A BILL TO BE ENTITLED
AN ACT to create a fund to provide loans to local government units for the development of sites and buildings, As recommended by the North Carolina Economic Development Board.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 143B‑437.02 reads as rewritten:
"§ 143B‑437.02.  Site infrastructure development.
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(b)	Fund. – The Site and Building Development Fund is created as a restricted reserve in the Department. Funds in the fund do not revert but remain available to the Department for these purposes. The Department may use the funds in the fund only for 	the acquisition and development of sites and buildings in accordance with this section.
	(c)	Definitions. – The definitions in G.S. 143B‑437.51 apply in this section. In addition, the following definitions apply in this section:
(1)	Department. – The Department of Commerce.
(2)	Site or building development. – A subsidized loan to one or more local government units to enable the unit or units, individually or pursuant to a multijurisdictional agreement, to acquire land or buildings or to improve land, including constructing buildings or renovating or rehabilitating existing buildings, or to do both in order to ready the property for lease or sale to a business.			
(3)	Subsidized loan. – A loan from the State, for a term to be determined by the Department, to one or more local government units for site or building development having an interest rate of zero percent (0%) for tier one counties, one percent (1%) for tier two counties, and two percent (2%) for tier three counties.
(d)	Eligibility. – To be eligible for consideration for site or building development for a project, a local government unit must execute a written agreement with the Department that provides for each of the following:
(1)	A requirement that the unit obtain from a business leasing or purchasing property acquired or improved by a subsidized loan an agreement to meet performance criteria that protects the State's investment and secures the benefits anticipated by the lease or sale to the business.
(2)	A requirement that any performance criteria used by the unit include, at a minimum, the creation and maintenance for a period of at least five years of an appropriate level of employment and capital investment by the business leasing or purchasing property acquired or improved by a subsidized loan and any other criteria the Department considers appropriate, other than a wage standard or test.
(3)	A requirement that the unit repay the subsidized loan if the business leasing or purchasing property acquired or improved by a subsidized loan fails to meet the performance criteria.
(4)	A requirement that the unit enter into an agreement with a business leasing or purchasing property acquired or improved by a subsidized loan, whereby the business agrees to reimburse the unit for any amount of repayment required by subdivision (3) of this subsection and agrees to structure the lease or sale as a conditional grant, revocable lease, or otherwise include terms permitting liquidated damages.
(5)	A requirement that the unit enter into an agreement with a business leasing or purchasing property acquired or improved by a subsidized loan, whereby the business agrees to meet the requirements of subsections (f) and (g) of this section.
(6)	A requirement that the property acquired or improved by a subsidized loan will not be primarily used for entertainment, retail, professional office, sporting event, museum, or governmental purposes.
	(f)	Safety and Health Programs. – In order for a business to be eligible to purchase or lease site or building development property under this section, the business must have no citations under the Occupational Safety and Health Act that have become a final order within the past three years for willful serious violations or for failing to abate serious violations with respect to the location for which the grant is made. For the purposes of this subsection, "serious violation" has the same meaning as in G.S. 95‑127.
(g)	Environmental Impact. – A business is eligible to purchase or lease site or building development property under this section only if the business certifies that, at the time of purchase or lease, the business satisfies the environmental impact standard under G.S. 105‑129.83.
(h)	Selection. – The Department shall administer the selection of projects to receive site or building development. The selection process shall include the following components:
(1)	Criteria. – The Department must develop criteria to be used to identify and evaluate eligible projects for possible site development.
(2)	Initial evaluation. – The Department must evaluate major competitive projects to determine if site development is merited and to determine whether the project is eligible and appropriate for consideration for site development.
(3)	Application. – The Department must require a local government unit to submit an application in order for a project to be considered for site development. The Department must prescribe the form of the application, the application process, and the information to be provided, including all information necessary to evaluate the project in accordance with the applicable criteria.
(4)	Development plan. – The Department, in evaluating each application, must obtain a strategic business facilities development analysis of potential sites for development, shell building needs, special use buildings needs, and buildings to be renovated. The Department shall obtain the analysis by contracting with another entity with demonstrated experience in site selection services for businesses and in evaluating sites and buildings for business recruitment purposes. The Department must consider, but is not bound by, the priority recommendations in the analysis. The analysis shall be updated every four years.
(5)	Findings. – In order to recommend a project for site development, the Department must make all of the following findings:
a.	The conditions for eligibility have been met.
b.	The site or building development project is necessary to carry out the public purposes provided in subsection (a) of this section.
c.	The site or building development project is consistent with the economic development goals of the State and of the area where it will be located.
	e.	The price and nature of any real property to be acquired or improved is appropriate to the site or building development project and not unreasonable or excessive.
f.	A subsidized loan under this section is necessary for the completion of the site or building development project in this State.
(6)	Awards. – If the Department approves a project for site or building development, it must determine the amount of State funds to be committed, the preferred form and details of the State participation, and the performance criteria and safeguards to be required in order to protect the State's investment.
