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<p class=nonumber align=center style='margin-top:24.0pt;text-align:center'><b>GENERAL
ASSEMBLY OF NORTH CAROLINA</b></p>
<p class=nonumber align=center style='margin-top:3.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'><b>SESSION 2011</b></p>
<p class=nonumber align=left style='text-align:left'><b>H
2</b></p>
<p class=nonumber align=center style='text-align:center'><b>HOUSE BILL 129*</b></p>
<p class=nonumber align=center style='text-align:center'><b>Committee
Substitute Favorable 3/23/11</b></p>
<p class=nonumber align=center style='text-align:center'><b> </b></p>
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border-bottom:solid windowtext 1.0pt;padding:0in .05in 0in 5.4pt'>
<p class=nonumber align=left style='margin-bottom:6.0pt;text-align:left'>Short
Title: Level Playing Field/Local
Gov't Competition.</p>
</td>
<td width=84 valign=top style='width:63.35pt;border:none;border-bottom:solid windowtext 1.0pt;
padding:0in .05in 0in 5.4pt'>
<p class=nonumber align=right style='margin-bottom:6.0pt;text-align:right'>(Public)</p>
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<p class=nonumber align=left style='margin-top:3.0pt;margin-right:0in;
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<td width=533 colspan=2 valign=top style='width:5.55in;border:none;
border-bottom:solid windowtext 1.0pt;padding:0in .05in 0in 5.4pt'>
<p class=nonumber style='margin-top:3.0pt;margin-right:0in;margin-bottom:
3.0pt;margin-left:0in'> </p>
</td>
</tr>
<tr>
<td width=96 valign=top style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;
padding:0in .05in 0in 5.4pt'>
<p class=nonumber align=left style='margin-top:3.0pt;margin-right:0in;
margin-bottom:3.0pt;margin-left:0in;text-align:left'>Referred to:</p>
</td>
<td width=533 colspan=2 valign=top style='width:5.55in;border:none;
border-bottom:solid windowtext 1.0pt;padding:0in .05in 0in 5.4pt'>
<p class=nonumber style='margin-top:3.0pt;margin-right:0in;margin-bottom:
3.0pt;margin-left:0in'> </p>
</td>
</tr>
<tr>
<td width=96 style='width:1.0in;padding:0in 0in 0in 0in'></td>
<td width=448 style='width:336.0pt;padding:0in 0in 0in 0in'></td>
<td width=84 style='width:63.0pt;padding:0in 0in 0in 0in'></td>
</tr>
</table>
<p class=nonumber align=center style='margin-top:6.0pt;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center'>February 21, 2011</p>
<p class=aBase align=center style='text-align:center'>A BILL TO BE ENTITLED</p>
<p class=aLongTitle><span style='font-family:"Times New Roman","serif"'>AN ACT to
protect jobs and investment by regulating local government competition with
private business.</span></p>
<p class=aMargin2>Whereas, certain cities in the State have chosen to compete
with private providers of communications services; and</p>
<p class=aMargin2>Whereas, these cities have been permitted to enter into
competition with private providers as a result of a decision of the North
Carolina Court of Appeals rather than legislation enacted by the General
Assembly; and</p>
<p class=aMargin2>Whereas, the communications industry is an industry of
economic growth and job creation; and</p>
<p class=aMargin2>Whereas, as expressed in G.S. 66-58, known as the
Umstead Act, it is against the public policy of this State for any unit,
department, or agency of the State, or any division or subdivision of a unit,
department, or agency of the State to engage directly or indirectly in the sale
of goods, wares, or merchandise in competition with citizens of the State; and </p>
<p class=aMargin2>Whereas, to protect jobs and to promote investment, it is
necessary to ensure that the State does not indirectly subsidize competition
with private industry through actions by cities and to ensure that where there
is competition between the private sector and the State, directly or through
its subdivisions, it exists under a framework that does not discourage private
investment and job creation; Now, therefore, </p>
<p class=aBase>The General Assembly of North Carolina enacts:</p>
<p class=aBillSection><b>SECTION 1.(a)</b> Chapter 160A of the General Statutes
is amended by adding a new Article to read as follows:</p>
<p class=aMargin1 align=center style='text-align:center'>"<u>Article 16A.</u></p>
<p class=aMargin1 align=center style='text-align:center'>"<u>Provision of
Communications Service by Cities.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340. Definitions.</u></p>
<p class=aMargin1><u>The following definitions apply in this Article:</u></p>
<p class=aBlock1><u>(1)</u> <u>City-owned
communications service provider. - A city that provides communications service
using a communications network, whether directly, indirectly, or through an
interlocal agreement or a joint agency.</u></p>
<p class=aBlock1><u>(2) </u> <u>Communications
network. - A wired or wireless network for the provision of communications
service.</u></p>
<p class=aBlock1><u>(3) </u> <u>Communications
service. - The provision of cable, video programming, telecommunications,
broadband, or high-speed Internet access service to the public, or any sector
of the public, for a fee, regardless of the technology used to deliver the
service. The terms "cable service," "telecommunications
service," and "video programming service" have the same meanings
as in G.S. 105-164.3. Neither the sharing of data between the governmental
entities for governmental purposes nor the provision of free services to the
public or a subset thereof shall be considered the provision of communications
service.</u></p>
<p class=aBlock1><u>(4) </u> <u>High-speed
Internet access service. - Internet access service with transmission speeds
that are consistent with requirements for basic broadband service as defined by
the Federal Communications Commission.</u></p>
<p class=aBlock1><u>(5)</u> <u>Interlocal
agreement. - An agreement between units of local government as authorized by
Part 1 of Article 20 of Chapter 160A of the General Statutes.</u></p>
<p class=aBlock1><u>(6)</u> <u>Joint
agency. - A joint agency created under Part 1 of Article 20 of Chapter 160A of
the General Statutes.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.1. City-owned communications service provider requirements.</u></p>
<p class=aMargin1><u>(a)</u> <u>A
city-owned communications service provider shall meet all of the following
requirements:</u></p>
<p class=aBlock1><u>(1)</u> <u>Comply
in its provision of communications service with all local, State, and federal
laws, regulations, or other requirements applicable to the provision of the
communications service if provided by a private communications service
provider.</u></p>
<p class=aBlock1><u>(2)</u> <u>In
accordance with the provisions of Chapter 159 of the General Statutes, the
Local Government Finance Act, establish one or more separate enterprise funds
for the provision of communications service, use the enterprise funds to
separately account for revenues, expenses, property, and source of investment
dollars associated with the provision of communications service, and prepare
and publish an independent annual report and audit in accordance with generally
accepted accounting principles that reflect the fully allocated cost of
providing the communications service, including all direct and indirect costs.
