H 952

GENERAL ASSEMBLY OF NORTH CAROLINA
  SESSION 2025
 H  1
  HOUSE BILL 952
 Short Title:   Comprehensive Capital for Childcare Expansion.  (Public)
 Sponsors:      Representatives Helfrich, Crawford, Turner, and Rubin (Primary Sponsors).
  For a complete list of sponsors, refer to the North Carolina General Assembly web site.
 Referred to:   Rules, Calendar, and Operations of the House
  April 14, 2025
1A BILL TO BE ENTITLED
2 AN ACT TO ESTABLISH THE NORTH CAROLINA CHILD CARE FINANCE AGENCY.
3 The General Assembly of North Carolina enacts:
4SECTION 1.(a) The General Statutes are amended by adding a new Chapter to read:
5"Chapter 122F.
6"North Carolina Child Care Finance Agency.
7 "§ 122F-1. Short title.
8     This Chapter shall be known and may be cited as the "North Carolina Child Care Finance
9 Agency Act."
10 "§ 122F-2. Legislative findings and purposes.
11     (a)    The General Assembly hereby finds and declares the following:
12(1)     That there exists in the State of North Carolina a serious shortage of accessible
13and affordable child care. This statewide shortage severely impacts the State's
14workforce and economy and is inimical to the health, safety, welfare and
15prosperity of all residents of the State and to the sound growth of North
16Carolina's economy.
17(2)     That private enterprise and investment have not been able to produce, without
18assistance, the needed supply or rehabilitation of child care facilities to
19provide sufficient child care for the State's workforce, including low-income
20families. It is imperative that the supply of child care for families be increased;
21and that private enterprise and investment be encouraged to sponsor, build,
22rehabilitate, and operate child care for families to remove barriers to
23employment and to foster health development for children.
24(3)     That the purposes of this Chapter are to provide financing for child care
25construction, new or rehabilitated, for individuals providing high-quality child
26care to families.
27(4)     That faith-based organizations are eligible for financing for child care
28construction that provides high-quality child care.
29(5)     That businesses that make child care accessible to the their employees are
30eligible for financing for child care construction that provides high-quality
31child care.
32     (b)    In accomplishing these public purposes, the North Carolina Child Care Finance
33 Agency, a public agency and an instrumentality of the State, is acting in all respects for the benefit
34 of the people of the State in the performance of essential public functions and serves a public
35 purpose in improving and otherwise promoting their health, welfare and prosperity. The North
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1 Carolina Child Care Finance Agency is empowered to act on behalf of the State of North Carolina
2 and its people in serving this public purpose for the benefit of the general public.
3     (c)    Whenever feasible, the North Carolina Child Care Finance Agency shall prioritize the
4 following policy goals in its actions:
5(1)      Give first priority in its programs to assisting child care providers with fewer
6than 10 facilities.
7(2)      Undertake its programs in the areas where the greatest child care needs exists.
8(3)      Give priority to projects for child care facilities with licenses that indicate
9high-quality child care, as determined by the North Carolina Child Care
10Commission.
11(4)      Incentivize child-care providers, including faith-based organizations, to
12provide full-day child care.
13(5)      Encourage private employers to provide on-site child care to employees, and
14provide advising on information for research-based solutions, including
15methods and guides to financing facilities and child care providers as partners.
16(6)      Encourage apprenticeships with community colleges and other institutions of
17higher education for child care workers.
18 "§ 122F-3. Definitions.
19     The following definitions apply in this Chapter:
20(1)      Agency. – The North Carolina Child Care Finance Agency created by this
21Chapter.
22(2)      Bonds or notes. – The bonds or the bond anticipation notes or construction
23loan notes authorized to be issued by the Agency under this Chapter.
24(3)      Child care facility. – As defined in G.S. 110-86. For the purposes of this
25chapter, a child care facility does not include a residential dwelling where
26child care is provided.
27(4)      Construction loan. – A loan made by a lending institution or by the Authority
28to any person for the purpose of financing construction of a child care facility.
29(5)      Federally insured securities. – An evidence of indebtedness secured by a first
30mortgage lien on child care centers and insured or guaranteed as to repayment
31of principal and interest by the United States or any agency or instrumentality
32thereof.
33(6)      Governmental agency. – Any department, division, public agency, political
34subdivision, or other public instrumentality of the State, the federal
35government, any other State or public agency, or any two or more thereof.
36(7)      Mortgage or mortgage loan. – A mortgage loan for child care facilities,
37including, without limitation, a mortgage loan to finance, either temporarily
38or permanently, the construction, rehabilitation, improvement, or acquisition
39and rehabilitation or improvement of a child care facility and a mortgage loan
40insured or guaranteed by the United States or an instrumentality thereof or for
41which there is a commitment by the United States or an instrumentality thereof
42to insure such a mortgage. A mortgage obligation may be evidenced by a
43security document and secured by a lien upon real property, including a deed
44of trust and land sale agreement.
45(8)      Mortgage lenders. – Any bank or trust company, savings bank, national
46banking association, savings and loan association, or building and loan
47association, life insurance company, mortgage banking company, the federal
48government, and any other financial institution authorized to transact business
49in the State.
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1(9)     Mortgagee. – The owner of a beneficial interest in a mortgage loan, the
2servicer for the owner of a beneficial interest in a mortgage loan, or the trustee
3for a securitized trust that holds title to a beneficial interest in a mortgage loan.
4(10) Obligations. – Any bonds or bond anticipation notes authorized to be issued
5by the Agency under the provisions of this Chapter.
6(11) Rehabilitation. – The renovation or improvement of a child care facility by the
7owner or operator of that facility.
8(12) Rehabilitation loan. – A loan made by a lending institution or by the Authority
9to any person for the purpose of financing renovation of a child care facility.
10(13) State. – The State of North Carolina.
11 "§ 122F-4. North Carolina Child Care Finance Agency.
12     (a)     There is hereby created a body politic and corporate to be known as "North Carolina
13 Child Care Finance Agency" which shall be constituted a public agency and an instrumentality
14 of the State for the performance of essential public functions.
15     (b)     The Agency shall be governed by a board of directors composed of 12 members for
16 a term of four years beginning July 1. The directors of the Agency shall be residents of the State
17 and shall not hold other public office.
18     (c)     The Agency shall be appointed as follows:
19(1)     Six members appointed by the Governor as follows:
20a.      One member with experience in workforce needs.
