Identical to S 826, filed 5/10/16.

Part I.

Enacts new GS 78A-17.1 to create the "Invest NC exemption." Provides that except as otherwise provided in GS Chapter 78A, an offer or a sale of security by an issuer is exempt from the provisions of GS 78A-24 (registration requirements for securities) and GS 78A-49(d) (rules, forms, orders and hearings, governing registration requirements for securities) if it is conducted according to the specified requirements.

Adds a new subdivision (20) to GS 78A-17 to provide that any offer or sale of a security by an issuer, conducted in accordance with GS 78A-17.1, is exempt from the provisions of GS 78A-24 and GS 78A-49(d).

Specifies the 13 criteria to be met to make an offer or sale of a security by an issuer qualified for the exemption under new GS 78A-17.1. Includes setting a cap on the cash and other consideration received for all sales of securities under GS 78A-17.1. Delineates rules and procedures governing an offer of sale of a security made through an Internet website. Sets out indexing, reporting, and fee requirements. Sets out when the exemption does not apply.

Makes conforming changes to GS 78A-49(d).

Directs the Secretary of State to adopt rules to implement the provisions of this act within 12 months of the effective date of this act. Specifies the procedure to which the Secretary is to adhere in adopting those rules. Provides that an adopted rule under this section becomes effective on the first day of the month following the month that the Secretary adopts and submits the rule to the Codifier of Rules to enter into the North Carolina Administrative Code. Effective when this act becomes law and expires 12 months after that date.

Provides that any rule adopted more than 12 months after the effective date of this act shall comply with the requirements of Article 2A of GS Chapter 150B. Becomes effective 12 months after the effective date of this act.

The remainder of this Part is effective when the Part becomes law.

Part II.

Enacts new Article 3L, North Carolina New Markets Jobs Act, in GS Chapter 105, which provides as follows.

Provides that an entity that makes a qualified equity investment is vested with an earned credit against tax liability that may be used as follows: (1) on each credit allowance date of such qualified equity investment, the entity or subsequent holder of the qualified equity investment is entitled to use a portion of the credit during the taxable year, including the credit allowance date and (2) the credit reduction amount is equal to the applicable percentage (12.5% for the first and second credit allowance dates and 0% for all other credit allowance dates) for the credit allowance date multiplied by the purchase price paid. The Article defines a qualified equity investment as any equity investment in a qualified community development entity that: (1) is acquired after the effective date of this act at its original issuance solely in exchange for cash or, if not so acquired, was a qualified equity investment in the hands of a prior holder; (2) has the full purchase price used by the qualified community development entity to make qualified low‑income community investments in qualified active low‑income community businesses located in this state by the first anniversary of the initial credit allowance date; and (3) is designated by the qualified community development entity as a qualified equity investment under this subdivision and as a federal qualified equity investment with the Community Development Financial Institutions Fund. Limits the amount of the credit to the amount of the entity's state tax liability for the tax year for which the credit is claimed and allows any amount that is prohibited from being claimed to be carried forward for five years.

Restricts transfer of the tax credit, except to an affiliate. 

Requires a qualified community development entity that seeks to have an equity investment designated as a qualified equity investment and eligible for tax credits under the Article to apply to the Department of Revenue (Department) on a form that must include specified items. The Article defines a qualified community development entity as it is defined in Section 45D of the Code; provided that such entity has entered into, for the current year or any prior year, an allocation agreement with the Community Development Financial Institutions Fund of the United States Treasury Department with respect to credits authorized by Section 45D of the Code, which includes the State of North Carolina within the service area set forth in the allocation agreement. The term includes qualified community development entities that are controlled by or are under common control with the qualified community development entity. Sets out the steps that must be taken when the Department grants or denies the application for designation as a qualified equity investment. Requires that $100 million in qualified equity investment authority be available for certification and allocation each fiscal year. Applications are to be accepted beginning on November 1, 2016, and each November 15 thereafter. Requires, within 30 days of receiving certification of qualified equity investment authority, the qualified community development entity to issue the qualified equity investment, receive cash in the amount of the certified amount, and designate an amount equal to the certified amount as a federal qualified equity investment with the Community Development Financial Institutions Fund. Requires the qualified community development entity to give the Department evidence of the receipt of the cash investment and designation of the qualified equity investment as a federal qualified equity investment within five business days after receipt. Provides that if the qualified community development entity does not receive the cash investment or designate the equity investment as a federal qualified equity investment within 30 days following receipt of the certification notice, the certification lapses and the entity may not issue the qualified equity investment without reapplying to the Department for certification. 