An annual independent audit conducted under G.S. 159-34 and submitted to
the Local Government Commission satisfies the audit requirement of this
subdivision.</u></p>
<p class=aBlock1><u>(3)</u> <u>Limit
the provision of communications service to within the corporate limits of the
city providing the communications service.</u></p>
<p class=aBlock1><u>(4)</u> <u>Shall
not, directly or indirectly, under the powers of a city, exercise power or
authority in any area, including zoning or land-use regulation, or exercise
power to withhold or delay the provision of monopoly utility service, to
require any person, including residents of a particular development, to use or
subscribe to any communications service provided by the city-owned
communications service provider.</u></p>
<p class=aBlock1><u>(5)</u> <u>Shall provide
nondiscriminatory access to private communications service providers on a
first-come, first-served basis to rights-of-way, poles, or conduits owned,
leased, or operated by the city unless the facilities have insufficient
capacity for the access and additional capacity cannot reasonably be added to
the facilities. For purposes of this subdivision, the term
"nondiscriminatory access" means that, at a minimum,
access shall be granted on the same terms and conditions as that given to
a city-owned communications service provider.</u></p>
<p class=aBlock1><u>(6)</u> <u>Shall
not air advertisements or other promotions for the city-owned communications
service on a public, educational, or governmental access channel if the city
requires another communications service provider to carry the channel. The city
shall not use city resources that are not allocated for cost accounting
purposes to the city-owned communications service to promote city-owned
communications service in comparison to private services or, directly or
indirectly, require city employees, officers, or contractors to purchase city
services.</u></p>
<p class=aBlock1><u>(7)</u> <u>Shall
not subsidize the provision of communications service with funds from any other
noncommunications service, operation, or other revenue source, including any
funds or revenue generated from electric, gas, water, sewer, or garbage
services.</u></p>
<p class=aBlock1><u>(8)</u> <u>Shall
not price any communications service below the cost of providing the service,
including any direct or indirect subsidies received by the city-owned
communications service provider and allocation of costs associated with any
shared use of buildings, equipment, vehicles, and personnel with other city
departments. The city shall, in calculating the costs of providing the
communications service, impute (i) the cost of the capital component that is
equivalent to the cost of capital available to private communications service
providers in the same locality and (ii) an amount equal to all taxes, including
property taxes, licenses, fees, and other assessments that would apply to a
private communications service provider, including federal, State, and local
taxes; rights-of-way, franchise, consent, or administrative fees; and pole
attachment fees.</u></p>
<p class=aBlock1><u>(9)</u> <u>The
city shall annually remit to the general fund of the city an amount equivalent
to all taxes or fees a private communications service provider would be
required to pay the city or county in which the city is located, including any
applicable tax refunds received by the city-owned communications service
provider because of its government status and a sum equal to the amount of
property tax that would have been due if the city-owned communications service
provider were a private communications service provider.</u></p>
<p class=aMargin1><u>(b)</u> <u>A
city-owned communications service provider shall not be required to obtain
voter approval under G.S. 160A-321 prior to the sale or discontinuance of
the city's communications network.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.2. Exemptions.</u></p>
<p class=aMargin1><u>(a)</u> <u>The
provisions of G.S. 160A-340.1, 160A-340.4, 160A-340.5, and 160A-340.6 do not
apply to the purchase, lease, construction, or operation of facilities by a
city to provide communications service within the city's corporate limits for
the city's internal governmental purposes, including the sharing of data
between governmental entities for governmental purposes, or within the
corporate limits of another unit of local government that is a party with the
city to an interlocal agreement under Part 1 of Article 20 of Chapter 160A of
the General Statutes for the provision of internal government services.</u></p>
<p class=aMargin1><u>(b)</u> <u>The
provisions of G.S. 160A-340.1, 160A-340.4, and 160A-340.5 do not apply to the
provision of communications service in an unserved area. A city seeking to
provide communications service in an unserved area shall petition the North
Carolina Utilities Commission for a determination that an area is unserved. The
petition shall identify with specificity the geographic area for which the
designation is sought. Any private communications service provider, or
any other interested party, may, within a time established by order of the
Commission, which time shall be no fewer than 30 days, file with the Commission
an objection to the designation on the grounds that one or more areas
designated in the petition is not an unserved area or that the city is not
otherwise eligible to provide the service. For purposes of this subsection, the
term "unserved area" means a geographical area in which at least
fifty percent (50%) of households either have no access to <a name="OLE_LINK1"></a><a
name="OLE_LINK2"></a>high-speed Internet service or have access to high-speed
Internet service only from a satellite provider.</u></p>
<p class=aMargin1><u>(c) The provisions of G.S. 160A-340.1, 160A-340.3,
160A-340.4, 160A-340.5, and 160A-340.6 do not apply to a city or joint agency providing
communications service as of January 1, 2011, provided the city or joint agency
limits the provision of communications service to the following service area
boundaries:</u></p>
<p class=aBlock1><u>(1)</u> <u>For
the joint agency operated by the cities of Davidson and Mooresville, the
service area is the service area designated in the initial notice of franchise
filed with the Secretary of State, and the contiguous area where the agency is
offering service as of the effective date of this act connecting the cities of
Davidson and Mooresville with areas set forth in the initial areas of
franchise.</u></p>
<p class=aBlock1><u>(2)</u> <u>For
the city of Salisbury, the service area is the corporate limits of the cities
of Salisbury, Spencer, East Spencer, Rockwell, Granite Quarry, and the
corridors between Salisbury and those cities only to the extent necessary to
provide service to those cities.</u></p>
<p class=aBlock1><u>(3)</u> <u>For
all other cities or joint agency offering communications service, the service
area is the area designated in the map filed as part of the initial notice of
franchise with the Secretary of State as of January 1, 2011.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.3. Notice; public hearing.</u></p>
<p class=aMargin1><u>A city or joint agency that proposes to provide
communications service shall hold not fewer than two public hearings, which
shall be held not less than 30 days apart, for the purpose of gathering
information and comment. Notice of the hearings shall be published at least
once a week for four consecutive weeks in the predominant newspaper of general
circulation in the area in which the city is located. The notice shall also be
provided to the North Carolina Utilities Commission, which shall post the
notice on its Web site, and to all companies that have requested service of the
notices from the city clerk. The city shall deposit the notice in the U.S. mail
to companies that have requested notice at least 45 days prior to the hearing
subject to the notice. Private communications service providers shall be
permitted to participate fully in the public hearings by presenting testimony
and documentation relevant to their service offerings and the city's plans. Any
feasibility study, business plan, or public survey conducted or prepared by the
city in connection with the proposed communications service project is a public
