A BILL TO BE ENTITLED
AN ACT to create the New Hanover convention center district, to establish the distribution of county occupancy tax proceeds derived from accommodations located in the district and to modify the distribution of the remaining occupancy tax proceeds, to create the new hanover county district U, to authorize the new hanover county district u to levy a three percent occupancy tax, and to make administrative changes to the wilmington occupancy tax.
The General Assembly of North Carolina enacts:
SECTION 1.  Part VIII of Chapter 908 of the 1983 Session Laws, as amended by Chapter 987 of the 1983 Session Laws, Chapters 726 and 971 of the 1985 Session Laws, Chapter 540 of the 1995 Session Laws, S.L. 2002‑138, and S.L. 2003‑166, reads as rewritten:
"Part VIII. New Hanover Occupancy Tax.
"Sec. 31. Levy of Tax. – (a) Two‑Percent Tax. – The New Hanover County Board of Commissioners may levy a room occupancy and tourism development tax of two percent (2%) of the gross receipts derived from the rental of any room, lodging, or accommodation furnished by a hotel, motel, inn, tourist camp, or similar place within the county that is subject to  sales tax imposed by the State under G.S. 105‑164.4(a)(3). This tax is in addition to any State or local sales tax. This tax does not apply to accommodations furnished by nonprofit charitable, educational, benevolent, or religious organizations when furnished in furtherance of their nonprofit purpose.
(b)	Additional One‑Percent Tax. – In addition to the tax authorized by  subsection (a) of this section, the New Hanover County Board of Commissioners may levy a room occupancy and tourism development tax of one percent (1%) of the gross receipts derived from the rental of accommodations taxable under that subsection. The levy, collection, administration, and repeal of the tax authorized by this  subsection, and the use of tax revenue from a tax levied under this subsection, shall be in accordance with Sections 31 through 35 of this Part. New Hanover County may not levy a tax under this subsection unless it also levies a tax under  subsection (a) of this section.
"Sec. 32. Definitions. – The following definitions apply in this Part:
(1)	Beach nourishment. – The placement of sand, from other sand sources, on a beach or dune by mechanical means and other associated activities that are in conformity with the North Carolina Coastal Management Program along the shorelines of the Atlantic Ocean of North Carolina and connecting inlets for the purpose of widening the beach to benefit public recreational use and mitigating damage and erosion from storms to inland property. The term includes expenditures for any of the following:
a.	Costs directly associated with qualifying for projects either contracted through the U.S. Army Corps of Engineers or otherwise permitted by all appropriate federal and State agencies.
b.	The nonfederal share of the cost required to construct these projects.
c.	The costs associated with providing enhanced public beach access.
d.	The costs of associated nonhardening activities such as the planting of vegetation, the building of dunes, and the placement of sand fences. 
(2)	Beach towns. – Carolina Beach, Kure Beach, and Wrightsville Beach.
(3)	Net proceeds. – Gross proceeds less the cost to the county of administering and collecting the tax, as determined by the finance officer, not to exceed three percent (3%) of the first five hundred thousand dollars ($500,000) of gross proceeds collected each year and one percent (1%) of the remaining gross receipts collected each year.
(4)	Promote travel and tourism. – To advertise or market an area or activity, publish and distribute pamphlets and other materials, conduct market research, or engage in similar promotional activities that attract tourists or business travelers to the area; the term includes administrative expenses incurred in engaging in the listed activities.
(5)	Tourism‑related expenditures. – Expenditures that, in the judgment of the Authority, are designed to increase the use of lodging facilities, meeting facilities, and convention facilities in an area by attracting tourists or business travelers to the area. The term includes tourism‑related capital expenditures and beach nourishment. These funds shall not be used for activities of projects that are ordinarily or historically funded through the town's general revenues.
"Sec. 33. Administration of Tax. – A tax levied under this Part shall be levied, administered, collected, and repealed as provided in G.S. 153A‑155. The penalties provided in G.S. 153A‑155 apply to a tax levied under thisPart.
"Sec. 34. Establishment of the Cape Fear Coast Convention and Visitors Bureau as a Tourism Development Authority. – (a) Creation. – As soon as practicable before February 1, 2003, the board of commissioners shall adopt a resolution creating the Cape Fear Coast Convention and Visitors Bureau, a tourism development authority, which shall be a public authority under the Local Government Budget and Fiscal Control Act. The county shall transfer to the Authority upon its creation all the assets of the county's convention and visitors bureau.
(b)	Membership. – The Authority shall be composed of the following 15 voting members: five ex officio members or their designees and 10 additional members appointed by the board of commissioners.
(1)	The ex officio members are listed below. Each ex officio member may designate to serve in the member's place an individual who serves on the governing body of the county or municipality that the member represents.
a.	The chair of the board of county commissioners.
b.	The mayor of the City of Wilmington.
c.	The mayors of the beach towns.
