Title: S29 [Edition 2]
Category: Introduced Bill 2013

General Assembly Of North Carolina	Session 2013

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2013
S	 2
SENATE BILL 29*
Program Evaluation Committee Substitute Adopted 4/17/13

Short Title:	NC Railroad Company Reporting and Dividends. | (Public)
Sponsors: |
Referred to: |
February 4, 2013

A BILL TO BE ENTITLED
AN ACT to (1) STRENGTHEN Oversight, annual reporting, and strategic planning by the North Carolina railroad company, (2) Require a one‑time cash dividend of the North Carolina railroad company to the highway fund, (3) Require an annual cash dividend of the North Carolina railroad company to the highway Fund, and (4) require the transfer of low‑income noncorridor properties from the North Carolina Railroad Company to the State.
The General Assembly of North Carolina enacts:
SECTION 1.  Reporting and Oversight. – (a) G.S. 124‑1 reads as rewritten:
"§ 124‑1.  Control of internal improvements.
The Governor and Council of State shall have charge of all the State's interest in all railroads, canals and other works of internal improvements. The Board of Directors of a State‑owned railroad company shall be responsible for managing its affairs and for reporting as set forth in G.S. 124‑17."
SECTION 1.(b)  Article 2 of Chapter 124 of the General Statutes is amended by adding a new section, G.S. 124‑15. G.S. 124‑6(b), as amended by Section 3.3(a) of S.L. 1999‑431, is recodified as G.S. 124‑15(a). G.S. 124‑5(b) is recodified as G.S. 124‑15(b). G.S. 124‑15, as created and amended by this subsection, reads as rewritten:
"§ 124‑15.  Board of directors; appointment and approval of encumbrances.
(a)	Notwithstanding subsection (a) of G.S. 124‑6, for any State‑owned railroad company that has trackage in more than two counties, seven of the members of the Board of Directors shall be appointed by the Governor, three of the members of the Board of Directors shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121, and three of the members of the Board of Directors shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121. The Board of Directors shall consist of 13 members. Of the Governor's seven appointments, one shall be from the appointees to the Board of Transportation, and one shall be the Secretary of Commerce or the Secretary's designee. Of the initial members appointed by the Governor, three shall be appointed for terms of four years and four shall be appointed for terms of two years. Of the initial members recommended to the General Assembly by the Speaker of the House of Representatives, two shall be appointed for terms of four years and one shall be appointed for a term of two years. Of the initial members recommended to the General Assembly by the President Pro Tempore of the Senate, two shall be appointed for terms of four years and one shall be appointed for a term of two years. Thereafter all Board members shall serve four‑year terms. The Board shall elect the chairman from among its membership.
(b)	No State‑owned railroad company shall sell, lease, mortgage, or otherwise encumber its franchise, right‑of‑way, or other property, except by and with the approval and consent of the Board of Directors of that corporation. The president or other chief officer of the State‑owned railroad company shall report any acquisitions and dispositions in accordance with G.S. 124‑3(10)."
SECTION 1.(c)  Article 2 of Chapter 124 of the General Statutes is amended by adding a new section to read as follows:
"§ 124‑16.  Strategic plan and capital investment plan required of State‑owned railroad company; performance management system.
(a)	Any State‑owned railroad company shall prepare and maintain a comprehensive strategic plan and a capital investment plan. The strategic plan shall include a mission statement describing the purpose of the company and clear goals that address the strategic issues facing the company.
(b)	Any State‑owned railroad company shall develop and implement a formalized performance management system based on its strategic plan. The performance management system shall measure and monitor progress toward achieving strategic objectives. When performance fails to achieve strategic objectives within the time period established in the plan, a State‑owned railroad company shall take corrective action."
SECTION 1.(d)  Article 2 of Chapter 124 of the General Statutes is amended by adding a new section, G.S. 124‑17. G.S. 124‑3(b) is recodified as G.S. 124‑17(b). G.S. 124‑3(c) is recodified as G.S. 124‑17(c). G.S. 124‑17, as created and amended by this subsection, reads as rewritten:
"§ 124‑17.  Enhanced annual report of State‑owned railroad company; additional reporting requirements to Governor and General Assembly.
(a)	A State‑owned railroad company shall submit an annual report to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Transportation Oversight Committee. The report shall include the following:
(1)	The information required under G.S. 124‑3.
(2)	A copy of the strategic plan and the capital investment plan required under G.S. 124‑16.
(3)	Any failures to meet strategic objectives and what corrective actions were taken under G.S. 124‑16(b).
(4)	Anticipated dividends for the next three fiscal years.
(5)	A description of the State‑owned railroad company's business, subsidiaries, and markets in which it operates.
(6)	A list of the properties owned by the State‑owned railroad company.
(7)	A list of the directors and executive officers of the State‑owned railroad company and a description of the background and experience of each.
(8)	A description of the State‑owned railroad company's code of ethics and conflicts of interest policy.
(9)	A summary of the fees paid to an accounting firm during the year.
(10)	A list of the compensation paid to directors and officers of the State‑owned railroad company.
(11)	A description of the State‑owned railroad company's disagreements with its accountants if there has been a change in accountants.
