January 18, 1996
The Honorable S. Davis Phillips Secretary North Carolina Department of Commerce 801 North Wilmington Street
P. O. Box 29571 Raleigh, North Carolina 27626-0571
RE: Advisory Opinion; Power of the North Carolina State Ports Authority to Finance an Industrial Facility; N.C.G.S. §143B-456.1; Article V, §13 of the North Carolina Constitution
Dear Secretary Phillips:
You request our opinion whether it would be legal for the North Carolina State Ports Authority to finance an industrial facility which would be owned by the Authority and leased to a private company. You state that the project in question would not be located immediately adjacent to our two state ports, but that the company would utilize the ports for import and export of materials and products. You also note that the State of North Carolina would have no contingent liability as the result of financing the project.
For reasons which follow, it is our opinion that the State Ports Authority may legally finance this facility so long as there is a binding obligation on the private company requiring a substantial level of utilization of the state ports and so long as no debt for the project is secured by the faith and credit of the state or any state agency.
Article V, §13 of the North Carolina Constitution provides that the General Assembly may enact laws to grant to state agencies "all powers useful in connection with the development of new and existing seaports . . . ." This section of our Constitution further empowers the General Assembly to authorize state agencies to acquire, construct, own, and finance for private parties seaport facilities and "improvements which relate to, develop or further waterborne . . . commerce and cargo . . ." including industrial and manufacturing facilities. Any such financing may not create a debt secured by a pledge of the faith and credit of the state or any state agency.
With this grant of power from the Constitution, the General Assembly enacted N.C.G.S. §143B456.1, which specifically grants to the State Ports Authority the power to issue bonds and notes to finance "special user projects." As defined in the statute, special user projects include land, offices, and industrial and manufacturing facilities primarily for the use of private parties. This statute also provides that the bonds or notes must be special limited obligations of the State Ports Authority.
In our opinion, the Constitution does not require facilities financed by the Ports Authority to be located at or near the State’s ports. We believe binding contract provisions requiring a substantial level of utilization of the state ports satisfies the Constitutional requirement that any improvements financed by the Ports Authority relate to, develop or further waterborne commerce. The Constitution does prohibit the Ports Authority from creating a debt secured by a pledge of the faith and credit of the State. The financing for the project, therefore, cannot violate
this express constitutional prohibition.
In closing, although it is our opinion that the Ports Authority may legally finance this facility, the
ultimate decision rests with private bond counsel, who is not bound by our opinion.
Andrew A. Vanore, Jr.
Chief Deputy Attorney General
John R. McArthur
Chief Counsel