21b.      One member with experience as a licensed child care provider.
22c.      One member with experience as a specialist in child care licensure.
23d.      One member with experience in construction of child care facilities.
24e.      One member with experience in commercial small business lending.
25f.      One member with experience in real estate development.
26(2)     Three members appointed by the General Assembly upon the
27recommendation of the President Pro Tempore of the Senate as follows:
28a.      One member with experience with a savings and loan institution.
29b.      One member with experience as a licensed child care provider.
30c.      One member with experience in construction lending.
31(3)     Three members appointed by the General Assembly upon the
32recommendation of the Speaker of the House of Representatives as follows:
33a.      One member with experience with a mortgage-servicing institution.
34b.      One member with experience as a licensed child care provider.
35c.      One member with experience in a business that makes on-site child
36care available to employees.
37     (d)     Any vacancy for a person appointed under subdivision (1) of section (c) of this section
38 shall be filled by appointment of the Governor for the remainder of the unexpired term. Any
39 appointment by the General Assembly shall be made in accordance with G.S. 120-121 and
40 vacancies in those appointments shall be filled in accordance with G.S. 120-122.
41     (e)     Any member of the board of directors shall be eligible for reappointment. Each
42 member of the board of directors may be removed by the Governor for misfeasance, malfeasance,
43 or neglect of duty after reasonable notice and a public hearing, unless the same are in writing
44 expressly waived. Each member of the board of directors before entering upon the duties shall
45 take an oath of office to administer the duties of the office faithfully and impartially, and a record
46 of such oath shall be filed in the office of the Secretary of State.
47     (f)     The Governor shall designate from among the members of the Board a chair and a
48 vice-chair. The terms of the chair and vice-chair shall extend to the earlier of either two years or
49 the date of expiration of their then current terms as members of the Board of Directors of the
50 Agency. The Agency shall exercise all of its prescribed statutory powers independently of any
51 principal State Department except as described in this Chapter.
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1     (g)     The Executive Director of the Agency shall be appointed by the Board of Directors,
2 subject to approval by the Governor. All staff and employees of the Agency shall be appointed
3 by the Executive Director, subject to approval by the Board of Directors; shall be eligible for
4 participation in the State Employees' Retirement System; and shall be exempt from the provisions
5 of the North Carolina Human Resources Act. All employees other than the Executive Director
6 shall be compensated in accordance with the salary schedules adopted pursuant to the North
7 Carolina Human Resources Act. The salary of the Executive Director shall be fixed by the Board
8 of Directors. The salary of the Executive Director and all staff and employees of the Agency shall
9 not be subject to any limitations imposed pursuant to any salary schedule adopted pursuant to the
10 terms of the North Carolina Human Resources Act. The Board of Directors shall, subject to the
11 approval of the Governor, elect and prescribe the duties of any other officers it finds necessary
12 or advisable, and the Board of Directors shall fix the compensation of these officers.
13     (h)     The books and records of the Agency shall be maintained by the Agency and shall be
14 subject to periodic review and audit by the State.
15     (i)     No part of the revenues or assets of the Agency shall inure to the benefit of or be
16 distributable to its members or officers or other private persons. The members of the Agency
17 shall receive no compensation for their services but shall be entitled to receive, from funds of the
18 Agency, for attendance at meetings of the Agency or any committee thereof and for other services
19 for the Agency reimbursement for such actual expenses as may be incurred for travel and
20 subsistence in the performance of official duties and such per diem as is allowed by law for
21 members of other State boards, commissions and committees.
22     (j)     The Executive Director shall administer, manage and direct the affairs and business
23 of the Agency, subject to the policies, control and direction of the members of the Agency Board
24 of Directors. The Secretary of the Agency shall keep a record of the proceedings of the Agency
25 and shall be custodian of all books, documents and papers filed with the Agency, the minute book
26 or journal of the Agency and its official seal. The Secretary may have copies made of all minutes
27 and other records and documents of the Agency and may give certificates under the official seal
28 of the Agency to the effect that such copies are true copies, and all persons dealing with the
29 Agency may rely upon such certificates.
30     (k)     Seven members of the Board of Directors of the Agency shall constitute a quorum
31 and the affirmative vote of a majority of the members present at a meeting of the Board of
32 Directors duly called and held shall be necessary for any action taken by the Board of Directors
33 of the Agency, except adjournment; provided, however, that the Board of Directors may appoint
34 an executive committee to act in behalf of said Board during the period between regular meetings
35 of said Board, and said committee shall have full power to act upon the vote of a majority of its
36 members. No vacancy in the membership of the Agency shall impair the rights of a quorum to
37 exercise all the rights and to perform all the duties of the Agency.
38 "§ 122F-5. General powers.
39     The Agency shall have all of the powers necessary or convenient to carry out the provisions
40 of this Chapter, including the power:
41(1)     To make or participate in the making of mortgage loans, construction loans,
42and rehabilitation loans to licensed child care providers for rehabilitation and
43construction; provided, however, that such loans shall be made only upon the
44determination by the Agency that mortgage loans, construction loans, and
45rehabilitation loans are not otherwise available wholly or in part from private
46lenders upon reasonably equivalent terms and conditions.
47(2)     To collect and pay reasonable fees and charges in connection with making,
48purchasing and servicing its loans, notes, bonds, commitments and other
49evidences of indebtedness.
50(3)     To acquire on a temporary basis real property, or an interest therein, in its own
51name, by purchase, transfer or foreclosure, where such acquisition is
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1necessary or appropriate to protect any loan in which the Agency has an
2interest and to sell, transfer and convey any such property to a buyer and, in
3the event such sale, transfer or conveyance cannot be effected with reasonable
4promptness or at a reasonable price, to rent or lease such property to a tenant
5pending such sale, transfer or conveyance.
6(4)    To sell, at public or private sale, all or any part of any mortgage or other
7instrument or document securing a loan of any type permitted by this Chapter.
8(5)    To procure insurance against any loss in connection with its operations in such
9amounts, and from such insurers, as it may deem necessary or desirable.
10(6)    To consent, whenever it deems it necessary or desirable in the fulfillment of
11its corporate purposes, to the modification of the rate of interest, time of
12payment of any installment of principal or interest, or any other terms, of any
13mortgage loan, mortgage loan commitment, construction loan, rehabilitation
14loan, contract or agreement of any kind to which the Agency is a party.
