GENERAL ASSEMBLY OF NORTH CAROLINA
HOUSE BILL 958
Committee Substitute Favorable 6/21/12
Short Title: NC Zoo Public-Private Ptshp.
May 17, 2012
A BILL TO BE ENTITLED
AN ACT to create a public-private partnership for the north carolina zoological park, as recommended by the house select committee on public-private partnerships.
The General Assembly of North Carolina enacts:
SECTION 1.(a) Part 22 of Article 7 of Chapter 143B of the General Statutes (North Carolina Zoological Park Council) is repealed.
SECTION 1.(b) Any assets of the Zoo Fund established under Part 22 of Article 7 of Chapter 143B of the General Statutes at the time of its repeal shall be administered by the Department of Environment and Natural Resources to improve State property at the North Carolina Zoological Park.
SECTION 2. Article 14 of Chapter 143 of the General Statutes reads as rewritten:
"North Carolina Zoological
Operation and transfer of Zoo;
Right right to receive
(a) Purpose; Management Agreement; Transfer of Zoo. - The North Carolina Zoological Park (Zoo) maintains a diverse collection of plant and wildlife specimens in order to study, conserve, and introduce to people the species of the world. The North Carolina Department of Environment and Natural Resources is directed to enter into a management agreement with the North Carolina Zoological Society, Inc., (Society) for a term not to exceed 25 years with options to renew at the end of each term, for the Society to operate the Zoo. The management agreement shall require that the Zoo provide free admission to North Carolina school students visiting the Zoo as part of an in-school tour group. The Society shall carry out the following minimum duties with respect to the Zoo:
(1) Providing park and outreach operation.
(2) Planning for and implementation of maintenance and expansion.
(3) Providing construction, furnishings, and equipment.
(4) Maintaining high standards of animal welfare and husbandry.
(5) Carrying out research and practical conservation programs.
(6) Establishing and setting admission fees.
(7) Promoting public appreciation of animals and plants.
(8) Disseminating information about the Zoo and its programs.
(9) Developing effective public support.
(10) Soliciting financial and material support from various private sources within and without the State of North Carolina.
(11) Maintaining the highest possible standards in the Zoo's exhibits, landscaping, and overall appearance.
(12) Maintaining Association of Zoos and Aquariums (AZA) accreditation.
(b) State Representation on Society Board. - As a condition of entering into the agreement, the Society shall amend its articles of incorporation, bylaws, or other appropriate corporate document to provide that the maximum size of the Society's board shall be 25 members and to provide that the following people shall be voting members of the Society's board:
(1) The Secretary of the Department of Environment and Natural Resources or that Secretary's designee serving ex officio.
(2) The Secretary of the Department of Administration or that Secretary's designee serving ex officio.
(3) Two people appointed by the General Assembly, one upon recommendation of the President Pro Tempore of the Senate and one upon recommendation of the Speaker of the House of Representatives.
(c) General Transfer Language. - As of January 1, 2013, all of the rights, privileges, liabilities, and obligations of the North Carolina Zoological Park Council not inconsistent with the provisions of this section shall, under the terms of the management agreement, be transferred to and assumed by the board of directors of the Society.
(d) Governance of Zoo. - As of January 1, 2013, the Zoo and the zoological programs established or maintained by the Zoo shall be governed by the Society under the general direction of its board of directors.
(e) Personal Property Transfer. - To effect an orderly transition, the management agreement shall detail the specific personal property of the State, both tangible and intangible, that shall be transferred to the Society. The management agreement must also provide for reversion of such personal property to the State or redirection by the State if the Society ceases to exist, enters bankruptcy, terminates its management agreement with the State, or in any other way is incapable of maintaining the Zoo. The Department of Environment and Natural Resources shall transfer to the Society any personal property listed in the State asset inventory that is necessary for the operation of the Zoo, including any relevant permits, registrations, and licenses necessary, appropriate, or convenient to ownership. If any fee or other payment is required to effectuate the transfer, the Society shall pay the fee or other payment or reimburse the Department of Environment and Natural Resources for any expenditure in relation to the transfer.
