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, TO SUPPORT REPAYMENT OF THE DEBT FROM THE HEALTH AND WELLNESS AND TOBACCO TRUST FUNDS, 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.  G.S. 147‑86.30 reads as rewritten:
"§ 147‑86.30.  Health and Wellness Trust Fund established.
(a)	Fund Established. – There is established the Health and Wellness Trust Fund in the Office of the State Treasurer to be used to develop a comprehensive plan to finance programs and initiatives to improve the health and wellness of the people of North Carolina. As used in this Article, the term "Fund" means the Health and Wellness Trust Fund. It is the intent of the General Assembly that the funds provided pursuant to this Article to address the health needs of North Carolinians be used to supplement, not supplant, existing funding of health and wellness programs.
(b)	Fund Earnings, Assets, and Balances. – The State Treasurer shall hold the Fund separate and apart from all other moneys, funds, and accounts. The State Treasurer shall be the custodian of the Fund and shall invest its assets in accordance with G.S. 147‑69.2 and G.S. 147‑69.3. 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 Commission, pursuant to directives of the Commission. The Commission may expend moneys in the Fund only as provided in subsections (c) and (d) of this section.
(c)	 Priority Use of Funds. – As soon as practicable after the beginning of each fiscal year, the State Treasurer must certify in writing to the chair of the Commission the estimated amount of debt service anticipated to be paid during the fiscal year for special indebtedness authorized by Senate Bill 1098, 2003 General Assembly. The chair of the Commission must issue a warrant from the Fund to the General Fund for the lesser of (i) one‑half of the amount certified by the Treasurer and (ii) thirty percent (30%) of the Fund's receipts for the current fiscal year.
(d)	Use of Remaining Funds. – The Commission may expend or commit moneys in the Fund in a fiscal year only after the payment required by subsection (c) of this section has been made. 
(e)	Fund Purposes. – Moneys from the Fund may be used for any of the following purposes:
(1)	To address the health needs of vulnerable and underserved populations in North Carolina.
(2)	To fund programs and initiatives that include research, education, prevention, and treatment of health problems in North Carolina and to increase the capacity of communities to respond to the public's health needs.
(3)	To develop a comprehensive, community‑based plan with goals and objectives to improve the health and wellness of the people of North Carolina with a priority on preventing, reducing, and remedying the health effects of tobacco use and with an emphasis on reducing youth tobacco use. The plan shall include measurable health and wellness objectives and a proposed timetable for achieving these objectives. In developing the plan, the Commission shall consider all facets of health, including prevention, education, treatment, research, and related areas.
(f)	Limit on Operating and Administrative Expenses. – No more than two and one‑half percent (2 1/2%) of the annual receipts of the Fund for the fiscal year beginning July 1 or a total of one million dollars ($1,000,000), whichever is less, may be used each fiscal year for administrative and operating expenses of the Commission and its staff. All administrative expenses of the Commission shall be paid from the Fund."
SECTION 3.  G.S. 143‑719 reads as rewritten:
"§ 143‑719.  Tobacco Trust Fund; creation; investment; priority use.
(a)	Fund Established. – The Tobacco Trust Fund is established in the Office of the State Treasurer. The Fund shall be used for the purposes provided in 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. The State Treasurer is the custodian of the Fund and shall invest the assets in accordance with G.S. 147‑69.2 and G.S. 147‑69.3. Investment earnings credited to the Fund become part of the Fund. Any balance remaining in the Fund at the end of any fiscal year is 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 Commission, pursuant to the directives of the Commission.
(c)	Priority Use of Funds. – As soon as practicable after the beginning of each fiscal year, the State Treasurer must certify in writing to the chair of the Commission the estimated amount of debt service anticipated to be paid during the fiscal year for special indebtedness authorized by Senate Bill 1098, 2003 General Assembly. The chair of the Commission must issue a warrant from the Fund to the General Fund for the lesser of (i) one‑half of the amount certified by the Treasurer and (ii) thirty percent (30%) of the Fund's receipts for the current fiscal year."
SECTION 4.  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 5.(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 5.(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 5.(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 6.  Sections 2 and 3 of this act become effective July 1, 2004. The remainder of this act is effective when it becomes law.