§ 159-153. Approval of other financing arrangements.
§ 159‑153. Approval of other financingarrangements.
(a) Commission Approval Required. Except as provided insubsection (b) of this section, approval by the Commission in accordance withthis section is required before a unit of local government, or any public body,agency, or similar entity created by any action of a unit of local government,may do any of the following:
(1) Incur indebtedness.
(2) Enter into any similar type of financing arrangement.
(3) Approve or otherwise participate in the incurrence ofindebtedness or the entering into of a similar type of financing arrangement byanother party on its behalf.
(a1) Nonprofit Water Corporation. A loan from the WaterInfrastructure Fund to a nonprofit water corporation, as defined in G.S. 159G‑20,is subject to approval by the Commission under this section.
(b) Exceptions. Approval by the Commission in accordance withthis section is not required in any of the following cases:
(1) Another law of this State already specifically requiresCommission approval of the indebtedness or financing arrangement and therequired approval is obtained in accordance with that law.
(2) The indebtedness or financing arrangement is a contractentered into by a unit of local government pursuant to G.S. 160A‑20 andis not subject to review by the Commission pursuant to G.S. 160A‑20(e).
(3) The indebtedness or financing arrangement is excepted fromthe review requirements of this Article because it does not meet the conditionsof G.S. 159‑148(a)(1) or (3) or because it is excluded pursuant to G.S.159‑148(b).
(c) Effect of Special Act. No special, local, or private actshall be construed to create an exception from the review of the Commissionrequired by this section unless the act explicitly excludes the review and approvalof the Commission.
(d) Factors Considered. The Commission may consider all of thefollowing factors in determining whether to approve the incurrence of, enteringinto, approval of, or participation in any indebtedness or financingarrangement subject to approval pursuant to this section:
(1) Whether the undertaking is necessary or expedient.
(2) The nature and amount of the outstanding debt of the entityproposing to incur the indebtedness or enter the financing arrangement.
(3) Whether the entity proposing to operate the facilitiesfinanced by the indebtedness or financing arrangement and the entity obligatingitself under the indebtedness or financing arrangement have demonstrated or candemonstrate the financial responsibility and capability to fulfill theirobligations with respect to the indebtedness or financing arrangement. Inmaking this determination, the Commission may consider the operating entity'sexperience and financial position, the nature of the undertaking beingfinanced, and any additional security such as insurance, guaranties, orproperty to be pledged to secure the indebtedness or financing arrangement.
(4) Whether the proposed date and manner of sale of obligationswill have an adverse effect upon any scheduled or anticipated sale ofobligations by the State or any political subdivision or by any agency ofeither of them.
(5) The local government unit's debt management procedures andpolicies.
(6) The local government unit's compliance with the LocalGovernment Budget and Fiscal Control Act.
(7) Whether the local government unit is in default in any ofits debt service obligations.
(e) Documentation. To facilitate the review of the proposedindebtedness or financing arrangement by the Commission, the Secretary mayrequire the unit or other entity to obtain and submit any financial data andinformation about the proposed indebtedness or financing arrangement andsecurity for it, including any proposed prospectus or offering circular, theproposed financing arrangement and security document, and annual and otherfinancial reports and statements of the obligated entity. Applications andother documents required by the Commission must be in the form prescribed bythe Commission.
(f) Conditions for Approval. If the Commission determinesthat all of the following conditions are met, the Commission shall approve theincurrence of the indebtedness, entering of the financing arrangement, orapproval or other participation in the indebtedness or financing arrangement,by the unit of local government or the other entity referred to in subsection(a) of this section:
(1) The amount of the indebtedness to be incurred or financed isnot excessive for the purpose contemplated.
(2) The entity that will operate the facilities financed by theindebtedness or financing arrangement and the entity obligating itself underthe indebtedness or financing arrangement have demonstrated or can demonstratethe financial responsibility and capability to fulfill their obligations withrespect to the indebtedness or financing arrangement.
(3) The proposed date and manner of sale of obligations will nothave an adverse effect upon any scheduled or anticipated sale of obligations bythe State or any political subdivision or any agency of either of them. (1998‑222, s. 2; 1999‑213, s. 11; 2005‑454, s. 10.)