be at the pleasure of the Trustees.
"§ 113-145.8.  Clean Water Management Trust Fund:  Advisory Council.
There is established the Clean Water Management Trust Fund Advisory Council.  The Council shall advise the Trustees with regard to allocations made from the Fund, and other issues as requested by the Trustees.  The Council shall be composed of the following or its designees:
(1)	Commissioner of Agriculture.
(2)	Chair of the Wildlife Resources Commission.
(3)	Secretary of the Department of Environment, Health, and Natural Resources.
(4)	Secretary of the Department of Commerce."
Sec. 2.  G.S. 150B-1(c) is amended by adding a new subdivision to read:
"(6)	The Clean Water Management Trust Fund Board of Trustees."
Sec. 3.  Article 1 of Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143-15.3B.  The Clean Water Management Trust Fund.
(a)	The Clean Water Management Trust Fund is established in G.S. 113-145.3.  The State Controller shall reserve to the Clean Water Management Trust Fund six and one-half percent (6.5%) of any unreserved credit balance remaining in the General Fund at the end of each fiscal year.  As used in this section, the term 'unreserved credit balance' means the credit balance amount, as determined on a cash basis, before funds are reserved by the State Controller to the Savings Reserve Account, the Repairs and Renovations Reserve Account, or the Clean Water Management Trust Fund pursuant to this section, G.S. 143-15.3, and G.S. 143-15.3A.
(b)	The funds in the Clean Water Management Trust Fund shall be used only in accordance with Article 13A of Chapter 113 of the General Statutes."
Sec. 4.  G.S. 105-130.34 reads as rewritten:
"§ 105-130.34.  Credit for certain real property donations.
(a)	Any corporation that makes a qualified donation of an interest in real property located in North Carolina during the taxable year that is useful for public beach access or use, public access to public waters or trails, fish and wildlife conservation, protection of water quality, or other similar land conservation purposes, is allowed a credit against the tax imposed by this Division equal to twenty-five percent (25%) of the fair market value of the donated property interest.  To be eligible for this credit, the interest in real property must be donated to and accepted by either the State, a unit of local government, or a body that is both organized to receive and administer lands for conservation purposes and qualified to receive charitable contributions pursuant to G.S. 105-130.9.  Lands required to be dedicated pursuant to local governmental regulation or ordinance and dedications made to increase building density levels permitted under the regulation or ordinance are not eligible for this credit.  To support the credit allowed by this section, the taxpayer shall file with its income tax return for the taxable year in which the credit is claimed, a certification by the Clean Water Management Trust Fund Board of Trustees that the property donated is suitable for one or more of the valid public benefits set forth in this subsection.
(b)	The credit allowed by this section may not exceed the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer.
(c)	Any unused portion of this credit may be carried forward for the next succeeding five years.
(d)	The fair market value, or any portion thereof, of a qualifying donation that is not eligible for a credit pursuant to this section may be considered as a charitable contribution pursuant to G.S. 105-130.9. That portion of the donation allowed as a credit pursuant to this section shall not be  eligible as a charitable contribution."
Sec. 5.  G.S. 105-151.12 reads as rewritten:
"§ 105-151.12.  Credit for certain real property donations.
(a)	A person who makes a qualified donation of an interest in real property located in North Carolina during the taxable year that is useful for (i) public beach access or use, (ii) public access to public waters or trails, (iii) fish and wildlife conservation, (iv) protection of water quality, or (v) other similar land conservation purposes, is allowed as a credit against the tax imposed by this Division an amount equal to twenty-five percent (25%) of the fair market value of the donated property interest.  To be eligible for this credit, the interest in property must be donated to and accepted by either the State, a local government, or a body that is both organized to receive and administer lands for conservation purposes and qualified to receive charitable contributions under the Code.  Lands required to be dedicated pursuant to local governmental regulation or ordinance and dedications made to increase building density levels permitted under the regulations or ordinances are not eligible for this credit.  To support the credit allowed by this section, the taxpayer shall file with the income tax return for the taxable year in which the credit is claimed a certification by the Clean Water Management Trust Fund Board of Trustees that the property donated is suitable for one or more of the valid public benefits set forth by this subsection.
(b)	The credit allowed by this section may not exceed the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer.
Any unused portion of this credit may be carried forward for the next succeeding five years.
(c)	In order to claim the credit allowed under this section, the taxpayer must add the fair market value of the donated property interest to taxable income as provided in G.S. 105-134.6(c).
(d)	In the case of property owned by a married couple, if both spouses are required to file North Carolina income tax returns, the credit allowed by this section may be claimed only if the spouses file a joint return.  If only one spouse is required to file a North Carolina income tax return, that spouse may claim the credit allowed by this section on a separate return.
(e)	In the case of marshland for which a claim has been filed pursuant to G.S. 113-205, the offer of donation must be made before December 31, 1998, to qualify for the credit allowed by this section."
Sec. 6.  G.S. 105-134.6(c)(5) reads as rewritten:
"(5)	The fair market value of the donated property interest for which the taxpayer claims a credit for the taxable year under G.S. 105-151.12 and the market price of the gleaned crop for which the taxpayer claims a credit for the taxable year under G.S. 105-151.14."
Sec. 7.  The Chair of the Board of Trustees of the Clean Water Management Trust Fund shall report to the Environmental Review Commission beginning November 1, 1996, and annually thereafter on implementation of this act.
Sec. 8.  Sections 4, 5, and 6 of this act are effective for taxable years beginning on or after January 1, 1996.  The remainder of this act becomes effective June 30, 1996.