The following definitions apply in this Article:

(1) Financing arrangement. – An installment financing arrangement, lease-purchase arrangement, arrangement under which funds are to be paid in the future based upon the availability of an asset, or any similar arrangement in the nature of a financing having a term (including renewal options) of greater than one year, in which a State entity agrees to make payments to acquire or obtain a capital asset for a State entity. Any arrangement that results in the identification of a portion of a lease payment, installment payment, or similar scheduled payment as “interest” for purposes of federal income taxation is a financing arrangement for purposes of this Article; provided, however, that (i) a contractual provision that requires interest charges for late or overdue payments shall not by themselves convert a construction or procurement contract into a financing arrangement and (ii) a contractual provision in a construction or purchase contract in which a State entity will withhold or retain from amounts otherwise payable under the contract a retainage until completion of construction, the resolution or adjudication of disputes under the contract, the satisfaction of contract provisions requiring that the property constructed or acquired meets specified performance or quality standards, or similar contractual provisions designed to protect the interests of the State under the contract do not convert an arrangement that otherwise does not constitute a financing arrangement into a financing arrangement. The term does not include any of the following:

a. A true operating lease.

b. Provisions in a construction or purchase contract in which payments are to be made over an extended period of time in accordance with the terms of the contract as construction is completed or assets are delivered.

c. A public-private partnership entered into pursuant to N.C. Gen. Stat. § 143-128.1C.

d. Agreements entered into pursuant to N.C. Gen. Stat. § 136-18(39a).

(2) State entity. – The State of North Carolina and every agency, authority, institution, board, commission, bureau, council, department, division, officer, or employee of the State. The term does not include counties, municipal corporations, political subdivisions, local boards of education, or other local public bodies.

(3) State-supported financing arrangement. – Any financing arrangement that requires payments that are payable, whether directly or indirectly, and whether or not subject to the appropriation of funds for payment, by payments from the General Fund, the Highway Fund, the Highway Trust Fund, or other funds and accounts of the State that are funded from the general revenues and other taxes and fees of the State or State entities. A State-supported financing arrangement does not include a financing arrangement where bonds or other obligations are issued or incurred to carry out a financing program authorized by the General Assembly under which the bonds or other obligations are payable from moneys derived from specified, limited, nontax sources, such as (i) loan payments made by a non-State entity receiving the benefit of financing by a State entity (including an “obligor” or “participating institution” within the meaning of Chapter 159D of the N.C. Gen. Stat., a “public agency” or a “nonprofit agency” within the meaning of Article 1 of Chapter 131A of the N.C. Gen. Stat., and similar entities); (ii) revenues of a revenue-producing enterprise or activity (such as “revenues” within the meaning of Part 4 of Article 1 of Chapter 116 of the N.C. Gen. Stat. and “obligated resources” within the meaning of Article 3 of Chapter 116D of the N.C. Gen. Stat.); and (iii) loan payments received, loans owned, and other assets of a State entity that are pledged to secure bonds under programs to finance that type of assets and the associated activities (such as mortgage loans under Chapter 122A of the N.C. Gen. Stat. and student loans under Article 23 of Chapter 116 of the N.C. Gen. Stat.). (2016-94, s. 37.8(a); 2019-240, s. 27.1(d).)