record as defined by G.S. 132-1 and shall be made available to the public
prior to the public hearings required by this section. This section does not
apply to the repair, rebuilding, replacement, or improvement of an existing
communications network, or equipment relating thereto.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.4. Financing.</u></p>
<p class=aMargin1><u>(a)</u> <u>A city or joint agency subject to the
provisions of G.S. 160A-340.1 shall not enter into a contract under
G.S. 160A-19 or G.S. 160A-20 to purchase or to finance the purchase
of property for use in a communications network or to finance the construction
of fixtures or improvements for use in a communications network unless it
complies with subsection (b) of this section. The provisions of this section
shall not apply to the repair, rebuilding, replacement, or improvement of an
existing communications network, or equipment relating thereto.</u></p>
<p class=aMargin1><u>(b)</u> <u>A city shall not incur debt for the
purpose of constructing a communications system without first holding a special
election under G.S. 163-287 on the question of whether the city should
incur debt for the proposed purposes. If a majority of the votes cast in the
special election are for the city incurring the debt, the city may provide the
communication service. If a majority of the votes cast in the special election
are against the city incurring the debt, the city shall not provide the
communications service. However, nothing in this section shall prohibit a city
from revising its plan to offer communications service and calling another
special election on the question prior to providing or offering to provide the
service. A special election required under Chapter 159 of the General Statutes
as a condition to the issuance of bonds shall satisfy the requirements of this
section.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.5. Taxes; payments in lieu of taxes.</u></p>
<p class=aMargin1><u>(a)</u> <u>A
communications network owned or operated by a city or joint agency shall be
exempt from property taxes. However, each city possessing an ownership share of
a communications network and a joint agency owning a communications network
shall, in lieu of property taxes, pay to any county authorized to levy property
taxes the amount which would be assessed as taxes on real and personal property
if the communications network were otherwise subject to valuation and
assessment. Any payments in lieu of taxes shall be due and shall bear interest,
if unpaid, as in the case of taxes on other property.</u></p>
<p class=aMargin1><u>(b)</u> <u>A
city-owned communications service provider shall pay to the State, on an annual
basis, an amount in lieu of taxes that would otherwise be due the State if the
communications service was provided by a private communications service
provider, including State income, franchise, vehicle, motor fuel, and other
similar taxes. The amount of the payment in lieu of taxes shall be set annually
by the Department of Revenue and shall approximate the taxes that would be due
if the communications service was undertaken by a private communications
service provider. A city-owned communications provider must provide information
requested by the Secretary of Revenue necessary for calculation of the
assessment. The Department must inform each city-owned communications provider
of the amount of the assessment by January 1 of each year. The assessment is
due by March 15 of each year. If the assessment is unpaid, the State may
withhold the amount due, including interest on late payments, from
distributions otherwise due the city under G.S. 105-164.44I.</u></p>
<p class=aMargin1><u>(c)</u> <u>A
city-owned communications service provider or a joint agency that provides
communications service shall not be eligible for a refund under
G.S. 105-164.14(c) for sales and use taxes paid on purchases of tangible
personal property and services related to the provision of communications
service, except to the extent a private communications service provider would
be exempt from taxation.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.6. Public-private partnerships for communications service.</u></p>
<p class=aMargin1><u>(a)</u> <u>Prior
to undertaking to construct a communications network for the provision of
communications service, a city shall first solicit proposals from private
business in accordance with the procedures of this section.</u></p>
<p class=aMargin1><u>(b)</u> <u>The
city shall issue requests for proposals that specifies the nature and scope of
the requested communications service, the area in which it is to be provided,
any specifications and performance standards, and information as to the city's
proposed participation in providing equipment, infrastructure, or other aspects
of the service. The city may prescribe the form and content of proposals, and
may require that proposals contain sufficiently detailed information to allow
for an objective evaluation of proposals using the factors stated in subsection
(c) of this section. Each proposal shall at minimum contain all of the
following:</u></p>
<p class=aBlock1><u>(1)</u> <u>Information
regarding the proposer's experience and qualifications to perform the
requirements of the proposal.</u></p>
<p class=aBlock1><u>(2)</u> <u>Information
demonstrating the proposer's ability to secure financing needed to perform the
requirements of the proposal.</u></p>
<p class=aBlock1><u>(3)</u> <u>Information
demonstrating the proposer's ability to provide staffing, implement work tasks,
and carry out all other responsibilities necessary to perform the requirements
of the proposal.</u></p>
<p class=aBlock1><u>(4)</u> <u>Information
clearly identifying and specifying all elements of cost of the proposal for the
term of the proposed contract, including the cost of the purchase or lease of
equipment and supplies, design, installation, operation, management, and
maintenance of any system, and any proposed services.</u></p>
<p class=aBlock1><u>(5)</u> <u>Any
other information the city determines has a material bearing on its ability to
evaluate the proposal.</u></p>
<p class=aMargin1><u>(c)</u> <u>The
city shall provide notice that it is requesting proposals in accordance with
this subsection. The notice shall state the time and place where plans and specifications
for the proposed service may be obtained and the time and place for opening
proposals. Any notice given under this subsection shall reserve to the city the
right to reject any or all proposals. Notice of request for proposals shall be
given by all of the following methods:</u></p>
<p class=aBlock1><u>(1)</u> <u>By
mailing a notice of request for proposals to each firm that has obtained a
license or permit to use the public rights-of-way in the city to provide a
communications service within the city by depositing such notices in the U.S.
mail at least 30 days prior to the date specified for the opening of proposals.
In identifying firms, the city may rely upon lists provided by the Office of
the Secretary of State and the North Carolina Utilities Commission.</u></p>
<p class=aBlock1><u>(2)</u> <u>By
posting a notice of request for proposals on the city's web site at least 30
days before the time specified for the opening of proposals.</u></p>
<p class=aBlock1><u>(3)</u> <u>By
publishing a notice of request for proposals in a newspaper of general
circulation in the county in which the city is predominantly located at least
30 days before the time specified for the opening of proposals.</u></p>
<p class=aMargin1><u>(d)</u> <u>In
evaluating proposals, the city may consider any relevant factors, including
system design, system reliability, operational experience, operational costs,
compatibility with existing systems and equipment, and emerging technology. The
city may negotiate aspects of any proposal with any responsible proposer with
regard to these factors to determine which proposal is the most responsive. A
determination of most responsive proposer by the city shall be final.</u></p>
<p class=aMargin1><u>(e)</u> <u>The
city may negotiate a contract with the most responsive proposer for the
performance of communications services specified in the request for proposals.
