§ 131E-32. Purchase money security interests.
§ 131E‑32. Purchase money security interests.
(a) An authority shall have the power and authority to purchasereal or personal property under installment contracts, purchase money mortgagesor deeds of trust, or other instruments, which create in the property purchaseda security interest to secure payment of the purchase price and interestthereon. No deficiency judgment may be rendered against any authority forbreach of an obligation authorized by this section. Any contract made orentered into by an authority before the date of ratification of Part 2 ofArticle 2 of this Chapter which would have been valid hereunder is valid,ratified and confirmed.
(b) A hospital authority may contract pursuant to this sectionin an amount of less than seven hundred fifty thousand dollars ($750,000),adjusted, as hereinafter provided, in any single transaction without theapproval of the Local Government Commission: Provided, however, that theapproval of the Local Government Commission shall be required for any single contractpursuant to this section if the aggregate dollar amount of all such contractsoutstanding after any such single transaction, exclusive of revenue bondsissued pursuant to G.S. 131E‑26 and federal contracts entered pursuant toG.S. 131E‑27, would exceed ten percent (10%) of the total operatingrevenues, as hereinafter defined, of the hospital authority for its mostrecently completed fiscal year as set forth in the audited financial statementsof such authority for such fiscal year. The approval of the Local GovernmentCommission shall be required with respect to any single contract pursuant tothis section in an amount of seven hundred fifty thousand dollars ($750,000) ormore, adjusted as hereinafter provided.
(c) Approval of the Local Government Commission under thissection or as required by G.S. 131E‑26(b) shall be obtained in accordancewith such rules and regulations as the Local Government Commission mayprescribe and shall be evidenced by the secretary's certificate on the contractor note or other evidence of indebtedness. In determining whether to approveany such contract or borrowing, the Local Government Commission shall considerwhether the hospital authority can demonstrate the financial responsibility andcapability of the hospital authority to fulfill its obligations with respect tosuch contract or borrowing. The Local Government Commission may approve theapplication without other findings, if it finds that (i) the proposed projector the purpose of the borrowing is necessary and expedient, (ii) the contractor the borrowing, under the circumstances, is preferable to a bond issue forthe same purpose, (iii) the sums to fall due under the contract or borrowingare adequate and not excessive for the proposed purpose, (iv) the authority'sdebt management procedures are good, or that reasonable assurances have beengiven that its debt will henceforth be managed in strict compliance with lawand (v) the authority is not in default on any of its debt service obligations.Any contract or borrowing subject to this subsection requiring the approval ofthe Local Government Commission that does not bear the secretary's certificatethereon shall be void, and it shall be unlawful for any officer, employee oragent of a hospital authority to make any payments of money thereunder. Anorder of the Local Government Commission approving any such contract orborrowing shall not be regarded as an approval of the legality of the contractor borrowing in any respect.
(d) The seven hundred fifty thousand dollars ($750,000) amountreferred to in G.S. 131E‑32(b) shall be in effect from July 15, 1983through September 30, 1984. For each twelve‑month period thereafter, theseven hundred fifty thousand dollar ($750,000) amount shall be the figure ineffect for the preceding twelve‑month period, adjusted to reflect thechange in the preceding twelve‑month period in the Department of CommerceComposite Construction Cost Index.
(e) For purposes of G.S. 131E‑32(b), the "totaloperating revenues" of a hospital authority for a fiscal year meanspatient revenue, less provisions for contractual adjustments, uncompensatedcare and bad debts, plus other operating revenues, all as determined inaccordance with generally accepted accounting principles. (1983, c. 775, s. 1.)