(2)	The board of county commissioners shall appoint the members listed below. The resolution creating the Authority must provide for staggered terms for the appointed members.
a.	The owner or manager of a hotel of 150 rooms or more in the town of Wrightsville Beach. This individual must have experience in promoting travel and tourism.
b.	The owner or manager of a hotel in the town of Carolina Beach and the owner or manager of a hotel in the town of Kure Beach. These individuals must have experience in promoting travel and tourism.
c.	The owner or manager of a hotel of 150 rooms or more in the City of Wilmington. This individual must have experience in promoting travel and tourism.
d.	The owner or manager of a hotel of fewer than 150 rooms in the City of Wilmington. This individual must have experience in promoting travel and tourism.
e.	The owner or manager of a bed and breakfast facility. This individual must have experience in promoting travel and tourism.
f.	The owner or manager of a company that manages and rents more than 100 vacation rental properties. This individual must have experience in promoting travel and tourism.
g.	A representative of a tourism attraction in the county who is actively involved in the promotion of travel and tourism in the county.
h.	A representative of the Wilmington Chamber of Commerce who is actively involved in promoting travel and tourism in the county.
i.	The owner or manager of a restaurant business in the county.
(c)	Administration. – The board of commissioners shall determine the compensation, if any, to be paid to members of the Authority. The resolution creating the Authority must designate one member of the Authority to serve as the initial chair. The Authority shall meet at the call of the chair and shall adopt rules of procedure to govern its meetings. During the first quarter of each calendar year beginning in 2004, the Authority must meet to elect a chair from among its members. The Finance Officer for New Hanover County shall be the ex officio finance officer of the Authority.
(d)	Duties. – The Authority shall expend the net proceeds of the taxes distributed to it for the purposes provided by law. The Authority shall promote travel, tourism, and conventions in the county, sponsor tourist‑related events and activities in the county, and finance tourist‑related capital projects in the county.
(e)	Reports. – The Authority shall report quarterly and at the close of the fiscal year on its receipts and expenditures for the preceding quarter and for the year in such detail as the board may require. It shall file these reports with the board of commissioners and with the governing body of each municipality in the county.
"Sec. 34.1. Establishment of the New Hanover County Convention Center District. – The area in Wilmington, North Carolina extending from the Isabel S. Holmes Bridge to the Cape Fear Memorial Bridge with Fourth Street on one side and the Cape Fear River on the other side shall be known as the New Hanover County Convention Center District.
"Sec. 35. Disposition of Taxes Collected. – 
(a)	Except as otherwise provided in subsection (b) of this section, New Hanover County shall distribute the net proceeds of the occupancy taxes levied under Section 31 of this Part as provided in this subsection:
(1)	One hundred percent (100%) of the net proceeds derived from accommodations located in the New Hanover Convention Center District established in Section 34.1 of this Part shall be remitted quarterly to the convention center account, established in accordance with S.L. 2002‑139, as amended by this act. The proceeds in the account shall be remitted quarterly to and used by the City of Wilmington only in accordance with Section 1(d) of S.L. 2002‑139, as amended by this act. 
(2)	Seventy percent (70%) of the remaining net proceeds shall be deposited in a special fund, the cash balance of which shall be deposited at interest or invested in accordance with G.S. 159‑30. These funds shall be used only for beach nourishment.
(2)	Thirty percent (30%) of the remaining net proceeds shall be distributed on a quarterly basis to the Tourism Development Authority. These funds shall be used only to promote travel and tourism throughout New Hanover County. These funds shall not be used to plan, construct, operate, maintain, or in any way promote a civic center, convention center, public auditorium, or like facility.
(b)	If construction has not begun on a public convention center in the New Hanover County Convention Center District by July 1, 2008, then the New Hanover County Convention Center District is dissolved, and the City of Wilmington must return to the county any funds it received under this section that have not been spent or committed. The county shall use these returned funds and all future tax proceeds derived from occupancy taxes levied under Section 31 of this Part as follows: 
(1)	Seventy percent (70%) of the net proceeds shall be deposited in a special fund, the cash balance of which shall be deposited at interest or invested in accordance with G.S. 159‑30. These funds shall be used only for beach nourishment.
(2)	Thirty percent (30%) of the net proceeds shall be distributed on a quarterly basis to the Tourism Development Authority. These funds shall be used only to promote travel and tourism throughout New Hanover County. These funds shall not be used to plan, construct, operate, or maintain a civic center, convention center, public auditorium, or like facility."
SECTION 2.  Section 3 of S.L. 2002‑138 reads as rewritten:
"SECTION 3.  Section 36.1 of Chapter 908 of the 1983 Session Laws is recodified as Section 31(b) of Chapter 908 of the 1983 Session Laws."