Sets out three conditions under which the Department must recapture and revoke the tax credit, including that the qualified community development entity fails to make qualified low‑income community investments in an amount equal to the purchase price in North Carolina non‑real estate qualified active low‑income community businesses within 12 months of the issuance of the qualified equity investment with at least 75% of its qualified equity investment authority initially invested in qualified active low‑income community businesses whose principal business operations are located in rural areas. Sets out when a sold or repaid investment may be considered held by a qualified community development entity. Provides that  a qualified community development entity is not required to reinvest capital returned from qualified low‑income community investments after the sixth anniversary of the issuance of the qualified equity investment, and the qualified low‑income community investment is considered held by the qualified community development entity through the seventh anniversary of the qualified equity investment.

Enforcement of the recapture provisions of GS 105‑129.105 of this Article is subject to a six‑month cure period. No recapture can occur until the qualified community development entity has been given notice of noncompliance by the Department of Insurance and afforded six months from the date of such notice to cure the noncompliance.

Provides that an entity claiming a credit under this Article is not required to pay any additional retaliatory tax as a result of claiming the credit and states the General Assembly's intent that an entity claiming a reduction under this Article is not required to pay any additional tax that may arise as a result of claiming that reduction.

Requires qualified community development entities that issue qualified equity investments to submit a report to the Department within the first five business days after the first anniversary of the initial credit allowance date that provides documentation of the investment of the full amount of the purchase price in qualified low‑income community investments in qualified active low‑income community businesses located in North Carolina; specifies items that must be included in the report. Also requires the qualified community development entity to submit an annual report to the Department within 45 days of the beginning of the calendar year during the compliance period; specifies items that must be included in the report.

Allows the Department to promulgate rules and issue advisory letters under the Article.

Prohibits a qualified active low‑income community business that receives a qualified low‑income community investment from a qualified community development entity that issues qualified equity investments under this Article, or any affiliates of such a qualified active low‑income community business, from directly or indirectly (1) owning or have the right to acquire an ownership interest in a qualified community development entity or member or affiliate of a qualified community development entity or (2) loan to or invest in a qualified community development entity or member or affiliate of a qualified community development entity where the proceeds of such loan or investment are directly or indirectly used to fund or refinance the purchase of a qualified equity investment hereunder.

Requires, before making a qualified low‑income community investment, that a qualified community development entity provide a revenue impact assessment that projects state and local tax revenue to be generated by a project that receives qualified low‑income community investment will result in a positive economic impact over a 10‑year period that exceeds 110% of the cumulative amount of tax credits the qualified low‑income community investment will generate. Gives the Department 15 days to review the assessment and provide notice of approval; any assessment not approved or denied within 15 days shall be deemed approved. 

Effective July 1, 2016, and applies to qualified equity investments made on or after that date.

Part III.

Amends GS 147-69.2(b), concerning the State Treasurer's duty to invest the cash of the 20 funds listed in the statute (including the Escheat Fund) that are in excess of the amount required to meet current needs and demands on the funds. The statute is amended to add GS 147-69.2(b)(12)d to allow up to $100 million, in addition to those investments otherwise authorized in (b), of Escheat Fund assets to be invested as authorized under the statute.

