Childcare Pilot.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 877

Short Title: Childcare Pilot. (Public)
Sponsors: Representatives Arp, Lambeth, Paré, and Rhyne (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Appropriations, if favorable, Rules, Calendar, and Operations of the House
April 10, 2025
*H877-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO ESTABLISH A PILOT PROGRAM INVO LVING A PUBLIC -PRIVATE 2
PARTNERSHIP TO PROVI DE REDUCED COST CHIL DCARE BY LEVERAGING 3
STATE RESOURCES TO R EDUCE COSTS ASSOCIAT ED WITH ESTABLISHING A 4
CHILDCARE FACILITY. 5
Whereas, the General Assembly recognizes that childcare availability is essential to 6
enabling all those individuals who wish to participate in the workforce to do so; and 7
Whereas, the General Assembly also recognizes that the costs of childcare need to be 8
lowered to enable more individuals to be able to afford to leave home and either go to work or 9
return to work after having a child; and 10
Whereas, assuring quality childcare opportunities in every county within the State 11
supports the potential for employers to make economic investments in all the State's 100 counties; 12
and 13
Whereas, being able to take advantage of quality childcare facilities within their local 14
communities at a below market rate cost will enable more parents to enter or reenter the 15
workplace; and 16
Whereas, the General Assembly recognizes that one of the ways to reduce the costs 17
of childcare to consumers is by lowering the one-time capital costs of the land, site infrastructure, 18
and the building that will house the childcare operation; and 19
Whereas, the General Assembl y further recognizes that another way to lower those 20
capital costs is through the repurposing of an existing publicly owned building and its site 21
infrastructure; and 22
Whereas, to promote the development of quality childcare facilities in all counties of 23
the State, the General Assembly implements the following pilot public -private (P3) project as a 24
demonstration of how publicly owned property and one -time public capital funding can be 25
leveraged to result in a quality childcare facility; Now, therefore, 26
The General Assembly of North Carolina enacts: 27
SECTION 1.(a) The Legislative Services Office shall, by October 15, 2025, working 28
collaboratively with the State Construction Office and the Department of Administration, 29
develop a comprehensive process for implementing a demonstration pilot project to select a 30
third-party childcare operator as the public-private partner (P3) for the project. The process shall 31
include, at a minimum, (i) the development of a request for proposals to competitively select the 32
P3 partner to be the operator of the childcare facility, (ii) t he basic methodology of scoring the 33
proposals received to select a P3 partner where that scoring criteria can be expanded to include 34
additional considerations being proposed a respondent, and (iii) a base P3 contract to be used to 35
General Assembly Of North Carolina Session 2025
Page 2 House Bill 877-First Edition
negotiate a final agreeme nt with the selected P3 partner. The Legislative Services Office shall 1
issue the initial request for proposals no later than January 2, 2026. 2
The Legislative Services Office shall extend an invitation to participate, as a partner, 3
to a constituent institution of The University of North Carolina System that is located within the 4
same county as the demonstration project. If that constituent institution accepts, it may participate 5
by providing either a site for the facility or a portion of the funding, or some combination thereof. 6
Based upon the level of participation as mutually agreed by the consistent institution and the 7
Legislative Services Office, a commensurate share of the childcare spaces shall be made available 8
on a first priority basis for employees of that constituent institution. 9
SECTION 1.(b) The Legislative Services Office, in conjunction with the State 10
Construction Office, shall select a site from available State - or University-owned lands suitable 11
for the construction of a shell building and shall issue a request for information and a request for 12
proposal regarding the execution of a ground lease with a third party with evidence supporting 13
the ability to operate a childcare facility as described in subsection (c) of this section. The ground 14
lease shall not exceed five hundred dollars ($500.00) per month, with a preferred initial term of 15
at least 10 years. Lease renewals of at least four years may be included in the agreement, provided 16
that the performance of the lessor is satisfactory to the Legis lative Services Office. The third 17
party selected by the Legislative Services Office shall submit a site plan that will be adapted and 18
developed for the site and shell building. The third party selected to operate the childcare facility 19
will be responsible for the upfit of the building, building and site maintenance, utilities, and all 20
other operating costs. The State may also partner with a constituent institution of The University 21
of North Carolina in the selection of a University -owned site as described i n subsection (a) of 22
this section. 23
SECTION 1.(c) The third party selected for the operation of the childcare facility 24
described in this section shall be able to meet at least all of the following criteria: 25
(1) Demonstrates the ability and commits to provid e childcare rates that are 26
twenty-five percent (25%) or more below the current market rates for the area 27
where the facility is to be located using a modified pro forma that eliminates 28
the cost of land, the cost of site improvements, the cost of utility ext ensions 29
and connection, the cost of the shell building and the anticipated costs of 30
construction loan interest. The respondent with the greatest reduction below 31
the current market rate shall receive the highest score for this category. 32
(2) Capable of opera ting a facility licensed under Chapter 110 of the General 33
Statutes that will enroll at least 180 children. 34
(3) Agrees to pay a wage to all childcare providers employed by the facility equal 35
to at least one hundred eighty percent (180%) of the federal minim um wage, 36
as of January 1, 2025, for the first year services are provided under the lease 37
agreement, and an annual increase of at least two and one-half percent (2.5%) 38
for at least the first four years thereafter, without changing the rates charged 39
to consumers for a period of at least four years. 40
(4) Agrees to provide health insurance for all of the full-time employees. For the 41
purposes of this subdivision, the provision of health insurance means that the 42
employer pays at least fifty percent (50%) of the pr emiums for health care 43
coverage that equals or exceeds the minimum requirements for small group 44
health benefit plans under State or federal law. 45
(5) Agrees to provide priority placement for eighty percent (80%) of available 46
childcare capacity at the site t o State employees, including employees of a 47
constituent institution of The University of North Carolina that partners with 48
the Legislative Services Office as described in this section. 49
SECTION 2. Notwithstanding G.S. 143C-5-2, there is appropriated from t he 50
General Fund to the Legislative Services Office the sum of five million dollars ($5,000,000) in 51
General Assembly Of North Carolina Session 2025
House Bill 877-First Edition Page 3
nonrecurring funds for the 2025 -2026 fiscal year to be used for the childcare pilot program 1
described in Section 1 of this act. The funds appropriated in this section shall not revert until July 2
1, 2027. 3
SECTION 3. Section 2 of this act becomes effective July 1, 2025. The remainder of 4
this act is effective when it becomes law. 5