SECTION 3.(a)  New Hanover County District U Created. – New Hanover County District U is created as a taxing district.  Its jurisdiction consists of that part of New Hanover County that is located outside of incorporated areas within the county.  New Hanover County District U is a body politic and corporate and has the power to carry out the provisions of this section.  The New Hanover County Board of Commissioners shall serve ex officio as the governing body of the district, and the officers of the county shall serve as the officers of the governing body of the district. A simple majority of the governing body constitutes a quorum, and approval by a majority of those present is sufficient to determine any matter before the governing body, if a quorum is present.
SECTION 3.(b)  Authorization and Scope. – The governing body of New Hanover County District U may levy a room occupancy tax of up to three percent (3%) of the gross receipts derived from the rental of any room, lodging, or accommodation furnished by a hotel, motel, inn, tourist camp, or similar place within the district that is subject to sales tax imposed by the State under G.S. 105‑164.4(a)(3).  This tax is in addition to any State or local sales or room occupancy tax. This tax does not apply to accommodations furnished by charitable, educational, or religious institutions or nonprofit organizations when furnished in furtherance of their nonprofit purpose.
SECTION 3.(c)  Administration. – A tax levied under this section shall be levied, administered, collected, and repealed as provided in G.S. 153A‑155 as if New Hanover County District U were a county.  The penalties provided in G.S. 153A‑155 apply to a tax levied under this section.
SECTION 3.(d)  Distribution and Use of Tax Revenue. – New Hanover County District U shall deposit one hundred percent (100%) of the net proceeds of the room occupancy and tourism development tax levied under this section into a special fund, the cash balance of which shall be deposited at interest or invested in accordance with G.S. 159‑30.  These funds shall be used only for beach nourishment. In accordance with the North Carolina Constitution and the United States Constitution, the tax proceeds may be used only for the direct benefit of the jurisdiction of New Hanover District U. None of the proceeds may be used for beach nourishment in areas within New Hanover County that are outside of the district."
SECTION 3.(e)  G.S. 153A‑155(g) reads as rewritten:
"(g)	This section applies only to Alleghany, Anson, Brunswick, Buncombe, Cabarrus, Camden, Carteret, Craven, Cumberland, Currituck, Dare, Davie, Duplin, Durham, Franklin, Granville, Halifax, Madison, Montgomery, Nash, New Hanover, New Hanover County District U, Pasquotank, Pender, Person, Randolph, Richmond, Rockingham, Rowan, Scotland, Stanly, Transylvania, Tyrrell, Vance, and Washington Counties, to Watauga County District U, and to the Township of Averasboro in Harnett County."
SECTION 4.(a)  Section 1(c) of S.L. 2002‑139 reads as rewritten:
"SECTION 1.(c)  Definitions. – The following definitions apply in this section:
(1)	New Hanover County Convention Center District. – The area in Wilmington, North Carolina extending from the Isabel S. Holmes Bridge to the Cape Fear Memorial Bridge with Fourth Street on one side and the Cape Fear River on the other side.
(2)	Net proceeds. – Gross proceeds less the cost to the county of administering and collecting the tax, as determined by the finance officer, not to exceed three percent (3%) of the first five hundred thousand dollars ($500,000) of gross proceeds collected each year and one percent (1%) of the remaining gross receipts collected each year.
(3)	Promote travel and tourism. – To advertise or market an area or activity, publish and distribute pamphlets and other materials, conduct market research, or engage in similar promotional activities that attract tourists or business travelers to the area; the term includes administrative expenses incurred in engaging in the listed activities.
(4)	Tourism Development Authority or Authority. – The Authority created by New Hanover County pursuant to Part VIII of Chapter 908 of the 1983 Session Laws, as amended.
SECTION 4.(b)  Section 1(d) of S.L. 2002‑139 reads as rewritten:
"SECTION 1.(d)  Use of Tax Revenue. – If a tax is levied under this section, New Hanover County shall create a convention center account. The county shall remit the net proceeds of a tax levied under this section quarterly to the convention center account. Funds in the account, including interest or investment income on the account,shall be remitted quarterly to the City of Wilmington. Except as otherwise provided in this section, the City of Wilmington shall use the funds only for the construction, financing, operation, promotion, and maintenance of a public convention center.
If the City of Wilmington does not provide reasonable evidence to the Tourism Development Authority by July 1, 2008, that construction has begun on a convention center in the New Hanover County Convention Center District, then the city must return to the county any funds it received under this subsection that have not been spent or committed. If the county has created a Tourism Development Authority pursuant to a local act of the General Assembly, the county shall remit the funds and future occupancy tax proceeds to the Tourism Development Authority. The Authority shall use these funds only to promote travel and tourism.
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SECTION 5.  Reporting Requirement. – The New Hanover Tourism Development Authority and the City of Wilmington shall report to the General Assembly by July 1, 2007, and annually thereafter, on the collection and distribution of occupancy tax proceeds, including how the amended distribution formula authorized by this act is working, on the progress of the construction of a public convention center, and on any other issues related to the use of occupancy tax proceeds in New Hanover County and the City of Wilmington as the General Assembly deems appropriate.
SECTION 6.  This act becomes effective July 1, 2006.