15(7)    To borrow money as herein provided to carry out and effectuate its corporate
16purposes and to issue its obligation as evidence of any such borrowing.
17(8)    To include in any borrowing such amounts as may be deemed necessary by
18the Agency to pay financing charges, interest on the obligations for a period
19not exceeding two years from their date, consultant, advisory and legal fees
20and such other expenses as are necessary or incident to such borrowing.
21(9)    To make and publish rules and regulations respecting its lending programs
22and such other rules and regulations as are necessary to effectuate its corporate
23purposes.
24(10)   To provide technical and advisory services to sponsors, builders and
25developers of child care facilities.
26(11)   To promote research and development in scientific methods of constructing
27low-cost child care facilities of high durability and improved safety and utility.
28(12)   To service or contract for the servicing of mortgage loans, construction loans,
29and rehabilitation loans, and to make and execute agreements, contracts and
30other instruments necessary or convenient in the exercise of the powers and
31functions of the Agency under this Chapter, including contracts with any
32person, firm, corporation, governmental agency or other entity, and each and
33any North Carolina governmental agency is hereby authorized to enter into
34contracts and otherwise cooperate with the Agency to facilitate the purposes
35of this Chapter.
36(13)   To receive, administer and comply with the conditions and requirements
37respecting any appropriation or any gift, grant or donation of any property or
38money, including the proceeds of general obligation bonds of the State.
39(14)   To sue and be sued in its own name, plead and be impleaded.
40(15)   To establish and maintain an office for the transaction of its business in the
41City of Raleigh and at such place or places as the board of directors deems
42advisable or necessary in carrying out the purposes of this Chapter.
43(16)   To adopt an official seal and alter the same at pleasure.
44(17)   To adopt bylaws for the regulation of its affairs and the conduct of its business
45and to prescribe rules, regulations and policies in connection with the
46performance of its functions and duties.
47(18)   To employ fiscal consultants, engineers, attorneys, real estate counselors,
48appraisers and such other consultants and employees as may be required in
49the judgment of the Agency and to fix and pay their compensation from funds
50available to the Agency therefor.
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1(19)     To purchase or to participate in the purchase and enter into commitments by
2itself or together with others for the purchase of federally insured securities;
3provided, however, that the Agency shall first determine that the proceeds of
4such securities will be utilized for the purpose of making new mortgage loans
5to licensed child care providers, all as specified in regulations to be adopted
6by the Agency.
7(20) To advise the Governor regarding the coordination of child care facilities.
8(21) To acquire, hold, rent, encumber, transfer, convey, and otherwise deal with
9real property and utilities in the same manner as a private person or
10corporation, subject only to the approval of the Governor and Council of State.
11The Board of Directors may pledge or encumber income and assets of the
12Agency to secure financing for real property.
13(22) To select and retain, subject to the approval of the Local Government
14Commission, the financial consultants, underwriters, and bond attorneys to be
15associated with the issuance of any bonds and to pay for services rendered by
16underwriters, financial consultants, or bond attorneys out of the proceeds of
17any such issue with regard to which the services were performed.
18 "§ 122F-6. Rules and regulations governing Agency activity.
19     (a)      The Agency shall from time to time adopt, modify or repeal rules and regulations
20 governing the purchase of federally insured securities by the Agency and the purchase and sale
21 of mortgage loans, construction loans, and rehabilitation loans and the application of the proceeds
22 thereof, including rules and regulations as to any or all of the following:
23(1)     Procedures for the submission of requests or the invitation of proposals for the
24purchase and sale of mortgage loans, construction loans, rehabilitation loans,
25or for the purchase of federally insured securities.
26(2)     Limitations or restrictions as to the number, location, or other qualifications
27or characteristics of child care facilities to be financed by mortgage loans,
28construction loans, and rehabilitation loans.
29(3)     Restrictions as to the interest rates on mortgage loans, construction loans, and
30rehabilitation loans or the return which may be realized by lenders on any
31mortgage loans, construction loans, and rehabilitation loans, or on the sale of
32federally insured securities to the Agency.
33(4)     Requirements as to commitments by lenders with respect to the use of the
34proceeds of sale of any federally insured securities.
35(5)     Schedules of any fees and charges necessary to provide for expenses and
36reserves of the Agency.
37(6)     Any other matters related to the duties and the exercise of the powers of the
38Agency to purchase and sell mortgage loans, construction loans, and
39rehabilitation loans or to purchase federally insured securities.
40     Such rules and regulations shall be designed to effectuate the general purposes of this Chapter
41 and the following specific objectives: (i) the construction of decent, safe and sanitary full day
42 child care facilities; (ii) the rehabilitation of present child care facilities; (iii) increasing the supply
43 and access to affordable child care for all families, regardless of income level; (iv) the
44 encouraging of private enterprise and investment to sponsor, build and rehabilitate child care
45 facilities; and (v) the restriction of the financial return and benefit to that necessary to protect
46 against the realization by lenders of an excessive financial return or benefit as determined by
47 prevailing market conditions.
48     (b)      The interest rate or rates and other terms of federally insured securities or mortgage
49 loans, construction loans, and rehabilitation loans purchased from the proceeds of any issue of
50 bonds of the Agency shall be at least sufficient to assure the payment of said bonds and the
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1 interest thereon as the same become due from the amounts received by the Agency in repayment
2 of such federally insured securities or such loans and interest thereon.
3     (c)     The Agency shall provide that mortgage loans, construction loans, and rehabilitation
4 loans are forgivable in full after 15 years if the licensed child care provider (i) serves at least
5 twenty-five percent (25%) more children than when the loan was received, and (ii) at least fifty
6 percent (50%) of the children served by the child care facility receive a child care subsidy.
7     (d)     The Agency shall require as a condition of the purchase of federally insured securities
8 from a mortgage lender and the purchase or the making of a commitment to purchase mortgage
9 loans from a mortgage lender where the Agency has not given its approval prior to the initial
10 making of the mortgage loan that such mortgage lender shall on or prior to the
11 one-hundred-eightieth day (or such earlier day as may be prescribed by rules and regulations of
12 the Agency) following the receipt of the sale proceeds have entered into written commitments to
13 make, and shall thereafter proceed as promptly as practicable to make from such sale proceeds,
14 new mortgage loans with respect to child care facilities in the State having a stated maturity of
15 not less than 20 years from the date thereof in an aggregate principal amount equal to the amount
16 of such sale proceeds. The Agency shall not purchase nor make commitment to purchase
17 mortgage loans, federally insured securities or other obligations from a mortgage lender from
18 which it has previously purchased federally insured securities or mortgage loans initially made
19 without such prior approval unless said mortgage lender has either made or entered into written
20 commitments to make such new mortgage loans.
