A BILL TO BE ENTITLED
AN ACT to amend the north carolina general statutes to allow the state to take full advantage of federal economic stimulus legislation also known as the american recovery and reinvestment 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:
"Article 34B.
"Qualified Zone Academy Bonds.
"§ 115C‑489.5.  Qualified zone academy bonds; findings.
The General Assembly finds:
(1)	Section 226 of the Taxpayer Relief Act of 1997, as codified at 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.
…
(2a)	Section 1521 et seq., of the American Recovery and Reinvestment 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 through the issuance of qualified school construction bonds.
(3)	Eligible taxpayers may receive federal tax credits for holding the qualified zone academy 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 so that the tax credits received are instead of interest that otherwise would have been paid on the bonds. Therefore, issuers of qualified zone academy bonds and qualified school construction bonds are obligated to repay the principal amount of the qualified zone academy 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.
"§ 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. § 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)	State Board of Education to Administer Qualified School Construction Bond Program. – The State Board of Education is designated the State education agency responsible for administering the 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 such allocation for the qualified zone activity 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.
(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.
(3)	Confirming that the terms of any qualified zone academy bonds issued in accordance with this program are consistent with the terms of the federal program.
(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.  Article 51B of Chapter 143 of the General Statutes reads as rewritten:
"Article 51B.
"North Carolina Federal Tax Reform Allocation Committee.
"§ 143‑433.6.  Legislative findings.
…
(c)	The General Assembly further finds and determines that section 1400U‑3 of the American Recovery and Reinvestment Act of 2009 (ARRTA) added a new type of exempt facility bond denominated 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 AARTA, and provides a formula for allocation of authority to issue recovery zone facility bonds to the states, and by which such authority is to be reallocated by the State to counties and large municipalities within the State.
…
"§ 143‑433.8.  Duties.
The Committee shall perform the following duties:
(1)	Manage the allocation of private activity bonds, low‑income housing credits,  qualified public educational facility bonds and recovery zone facility 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,  qualified public educational facility bonds and recovery zone facility 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.
"§ 143‑433.9.  Allocation.
(a)	To provide for the orderly and prompt issuance of private activity bonds and qualified public educational facility bonds, there are hereby proclaimed formulas for allocating the following: (i) the unified volume limitation, (ii) the state housing credit ceiling,  (iii) the annual aggregate limitation on the face amount of qualified public educational facility bonds, and (iv) the annual authority for recovery zone facility bonds. The unified volume limitation for all issues of private activity bonds, other than qualified public educational facility 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,  (iii) allocations of the aggregate limitation on the face amount of qualified public educational facility bonds, and (iv) reallocation of the allocation for recovery zone facility bonds allocated to the State. 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, and general prosperity of the people of North Carolina. In reallocating allocation for recovery zone facility bonds, the Committee shall follow the formula provided in section 1400U‑1(a)(3) of ARRTA. The Committee shall make all elective carryforwards of the unused unified volume limitation and the annual aggregate limitation on the face amount of qualified public educational facility bonds and recovery zone facility bonds on behalf of the State.
.…"
SECTION 3.  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); a facility that qualifies as "recovery zone property" under section 1400U‑3 of the American Recovery and Reinvestment Tax Act of 2009; or distribution facility for industrial or manufactured products.
.…"
SECTION 4.  This act is effective when it becomes law.