Section 1

Makes the following changes to GS Chapter 159G, Water Infrastructure.

Amends GS 159G-20 to define distressed unit and Viable Utility Reserve. Modifies the term local government unit to include a metropolitan water district, a metropolitan sewerage district, and a county water and sewer district. Makes organizational changes and updates GS Chapter 162A Article and GS Chapter 160A references.

Amends GS 159G-21 to establish that revenue received under GS 162A-221 (as enacted, establishes monthly surcharges for water and wastewater services) is governed by the Chapter to provide local government grants.

Amends GS 159G-22 to establish the Viability Utility Reserve (Reserve) account within the Water Infrastructure Fund to receive collections under GS 162A-221 and State appropriations. Specifies that credited revenue to the account is neither received from the federal government nor provided as a match for federal funds. Directs the Department of Environmental Quality (DEQ) to establish accounts within the Reserve to administer grants for public water systems or wastewater systems owned by local government units. 

Amends GS 159G-30 to include the administration of grants made from the Reserve, through the Division of Water Infrastructure (Division), in DEQ's responsibilities. Makes clarifying and technical changes.

Amends GS 159G-31 to establish that a local government unit, as now defined, is eligible to apply for a grant from the Reserve.

Amends GS 159G-32 to specify five authorized uses for grants from the Reserve, including rehabilitating existing public water or wastewater infrastructure, decentralizing an existing public water or wastewater system, and funding a study of rates or merger and regionalization options.

Enacts GS 159G-34A, detailing three types of authorized Reserve grants: (1) an asset assessment and rate study grant, (2) a merger/regionalization feasibility grant, and (3) a project grant. Requires separate accounts in the Reserve for each type of grant. Describes budgeting for grants based upon estimates of collections remitted under GS 162A-222 (as enacted, provides for the transfer of water and wastewater services surcharge collections under GS 162A-221 to the Reserve) and gives priority to local government units in the subsequent year in which the actual remittance of collections is less than the estimate.

Amends GS 159G-35 to require the Local Government Commission and the State Water Infrastructure Authority (Authority) to jointly develop evaluation criteria to review grant applications and award grants from the Reserve as provided in GS 159G-39, as amended. Makes clarifying changes.

Amends GS 159G-36 to prohibit the amount of a Reserve grant from exceeding the construction costs of a project. Specifies that grant availability is limited to the extent that other funding sources are not reasonably available to the applicant. Caps grants from the Reserve to any single local government unit at $15 million, and at $30 million where two or more governmental units are merging into a single utility.

Expands the application provisions set forth in GS 159G-37 concerning loans and grants from other Reserves under the Chapter to include applications for grants from the Reserve.

Amends GS 159G-39 to require the Local Government Commission to approve the grant award and terms before a grant can be awarded. Authorizes DEQ and the Local Government Commission to impose specific performance measures or conditions on a Reserve grant, in their discretion.

Enacts GS 159G-45 to require the Authority and the Local Government Commission to develop criteria for assessment and review of local government units to identify distressed units, defined as a public water or wastewater system exhibiting signs of failure to identify or address those financial or operating needs necessary to enable that system to become or to remain a local government unit generating sufficient revenues to adequately fund management and operations, personnel, appropriate levels of maintenance, and reinvestment that facilitate the provision of reliable water or wastewater services. Details five components which the criteria should address, including whether the public water or wastewater system has an established, operational, and adequately funded program for its repair, maintenance, and management. Requires distressed units to take certain actions, as described, including developing an action plan for short- and long-term infrastructure repair, maintenance and management, continuing education of the governing board and system operating staff, and long-term financial management. Also requires distressed units to conduct an asset assessment and rate study, and participate in a training and educational program. Provides that once the requirements are met, the local government unit is no longer identified as a distressed unit for the remainder of that assessment and review cycle. Requires the assessment and review cycle of local government units to be no less than every two years, with frequency to be established by the Authority and the Local Government Commission.

Effective October 1, 2019.

Section 2

Enacts Article 9, Water and Wastewater Surcharge, to GS Chapter 162A. Sets forth definitions for the Article. Imposes a monthly surcharge on each active account of a public water system or wastewater system, payable by the account holder, in the amount of $1 per residential account and nonresidential account receiving water service or wastewater service from a local government unit, as specified. Makes local government units responsible for surcharge billing and collecting, and authorizes local government units to retain up to 2% of the amounts collected to cover administrative costs. Requires local government units to remit the amounts collected to the Reserve on a quarterly basis. Sunsets the Article June 30, 2029.

Amends specified statutes of GS Chapter 130A, GS Chapter 153A, GS Chapter 160A, and GS Chapter 162A to require sanitary district boards, cities, counties, and authorities and district boards created under GS Chapter 162A to collect any applicable monthly surcharges under new GS Chapter 162A-221.

Effective October 1, 2019.

Section 3

Enacts Article 10, Dissolution and Merger of Units, to GS Chapter 162A. Defines unit as the same entities created under GS Chapter 162A that are included in the term local government unit under GS Chapter 159G, as amended. Details information which must be provided to the Environmental Management Commission (Commission) prior to any action under the Article to merge or dissolve. Requires the Commission to provide a copy of the information submitted to DEQ and the Local Government Commission upon receipt of a request to dissolve or merge. Specifies notice requirements for district boards of affected units and any other governing boards affected upon confirmation of the time and place for a public hearing on dissolution or merger. 

Authorizes a unit to merge with any other unit, county, city, consolidated city-county, sanitary district, or  joint agency, as described, (1)  if the merger is a condition of receiving a grant from the Reserve or (2) upon approval of the Commission, in consultation with DEQ and the Local Government Commission. Provides for the the transfer of assets, liabilities, and obligations by resolution of the Commission, as specified, and details dissolving a unit upon satisfaction of certain criteria. 

Authorizes a unit to be dissolved (1) if the merger is a condition of receiving a grant from the Reserve or (2) in order to merge with another unit, county, city, consolidated city-county, sanitary district, or joint agency, as described, and establish a new entity upon approval of the Commission, in consultation with DEQ and the Local Government Commission. Provides for the the transfer of assets, liabilities, and obligations by resolution of the Commission, as specified, and dissolving a unit.

Establishes the effective date for merger or dissolution upon the adoption of a resolution by the Commission to be fixed as of June 30 following the adoption or the second June 30 following the adoption of the resolution. Details the effect of a merger or dissolution upon adoption of a resolution by the Commission and authorizes all governing boards and district boards to take actions and execute the documents necessary to effectuate the described provisions. 

Effective October 1, 2019.

Section 4

Enacts Article 5, Water and Wastewater Systems, to GS Chapter 160A. Sets forth defined terms. Authorizes interlocal cooperation between local government units for any purpose. Specifies that interlocal cooperation contracts for one or more undertakings under Part 5 are governed by the provisions of Part 1, Joint Exercise of Powers, Article 20, GS Chapter 160A.

Section 5

Directs DEQ to study the statutes and rules governing subbasin transfers. Details requirements of the study, including whether the costs of complying with specific statutory requirements are worth the benefits of the requirements. Requires DEQ to submit a report to the Commission by October 1, 2019.

Section 6

Directs the State Treasurer and Secretary of State to study the feasibility of authorizing historical charts for local government units that have become or may become defunct. Details requirements of the study, including the consequences of such charters. Requires the State Treasurer and the Secretary of State to report to the General Assembly by March 1, 2020.