(f) Real Property Transfer. - All real property currently owned by the State and allocated to the Zoo shall remain in title to the State. The State shall retain property control over all State real property at the Zoo, except that the Society shall be afforded naming rights on land or fixtures owned by the State.
(g) Annual Appropriations by the State. - As a management fee to support operation of the Zoo, the sum of ten million dollars ($10,000,000) shall be appropriated annually by the State to the Society under the terms of the management agreement until the end of its term, except for the 2012-2013 fiscal year. For the 2012-2013 fiscal year, the sum of five million dollars ($5,000,000) shall be appropriated to annualize it to the January 1, 2013, effective date of the transfer.
(h) Annual Expenditure by the Society. - The management agreement shall require that the Society spend the sum of four million dollars ($4,000,000) annually on the operation and capital improvements at the Zoo from the Society's funds, excluding all funds received from the State and excluding admission fees.
(i) Annual Reports Required. - The Society shall make the following annual reports to the Office of State Budget and Management and to the Joint Legislative Commission on Governmental Operations:
(1) Actual and proposed budget.
(2) Report on operations.
(3) Financial statements.
(j) Reserve for Repair and Renovation. - The Society shall be eligible for allocations from the Reserve for Repair and Renovation to cover current deferred maintenance on State property at the Zoo that as of January 1, 2012, totaled thirty million dollars ($30,000,000). It is the intent of the General Assembly that five million dollars ($5,000,000) annually shall be provided to the Society from the Reserve until a total of thirty million dollars ($30,000,000) has been satisfied. The allocation shall be administered by the Department of Environment and Natural Resources. As initial implementation of this subsection, for the 2012-2013 fiscal year, the sum of five million dollars ($5,000,000) is allocated from the Reserve for Repair and Renovation to the Department of Environment and Natural Resources and provided to the Society to cover deferred maintenance on State property at the Zoo.
(k) Transition Costs. - The sum of three million two hundred thousand dollars ($3,200,000) for the 2012-2013 fiscal year is appropriated from the General Fund to the Department of Environment and Natural Resources for transition expenses necessary to implement this section.
(l) Audit. - The Society shall be subject to audit by the State Auditor and the Program Evaluation Division of the General Assembly.
(m) Management Agreement Subject to Prior Approval of State Treasurer. - The management agreement is subject to the prior approval of the State Treasurer with regard to issues that might impact the tax-exempt status of outstanding debt issued by the State for Zoo facilities, including the tax-exempt status of the Society. The Society shall provide evidence satisfactory to the Secretary of the Department of Environment and Natural Resources and the State Treasurer that the Society is recognized as exempt under section 501(c)(3) of the Internal Revenue Code prior to the effective date of the management agreement and upon request at other times.
(n) Further Conditions on Management Agreement. - The management agreement must contain the following terms:
(1) An acknowledgement that a portion of the facilities at the Zoo were financed by the State through the issuance of bonds the interest on which is exempt from income taxation under the Internal Revenue Code as a result of the characterization of such bonds as "governmental bonds" and not "private activity bonds" and such characterization depends in part on the management agreement being treated as a qualified management agreement under applicable requirements (Qualified Management Agreement).
(2) A covenant by the Society not to take any action that will cause the management agreement to cease to be treated as a Qualified Management Agreement.
(3) A covenant by the Society that as of each January 1 and upon request at other times to provide the State Treasurer a report on the current status of financial matters under the management agreement and any related agreements which might impact the tax-exempt status of outstanding debt issued by the State for Zoo facilities.
(o) Certain Arrangements Subject to Prior Approval of State Treasurer. - If any entity other than the Society will have any property rights or contractual rights to the use of property at the Zoo, including naming rights, the right to operate concessions or rights under similar arrangements, whether through the management agreement or otherwise, then the proposed agreement or arrangement providing for such rights is subject to the prior approval of the State Treasurer with regard to issues that might impact the tax-exempt status of outstanding debt issued by the State for Zoo facilities.