21 "§ 122F-7. Mortgage insurance authority.
22     (a)     The Agency may upon application of a proposed mortgagee insure and make advance
23 commitments to insure payments required by a loan for child care facilities upon such terms and
24 conditions as the Agency may prescribe. Mortgage loans insured by the Agency under this
25 Chapter may provide financing for related ancillary facilities to the extent permitted by applicable
26 Agency regulations. Mortgage loans insured by the Agency under this Chapter shall be secured
27 by a first mortgage.
28     The aggregate principal amount of all mortgages so insured by the Agency under this Chapter
29 and outstanding at any one time shall not exceed 10 times the average annual balance for the
30 preceding calendar year of funds on deposit in the child care mortgage insurance fund, the
31 creation of which is hereby authorized. The aggregate amount of principal obligations of all
32 mortgages so insured shall not be deemed to constitute a debt, liability or obligation of the State
33 or of any political subdivision thereof or a pledge of the faith and credit of the State or of any
34 such political subdivision, but shall be payable solely from moneys on deposit to the credit of the
35 child care mortgage insurance fund. Any contract of insurance executed by the Agency under
36 this section shall be conclusive evidence of eligibility for such mortgage insurance and the
37 validity of any contract of insurance so executed or of an advance commitment to issue such shall
38 be incontestable in the hands of a mortgagee from the date of execution of such contract or
39 commitment, except for fraud or misrepresentation on the part of such mortgagee and, as to
40 commitments to insure, noncompliance with the terms of the advance commitment or Agency
41 regulations in force at the time of issuance of the advance commitment.
42     (b)     For mortgage payments to be eligible for insurance under the provisions of this
43 Chapter, the underlying mortgage loan shall:
44(1)     Be one which is made and held by a mortgagee approved by the Agency as
45responsible and able to service the mortgage properly.
46(2)     Not exceed ninety percent (90%) of the estimated cost of the proposed child
47care facility.
48(3)     Have a maturity satisfactory to the Agency but in no case longer than eighty
49percent (80%) of the Agency's estimate of the remaining useful life of said
50child care facility or 40 years from the date of the issuance of insurance,
51whichever is earlier.
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1(4)       Contain amortization provisions satisfactory to the Agency requiring periodic
2payments by the mortgagor not in excess of the ability to pay as determined
3by the Agency.
4(5)      Be in such form and contain such terms and provisions with respect to
5maturity, property insurance, repairs, alterations, payment of taxes and
6assessments, default reserves, delinquency charges, default remedies,
7anticipation of maturity, additional and secondary liens, equitable and legal
8redemption rights, prepayment privileges and other matters as the Agency
9may prescribe.
10     (c)     All applications for mortgage insurance shall be forwarded, together with an
11 application fee prescribed by the Agency, to the executive director of the Agency. The Agency
12 shall cause an investigation of the proposed project to be made, review the application and the
13 report of the investigation, and approve or deny the application. No application shall be approved
14 unless the Agency finds that it is consistent with the purposes of this Chapter and further finds
15 that the financing plan for the proposed project is sound. The Agency shall notify the applicant
16 and the proposed lender of its decision. Any such approval shall be conditioned upon payment
17 to the Agency, within such reasonable time and after notification of approval as may be specified
18 by the Agency, of the commitment fee prescribed by the Agency.
19     (d)     The Agency shall fix mortgage insurance premiums for the insurance of mortgage
20 payments under the provision of this Chapter. Such premiums shall be computed as a percentage
21 of the principal of the mortgage outstanding at the beginning of each mortgage year, but shall not
22 be more than one half of one percent (1/2 of 1%) per year of such principal amount. The amount
23 of premium need not be uniform for all insured loans. Such premiums shall be payable by
24 mortgagors or mortgagees in such manner as prescribed by the Agency.
25     (e)     In the event of default by the mortgagor, the mortgagee shall notify the Agency both
26 of the default and the mortgagee's proposed course of action. When it appears feasible, the
27 Agency may for a temporary period upon default or threatened default by the mortgagor authorize
28 mortgage payments to be made by the Agency to the mortgagee which payments shall be repaid
29 under such conditions as the Agency may prescribe. The Agency may also agree to revised terms
30 of financing when such appear prudent. The mortgagee shall be entitled to receive the benefits
31 of the insurance provided herein upon:
32(1)      Any sale of the mortgaged property by court order in foreclosure or a sale with
33the consent of the Agency by the mortgagor or a subsequent owner of the
34property or by the mortgagee after foreclosure or acquisition by deed in lieu
35of foreclosure, provided all claims of the mortgagee against the mortgagor or
36others arising from the mortgage, foreclosure, or any deficiency judgment
37shall be assigned to the Agency without recourse except such claims as may
38have been released with the consent of the Agency; or
39(2)      The expiration of six months after the mortgagee has taken title to the
40mortgaged property under judgment of strict foreclosure, foreclosure by sale
41or other judicial sale, or under a deed in lieu of foreclosure if during such
42period the mortgagee has made a bona fide attempt to sell the property, and
43thereafter conveys the property to the Agency with an assignment, without
44recourse, to the Agency of all claims of the mortgagee against the mortgagor
45or others arising out of the mortgage foreclosure, or deficiency judgment; or
46(3)      The acceptance by the Agency of title to the property or an assignment of the
47mortgage, without recourse to the Agency, in the event the Agency determines
48it imprudent to proceed under subdivision (1) or (2) above.
49     Upon the occurrence of either subdivision (1), (2) or (3) hereof, the obligation of the
50 mortgagee to pay premium charges for insurance shall cease, and the Agency shall, within 30
51 days thereafter, pay to the mortgagee ninety-eight percent (98%) of the sum of (i) the then unpaid
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1 principal balance of the insured indebtedness, (ii) the unpaid interest to the date of conveyance
2 or assignment to the Agency, as the case may be, (iii) the amount of all payments made by the
3 mortgagee for which it has not been reimbursed for taxes, insurance, assessments and mortgage
4 insurance premiums, and (iv) such other necessary fees, costs or expenses of the mortgagee as
5 may be approved by the Agency.
