GENERAL ASSEMBLY OF NORTH CAROLINA

 SESSION 2011

SESSION LAW 2012-59

SENATE BILL 932

AN ACT authorizing union county to construct law enforcement and human services facilities using design-build delivery methods.

The General Assembly of North Carolina enacts:

SECTION 1.  Union County may contract for the design and construction or design, construction, and operation of law enforcement facilities including, without limitation, a jail and emergency dispatch center and facilities ancillary to law enforcement, and human services facilities and facilities ancillary to human services, without being subject to the requirements of Article 3D (Procurement of Architectural, Engineering, and Surveying Services) or Article 8 (Public Contracts) of Chapter 143 of the General Statutes. The authorization includes, if deemed appropriate by the Union County Board of Commissioners, the use of the single-prime contractor method of design and construction, the design-build or design-build-operate method of construction, or a request for proposals and negotiation as an alternative design and construction method.

SECTION 2.  Pursuant to the authority to conduct a request for proposals and negotiation as an alternative design and construction method, Union County may enter into build-to-suit capital leases of real or personal property for use as law enforcement facilities or human services facilities.  For purposes of this act, (i) the term "build-to-suit capital lease" means a capital lease, as defined by generally accepted accounting principles, regardless of how the parties describe the agreement, which provides for the construction of new facilities or the renovation of existing facilities by a private developer at a cost estimated to be greater than three hundred thousand dollars ($300,000); and (ii) the term "private developer" means the entity with which the Board of Commissioners enters into a build-to-suit capital lease under the provisions of this act.  A build-to-suit capital lease may provide that the private developer is responsible for providing or contracting for construction, repair, or renovation work.  The lease may include contractual provisions by the private developer regarding the provision of products, services, and guaranties related to a facility that is the subject of a build-to-suit capital lease.  The Board of Commissioners may also enter into a separate agreement or a series of related agreements regarding the provision of products, services, and guaranties related to a facility that is the subject of a build-to-suit capital lease.  Construction, repair, or renovation work undertaken or contracted by a private developer is not subject to the requirements of Article 3D or Article 8 of Chapter 143 of the General Statutes.

SECTION 3.  In recognition of the potential economic and technical utility of build-to-suit capital leases, which may include in their scope combinations of design, construction, operation, management, and maintenance responsibilities over prolonged periods of time, and the potential desirability of a single point of responsibility for these matters in connection with build-to-suit capital leases, any build-to-suit capital lease may include provisions imposing responsibility on the private developer or any identified affiliated entity for any of the following matters:

(1)        Site selection, land acquisition, and site preparation, including wetlands delineation, archaeological review, and State and local government land-use permitting.

(2)        Facility programming, planning, and design, including both architectural and engineering services.

(3)        Qualification and prequalification of contractors and subcontractors.

(4)        Construction and construction management.

(5)        Financing.

(6)        Facility maintenance and repairs.

(7)        Energy usage guaranties.

(8)        Transfer of ownership of the leased property to Union County at the end of the lease term.

(9)        Any other guaranties, products, and services the Board of Commissioners deem appropriate.

SECTION 4.  The Board of Commissioners may enter into predevelopment agreements with a private developer in advance of entering into a build-to-suit capital lease.  Predevelopment agreements may include, without limitation, provisions for each of the following:  (i) site selection, land acquisition, and site preparation, including services such as wetlands delineation, archaeological review, and State and local government land-use permitting; and (ii) building programming and design, including both architectural and engineering services.

SECTION 5.  Notwithstanding any provisions of law to the contrary, the Board of Commissioners may, pursuant to the provisions of G.S. 160A-267, and without limitation as to value of the interest conveyed or the consideration received, sell, lease, or otherwise transfer real or personal property to any private developer for construction, repair, or renovation of the facilities subject to a build-to-suit capital lease.  The Board of Commissioners may subject the property to any covenants, conditions, or restrictions it deems necessary to carry out the purposes of this act.  The facilities subject to a build-to-suit capital lease may be constructed on real property owned by Union County or real property owned by the private developer.

SECTION 6.  A build-to-suit capital lease shall also be subject to the following requirements:

(1)        The lease shall not contain a nonsubstitution clause that restricts the right of the Board of Commissioners to continue to provide a service or activity or to replace or provide a substitute for any property financed or purchased by the capital lease.

(2)        No deficiency judgment may be rendered against Union County or the Board of Commissioners in any action for breach of a contractual obligation in a lease authorized by this act, and the taxing power of Union County is not and may not be pledged directly or indirectly to secure any moneys due under a lease authorized by this act. A build-to-suit capital lease shall state that it does not constitute a pledge of the taxing power or full faith and credit of the Board of Commissioners.

(3)        A build-to-suit capital lease entered into pursuant to this act is subject to approval by the Local Government Commission under Article 8 of Chapter 159 of the General Statutes if it meets the standards provided in G.S. 159-148(a)(2) and G.S. 159-148(a)(3). For purposes of determining whether the standards provided in G.S. 159-148(a)(3) have been met, only the five hundred thousand dollar ($500,000) threshold shall apply.

(4)        The Board of Commissioners, in its discretion, may require the private developer to provide a performance and payment bond for construction work in accordance with the provisions of Article 3 of Chapter 44A of the General Statutes and may require the private developer to provide a bond or other appropriate guaranty to cover any other guaranties, products, or services to be provided by the private developer. In addition, the Board of Commissioners may require that the private developer (i) provide an irrevocable letter of credit for the benefit of laborers and materialmen in an amount not less than five percent (5%) of the total cost of the improvements that are the subject of the build-to-suit capital lease; and (ii) maintain the letter of credit throughout the construction of the project and for the succeeding six-month period.

SECTION 7.  Union County shall request proposals from and interview at least five design-build teams, design-build-operate teams, or private developers, as appropriate, that have submitted proposals for a project authorized under the provisions of this act.  If five proposals are not received and the project has been publicly advertised for a minimum of 30 days, the County may proceed with the proposal or proposals received.  If it determines to proceed, the Board of Commissioners shall award the contract to the best qualified contractor or private developer for the project as deemed by the Board of Commissioners, in its sole discretion, to be in the county's best interests under all the circumstances, taking into account (i) the knowledge, skill, and reputation of the contractor or private developer and its associated persons; (ii) the time, cost, and quality of design, engineering, and construction, including the time required to begin and the time required to complete a particular activity; (iii) occupancy costs, including lease payments, life-cycle maintenance, repair, and energy costs; (iv) any other factors and information set forth in the request for proposals that the county determines to have a material bearing on the ability to evaluate any proposal; and (v) any other factors the Board of Commissioners deems relevant.

SECTION 8.  This act is effective when it becomes law and expires five years after the effective date.

In the General Assembly read three times and ratified this the 26^th day of June, 2012.

                                                                    s/  Walter H. Dalton

                                                                         President of the Senate

                                                                    s/  Thom Tillis

                                                                         Speaker of the House of Representatives