(12)	A description of any transactions between the State‑owned railroad company and its directors, officers, and their family members.(b)	Upon the request of the Governor or any committee of the General Assembly, a State‑owned railroad company shall provide all additional information and data within its possession or ascertainable from its records. The State‑owned railroad company shall not be deemed to have waived any attorney‑client privilege when complying with this subsection. At the time a State‑owned railroad company provides information under this section, it shall indicate whether the information is confidential. Confidential information shall be subject to subsection (c) of this section.
(c)	Confidential information includes (i) information related to a proposed specific business transaction where inspection, examination, or copying of the records would frustrate the purpose for which the records were created, or (ii) information that is subject to confidentiality obligations of a railroad company. Confidential information is exempt from Chapter 132 of the General Statutes and shall not be subject to a request under G.S. 132‑6(a)."
SECTION 2.(a)  The Freight Rail & Rail Crossing Safety Improvement Account is established within the Highway Fund as a separate, nonreverting account.
SECTION 2.(b)  One‑time cash dividend. – Notwithstanding G.S. 124‑5.1 and G.S. 136‑16.6, any State‑owned railroad company, as defined under G.S. 124‑11, that has trackage in more than two counties shall issue a cash dividend in the amount of fifteen million five hundred thousand dollars ($15,500,000), which shall be deposited into the Freight Rail & Rail Crossing Safety Improvement Account no later than June 30, 2013.
SECTION 3.  Annual cash dividend. – (a) G.S. 124‑5.1 reads as rewritten:
"§ 124‑5.1.  North Carolina Railroad Company dividends deposited to Highway Fund.
(a)	Any dividends of the North Carolina Railroad Company received by the State shall be deposited into the Rail & Rail Crossing Safety Improvement Account, a separate nonreverting account within the Highway Fund and administered by the Department of Transportation's Rail Division. Funds from the Account shall be used for the enhancement of rail service and railroad‑roadway crossing safety, and may include, but is not limited to, the following project types:
(1)	Track and associated infrastructure improvements for rail service.(2)	Grade crossing protection, elimination, and hazard removal.(3)	Signalization improvements.(4)	Assistance for projects to improve rail access to industrial, port, and military facilities and for freight intermodal facility improvements, provided that funding assistance under this subdivision shall be subject to the same limits as that for short‑line railroads under G.S. 136‑44.39.	
	"
SECTION 3.(b)  Article 2 of Chapter 124 of the General Statutes is amended by adding the following new section:
"§ 124‑18.  Dividends required of State‑owned railroad company.
Any State‑owned railroad company that has trackage in more than two counties shall issue an annual cash dividend to the State. The amount of the annual dividend is twenty‑five percent (25%) of the company's income from its trackage rights agreements for the prior year. The dividend is due by January 15 of each year, and interest shall accrue at the annual rate of prime plus one percent (1%) if the payment is not paid by the due date. The Directors of any State‑owned railroad company who vote for or assent to the dividend required under this section shall not be held liable under G.S. 55‑8‑33."
SECTION 3.(c)  G.S. 136‑16.6 is repealed.
SECTION 4.  One‑time real property dividend. – (a) Any State‑owned railroad company, as defined under G.S. 124‑11, that has trackage in more than two counties shall issue a dividend consisting of any of the company's noncorridor real property that is among the following parcels:
Property Description	County	Nearest Town	Parcel ID 
Burke Street Lot	Alamance	Gibsonville	107493
4th Street Lot	Carteret	Morehead	638620808907000
Bridges St. Lot	Carteret	Morehead	638620911461000
Newport Lot	Carteret	Newport	634814246231000
Station & Former Industrial Lot	Carteret	Morehead	638620718127000
Waterfront & Riparian Rights	Carteret	Morehead	638620708857000 &
			   638620709868000
Wye Ppty. Extension	Carteret	Morehead	637616924807000
Wye Property	Carteret	Morehead	637620923019000
Clarks Lot	Craven	Clarks	8‑221‑035
N. Craven St. Lot	Craven	New Bern	8‑003‑241‑A
Tiffany & Bright Sts. Property	Lenoir	Kinston	11185 & 26555
Morrisville Former Depot	Wake	Morrisville	0755‑14‑6475
Waynesboro Lot	Wayne	Goldsboro	2599119118
For purposes of this section, the value of the real property dividend shall be based upon either an appraisal of the fair market value of the parcel as of the date of transfer of the parcel to the State or the ad valorem tax value for the parcel for the year of transfer, as determined by the Board of Directors of any State owned railroad company.
The dividend required by this section shall be issued no later than June 30, 2013. Any State‑owned railroad making a dividend under this section may deduct any tax liabilities under the Internal Revenue Code triggered by this dividend from the amount of the dividend required under Section 2 of this act.
SECTION 4.(b)  Notwithstanding G.S. 124‑5.1 and G.S. 136‑16.6, the Department of Administration shall sell the properties issued as dividends under this section and deposit the proceeds of the sales into the Freight Rail & Rail Crossing Safety Improvement Account of the Highway Fund. Notwithstanding any other provision of law, the Department of Administration may deduct the costs of selling the property from the proceeds of the sales.
SECTION 5.  Section 3 of this act becomes effective January 1, 2014. The remainder of this act is effective when it becomes law.

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