Amends GS 147-69.2A, concerning administration of the Fund, by adding that for assets of the Fund made available for investment under new GS 147-69.2(b)(12)d, following a public procurement process the specified designees must jointly and unanimously select a third-party professional investment management firm to administer the Fund and select investment opportunities appropriate for allocation from the Fund on the basis of limitations already specified in the statute as well as new statutory limitations, discussed below. Specifies that for assets of the Fund made available for investment under new GS 147-69.2(b)(12)d, all documents of the Governor, Secretary of Commerce, or State Treasurer concerning the Fund are public records. Requires the State Treasurer, Secretary of Commerce, and the Governor to jointly develop and adopt an investment policy statement for assets of the Fund made available for investment under new GS 147-69.2(b)(12)d. Adds that assets of the Fund made available for investment under new GS 147-69.2(b)(12)d only, the following additional limitations apply: (1) the assets must be allocated to small business ventures (a) with a North Carolina nexus (as defined in the statute); (b) of various sizes, growth potential, and industry classifications to maximize opportunities for reasonable return on investment, accounting for risks associated with similar types of investment, and to provide capital and growth opportunities for small business enterprises typically underserved by ordinary venture capital and investment funds; and (c) that diversify investment risk and maximize the number of business ventures that may benefit from the Fund. A small business is a business whose annual receipts, combined with the annual receipts of all related persons, for the applicable period of measurement did not exceed $5 million; (2) no more than 33% of those assets may be allocated to business ventures located in urban regions in the state; (3) the maximum amount for total annual investments, excluding rollover investments, made in any single calendar year is $20 million; prohibits an investment from being made that, when considered together with other investments made during a single calendar year, excluding rollover investments, could cause the state's total annual investments during a single calendar year to exceed $20 million; (4) at least 20% of such assets must be invested in business ventures started and owned, in at least majority part, by a veteran of any branch of the US Armed Forces whose character of service at separation was honorable or under honorable conditions and who has not been convicted of a felony offense or who has been convicted of one or more felonies but each conviction has been expunged.

Makes conforming, clarifying, and technical changes.

Effective July 1, 2016.

Part IV.

Enacts new GS 143B-437.56A, providing that if a project will be located in more than one development tier area, the location with the highest area designation determines the standards applicable under the Job Development Investment Grant Program to the project. Specifies that for the purposes of GS 143B-437.56(d), concerning the calculation of how much  of an annual grant is to be payable to the business and how much is payable to the Utility Account, if a project will be located in more than one development tier area, the location with the lowest area designation determines the percentage of the annual grant that is payable to the Utility Account if (1) the project will have at least one location in a development tier three area, (2) the project will have at least one location in a development tier one or two area, and (3) at least 66% of the number of eligible positions created or the total benefits of the project to the State, or both, are located in the lowest area designation.

Makes conforming changes to GS 143B-437.53.

Effective January 1, 2017, and applies to awards made on or after that date.

Part V.

Repeals GS Chapter 105, Article 5F (concerning the taxation of certain machinery and equipment). Taxes were imposed under Article 5F on mill machinery, certain recyclers, research and development companies, industrial machinery refurbishing companies, companies located at ports facilities, and machinery at a large manufacturing and distribution facility. Makes a conforming repeal of GS 105-164.136(5a), which exempted products that are subject to tax under Article 5F from the sales and use tax. Makes conforming changes to GS 105-164.4I.

Effective July 1, 2016, and applies to sales made on or after that date.

Part VI. 

Requires the Department of Transportation (DOT), for each type of permit issued by the Highway Divisions under GS Chapter 136, to make uniform all processes and procedures followed by the Highway Divisions when issuing that type of permit. Requires DOT to report no later than February 1, 2017, to the Joint Legislative Transportation Oversight Committee on implementation, and specifies items that must be included in the report. Effective July 1, 2016.

Enacts new GS 136-93.01 to allow an application submitted for a permit issued by DOT or its agents under GS Chapter 136 (Transportation) to be submitted electronically.

Amends GS 136-19.5 to now require DOT to also reimburse the utility owner for the cost of moving cable service when DOT requires the relocation of the cable and it is located in a right‑of‑way for which the utility owner contributed to the cost of acquisition. 

Allows DOT to adopt temporary rules to implement the provisions of this section.

Part VII. 

