AN ACT to authorize cities to establish a municipal service district for the purpose of converting private residential streets to public streets and to authorize related community associations to transfer planned community property to cities.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 160A‑536(a) is amended by adding a new subdivision to read:
"(a)	Purposes. – The city council of any city may define any number of service districts in order to finance, provide, or maintain for the districts one or more of the following services, facilities, or functions in addition to or to a greater extent than those financed, provided or maintained for the entire city:
…
(6)	Conversion of private residential streets to public streets as provided in subsection (e) of this section."
SECTION 2.  G.S. 160A‑536 is amended by adding a new subsection to read:
"(e)	Converting Private Residential Streets to Public Streets. – A city may establish a municipal service district for the purpose of converting private residential streets to public streets if the conditions of this subsection are met. The property tax levied in a municipal service district created for this purpose may be used only to pay the costs related to the transfer of ownership of the streets, evaluation of the condition of the private streets, and the design and construction costs related to improving the private streets to meet public street standards as approved by the governing board. Notwithstanding G.S. 160A‑542, the property tax rate in a district created for this purpose may not be in excess of thirty percent (30%) of the ad valorem tax rate in effect in the city in the fiscal year prior to the establishment of the district. After the private streets have been upgraded to meet public street standards and all costs have been recovered from the tax in the district, no further tax may be levied in the district, and the city council must abolish the municipal service district as provided by G.S. 160A‑541.
Notwithstanding G.S. 160A‑299, if a city abandons the streets and associated rights‑of‑way acquired pursuant to this subsection, the street‑related common elements must be returned to the owners' association from which the city acquired them in a manner that makes the owners' association's holdings in common elements as they were prior to the establishment of the municipal service district.
For a city to create a municipal service district for the purpose of converting private residential streets to public streets, all of the following conditions must be met:
(1)	The private residential road must be nongated.
(2)	The city must receive a petition signed by at least sixty percent (60%) of the lot owners of the owners' association requesting the city to establish a municipal service district for the purpose of paying the costs related to converting private residential streets to public streets. The executive board of an owners' association for which the city has received a petition under this subsection may transfer street‑related common elements to the city, notwithstanding the provisions of the North Carolina Planned Community Act in Chapter 47F of the General Statutes, related articles of declaration, deed covenants, or any other similar document recorded with the Register of Deeds.
(3)	The city must agree to accept the converted streets for perpetual public maintenance.
(4)	The city must meet one of the following requirements:
a.	Located primarily in a county that has a population of 750,000 or more according to the most recent decennial federal census, and also located in an adjacent county with a population of 250,000 or more according to the most recent decennial federal census.
b.	Located primarily in a county with a population of 250,000 or more according to the most recent decennial federal census, and also located in an adjacent county with a population of 750,000 or more according to the most recent decennial federal census."
SECTION 3.  This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 3rd day of May, 2011.

	s/	 Walter H. Dalton
	 President of the Senate

	s/	 Thom Tillis
	 Speaker of the House of Representatives

	s/	 Beverly E. Perdue
	 Governor

Approved 11:12 a.m. this 12th day of May, 2011