6      (f)     Upon request of the mortgagee, the Agency may at any time, under such terms and
7 conditions as it may prescribe, consent to the release of the mortgagor from the mortgagor's
8 liability or consent to the release of parts of the property from the lien of the mortgage, or approve
9 a substitute mortgagor or sale of the property or part thereof.
10      (g)     No claim for the benefit of the insurance provided in this Chapter shall be accepted
11 by the Agency except within one year after any sale or acquisition of title of the mortgaged
12 premises described in subdivisions (1) or (2) of subsection (e) of this section.
13      (h)     There shall be paid into the child care mortgage insurance fund (i) all premiums
14 received by the Agency for the granting of such mortgage insurance, (ii) any moneys or other
15 assets received by the Agency as a result of default or delinquency on mortgage loans insured by
16 the Agency, including any proceeds from the sale or lease of real property, (iii) any moneys
17 appropriated and made available by the State for the purpose of such fund.
18 "§ 122F-8. Terms and conditions of loans to and by lenders.
19      (a)     The Agency shall from time to time adopt, modify, amend or repeal rules and
20 regulations governing the making of loans to lenders and the application of the proceeds thereof.
21 These rules and regulations shall be designed to effectuate the general purposes of this Chapter
22 and the following specific objectives: (i) the construction and renovation of decent, safe and
23 sanitary child care facilities; (ii) the encouragement of private enterprise and investment to
24 sponsor, build and renovate child care facilities; (iii) the increase in the supply and access to
25 affordable child care for all families, regardless of income level; and (iv) the restriction of the
26 financial return and benefit to the mortgage lenders from such loans to an amount that is
27 necessary to induce their participation and that is not excessive as determined by prevailing
28 market conditions.
29      (b)     Notwithstanding any other provision of this section, the interest rate or rates and other
30 terms of the loans to lenders made from the proceeds of any issue of bonds of the Agency shall
31 provide that the amounts received by the Agency in repayment of the loans and interest thereon
32 shall be at least sufficient to assure the payment of the principal of and the interest on the bonds
33 as they become due.
34      (c)     The Agency shall enter into a written agreement with each lender that shall require as
35 a condition of each loan to such lender that the lender shall originate new mortgage loans,
36 construction loans, and rehabilitation loans within a reasonable period of time as determined by
37 the Agency's rules and regulations and that such new loans shall have such stated maturities as
38 determined by the Agency's rules and regulations.
39      (d)     The loans to lenders shall be general obligations of the respective lenders owing them.
40 The Agency shall require that such loans shall be secured as to payment of both principal and
41 interest by a pledge and lien upon collateral security. The collateral security itself shall be in such
42 amount as the Agency determines will assure the payment of the principal of and the interest on
43 the bonds as they become due. Collateral security shall be deemed to be sufficient if the principal
44 of and the interest on the collateral security, when due, will be sufficient to pay the principal of
45 and the interest on the bonds. The collateral security shall consist of any of the following items:
46 (i) direct obligations of, or obligations guaranteed by, the State or the United States of America;
47 (ii) bonds, debentures, notes or other evidences of indebtedness, satisfactory to the Agency,
48 issued by any of the following federal agencies: Bank for Cooperatives, Federal Intermediate
49 Credit Bank, Export-Import Bank of Washington, Federal Land Banks, the Government National
50 Mortgage Association; (iii) direct obligations of or obligations guaranteed by the State; (iv)
51 mortgages insured or guaranteed by the United States of America or an instrumentality of it as
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1 to payment of principal and interest; (v) any other mortgages secured by real estate on which
2 there is located a commercial structure, the collateral value of which shall be determined by the
3 regulations issued from time to time by the Agency; (vii) certificates of deposit of banks or trust
4 companies, including the trustee, organized under the laws of the United States or any state,
5 which have a combined capital and surplus of at least fifteen million dollars ($15,000,000); (viii)
6 Bankers Acceptances; and (ix) commercial paper that has been classified for rating purposes by
7 Dun & Bradstreet, Inc., as Prime-1 or by Standard & Poor's Corp. as A-1.
8      (e)     The Agency may require as a condition of any loan to a lender such representations
9 and warranties that it determines to be necessary to secure such loans and to carry out the
10 purposes of this section.
11 "§ 122F-9. Credit of State not pledged.
12      Obligations issued under the provisions of this Chapter shall not be deemed to constitute a
13 debt, liability or obligation of the State or of any political subdivision thereof or a pledge of the
14 faith and credit of the State or of any such political subdivision, but shall be payable solely from
15 the revenues or assets of the Agency. Each obligation issued under this Chapter shall contain on
16 the face thereof a statement to the effect that the Agency shall not be obligated to pay the same
17 nor the interest thereon except from the revenues or assets pledged therefor and that neither the
18 faith and credit nor the taxing power of the State or of any political subdivision thereof is pledged
19 to the payment of the principal of or the interest on such obligation.
20      Expenses incurred by the Agency in carrying out the provisions of this Chapter may be made
21 payable from funds provided pursuant to this Chapter and no liability shall be incurred by the
22 Agency hereunder beyond the extent to which moneys shall have been so provided.
23 "§ 122F-10. Bonds and notes.