Provides that the Rallying Investors and Skilled Entrepreneurs of North Carolina (RISE NC) initiative creates a statewide network that develops and leverages existing North Carolina entrepreneurial management talent and recruits world‑class investors, skilled entrepreneurs, and managers to North Carolina. Requires the Office of Science, Technology, and Innovation (Office) in the Department of Commerce to establish a competitive award process to provide funding to one or more North Carolina nonprofit corporations to: (1) develop a statewide entrepreneurial network to connect serial entrepreneurs to university start‑ups and (2) develop an entrepreneurship fellowship program. Requires grant funds to be matched on the basis of $1 in grant funds for every $2 of nongrant funds. Requires the Office and the selected nonprofit to provide an annual report to the Office of State Budget and Management and the Fiscal Research Division by January 1 of each fiscal year. Specifies what must be included in the report. Requires the Department of Commerce, in consultation with the Office of State Budget and Management, to provide monitoring and oversight of the performance of a contract entered into with a nonprofit.

Appropriates $2.5 million from the General Fund to the Office of State Budget and Management in nonrecurring funds for 2016‑17 to be allocated to a reserve to be used for the purposes set forth in this section. Funds appropriated in this section do not revert at the end of the fiscal year and remain available until expended. Allows the Department of Commerce to use up to 5% of the reserve funds to administer the initiative.

Effective July 1, 2016.

Establishes the University Innovation Commercialization Grant Program to increase the number of high‑tech start‑up companies and enhance job creation resulting from research conducted by North Carolina's universities and research‑focused nonprofit corporations. Requires the Office to establish a competitive award process to provide funding to develop and implement processes for technology proof of concept, validation, Internet protocol protection, early‑ and mid‑stage product development and production, commercialization, and translation for technologies developed by North Carolina universities. Allows the Department of Commerce to use up to 10% of grant funds appropriated in this act to contract with one or more nonprofit corporations to assist with the following: (1) select university technologies for development based on commercial potential, (2) create a development plan of key activities to make the technologies more attractive to investors, (3) guide implementation of these activities to assure efficient deployment of funds and commercial‑quality results. Specifies that the Department of Commerce may make grant awards only to the following: (1) a constituent institution of The University of North Carolina or (2) a private college or university located in North Carolina. Requires the Office and the selected nonprofit to provide an annual report to the Office of State Budget and Management and the Fiscal Research Division by January 1 of each fiscal year. Specifies what must be included in the report. Requires the Department of Commerce, in consultation with the Office of State Budget and Management, to provide monitoring and oversight of the performance of any contract entered into pursuant to this section with a North Carolina nonprofit corporation and of the funds granted to institutes of higher education.

Appropriates $2.5 million from the General Fund to the Office of State Budget and Management in nonrecurring funds for 2016‑17 to be allocated to a reserve to be used for the purposes set forth above. Specifies that funds appropriated in this section do not revert at the end of the fiscal year and remain available until expended. Allows the Department of Commerce to use up to 5% of the reserve funds to administer the initiative.

Effective July 1, 2016.

Part VIII.

Appropriates $230,000 in recurring funds for 2016‑17 from the General Fund to the Department of Agriculture and Consumer Services to be allocated to the North Carolina Food Manufacturing Task Force established pursuant to Executive Order 73 issued by the Governor on April 9, 2015, to be used for the creation of a new Science, Technology, and Policy Director position. Sets out the Director's minimum responsibilities. 

Requires the Department of Agriculture and Consumer Services to create a marketing and communication program and sets out minimum program elements, including coordination of existing branding and the highlighting and expansion of the marketing of North Carolina food manufacturing to new markets.

Appropriates $1 million in nonrecurring funds for 2016-17 from the General Fund to the Department of Agriculture and Consumer Services to be used for the purposes set forth in this section. Funds appropriated in this section do not revert at the end of the fiscal year and remain available until expended pursuant to this section.

Effective July 1, 2016.

Part IX.

Appropriates $12 million from the General Fund to the Department of Commerce (Department) in nonrecurring funds for 2016-17, to be used to promote tourism and expansion of foreign investment and interest in the state by investing domestically and internationally in promotion of sports events, film tourism, retirement destination advertising, and other activities designed to increase the effective geographic reach of activities, positioning the state as a preferred destination for travelers.  