(p) In order
to carry out the purposes of this Article, the
Board is authorized Society
may to acquire by gift or will, absolutely or in trust, from
individuals, corporations, or any other source money or other property, or any
interests in property, which may be retained, sold or otherwise used to promote
the purposes of this Article. The use of gifts shall be subject to such
limitations as may be imposed thereon by donors, notwithstanding any other
provisions of this Article.
North Carolina Zoological Park Fund. All gifts made to the North Carolina Zoological Park for
the purposes of this Article shall be exempt from every form of taxation
including, but not by the way of limitation, ad valorem, intangible, gift,
inheritance and income taxation. Proceeds from the sale of any property
acquired under the provisions of this Article shall be deposited in the North
Carolina State treasury and shall be credited to the North Carolina Zoological
"§ 143-177.2. Cities and counties.
Cities and counties are hereby authorized to expend funds derived from nontax sources and to make gifts of surplus property, to assist in carrying out the purposes of this Article.
"§ 143-177.3. Sources of funds.
(a) It is
the intent of this Article that the funds for the creation, establishment,
construction, operation and maintenance of the North Carolina Zoological
Park Zoo shall be obtained primarily from private sources; however,
the Council Society, under the supervision and approval and with
the assistance of the Secretary of Environment and Natural Resources Resources,
is hereby authorized to receive and expend such funds as may from time to time
become available by appropriation or otherwise from the State of North
Carolina; provided, that the North Carolina Zoological Park Council Society
shall not in any manner pledge the faith and credit of the State of North
Carolina for any of its purposes. Real property of the State may not be
pledged as collateral by the Society in any financing, nor may the annual
appropriation for operating expenses be pledged as security in any financing. (b) The
Council with the approval of the Secretary of Environment and Natural Resources
is authorized to establish and set admission fees which are reasonable and
consistent with the purpose and function of the North Carolina Zoological Park.
"§ 143-177.4. Maintenance and capital improvement projects.
(a) Department of Administration Authority Over Building Maintenance and Construction. - Notwithstanding any other provision of law, the Department of Administration is authorized, without approval of the Council of State, to grant rights of entry, ground leases, and easements, as appropriate, for the Society to conduct construction, renovation, and repair projects on State land at the Zoo. Such projects shall have plan review, inspection, and acceptance on behalf of the State by the State Construction Office. The Department of Administration may enter into separate project review and construction management agreements with the Society governing the detailed processes and procedures relating to each project undertaken by the Society on State land at the Zoo. All construction, renovation, and repair projects shall become the sole property of the State upon final completion and acceptance.
(b) Approval of Facility Master Plan. - The Department of Environment and Natural Resources and the Department of Administration shall approve a facility master plan before the Society begins any capital improvement projects on State lands or uses any State funds for capital improvement projects. The Department of Environment and Natural Resources may authorize the Society to conduct some projects by type, such as small repairs approved by the Department of Administration, in the management agreement. The Department of Administration may also authorize the Society to conduct some projects by type, such as emergency repairs, under the building maintenance and construction agreement.
(c) The Society or Department of Environment and Natural Resources may request State funding for capital improvement projects through the State's capital planning and budgeting process."
SECTION 3. This act becomes effective January 1, 2013, except that the Department of Environment and Natural Resources and the North Carolina Zoological Society, Inc., may enter into the management agreement provided by G.S. 143-177, as amended by this act, at any time prior to that date; the Department of Environment and Natural Resources may also act on any transitional requirements prior to that date; the Department of Administration and the North Carolina Zoological Society, Inc., may enter into the building maintenance and construction agreement provided by G.S. 143-177.4 at any time prior to that date; and the Department of Administration may also act on any transitional requirements prior to that date.