24      The Agency is hereby authorized to provide for the issuance, at one time or from time to time,
25 of bonds and notes of the Agency to carry out and effectuate its corporate purposes. The Agency
26 also is hereby authorized to provide for the issuance, at one time or from time to time of (i) bond
27 anticipation notes in anticipation of the issuance of such bonds and (ii) construction loan notes
28 to finance the making or purchase of mortgage loans, construction loans, and rehabilitation loans,
29 for the construction, rehabilitation or improvement of child care facilities. The total amount of
30 bonds, bond anticipation notes, and construction loan notes outstanding at any one time shall not
31 exceed twelve billion dollars ($12,000,000,000) excluding therefrom any bond anticipation notes
32 for the payment of which bonds have been issued. The principal of and the interest on such bonds
33 or notes shall be payable solely from the funds herein provided for such payment. Any such notes
34 may be made payable from the proceeds of bonds or renewal notes or, in the event bond or
35 renewal note proceeds are not available, such notes may be paid from any available revenues or
36 assets of the Agency. The bonds or notes of each issue shall be dated and may be made
37 redeemable before maturity at the option of the Agency at such price or prices and under such
38 terms and conditions as may be determined by the Agency. Any such bonds or notes shall bear
39 interest at such rate or rates as may be determined by the Local Government Commission of
40 North Carolina with the approval of the Agency. Notes shall mature at such time or times not
41 exceeding 10 years from their date or dates and bonds shall mature at such time or times not
42 exceeding 43 years from their date or dates, as may be determined by the Agency. The Agency
43 shall determine the form and manner of execution of the bonds or notes, including any interest
44 coupons to be attached thereto, and shall fix the denomination or denominations and the place or
45 places of payment of principal and interest, which may be any bank or trust company within or
46 without the State. In case any officer whose signature or a facsimile of whose signature shall
47 appear on any bonds or notes or coupons attached thereto shall cease to be such officer before
48 the delivery thereof, such signature or such facsimile shall nevertheless be valid and sufficient
49 for all purposes the same as if that officer had remained in office until such delivery. The Agency
50 may also provide for the authentication of the bonds or notes by a trustee or fiscal agent. The
51 bonds or notes may be issued in coupon or in registered form, or both, as the Agency may
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1 determine, and provision may be made for the registration of any coupon bonds or notes as to
2 principal alone and also as to both principal and interest, and for the reconversion into coupon
3 bonds or notes of any bonds or notes registered as to both principal and interest, and for the
4 interchange of registered and coupon bonds or notes. Upon the filing with the Local Government
5 Commission of North Carolina of a resolution of the Agency requesting that its bonds and notes
6 be sold, such bonds or notes may be sold in such manner, either at public or private sale, and for
7 such price as the Commission shall determine to be for the best interest of the Agency and best
8 effectuate the purposes of this Chapter, as long as the sale is approved by the Agency.
9     The proceeds of any bonds or notes shall be used solely for the purposes for which issued
10 and shall be disbursed in such manner and under such restrictions, if any, as the Agency may
11 provide in the resolution authorizing the issuance of such bonds or notes or in the trust agreement
12 hereinafter mentioned securing the same.
13     Prior to the preparation of definitive bonds, the Agency may, under like restrictions, issue
14 interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds
15 when such bonds shall have been executed and are available for delivery. The Agency may also
16 provide for the replacement of any bonds or notes which shall become mutilated or shall be
17 destroyed or lost.
18     Bonds or notes may be issued under the provisions of this Chapter without obtaining, except
19 as otherwise expressly provided in this Chapter, the consent of any department, division,
20 commission, board, body, bureau or agency of the State, and without any other proceedings or
21 the happening of any conditions or things other than those proceedings, conditions or things
22 which are specifically required by this Chapter and the provisions of the resolution authorizing
23 the issuance of such bonds or notes or the trust agreement securing the same.
24 "§ 122F-11. Trust agreement or resolution.
25     In the discretion of the Agency any obligations issued under the provisions of this Chapter
26 may be secured by a trust agreement by and between the Agency and a corporate trustee, which
27 may be any trust company or bank having the powers of a trust company within or without the
28 State. Such trust agreement or the resolution providing for the issuance of such obligations may
29 pledge or assign all or any part of the revenues or assets of the Agency, including, without
30 limitation, mortgage loans, construction loans, rehabilitation loans, mortgage loan commitments,
31 contracts, agreements and other security or investment obligations, the fees or charges made or
32 received by the Agency, the moneys received in payment of loans and interest thereon and any
33 other moneys received or to be received by the Agency. Such trust agreement or resolution may
34 contain such provisions for protecting and enforcing the rights and remedies of the holders of
35 any such obligations as may be reasonable and proper and not in violation of law, including
36 covenants setting forth the duties of the Agency in relation to the purposes to which obligation
37 proceeds may be applied, the disposition or pledging of the revenues or assets of the Agency, the
38 terms and conditions for the issuance of additional obligations, and the custody, safeguarding
39 and application of all moneys. It shall be lawful for any bank or trust company incorporated under
40 the laws of the State which may act as depositary of the proceeds of obligations, revenues or
41 other money hereunder to furnish such indemnifying bonds or to pledge such securities as may
42 be required by the Agency. Any such trust agreement or resolution may set forth the rights and
43 remedies of the holders of any obligations and of the trustee, and may restrict the individual right
44 of action by any such holders. In addition to the foregoing, any such trust agreement or resolution
45 may contain such other provisions as the Agency may deem reasonable and proper for the
46 security of the holders of any obligations. All expenses incurred in carrying out the provisions of
47 such trust agreement or resolution may be paid from the revenues or assets pledged or assigned
48 to the payment of the principal of and the interest on obligations or from any other funds available
49 to the Agency.
50 "§ 122F-12. Validity of any pledge.
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1     The pledge of any assets or revenues of the Agency to the payment of the principal of or the
2 interest on any obligations of the Agency shall be valid and binding from the time when the
3 pledge is made and any such assets or revenues shall immediately be subject to the lien of such
4 pledge without any physical delivery thereof or further act, and the lien of any such pledge shall
5 be valid and binding as against all parties having claims of any kind in tort, contract or otherwise
6 against the Agency, irrespective of whether such parties have notice thereof. Nothing herein shall
7 be construed to prohibit the Agency from selling any assets subject to any such pledge except to
8 the extent that any such sale may be restricted by the trust agreement or resolution providing for
9 the issuance of such obligations.
10 "§ 122F-13. Trust funds.
11     Notwithstanding any other provisions of law to the contrary, all moneys received pursuant to
12 the authority of this Chapter shall be deemed to be trust funds to be held and applied solely as
13 provided in this Chapter. The resolution authorizing any obligations or the trust agreement
14 securing the same may provide that any of such moneys may be temporarily invested pending
15 the disbursement thereof and shall provide that any officer with whom, or any bank or trust
16 company with which, such moneys shall be deposited shall act as trustee of such moneys and
17 shall hold and apply the same for the purposes hereof, subject to such regulations as this Chapter
18 and such resolution or trust agreement may provide.
19     Any moneys received pursuant to the authority of this Chapter and any other moneys
20 available to the Agency for investment may be invested:
21(1)     As provided in G.S. 159-30, except that for purposes of G.S. 159-30(b) the
22Agency may deposit moneys at interest in banks or trust companies outside as
23well as in this State, as long as any moneys at deposit outside this State are
24collateralized to the same extent and manner as if at deposit in this State.
