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Bill Analysis — Senate Bill 367, UNC Self-Liquidating Capital Projects (June 17, 2021)

Summary

A bill analysis of the second edition of Senate Bill 367, UNC Self-Liquidating Capital Projects, 2021-2022 General Assembly, prepared by Brian Gwyn for the House Education - Universities committee and dated June 17, 2021. The analysis states that the bill would authorize two campuses of The University of North Carolina to finance and construct capital improvement projects: The Arts Place at Tate and Gate at UNC at Greensboro, and Walton Drive Student Village Recreation Fields and Facilities at UNC at Wilmington, listed at $9,750,000. It states that the proposed indebtedness authorized under the bill is not a debt of the State. The analysis states that the bill would be effective when it becomes law.

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“Bill Analysis — Senate Bill 367, UNC Self-Liquidating Capital Projects (June 17, 2021).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/undated-s367-smbe-74-e2-v1-14b2ce1b41/, SHA-256 4fa03ce56b6bab7456aba4443440e12fba74bd0dae05a485778ac9483277d55d.

Full text

                                                     SENATE BILL 367:
                                                     UNC Self-Liquidating Capital Projects.
      2021-2022 General Assembly
     Committee:     House Education - Universities. If favorable, Date:         June 17, 2021
                    re-refer to Finance. If favorable, re-refer to
                    Rules, Calendar, and Operations of the House
     Introduced by: Sen. Lee                                       Prepared by: Brian Gwyn*
     Analysis of:   Second Edition                                              Committee Co-Counsel

     OVERVIEW: Senate Bill 367 would authorize the financing and construction of listed capital
     improvement projects by the constituent institutions of The University of North Carolina. The projects
     will be financed through revenue bonds, special obligation bonds, and other funds available to the
     institutions, excluding tuition and appropriations from the General Fund.
     BILL ANALYSIS: Senate bill 367 would authorize two campuses of The University of North Carolina
     (UNC) to finance and construct capital improvement projects:
             •     UNC at Greensboro (UNCG), The Arts Place at Tate and Gate
                    $10,330,3061
                   A new 20,000 GSF multi-purpose cultural arts venue located at 842 West Gate City Boulevard.
                   The goal of the project is to foster an active partnership between UNCG with the surrounding
                   local and regional arts community. The project will include a flexible performance space,
                   instructional and practice rooms, and a retail component.
             •     UNC at Wilmington (UNCW), Walton Drive Student Village Recreation Fields and Facilities
                   $9,750,000
                   A multi-purpose natural turf field, a smaller flex field, basketball, sand volleyball, tennis courts;
                   an outdoor gym/yoga area; and a building for Student Recreation Center staff and equipment
                   storage. The amenities exist but need replacement. This area was master planned in 2009-2010
                   and is included in the university's 2017 Campus Master Plan.
     The proposed indebtedness authorized under this bill is not a debt of the State.
     UNC is authorized to change, with approval of the Director of the Budget, the means of finance and
     increase or decrease the cost of the project. UNC can issue debt plus an additional 5% of the total cost of
     the project, including any increase authorized by the Director of the Budget, to cover the cost of debt
     issuance.
     CURRENT LAW: Under Article 8 of the State Budget Act, no State agency may expend funds for the
     construction or renovation of a capital improvement project unless authorized to do so by the General
     Assembly. The Board of Governors of The University of North Carolina may approve expenditures for
     projects that are to be funded entirely with non-General Fund money. However, under Article 3 of Chapter
     116D, the General Assembly must approve the issuance of special obligation bonds for UNC projects.

     1
       The total project cost is $10,330,306. A portion of this cost, $830,306, will be funded through bond savings realized from
     the refinancing of existing debt and private philanthropy. The remaining amount, $9,500,000 will financed through the
     issuance of long-term debt.
                                                                                                                   Legislative Analysis
     Jeffrey Hudson
                                                                                                                          Division
         Director                            S367-SMBE-74(e2)-v-1                                                     919-733-2578
This bill analysis was prepared by the nonpartisan legislative staff for the use of legislators in their deliberations and does not constitute an official statement of legislative intent.
Senate Bill 367
Page 2

There are two types of self-liquidating bonds that may be issued by the Board of Governors of the
University of North Carolina:
   •     Article 21 of Chapter 116 of the General Statutes authorizes the Board of Governors to issue
         revenue bonds for educational buildings, dormitories, recreational facilities, dining facilities,
         student centers, health care buildings, and parking decks. The projects may be for the educational
         institutions, the University of North Carolina Health Care System, the University of North Carolina
         General Administration, and The University of North Carolina Hospitals at Chapel Hill. The
         revenue bonds are payable from rentals, charges, fees, and other revenues generated by the facility.
         The bonds are not payable from tax revenues.
   •     Article 3 of Chapter 116D of the General Statutes authorizes the Board of Governors to issue
         special obligation bonds payable from any sources of income or receipts of the Board of Governors
         or a constituent or affiliated institution, excluding tuition payments and appropriations from the
         General Fund. Examples of sources of income or receipts would include rents, charges, fees,
         earnings on investments of endowment funds, or overhead receipts. The bond proceeds could be
         used for construction, improvement, and acquisition of any capital facilities located at UNC
         constituent and affiliated institutions. The project must be approved by both the board of trustees
         of the recipient institution and the General Assembly. The General Assembly must also approve
         the maximum aggregate principal amount for the project. The bonds are not payable from tax
         revenues.
EFFECTIVE DATE: This bill would be effective when it becomes law.


*Cindy Avrette, Staff Attorney with the Legislative Analysis Division, substantially contributed to this
summary.

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