All contracts entered into pursuant to this section shall be approved and
awarded by the governing body of the city.</u></p>
<p class=aMargin1><u>(f)</u> <u>If
the city is unable to successfully negotiate the terms of a contract with the
most responsive proposer with 60 days of the opening of the proposals, the city
may proceed to negotiate with the firm determined to be the next most
responsive proposer if such a proposer exists. If the city is unable to
successfully negotiate the terms of a contract with the next most responsive
proposer within 60 days, it may proceed under this Article to provide
communications services.</u></p>
<p class=aMargin1><u>(g)</u> <u>All
proposals shall be sealed and shall be opened in public.</u>"</p>
<p class=aBillSection><b>SECTION 1.(b) </b>G.S. 105-164.14
is amended by adding a new subsection to read:</p>
<p class=aMargin1>"<u>(d2)</u> <u>A city subject to the provisions
of G.S. 160A-340.5 is not allowed a refund of sales and use taxes paid by
it under this Article for purchases related to the provision of communications
services as defined in Article 16A of Chapter 160A.</u>"</p>
<p class=aBillSection><b>SECTION 1.(c)</b> Subsection (b) of this section
is effective when it becomes law and applies to sales made on or after that
date.</p>
<p class=aBillSection><b>SECTION 2.(a)</b> G.S. 62-3(23) is amended
by adding the following new sub-subdivision to read:</p>
<p class=aBlock2>"<u>l.</u>
<u>The term "public utility" shall include a city or a joint agency<b>
</b>under Part 1 of Article 20 of Chapter 160A of the General Statutes that
provides service as defined in G.S. 62-3(23)a.6. and is subject to the
provisions of G.S. 160A-340.1.</u>"</p>
<p class=aBillSection><b>SECTION 2.(b)</b> This section shall not be
construed to change the regulatory nature of or requirements applicable to any
particular service currently regulated by the Commission under Chapter 62 of
the General Statutes.</p>
<p class=aBillSection><b>SECTION 3.</b> Subchapter IV of Chapter 159 of
the General Statutes is amended by adding a new Article to read as follows:</p>
<p class=aMargin1 align=center style='text-align:center'>"<u>Article 9A.</u></p>
<p class=aMargin1 align=center style='text-align:center'>"<u>Borrowing by
Cities for Competitive Purposes.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
159-175.10. Additional requirements for review of city financing
application; communications service.</u></p>
<p class=aMargin1><u>The Commission shall apply additional requirements to an
application for financing by a city or a joint agency under Part 1 of Article
20 of Chapter 160A of the General Statutes for the construction, operation,
expansion, or repair of a communications system or other infrastructure for the
purpose of offering communications service, as that term is defined in
G.S. 160A-340(2), that is or will be competitive with communications
service offered by a private communications service provider. This section does
not apply to the repair, rebuilding, replacement, or improvement of an existing
communications network, or equipment relating thereto, but does apply to the
expansion of such existing network. The additional requirements are the
following:</u></p>
<p class=aBlock1><u>(1)</u> <u>Prior
to submitting an application to the Commission, a city or joint agency shall
comply with the provisions of G.S. 160A-340.3 requiring at least two
public hearings on the proposed communications service project and notice
of the hearings to private communications service providers who have requested
notice.</u></p>
<p class=aBlock1><u>(2)</u> <u>At the
same time the application is submitted to the Commission, the city or joint
agency shall serve a copy of the application on each person that provides
competitive communications service within the city's jurisdictional boundaries
or in areas adjacent to the city. No hearing on the application shall be heard
by the Commission until at least 60 days after the application is submitted to
the Commission.</u></p>
<p class=aBlock1><u>(3)</u> <u>Upon
the request of a communications service provider, the Commission shall accept
written and oral comments from competitive private communications service
providers in connection with any hearing or other review of the application.</u></p>
<p class=aBlock1><u>(4)</u> <u>In
considering the probable net revenues of the proposed communications service
project, the Commission shall consider and make written findings on the
reasonableness of the city or joint agency's revenue projections in light of
the current and projected competitive environment for the services to be
provided, taking into consideration the potential impact of technological
innovation and change on the proposed service offerings and the level of
demonstrated community support for the project.</u></p>
<p class=aBlock1><u>(5)</u> <u>The
city or joint agency making the application to the Commission shall bear the
burden of persuasion with respect to subdivisions (1) through (4) of this
section.</u>"</p>
<p class=aBillSection><b>SECTION 4.</b> G.S. 159-81(3) is amended by
adding a new sub-subdivision to read:</p>
<p class=aBlock2>"<u>q.</u> <u>Cable
television systems.</u>"</p>
<p class=aBillSection><b>SECTION 5.</b> Sections 2, 3, and 4 of this act do not
apply to a city or joint agency providing communications service as of January
1, 2011, provided the city limits the provision of communications service to
the service area boundaries in G.S. 160A-340.2(c).</p>
<p class=aBillSection><b>SECTION 6.</b> Any city that is designated as a
public utility under Chapter 62 of the General Statutes when this act becomes
law shall not be subject to the provisions of this act with respect to any of
its operations that are authorized by that Chapter.</p>
<p class=aBillSection><b>SECTION 7.</b> If any provision of this act or
the application thereof to any person or circumstance is held invalid, the
invalidity shall not affect other provisions or applications of this act which
can be given effect without the invalid provision or application, and to that
end the provisions of this act are declared to be severable.</p>
<p class=aBillSection><b>SECTION 8.</b> Except as otherwise provided,
this act is effective when it becomes law and applies to the provision of
communications service by a city or joint agency under Part 1 of Article 20 of
Chapter 160A of the General Statutes on and after that date.</p>
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<p class=nonumber align=center style='margin-top:24.0pt;text-align:center'><b><u>GENERAL
ASSEMBLY OF NORTH CAROLINA</u></b></p>
<p class=nonumber align=center style='margin-top:3.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'><b><u>SESSION 2011</u></b></p>
<p class=nonumber align=left style='text-align:left'><b><u>H
5</u></b></p>
<p class=nonumber align=center style='text-align:center'><b><u>HOUSE BILL 129*</u></b></p>
<p class=nonumber align=center style='text-align:center'><b><u>Committee
Substitute Favorable 3/23/11<br>
Third Edition Engrossed 3/28/11</u></b></p>