25(2)     In evidences of ownership of, or fractional undivided interests in, future
26interest and principal payments on either direct obligations of the United
27States government or obligations the principal of and the interest on which are
28guaranteed by the United States government, which obligations are held by a
29bank or trust company organized and existing under the laws of the United
30States of America or any state in the capacity of custodian.
31(3)     In repurchase agreements with respect to (i) direct obligations of the United
32States government, (ii) obligations the principal of and the interest on which
33are guaranteed by the United States government, or (iii) obligations described
34in G.S. 159-30(c)(2), (3), (6), or (7), if all of the following conditions are met:
35a.      The repurchase agreement is entered into with an institution whose
36ability to pay its unsecured long-term obligations (including, if the
37institution is an insurance company, its claims paying ability) is rated
38in one of the two highest ratings categories by a nationally recognized
39securities rating agency. If the term of the repurchase agreement is for
40a period of one year or less, however, the repurchase agreement may
41be entered into with an institution that does not have such a long-term
42rating if its ability to pay its unsecured short-term obligations is rated
43in one of the two highest ratings categories by a nationally recognized
44securities rating agency. If the institution with which the agreement is
45to be entered does not meet the ratings requirement of this
46subparagraph, the repurchase agreement may nevertheless be entered
47into with the institution if the obligations of the institution under the
48repurchase agreement are fully guaranteed by another institution that
49does meet the ratings requirement of this subparagraph.
50b.      The repurchase agreement provides that it shall be terminated, without
51penalty, if the institution with which the repurchase agreement is
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1entered or by whom the institution's obligations are guaranteed fails to
2maintain (i) in the event that the repurchase agreement was entered
3into in reliance upon the rating of the institution's long-term
4obligations, a rating of its long-term obligations in one of the three
5highest ratings categories by at least one nationally recognized
6securities rating agency, or (ii) in the event that the repurchase
7agreement was entered into in reliance upon the rating of the
8institution's short-term obligations, a rating of its short-term
9obligations in one of the two highest ratings categories by at least one
10nationally recognized securities rating agency. The repurchase
11agreement does not have to be terminated, however, if a new guarantor
12meeting the rating requirement set forth in subparagraph a. as the
13requirement necessary for the Agency to enter the repurchase
14agreement agrees to fully guarantee the obligations of the institution
15under the repurchase agreement.
16c.     The obligations that are subject to the repurchase agreement are
17delivered (in physical or in book entry form) to the Agency, or any
18financial institution serving either as trustee for obligations issued by
19the Agency or as fiscal agent for the Agency or the State Treasurer or
20are supported by a safekeeping receipt issued by a depository
21satisfactory to the Agency. The repurchase agreement must provide
22that the value of the underlying obligations shall be maintained at a
23current market value, calculated at least daily, of not less than one
24hundred percent (100%) of the repurchase price. The financial
25institution serving either as trustee or as fiscal agent for the Agency
26holding the obligations subject to the repurchase agreement hereunder
27or the depository issuing the safekeeping receipt shall not be the
28provider of the repurchase agreement.
29d.     A valid and perfected first security interest in the obligations which
30are the subject of the repurchase agreement has been granted to the
31Agency or its assignee or book entry procedures, conforming, to the
32extent practicable, with federal regulations and satisfactory to the
33agency have been established for the benefit of the Agency or its
34assignee.
35e.    The securities are free and clear of any adverse third-party claims.
36f.    The repurchase agreement is in a form satisfactory to the Agency.
37 "§ 122F-14. Remedies.
38     Any holder of obligations issued under the provisions of this Chapter or any coupons
39 appertaining thereto, and the trustee under any trust agreement or resolution authorizing the
40 issuance of such obligations, except to the extent the rights herein given may be restricted by
41 such trust agreement or resolution, may, either at law or in equity, by suit, action, mandamus or
42 other proceeding, protect and enforce any and all rights under the laws of the State or granted
43 hereunder or under such trust agreement or resolution, or under any other contract executed by
44 the Agency pursuant to this Chapter, and may enforce and compel the performance of all duties
45 required by this Chapter or by such trust agreement or resolution to be performed by the Agency
46 or by any officer thereof.
47 "§ 122F-15. Negotiable instruments.
48     Notwithstanding any of the foregoing provisions of this Chapter or any recitals in any
49 obligations issued under the provisions of this Chapter, all such obligations and interest coupons
50 appertaining thereto shall be and are hereby made negotiable instruments under the laws of this
51 State, subject only to any applicable provisions for registration.
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1 "§ 122F-16. Obligations eligible for investment.
2      Obligations issued under the provisions of this Chapter are hereby made securities in which
3 all public officers and public bodies of the State and its political subdivisions, all insurance
4 companies, trust companies, banking associations, investment companies, executors,
5 administrators, trustees and other fiduciaries may properly and legally invest funds, including
6 capital in their control or belonging to them. Such obligations are hereby made securities which
7 may properly and legally be deposited with and received by any State or municipal officer or any
8 agency or political subdivision of the State for any purpose for which the deposit of bonds, notes
9 or obligations of the State is now or may hereafter be authorized by law.
10 "§ 122F-17. Refunding obligations.
11      The Agency is hereby authorized to provide for the issuance of refunding obligations for the
12 purpose of refunding any obligations then outstanding which shall have been issued under the
13 provisions of this Chapter, including the payment of any redemption premium thereon and any
14 interest accrued or to accrue to the date of redemption of such obligations and, if deemed
15 advisable by the Agency, for any corporate purpose of the Agency. The issuance of such
16 obligations, the maturities and other details thereof, the rights of the holders thereof, and the
17 rights, duties and obligations of the Agency in respect of the same shall be governed by the
18 provisions of this Chapter which relate to the issuance of obligations, insofar as such provisions
19 may be appropriate therefor.
20      Refunding obligations may be sold or exchanged for outstanding obligations issued under
21 this Chapter and, if sold, the proceeds thereof may be applied, in addition to any other authorized
22 purposes, to the purchase, redemption or payment of such outstanding obligations. Pending the
23 application of the proceeds of any such refunding obligations, with any other available funds, to
24 the payment of the principal, accrued interest and any redemption premium on the obligations
25 being refunded, and, if so provided or permitted in the resolution authorizing the issuance of such
26 refunding obligations or in the trust agreement securing the same, to the payment of any interest
27 on such refunding obligations and any expenses in connection with such refunding, such
28 proceeds may be invested in direct obligations of, or obligations the principal of and the interest
29 on which are unconditionally guaranteed by, the United States of America which shall mature or
30 which shall be subject to redemption by the holders thereof, at the option of such holders, not
31 later than the respective dates when the proceeds, together with the interest accruing thereon, will
32 be required for the purposes intended.