Directs that the funds are to be used primarily for media purchases for marketing and advertising campaigns on television, online video, and print; expansion of direct-to-consumer promotion in established markets; and international marketing. Provides that other permissible uses of the funds include contracting with research firms to assess image and awareness and identify the anticipated return on investment for advertising campaigns, ongoing analytics activities to track efficiency of owned and paid digital media investment in generating arrivals in the state, identification and prioritization of geographic areas and audience segmentation by interest showing greatest growth potential for tourism in the state, efforts directed toward retirement, sports events recruitment, film tourism, and additional development and deployment of online tourism efforts of the state, including social media strategy. Directs the Department, of the funds appropriated in the section, to ensure the funds are allocated as specified for domestic marketing and advertising, international marketing and advertising, sports events marketing and advertising, retiree attraction marketing and advertising, and film tourism marketing and advertising. 

Requires the Department to report on the use of all funds appropriated in the section to the Joint Legislative Economic Development and Global Engagement Oversight Committee and the Fiscal Research Division by October 1, 2017. Specifies what is to be included in the report. 

Effective July 1, 2016.

Part X.

Amends GS 105-129.51 to extend the applicability of the research and development tax credit until January 1, 2020 (was, January 1, 2016). Effective for taxable years beginning on or after January 1, 2016.

Part XI.

Appropriates $600,000 in nonrecurring funds for 2016-17 from the General Fund to the Department of Administration (Department) to be used in determining which existing, currently underutilized state properties will be best suited for sale or lease by enabling the Department to conduct qualitative analysis on the cost and best use of such properties, including appraisals, surveys, environmental studies, and Phase I and II studies and to hire third‑party consultants to conduct comprehensive space and design planning for prospective office space so as to ensure efficient use of existing office square footage in light of future office needs.

Amends GS 66-58(b) to allow for the lease of parking spaces in accordance with the procedure for leases under GS Chapter 146 for any period of time the Department determines the spaces to be in excess of need, and to allow a ground lease of state-owned land in accordance with the procedures for leases in GS Chapter 146.

Part XII.

Appropriates $1 million in nonrecurring funds for 2016-17 from the General Fund to the Department of Commerce to be allocated to the Main Street Solutions Fund and used for the purposes of GS Chapter 143B, Article 10, Part 15 (Main Street Solutions). Effective July 1, 2016.

Part XIII. 

Amends Section 4.1 of SL 2014-18, as amended, to require the Department of Commerce to additionally have at least one employee from the Rural Economic Development Division Main Street and Rural Planning Center physically located in each office in each of the Collaboration Prosperity Zones. Makes it the responsibility of those employees to assist communities in the Prosperity Zone with adding value to their economic and community development projects by assisting communities with solutions and technical support.

Appropriates $336,000 in recurring funds for 2016-17 from the General Fund to the Department of Commerce to fund the positions.

Effective July 1, 2016.

Part XIV. 

Authorizes the Department of Commerce to contract with a North Carolina nonprofit foundation to create a public‑private partnership to administer a program, in conjunction with North Carolina State University, to devise and implement a three‑year plan to assist the most distressed rural counties in North Carolina by leveraging private economic development expertise and existing state economic development entities. States the General Assembly's intent to provide the support established in this section to at least 24 communities in the state over the next three years. Requires the nonprofit to identify no more than eight communities per year, provided that no more than one community comes from a single Collaboration for Prosperity Zone and that the nonprofit foundation selects recipient communities that are among the most distressed in each zone. Requires that the nonprofit deliver, at least the following to each selected community: (1) establishing a current economic reality, including conducting competitiveness assessments; (2) developing realistic goals for future economic development, including identifying anticipated future economic opportunities, and implementing local strategic action agendas that move the community from its current position to a more economically competitive position; (3) creating a local leadership structure for plan implementation, including coordinating relevant economic development leaders and expertise, and providing professional and technical support to local leadership; and (4) providing other aid to ensure necessary specific actions that will improve local economic prosperity are identified and undertaken. Specifies what must be included in the contract with the nonprofit, including compensation limits and reporting requirements.

Appropriates $384,000 in nonrecurring funds for 2016-17 from the General Fund to the Department of Commerce to be used for the contracting functions under this section.

Effective July 1, 2016.

Part XV.

Unless otherwise provided, the act is effective when it becomes law.