<p class=nonumber align=center style='text-align:center'><b><u>Senate Finance
Committee Substitute Adopted 4/27/11<br>
Fifth Edition Engrossed 5/3/11</u></b></p>
<p class=nonumber align=center style='text-align:center'><b> </b></p>
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<p class=nonumber align=left style='margin-bottom:6.0pt;text-align:left'><u>Short
Title: Level Playing Field/Local
Gov't Competition.</u></p>
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<p class=nonumber align=right style='margin-bottom:6.0pt;text-align:right'><u>(Public)</u></p>
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padding:0in .05in 0in 5.4pt'>
<p class=nonumber align=left style='margin-top:3.0pt;margin-right:0in;
margin-bottom:3.0pt;margin-left:0in;text-align:left'><u>Sponsors:</u></p>
</td>
<td width=533 colspan=2 valign=top style='width:5.55in;border:none;
border-bottom:solid windowtext 1.0pt;padding:0in .05in 0in 5.4pt'>
<p class=nonumber style='margin-top:3.0pt;margin-right:0in;margin-bottom:
3.0pt;margin-left:0in'><u> </u></p>
</td>
</tr>
<tr>
<td width=96 valign=top style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;
padding:0in .05in 0in 5.4pt'>
<p class=nonumber align=left style='margin-top:3.0pt;margin-right:0in;
margin-bottom:3.0pt;margin-left:0in;text-align:left'><u>Referred to:</u></p>
</td>
<td width=533 colspan=2 valign=top style='width:5.55in;border:none;
border-bottom:solid windowtext 1.0pt;padding:0in .05in 0in 5.4pt'>
<p class=nonumber style='margin-top:3.0pt;margin-right:0in;margin-bottom:
3.0pt;margin-left:0in'> </p>
</td>
</tr>
<tr>
<td width=96 style='width:1.0in;padding:0in 0in 0in 0in'></td>
<td width=448 style='width:336.0pt;padding:0in 0in 0in 0in'></td>
<td width=84 style='width:63.0pt;padding:0in 0in 0in 0in'></td>
</tr>
</table>
<p class=nonumber align=center style='margin-top:6.0pt;text-align:center'><u>February
21, 2011</u></p>
<p class=nonumber align=left style='text-align:left'> </p>
<p class=aBase align=center style='text-align:center'>A BILL TO BE ENTITLED</p>
<p class=aLongTitle><span style='font-family:"Times New Roman","serif"'>AN ACT
to protect jobs and investment by regulating local government competition with
private business.</span></p>
<p class=aMargin2>Whereas, certain cities in the State have chosen to compete
with private providers of communications services; and</p>
<p class=aMargin2>Whereas, these cities have been permitted to enter into
competition with private providers as a result of a decision of the North
Carolina Court of Appeals rather than legislation enacted by the General
Assembly; and</p>
<p class=aMargin2>Whereas, the communications industry is an industry of
economic growth and job creation; and</p>
<p class=aMargin2>Whereas, as expressed in G.S. 66-58, known as the
Umstead Act, it is against the public policy of this State for any unit,
department, or agency of the State, or any division or subdivision of a unit,
department, or agency of the State, to engage directly or indirectly in the
sale of goods, wares, or merchandise in competition with citizens of the State;
and </p>
<p class=aMargin2>Whereas, to protect jobs and to promote investment, it is
necessary to ensure that the State does not indirectly subsidize competition
with private industry through actions by cities and to ensure that where there
is competition between the private sector and the State, directly or through
its subdivisions, it exists under a framework that does not discourage private
investment and job creation; Now, therefore, </p>
<p class=aBase>The General Assembly of North Carolina enacts:</p>
<p class=aBillSection><b>SECTION 1.(a)</b> Chapter 160A of the General Statutes
is amended by adding a new Article to read as follows:</p>
<p class=aArticle>"<u>Article 16A.</u></p>
<p class=aArticleTitle>"<u>Provision of Communications Service by Cities.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340. Definitions.</u></p>
<p class=aMargin1><u>The following definitions apply in this Article:</u></p>
<p class=aBlock1><u>(1)</u> <u>City-owned
communications service provider. - A city that provides communications service
using a communications network, whether directly, indirectly, or through an
interlocal agreement or a joint agency.</u></p>
<p class=aBlock1><u>(2)</u> <u>Communications
network. - A wired or wireless network for the provision of communications
service.</u></p>
<p class=aBlock1><u>(3)</u> <u>Communications
service. - The provision of cable, video programming, telecommunications,
broadband, or high-speed Internet access service to the public, or any sector
of the public, for a fee, regardless of the technology used to deliver the
service. The terms "cable service," "telecommunications service,"
and "video programming service" have the same meanings as in
G.S. 105-164.3. The following is not considered the provision of
communications service:</u></p>
<p class=aBlock2><u>a.</u> <u>The
sharing of data or voice between governmental entities for internal
governmental purposes.</u></p>
<p class=aBlock2><u>b.</u> <u>The
remote reading or polling of data from utility or parking meters, or the
provisioning of energy demand reduction or smart grid services for an electric,
water, or sewer system.</u></p>
<p class=aBlock2><u>c.</u> <u>The
provision of free services to the public or a subset thereof.</u></p>
<p class=aBlock1><u>(4)</u> <u>High-speed
Internet access service. - Internet access service with transmission speeds
that are equal to or greater than the requirements for basic broadband tier 1
service as defined by the Federal Communications Commission for broadband data
gathering and reporting.</u></p>
<p class=aBlock1><u>(5)</u> <u>Interlocal
agreement. - An agreement between units of local government as authorized by
Part 1 of Article 20 of Chapter 160A of the General Statutes.</u></p>
<p class=aBlock1><u>(6)</u> <u>Joint
agency. - A joint agency created under Part 1 of Article 20 of Chapter 160A of
the General Statutes.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.1. City-owned communications service provider requirements.</u></p>
<p class=aMargin1><u>(a)</u> <u>A
city-owned communications service provider shall meet all of the following
requirements:</u></p>
<p class=aBlock1><u>(1)</u> <u>Comply
in its provision of communications service with all local, State, and federal
laws, regulations, or other requirements applicable to the provision of the
communications service if provided by a private communications service
provider.</u></p>
<p class=aBlock1><u>(2)</u> <u>In accordance
with the provisions of Chapter 159 of the General Statutes, the Local
Government Finance Act, establish one or more separate enterprise funds for the
provision of communications service, use the enterprise funds to separately
account for revenues, expenses, property, and source of investment dollars
associated with the provision of communications service, and prepare and
publish an independent annual report and audit in accordance with generally
accepted accounting principles that reflect the fully allocated cost of
providing the communications service, including all direct and indirect costs.
