STIP Grant Anticipation Notes.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 3
HOUSE BILL 364
Committee Substitute Favorable 4/16/25
Committee Substitute #2 Favorable 5/6/25

Short Title: STIP Grant Anticipation Notes. (Public)
Sponsors:
Referred to:
March 12, 2025
*H364-v-3*
A BILL TO BE ENTITLED 1
AN ACT TO AUTHORIZE A LOCAL GOVERNMENT T O BORROW MONEY FOR T HE 2
PURPOSE OF ACCELERAT ING A LOCAL TRANSPOR TATION PROJECT THAT IS 3
IDENTIFIED FOR FUNDI NG UNDER THE STATE T RANSPORTATION 4
IMPROVEMENT PROGRAM. 5
The General Assembly of North Carolina enacts: 6
SECTION 1. G.S. 159-171 reads as rewritten: 7
"§ 159-171. Grant anticipation notes. 8
(a) A Except as provided in subsection (a1) of this section, a unit of local government is 9
authorized to borrow money for the purpose of paying appropriations made for a capital project 10
in anticipation of the receipt of moneys from grant commitments for such capital project from 11
the State or the United States or any a gencies of either, and to issue its negotiable notes in 12
evidence thereof. Grant anticipation notes under this subsection shall mature not later than 12 13
months after the estimated completion date of such capital project as determined by the governing 14
body of the unit of local government and may be renewed from time to time, but no renewal shall 15
mature later than 12 months after the estimated completion date of such capital project. 16
(a1) A unit of local government is authorized to borrow money for the purpose of paying 17
appropriations made for a capital project identified for funding as a regional impact or division 18
need project under Article 14B of Chapter 136 of the General Statutes , Strategic Prioritization 19
Funding Plan for Transportation Investments, in anticipation of the receipt of grant funding from 20
the State or the United States or any agencies of either and to issue its negotiable notes in evidence 21
thereof. Grant anticipation notes under this subsection shall mature no later than 12 months after 22
the first day of the calendar year following the calendar year in which the project is scheduled to 23
be completed. Renewal of grant anticipation notes under this subsection is not allowed . Prior to 24
borrowing money under this subsection, the unit of local government shall enter into an expedited 25
project agreement with the Department of Transportation in accordance with G.S. 136-66.8, the 26
terms of which shall include all of the following: 27
(1) A provision requiring approval of the grant anticipation note from the Local 28
Government Commission. 29
(2) Project identification. 30
(3) Cost of project. 31
(4) A provision including, and requiring compliance with, the project plan as set 32
out in the agreement, including the time line, whether the project is in 33
development or delivery period, project phase, current expected completion 34
General Assembly Of North Carolina Session 2025
Page 2 House Bill 364-Third Edition
date, acc elerated completion date using funds authorized under this 1
subsection, and a requirement that the project be administered accordingly. 2
(5) Funding expected, source of f unding, revenue forecasts that support funding 3
assumptions, and expected final installment funding date. Identified funding 4
may include financing agreements with private entities but must be equal to 5
the full estimated cost of the project. 6
(6) Repayment plan, and contingency plan for un expected events or 7
circumstances such as natural disasters, delay in federal funding, unex pected 8
revenue losses , increase in project costs, or other circumstances requiring 9
modifying the Strategic Transportation Improvement Program. 10
(7) Any other terms the Department of Transportation deems necessary to comply 11
with federal law and to ensure (i) any State funds transferred to the unit of 12
local government for repayment of a note under this su bsection will not 13
exceed the local portion of the nonfederal share of the cost of the project and 14
(ii) that State funds either flow back to the unit of local government for 15
repayment of the note or are used directly to repay the note. 16
(b) No Except as provided in s ubsection (b1) of this section, no grant anticipation note 17
under subsection (a) of this section may be issued if the amount thereof, together with the amount 18
of all other notes authorized or issued in anticipation of the same grant commitment, shall exceed 19
exceeds ninety percent (90%) of the unpaid amount of said grant commitment. Each note shall 20
bear on its face a statement to the effect that it is payable solely from moneys received from a 21
described grant and that the faith and credit of the issuing unit are not pledged for the payment 22
thereof, and on its face or reverse the following certificate signed by the finance officer: "This 23
note and all other grant anticipation notes of (issuing unit) authorized or outstanding as of (date) 24
and issued or to be issu ed in anticipation of (describe grant commitment) amount to ninety 25
percent (90%) or less of the unpaid amount of said grant commitment." No grant anticipation 26
note shall be valid without this certificate. 27
(b1) No grant anticipation note under subsection (a 1) of this section may be issued if the 28
amount thereof, together with the amount of all other notes authorized or issued in anticipation 29
of the same grant funding, exceeds the amount of funding identified for the identified project. 30
Each note shall bear on its face a statement to the effect that it is payable solely from moneys 31
received from a described grant and that the faith and credit of the issuing unit are not pledged 32
for the payment thereof, and on its face or reverse the following certificate signed by the finance 33
officer: "This note and all other grant anticipation notes of (issuing unit) authorized or 34
outstanding as of (date) and issued or to be issued in anticipation of (describe grant) amount to 35
not more than the unpaid amount of said grant." No grant anticipation note shall be valid without 36
this certificate. 37
(c) Grant anticipation notes issued under this section shall be special obligations of the 38
issuing unit. Neither the credit nor the taxing power of the issuing unit ma y be pledged for the 39
payment of grant anticipation notes, and no holder of such notes shall have the right to compel 40
the exercise of the taxing power by the issuing unit or the forfeiture of any of its property in 41
connection with any default thereon." 42
SECTION 2. G.S. 136-189.11 is amended by adding a new subsection to read: 43
"(f1) Expedited Project Funded by Local Government. – The Department shall ensure any 44
amendment or modification to the State Transportation Improvement Program will not cause a 45
delay in the repayment of a grant anticipation note issued by a local government in accordance 46
with G.S. 159-171(a1) and (b1)." 47
SECTION 3. The Department of Transportation shall develop procedures and adopt 48
rules as necessary for expedited pr oject agreements made under G.S. 136-66.8 that include the 49
terms and use of grant anticipation notes under G.S. 159-171(a1) and (b1), as enacted by Section 50
1 of this act, and the amendment or modification of the State Transportation Improvement 51
General Assembly Of North Carolina Session 2025
House Bill 364-Third Edition Page 3
Program under Section 2 of this act. The Department of the State Treasurer, in consultation with 1
the Department of Transportation, shall adopt rules as necessary that are consistent with the 2
purposes of Section 1 of this act and Article 9 of Chapter 159 of the General Statutes. 3
SECTION 4. This act is effective when it becomes law. 4