33 "§ 122F-18. Oversight by committees of General Assembly; annual report; audit;
34 construction of Chapter.
35      (a)     Oversight. – The Finance Committee of the House of Representatives, the Finance
36 Committee of the Senate, and the Joint Legislative Oversight Committee on Health and Human
37 Services shall exercise continuing oversight of the Agency in order to assure that the Agency is
38 effectively fulfilling its statutory purpose.
39      (b)     Comprehensive Report. – The Agency shall, on or before February 15 of each year,
40 submit an annual comprehensive report of its activities for the preceding year to the Governor,
41 the Office of State Budget and Management, State Auditor, the Local Government Commission,
42 the Joint Legislative Oversight Committee on Health and Human Services, and the Fiscal
43 Research Division. The comprehensive report required under this subsection shall include at least
44 all of the following:
45(1)     The goals and objectives of the program administered by the Agency.
46(2)     The number and types of activities funded by the Agency.
47      (c)     Audit. – The Agency shall cause an audit of its books and accounts to be made at least
48 once in each year by an independent certified public accountant and the cost thereof may be paid
49 from any available moneys of the Agency.
50      (d)     Construction. – Nothing in this Chapter shall be construed as requiring the Agency to
51 receive legislative approval for the exercise of any of the powers granted by this Chapter.
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1 "§ 122F-19. Officers not liable.
2     No member or other officer of the Agency shall be subject to any personal liability or
3 accountability by reason of his execution of any obligations or the issuance thereof.
4 "§ 122F-20. Authorization to accept appropriated moneys.
5     The Agency is authorized to accept such moneys as may be appropriated from time to time
6 by the General Assembly for effectuating its corporate purposes including, without limitation,
7 the payment of the initial expenses of administration and operation and the establishment of a
8 reserve or contingency fund to be available for the payment of the principal of and the interest
9 on any bonds or notes of the Agency.
10 "§ 122F-21. Tax exemption.
11     The exercise of the powers granted by this Chapter will be in all respects for the benefit of
12 the people of the State, for their well-being and prosperity and for the improvement of their social
13 and economic conditions, and the Agency shall not be required to pay any tax or assessment on
14 any property owned by the Agency under the provisions of this Chapter or upon the income
15 therefrom.
16     Any obligations issued by the Agency under the provisions of this Chapter shall at all times
17 be free from taxation by the State or any local unit or political subdivision or other instrumentality
18 of the State, excepting inheritance or gift taxes, income taxes on the gain from the transfer of the
19 obligations, and franchise taxes. The interest on the obligations is not subject to taxation as
20 income.
21 "§ 122F-22. Conflict of interest.
22     If any member, officer or employee of the Agency shall be interested either directly or
23 indirectly, or shall be an officer or employee of or have an ownership interest in any firm or
24 corporation interested directly or indirectly in any contract with the Agency, including any loan
25 to any sponsor, builder or developer, such interest shall be disclosed to the Agency and shall be
26 set forth in the minutes of the Agency, and the member, officer or employee having such interest
27 therein shall not participate on behalf of the Agency in the authorization of any such contract.
28 "§ 122F-23. Additional method.
29     The foregoing sections of this Chapter shall be deemed to provide an additional and
30 alternative method for the doing of the things authorized thereby and shall be regarded as
31 supplemental and additional to powers conferred by other laws, and shall not be regarded as in
32 derogation of any powers now existing; provided, however, that the issuance of bonds or notes
33 under the provisions of this Chapter need not comply with the requirements of any other law
34 applicable to the issuance of bonds or notes.
35 "§ 122F-24. Chapter liberally construed.
36     This Chapter, being necessary for the prosperity of the State and its inhabitants, shall be
37 liberally construed to effect the purposes thereof.
38 "§ 122F-25. Inconsistent laws inapplicable.
39     Insofar as the provisions of this Chapter are inconsistent with the provisions of any general
40 or special laws, or parts thereof, the provisions of this Chapter shall be controlling."
41SECTION 1.(b) Notwithstanding the requirements of G.S. 122F-4, as enacted by
42 this act, the initial appointments to the North Carolina Child Care Finance Agency shall be
43 appointed to a term beginning October 1, 2025, as follows:
44(1)     Six members appointed by the Governor as follows:
45a.      One member with experience in workforce needs to a two-year term
46expiring June 30, 2027.
47b.      One member with experience as a licensed child care provider to a
48four-year term expiring June 30, 2029.
49c.      One member with experience as a specialist in child care licensure to
50a two-year term expiring June 30, 2027.
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1d.      One member with experience in construction of child care facilities to
2a four-year term expiring June 30, 2029.
3e.      One member with experience in commercial small business lending to
4a two-year term expiring June 30, 2027.
5f.      One member with experience in real estate development to a four-year
6term expiring June 30, 2029.
7(2)    Three members appointed by the General Assembly upon the
8recommendation of the President Pro Tempore of the Senate as follows:
9a.      One member with experience with a savings and loan institution to a
10four-year term expiring June 30, 2029.
11b.      One member with experience as a licensed child care provider to a
12two-year term expiring June 30, 2027.
13c.      One member with experience in construction lending to a four-year
14term expiring June 30, 2029.
15(3)    Three members appointed by the General Assembly upon the
16recommendation of the Speaker of the House of Representatives as follows:
17a.      One member with experience with a mortgage-servicing institution to
18a two-year term expiring June 30, 2027.
19b.      One member with experience as a licensed child care provider to a
20four-year term expiring June 30, 2029.
21c.      One member with experience in a business that makes on-site child
22care available to employees to a two-year term expiring June 30, 2027.
23SECTION 2. The State Treasurer shall invest three and one-half percent (3.5%) of
24 the corpus of the North Carolina Innovation Fund with the North Carolina Child Care Finance
25 Agency.
26SECTION 3. There is appropriated from the General Fund to the Department of
27 Administration the sum of twenty million dollars ($20,000,000) in nonrecurring funds for the
28 2025-2026 fiscal year for the North Carolina Child Care Finance Agency. The North Carolina
29 Child Care Finance Agency shall use the funds as provided in G.S. 122F-20, as enacted by this
30 act.
31SECTION 4. This act is effective July 1, 2025.
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