An annual independent audit conducted under G.S. 159-34 and submitted to
the Local Government Commission satisfies the audit requirement of this subdivision.</u></p>
<p class=aBlock1><u>(3)</u> <u>Limit
the provision of communications service to within the corporate limits of the
city providing the communications service.</u></p>
<p class=aBlock1><u>(4)</u> <u>Shall
not, directly or indirectly, under the powers of a city, exercise power or
authority in any area, including zoning or land-use regulation, or exercise
power to withhold or delay the provision of monopoly utility service, to
require any person, including residents of a particular development, to use or
subscribe to any communications service provided by the city-owned
communications service provider.</u></p>
<p class=aBlock1><u>(5)</u> <u>Shall
provide nondiscriminatory access to private communications service providers on
a first-come, first-served basis to rights-of-way, poles, or conduits owned,
leased, or operated by the city unless the facilities have insufficient
capacity for the access and additional capacity cannot reasonably be added to
the facilities. For purposes of this subdivision, the term
"nondiscriminatory access" means that, at a minimum, access shall
be granted on the same terms and conditions as that given to a city-owned
communications service provider.</u></p>
<p class=aBlock1><u>(6)</u> <u>Shall
not air advertisements or other promotions for the city-owned communications
service on a public, educational, or governmental access channel if the city
requires another communications service provider to carry the channel. The city
shall not use city resources that are not allocated for cost accounting
purposes to the city-owned communications service to promote city-owned
communications service in comparison to private services or, directly or
indirectly, require city employees, officers, or contractors to purchase city
services.</u></p>
<p class=aBlock1><u>(7)</u> <u>Shall
not subsidize the provision of communications service with funds from any other
noncommunications service, operation, or other revenue source, including any
funds or revenue generated from electric, gas, water, sewer, or garbage
services.</u></p>
<p class=aBlock1><u>(8)</u> <u>Shall
not price any communications service below the cost of providing the service,
including any direct or indirect subsidies received by the city-owned
communications service provider and allocation of costs associated with any
shared use of buildings, equipment, vehicles, and personnel with other city
departments. The city shall, in calculating the costs of providing the
communications service, impute (i) the cost of the capital component that is
equivalent to the cost of capital available to private communications service
providers in the same locality and (ii) an amount equal to all taxes, including
property taxes, licenses, fees, and other assessments that would apply to a
private communications service provider, including federal, State, and local
taxes; rights-of-way, franchise, consent, or administrative fees; and pole
attachment fees. In calculating the costs of the service the city may amortize
the capital assets of the communications system over the useful life of the
assets in accordance with generally accepted principles of governmental
accounting.</u></p>
<p class=aBlock1><u>(9)</u> <u>The
city shall annually remit to the general fund of the city an amount equivalent
to all taxes or fees a private communications service provider would be
required to pay the city or county in which the city is located, including any
applicable tax refunds received by the city-owned communications service
provider because of its government status and a sum equal to the amount of
property tax that would have been due if the city-owned communications service
provider were a private communications service provider.</u></p>
<p class=aMargin1><u>(b)</u> <u>A city-owned
communications service provider shall not be required to obtain voter approval
under G.S. 160A-321 prior to the sale or discontinuance of the city's
communications network.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.2. Exemptions.</u></p>
<p class=aMargin1><u>(a)</u> <u>The
provisions of G.S. 160A-340.1, 160A-340.4, 160A-340.5, and 160A-340.6 do
not apply to the purchase, lease, construction, or operation of facilities by a
city to provide communications service within the city's corporate limits for
the city's internal governmental purposes, including the sharing of data or
voice between governmental entities for internal governmental purposes, or
within the corporate limits of another unit of local government that is a party
with the city to an interlocal agreement under Part 1 of Article 20 of Chapter 160A
of the General Statutes for the provision of internal government services.</u></p>
<p class=aMargin1><u>(b)</u> <u>The
provisions of G.S. 160A-340.1, 160A-340.4, and 160A-340.5 do not apply to
the provision of communications service in an unserved area. A city seeking to
provide communications service in an unserved area shall petition the North
Carolina Utilities Commission for a determination that an area is unserved. The
petition shall identify with specificity the geographic area for which the
designation is sought. Any private communications service provider, or
any other interested party, may, within a time established by order of the
Commission, which time shall be no fewer than 30 days, file with the Commission
an objection to the designation on the grounds that one or more areas
designated in the petition is not an unserved area or that the city is not
otherwise eligible to provide the service. For purposes of this subsection, the
term "unserved area" means a census block, as designated by the most
recent census of the U.S. Census Bureau, in which at least fifty percent (50%)
of households either have no access to <a name="OLE_LINK1"></a><a
name="OLE_LINK2"></a>high-speed Internet service or have access to high-speed
Internet service only from a satellite provider. A city may petition the
Commission to serve multiple contiguous unserved areas in the same proceeding.</u></p>
<p class=aMargin1><u>(c)</u> <u>The
provisions of G.S. 160A-340.1, 160A-340.3, 160A-340.4, 160A-340.5, and
160A-340.6 do not apply to a city or joint agency providing communications
service as of January 1, 2011, provided the city or joint agency limits the
provision of communications service to any one or more of the following:</u></p>
<p class=aBlock1><u>(1)</u> <u>Persons
within the corporate limits of the city providing the communications service.
For the purposes of this subsection, corporate limits shall mean the corporate
limits of the city as of April 1, 2011, or as expanded through annexation.</u></p>
<p class=aBlock1><u>(2)</u> <u>Existing
customers of the communications service as of April 1, 2011. Service to a
customer outside the service area of the city or joint agency who is also a
public entity must comply with the open bidding procedures of
G.S. 143-129.8 upon the expiration or termination of the existing service
contract.</u></p>
<p class=aBlock1><u>(3)</u> <u>The
following service areas:</u></p>
<p class=aBlock2><u>a.</u> <u>For
the joint agency operated by the cities of Davidson and Mooresville, the
service area is the combined areas of the city of Cornelius; the town of
Troutman; the town of Huntersville; the unincorporated areas of Mecklenburg
County north of a line beginning at Highway 16 along the west boundary of the county,
extending eastward along Highway 16, continuing east along Interstate 485, and
continuing eastward to the eastern boundary of the county along Eastfield Road;
and the unincorporated areas of Iredell County south of Interstate 40,
excluding Statesville and the extraterritorial jurisdiction of Statesville.</u></p>
<p class=aBlock2><u>b.</u> <u>For
the city of Salisbury, the service area is the municipalities of Salisbury,
Spencer, East Spencer, Granite Quarry, Rockwell, Faith, Cleveland, China Grove,
Landis and the corridors between those cities. The service area also includes
the economic development sites, public safety facilities, governmental
facilities, and educational schools and colleges located outside the
municipalities and the corridors between the municipalities and these sites,
facilities, schools, and colleges. The corridors between Salisbury and these
municipalities and these sites, facilities, schools, and colleges includes only
the area necessary to provide service to these municipalities and these sites,
facilities, schools, and colleges and shall not be wider than 300 feet. The
elected bodies of Spencer, East Spencer, Granite Quarry, Rockwell, Faith,
Cleveland, China Grove, and Landis shall vote to approve the service extension
into each respective municipality before Salisbury can provide service to that
municipality. The Rowan County Board of County Commissioners shall vote to
approve service extension to any governmental economic development site,
governmental facility, school, or college owned by Rowan County. The Rowan
Salisbury School Board shall also vote to approve service extension to schools.