(i)	Agreement. – Unless the Secretary of Commerce determines that the project is no longer eligible or appropriate for site or building development, the Secretary shall enter into an agreement to provide a subsidized loan for site or building development within available funds for a project. In doing so, consideration shall be given to projects according to the strategic business facilities development analysis obtained by the Department, as required by subdivision (4) of subsection (h) of this section. Each development agreement is binding and constitutes a continuing contractual obligation of the State and the local government unit. The development agreement must include all of the performance criteria, remedies, and other safeguards determined necessary by the Department to secure the State's investment. Each development agreement must contain a provision prohibiting a local government unit from leasing or selling under the agreement to a business that has received a notice of an overdue tax debt and the overdue tax debt has not been satisfied or otherwise resolved. Nothing in this section constitutes or authorizes a guarantee or assumption by the State of any debt of any business or authorizes the taxing power or the full faith and credit of the State to be pledged.
The Department shall cooperate with the Department of Administration and the Attorney General's Office in preparing the documentation for the site development agreement. The Attorney General shall review the terms of all proposed agreements to be entered into under this section. To be effective against the State, an agreement entered into under this section must be signed personally by the Attorney General.
(i1)	Subsidized Loans. – Subsidized loans must be evidenced by a promissory note and secured by a deed of trust on the property acquired or improved by the loan. Repayment of a subsidized loan is required on the occurrence of the earlier of (i) the passage of five years from the date the subsidized loan was made or (ii) the property secured by the loan being sold or leased for a period of more than three years, including all options or automatic rights to extend the base term of the lease. The amount of repayment triggered is proportional to the amount of the property sold or leased and shall be calculated by multiplying the loan by a fraction, the numerator of which is the amount of property secured by the loan sold or leased and the denominator of which is the total amount of property subject to the loan. Upon the payment of the amount of the loan calculated to be required by this subsection, a release deed shall be executed and filed for the portion of the property for which the payment was made.(i2)	Multiple Loans. – One or more financial institutions may hold a security interest on the property with a priority equal to the security interest for the subsidized loan if there is a written intercreditor agreement that (i) has been reviewed and approved by the Department and (ii) provides that, in the event of default, any loss is shared among the creditors in proportion to the amount loaned.
(i3)	Payments. – The Department shall remit amounts repaid pursuant to subsection (i1) of this section to the Site and Building Development Fund.
(j)	Safeguards. – To ensure that public funds are used only to carry out the public purposes provided in this section, the Department shall require that each local government unit that leases or sells property improved by a subsidized loan obtains from the acquiring business an agreement to meet performance criteria to protect the State's investment and assure that the projected benefits of the project are secured.(k)	Monitoring and Reports. – The Department is responsible for monitoring compliance with the performance criteria under each site development agreement and for administering the repayment in case of default. The Department shall pay for the cost of this monitoring from funds appropriated to it for that purpose or for other economic development purposes.
On September 1 of each year until all funds have been expended, the Department shall report to the Joint Legislative Commission on Governmental Operations regarding the Site Infrastructure Development Program. This report shall include a listing of each agreement negotiated and entered into during the preceding year, including the cost/benefit analysis conducted during the application process, a description of the project, the amount of the site development incentive expected to be paid under the agreement during the current fiscal year, and the status of any property sold or leased to a business. The report shall also include detailed information about any defaults and repayment during the preceding year and the information contained in the report required by G.S. 105‑277.15A(g). The Department shall publish this report on its web site and shall make printed copies available upon request.
(l)	Program Guidelines. – The Department shall develop guidelines related to the administration of site infrastructure development, as authorized by this section, and to the selection of projects. At least 20 days before the effective date of any guidelines or nontechnical amendments to guidelines, the Department must publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice of proposed guidelines. In addition, the Department must accept oral and written comments on the proposed guidelines during the 15 business days beginning on the first day the Department has completed the notice requirement of this subsection. For purposes of this subsection, a technical amendment is one (i) that corrects a spelling or grammatical error or (ii) that makes a clarification based on public comment and could have been anticipated by the public notice that immediately preceded the public comment.
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SECTION 2.  G.S. 150B‑1(d) is amended by adding a new subdivision to read:
"(d)	Exemptions from Rule Making. – Article 2A of this Chapter does not apply to the following:
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(21)	The Department of Commerce in developing criteria and guidelines under G.S. 143B‑437.02.
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SECTION 3.  There is appropriated from the General Fund to the Department of Commerce the sum of four hundred thousand dollars ($400,000) for the 2014‑2015 fiscal year to be used to contract for the preparation of the strategic business facilities development analysis required by Section 1 of this act.
SECTION 4.  The provisions of this act are not subject to the terms of G.S. 160A‑20.
SECTION 5.  Subsidized loans undertaken by units of local government are not subject to review and approval by the Local Government Commission under Article 8 of Chapter 159 of the General Statutes.
SECTION 6.  This act becomes effective July 1, 2014, and applies to site development agreements entered on or after that date.