A BILL TO BE ENTITLED
AN ACT TO AUTHORIZE THE ISSUANCE OF SPECIAL INDEBTEDNESS TO FINANCE VITAL STATE FACILITIES FOR HEALTH CARE AND BIOTECHNOLOGY RESEARCH, AND TO DIRECT THE STATE TREASURER TO STUDY THE POTENTIAL COSTS AND BENEFITS OF INNOVATIVE STATE FINANCING.
The General Assembly of North Carolina enacts:
SECTION 1.  In accordance with G.S. 142‑83, this section authorizes the issuance or incurrence of special indebtedness in the following maximum aggregate principal amounts to finance the costs of acquiring, constructing, and equipping the following projects. The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes, is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the cost of these projects.
(1)	One hundred eighty million dollars ($180,000,000) for a new cancer rehabilitation and treatment center, a nearby physicians' office building, and a walkway between the two, all to be located at the University of North Carolina Hospitals at Chapel Hill.
(2)	Sixty million dollars ($60,000,000) for the North Carolina Cardiovascular Diseases Institute at East Carolina University.
(3)	Thirty‑five million dollars ($35,000,000) for a Bioinformatics Center at the University of North Carolina at Charlotte.
(4)	Twenty‑eight million dollars ($28,000,000) for a stand‑alone facility to house the new Pharmacy School program to be located at Elizabeth City State University, and interim temporary facilities to house the program during construction of the stand‑alone facility.
(5)	Thirty‑five million dollars ($35,000,000) for a Center for Health Promotion and Partnerships at the University of North Carolina at Asheville.
SECTION 2.  Article 9 of Chapter 142 of the General Statutes is amended by adding a new section to read:
"§ 142‑95. RECOP indebtedness.
(a)	Authorization. – In addition to special indebtedness described in the preceding sections of this Article, the State may incur special indebtedness as described in this section to be called real estate certificates of participation (RECOP) indebtedness. RECOP indebtedness shall be incurred for the purposes and otherwise as prescribed in the preceding sections of this Article, with the exceptions and limitations provided in this section. All of the provisions of this Article apply to RECOP indebtedness except to the extent a provision of this section specifically conflicts with a provision in the preceding sections of this Article.
(b)	Purposes. – In addition to the purposes provided in G.S. 142‑83, RECOP indebtedness may be incurred to refund any indebtedness of the State. RECOP indebtedness may refund non‑RECOP indebtedness to the same extent it may refund RECOP indebtedness in accordance with the preceding sections of this Article, except that the General Assembly must first enact legislation authorizing the incurrence of RECOP indebtedness for this purpose up to a specific maximum amount. The proceeds of RECOP indebtedness may not be used for operating expenses, start‑up costs, or other items of working capital.
(c)	Security. – In addition to the security authorized in G.S. 142‑85(a), RECOP indebtedness may be secured by any property or interest in property of the State selected by the Director of the Budget in consultation with the State Treasurer and approved by the Council of State in accordance with this Article. Before selecting as security any property or interest in property not authorized in G.S. 142‑85, the Director of the Budget must consult with the Joint Legislative Commission on Governmental Operations. This subsection supplements G.S. 142‑85(a); all of the remaining provisions of G.S. 142‑85 apply to RECOP indebtedness.
(d)	Principal. – The entire principal amount may mature on a single date. No principal reduction is required prior to maturity.
(e)	Interest. – Interest on RECOP indebtedness may be payable partly periodically and partly at maturity or earlier redemption, in the latter case with interest accreting and compounding at a stated interest rate.
(f)	Additional State Property Law Exception. – Chapter 146 of the General Statutes does not apply to any sale of the State's interest in property securing RECOP indebtedness if the sales proceeds are used first to pay, or provide for the payment of, all or a portion of that RECOP indebtedness. The property law exceptions in G.S. 142‑85(h) also apply to RECOP indebtedness."
SECTION 3.(a)  Findings. – The General Assembly finds that there are circumstances in which the State may benefit from the use of innovative or flexible public financing tools not previously considered in North Carolina. In light of the value of State property and its great potential for appreciation, financing vehicles may be developed that provide for a lower annual debt service in exchange for a larger payment when the debt matures. In the context of urgent State needs or temporary budget restrictions, the General Assembly finds that it may be in the best interest of the State to be able to take advantage of this type of financing option. In order for the General Assembly to make a policy decision on this issue, more economic and financial information is needed.
SECTION 3.(b)  Study. – The State Treasurer shall study the effects of refunding State indebtedness or financing new State facilities with RECOP indebtedness as defined in G.S. 142‑95. In evaluating the feasibility of incurring RECOP indebtedness and the surrounding policy issues, the State Treasurer shall evaluate all of the following:
(1)	The overall net economic cost to the State in incurring RECOP indebtedness as compared to other forms of indebtedness.
(2)	The relative annual debt service costs and final maturity payments of RECOP indebtedness as compared to other forms of indebtedness.
(3)	The availability of alternative financing opportunities and their relative costs to the State.
(4)	For refundings, whether the refunding would result in an economic gain, overall lower borrowing costs, or other benefits to the State.
(5)	Factors that affect which circumstances might make RECOP financing more or less desirable.
(6)	The impact on the State’s credit rating of various debt options in various situations.
(7)	Any other issues the State Treasurer considers relevant.
SECTION 3.(c)  Report. – The State Treasurer shall report to the Joint Legislative Commission on Governmental Operations by February 1, 2005, the results of this study, including specific findings and recommendations.
SECTION 4.  This act is effective when it becomes law.