</u></p>
<p class=aBlock2><u>c.</u> <u>For
the city of Wilson, the service area is the county limits of Wilson County,
including the incorporated areas within the County.</u></p>
<p class=aBlock2><u>d.</u> <u>For
all other cities or joint agencies offering communications service,</u> <u>the
service area is the area designated in the map filed as part of the initial
notice of franchise with the Secretary of State as of January 1, 2011.</u></p>
<p class=aMargin1><u>(d)</u> <u>The
exemptions provided in this section do not exempt a city or joint agency from
laws and rules of general applicability to governmental services, including
nondiscriminatory obligations.</u></p>
<p class=aMargin1><u>(e)</u> <u>In
the event a city subject to the exemption set forth in subsection (c) of this
section provides communications service to a customer outside the limits set
forth in that subsection, the city shall have 30 days from the date of notice
or discovery to cease providing service to the customer without loss of the
exemption.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.3. Notice; public hearing.</u></p>
<p class=aMargin1><u>A city or joint agency that proposes to provide
communications service shall hold not fewer than two public hearings, which
shall be held not less than 30 days apart, for the purpose of gathering
information and comment. Notice of the hearings shall be published at least
once a week for four consecutive weeks in the predominant newspaper of general
circulation in the area in which the city is located. The notice shall also be
provided to the North Carolina Utilities Commission, which shall post the
notice on its Web site, and to all companies that have requested service of the
notices from the city clerk. The city shall deposit the notice in the U.S. mail
to companies that have requested notice at least 45 days prior to the hearing subject
to the notice. Private communications service providers shall be permitted to
participate fully in the public hearings by presenting testimony and
documentation relevant to their service offerings and the city's plans. Any
feasibility study, business plan, or public survey conducted or prepared by the
city in connection with the proposed communications service project is a public
record as defined by G.S. 132-1 and shall be made available to the public
prior to the public hearings required by this section. This section does not
apply to the repair, rebuilding, replacement, or improvement of an existing
communications network, or equipment relating thereto.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.4. Financing.</u></p>
<p class=aMargin1><u>(a)</u> <u>A
city or joint agency subject to the provisions of G.S. 160A-340.1 shall
not enter into a contract under G.S. 160A-19 or G.S. 160A-20 to
purchase or to finance the purchase of property for use in a communications
network or to finance the construction of fixtures or improvements for use in a
communications network unless it complies with subsection (b) of this section.
The provisions of this section shall not apply to the repair, rebuilding,
replacement, or improvement of an existing communications network, or equipment
relating thereto.</u></p>
<p class=aMargin1><u>(b)</u> <u>A
city shall not incur debt for the purpose of constructing a communications
system without first holding a special election under G.S. 163-287 on the
question of whether the city may provide communications service. If a majority
of the votes cast in the special election are for the city providing
communications service, the city may incur the debt for the service. If a
majority of the votes cast in the special election are against the city
providing communications service, the city shall not incur the debt. However,
nothing in this section shall prohibit a city from revising its plan to offer
communications service and calling another special election on the question
prior to providing or offering to provide the service. A special election
required under Chapter 159 of the General Statutes as a condition to the
issuance of bonds shall satisfy the requirements of this section.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.5. Taxes; payments in lieu of taxes.</u></p>
<p class=aMargin1><u>(a)</u> <u>A
communications network owned or operated by a city or joint agency shall be
exempt from property taxes. However, each city possessing an ownership share of
a communications network and a joint agency owning a communications network
shall, in lieu of property taxes, pay to any county authorized to levy property
taxes the amount which would be assessed as taxes on real and personal property
if the communications network were otherwise subject to valuation and
assessment. Any payments in lieu of taxes shall be due and shall bear interest,
if unpaid, as in the case of taxes on other property.</u></p>
<p class=aMargin1><u>(b)</u> <u>A
city-owned communications service provider shall pay to the State, on an annual
basis, an amount in lieu of taxes that would otherwise be due the State if the
communications service was provided by a private communications service
provider, including State income, franchise, vehicle, motor fuel, and other
similar taxes. The amount of the payment in lieu of taxes shall be set annually
by the Department of Revenue and shall approximate the taxes that would be due
if the communications service was undertaken by a private communications
service provider. A city-owned communications service provider must provide
information requested by the Secretary of Revenue necessary for calculation of
the assessment. The Department must inform each city-owned communications
service provider of the amount of the assessment by January 1 of each year. The
assessment is due by March 15 of each year. If the assessment is unpaid, the
State may withhold the amount due, including interest on late payments, from
distributions otherwise due the city under G.S. 105-164.44I.</u></p>
<p class=aMargin1><u>(c)</u> <u>A
city-owned communications service provider or a joint agency that provides
communications service shall not be eligible for a refund under
G.S. 105-164.14(c) for sales and use taxes paid on purchases of tangible
personal property and services related to the provision of communications
service, except to the extent a private communications service provider would
be exempt from taxation.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
160A-340.6. Public-private partnerships for communications service.</u></p>
<p class=aMargin1><u>(a)</u> <u>Prior
to undertaking to construct a communications network for the provision of
communications service, a city shall first solicit proposals from private
business in accordance with the procedures of this section.</u></p>
<p class=aMargin1><u>(b)</u> <u>The
city shall issue requests for proposals that specify the nature and scope of
the requested communications service, the area in which it is to be provided,
any specifications and performance standards, and information as to the city's
proposed participation in providing equipment, infrastructure, or other aspects
of the service. The city may prescribe the form and content of proposals and
may require that proposals contain sufficiently detailed information to allow
for an objective evaluation of proposals using the factors stated in subsection
(d) of this section. Each proposal shall at minimum contain all of the
following:</u></p>
<p class=aBlock1><u>(1)</u> <u>Information
regarding the proposer's experience and qualifications to perform the
requirements of the proposal.</u></p>
<p class=aBlock1><u>(2)</u> <u>Information
demonstrating the proposer's ability to secure financing needed to perform the
requirements of the proposal.</u></p>
<p class=aBlock1><u>(3)</u> <u>Information
demonstrating the proposer's ability to provide staffing, implement work tasks,
and carry out all other responsibilities necessary to perform the requirements
of the proposal.</u></p>
<p class=aBlock1><u>(4)</u> <u>Information
clearly identifying and specifying all elements of cost of the proposal for the
term of the proposed contract, including the cost of the purchase or lease of
equipment and supplies, design, installation, operation, management, and
maintenance of any system, and any proposed services.</u></p>
<p class=aBlock1><u>(5)</u> <u>Any
other information the city determines has a material bearing on its ability to
evaluate the proposal.</u></p>
<p class=aMargin1><u>(c)</u> <u>The
city shall provide notice that it is requesting proposals in accordance with
this subsection. The notice shall state the time and place where plans and
specifications for the proposed service may be obtained and the time and place
for opening proposals. Any notice given under this subsection shall reserve to
the city the right to reject any or all proposals. Notice of request for
proposals shall be given by all of the following methods:</u></p>
<p class=aBlock1><u>(1)</u> <u>By
mailing a notice of request for proposals to each firm that has obtained a
license or permit to use the public rights-of-way in the city to provide a
communications service within the city by depositing such notices in the U.S.
mail at least 30 days prior to the date specified for the opening of proposals.
In identifying firms, the city may rely upon lists provided by the Office of
the Secretary of State and the North Carolina Utilities Commission.</u></p>
<p class=aBlock1><u>(2)</u> <u>By
posting a notice of request for proposals on the city's Web site at least 30 days
before the time specified for the opening of proposals.</u></p>
<p class=aBlock1><u>(3)</u> <u>By
publishing a notice of request for proposals in a newspaper of general
circulation in the county in which the city is predominantly located at least
30 days before the time specified for the opening of proposals.</u></p>
<p class=aMargin1><u>(d)</u> <u>In
evaluating proposals, the city may consider any relevant factors, including
system design, system reliability, operational experience, operational costs,
compatibility with existing systems and equipment, and emerging technology. The
city may negotiate aspects of any proposal with any responsible proposer with
regard to these factors to determine which proposal is the most responsive. A
determination of most responsive proposer by the city shall be final.</u></p>
<p class=aMargin1><u>(e)</u> <u>The
city may negotiate a contract with the most responsive proposer for the
performance of communications service specified in the request for proposals.
All contracts entered into pursuant to this section shall be approved and
awarded by the governing body of the city.</u></p>
<p class=aMargin1><u>(f)</u> <u>If
the city is unable to successfully negotiate the terms of a contract with the
most responsive proposer within 60 days of the opening of the proposals, the
city may proceed to negotiate with the firm determined to be the next most
responsive proposer if such a proposer exists. If the city is unable to
successfully negotiate the terms of a contract with the next most responsive
proposer within 60 days, it may proceed under this Article to provide
communications service.</u></p>
<p class=aMargin1><u>(g)</u> <u>All
proposals shall be sealed and shall be opened in public. Provided, that trade
secrets shall remain confidential as provided under G.S. 132-1.2.</u>"</p>
<p class=aBillSection><b>SECTION 1.(b) </b>G.S. 105-164.14
is amended by adding a new subsection to read:</p>
<p class=aMargin1>"<u>(d2)</u> <u>A city subject to the
provisions of G.S. 160A-340.5 is not allowed a refund of sales and use
taxes paid by it under this Article for purchases related to the provision of
communications service as defined in Article 16A of Chapter 160A of the General
Statutes.</u>"</p>
<p class=aBillSection><b>SECTION 1.(c)</b> Subsection (b) of this section
is effective when it becomes law and applies to sales made on or after that
date.</p>
<p class=aBillSection><b>SECTION 2.(a)</b> G.S. 62-3(23) is amended
by adding the following new sub-subdivision to read:</p>
<p class=aBlock2>"<u>l.</u>
<u>The term "public utility" shall include a city or a joint agency<b>
</b>under Part 1 of Article 20 of Chapter 160A of the General Statutes that
provides service as defined in G.S. 62-3(23)a.6. and is subject to the
provisions of G.S. 160A-340.1.</u>"</p>
<p class=aBillSection><b>SECTION 2.(b)</b> This section shall not be
construed to change the regulatory nature of or requirements applicable to any
particular service currently regulated by the Commission under Chapter 62 of
the General Statutes.</p>
<p class=aBillSection><b>SECTION 3.</b> Subchapter IV of Chapter 159 of
the General Statutes is amended by adding a new Article to read as follows:</p>
<p class=aArticle>"<u>Article 9A.</u></p>
<p class=aArticleTitle>"<u>Borrowing by Cities for Competitive Purposes.</u></p>
<p class=aSection><span style='font-weight:normal'>"</span><u>§
159-175.10. Additional requirements for review of city financing
application; communications service.</u></p>
<p class=aMargin1><u>The Commission shall apply additional requirements to an
application for financing by a city or a joint agency under Part 1 of Article
20 of Chapter 160A of the General Statutes for the construction, operation,
expansion, or repair of a communications system or other infrastructure for the
purpose of offering communications service, as that term is defined in
G.S. 160A-340(2), that is or will be competitive with communications
service offered by a private communications service provider. This section does
not apply to the repair, rebuilding, replacement, or improvement of an existing
communications network, or equipment relating thereto, but does apply to the
expansion of such existing network. The additional requirements are the
following:</u></p>
<p class=aBlock1><u>(1)</u> <u>Prior
to submitting an application to the Commission, a city or joint agency shall
comply with the provisions of G.S. 160A-340.3 requiring at least two
public hearings on the proposed communications service project and notice
of the hearings to private communications service providers who have requested
notice.</u></p>
<p class=aBlock1><u>(2)</u> <u>At the
same time the application is submitted to the Commission, the city or joint
agency shall serve a copy of the application on each person that provides
competitive communications service within the city's jurisdictional boundaries
or in areas adjacent to the city. No hearing on the application shall be heard
by the Commission until at least 60 days after the application is submitted to
the Commission.</u></p>
<p class=aBlock1><u>(3)</u> <u>Upon
the request of a communications service provider, the Commission shall accept
written and oral comments from competitive private communications service
providers in connection with any hearing or other review of the application.</u></p>
<p class=aBlock1><u>(4)</u> <u>In
considering the probable net revenues of the proposed communications service
project, the Commission shall consider and make written findings on the
reasonableness of the city or joint agency's revenue projections in light of
the current and projected competitive environment for the services to be
provided, taking into consideration the potential impact of technological
innovation and change on the proposed service offerings and the level of
demonstrated community support for the project.</u></p>
<p class=aBlock1><u>(5)</u> <u>The
city or joint agency making the application to the Commission shall bear the
burden of persuasion with respect to subdivisions (1) through (4) of this
section.</u>"</p>
<p class=aBillSection><b>SECTION 4.</b> G.S. 159-81(3) is amended by
adding a new sub-subdivision to read:</p>
<p class=aBlock2>"<u>q.</u> <u>Cable
television systems.</u>"</p>
<p class=aBillSection><b>SECTION 5.</b> Sections 2, 3, and 4 of this act do
not apply to a city or joint agency providing communications service as of
January 1, 2011, provided the city or joint agency limits the provision of
communications service as provided in G.S. 160A-340.2(c). In the
event a city subject to the exemption set forth in this section provides
communications service to a customer outside the limits set forth in
G.S. 160A-340(c), the city shall have 30 days from the date of notice or
discovery to cease providing service to the customer without loss of the exemption.</p>
<p class=aBillSection><b>SECTION 6.</b> Any city that is designated as a
public utility under Chapter 62 of the General Statutes when this act becomes
law shall not be subject to the provisions of this act with respect to any of
its operations that are authorized by that Chapter.</p>
<p class=aBillSection><b>SECTION 7.</b> If any provision of this act or
the application thereof to any person or circumstance is held invalid, the
invalidity shall not affect other provisions or applications of this act which
can be given effect without the invalid provision or application, and to that
end the provisions of this act are declared to be severable.</p>
<p class=aBillSection><b>SECTION 8.</b> Except as otherwise provided,
this act is effective when it becomes law and applies to the provision of
communications service by a city or joint agency under Part 1 of Article 20 of
Chapter 160A of the General Statutes on and after that date.</p>
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