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HomeMy WebLinkAboutAgenda 2013 06-03 AGENDA NEW HANOVER COUNTY BOARD OF COMMISSIONERS : . Assembly Room, New Hanover County Historic Courthouse `Y 24 North Third Street, Room 301 Wilmington, NC WOODY WHITE,CHAIRMAN-BETH DAWSON,VICE-CHAIR - JONATHAN BARFIELD,JR.,COMMISSIONER-THOMAS WOLFE,COMMISSIONER CHRIS COUDRIET,COUNTY MANAGER WANDA COPLEY,COUNTY ATTORNEY SHEILA SCHULT,CLERK TO THE BOARD o- JUNE 3, 2013 6:00 P.M. MEETING CALLED TO ORDER(Chairman Woody White) NON-SECTARIAN INVOCATION (Rick Houston, Senior Pastor, Pilgrim Rest Missionary Baptist Church) PLEDGE OF ALLEGIANCE(Vice-Chair Beth Dawson) APPROVAL TO CONTINUE ITEMS 11 AND 12 APPROVAL OF CONSENT AGENDA CONSENT AGENDA ITEMS OF BUSINESS 1. Approval of Minutes 2. Approval of the Adoption of the ABC Board's Travel Policy 3. Approval of April 2013 Records Retention and Disposition Schedule as Presented by the N.C. Division of Archives and History 4. Adoption of State Road Resolution 5. Approval of Ordinance Addressing Alcohol Use in County Buildings 6. Approval of EPA Consent Decree ESTIMATED REGULAR AGENDA ITEMS OF BUSINESS TIMES 6:05 p.m. 7. Public Hearing on the Fiscal Year 2013-2014 Recommended Budget 6:50 p.m. 8. Public Hearing on the NCDOT Secondary Road Construction Program and Consideration of a Resolution in Support of the Program 7:00 p.m. 9. Public Hearing and Consideration of an Industrial Investment Grant to General Electric Company 7:10 p.m. 10. Consideration of a Resolution Recognizing the Arts Council of Wilmington and New Hanover County 7:15 p.m. 11. Public Hearing Rezoning Request(Z-925, 05/13) -Request by Cindee Wolf, Design Solutions, on Behalf of College Road Development Partners, LLC to Rezone 8.05 Acres Located at 2530, 2600, 2608, 2612, & 2616 North College Road from B-2 Highway Business and R-15 Residential to CUD(B-2) Conditional Use District B-2 7:55 p.m. 12. Public Hearing Text Amendment(A-412, 05/13)-Request by Staff to Amend Section 71-1(9) of the Zoning Ordinance to Provide Clarification as to Who has the Authority to Approve an Administrative Approval and Qualifying Modifications 8:10 P.M. 13. Consideration of Public Records Request Policy 8:15 p.m. 14. Consideration of Resolutions Authorizing the Issuance of Hospital Revenue Bonds, Adopting a Series Resolution and Certain Related Matters 8:20 p.m. 15. Presentation of Parks Development Plan - This item is continued to July 1, Board of Commissioners Meeting 06/03/2013 2013. 8:20 p.m. 16. Adoption of Addendum to By-Laws and Appointment of Initial Terms to Parks Conservancy Board PUBLIC COMMENTS ON NON-AGENDA ITEMS (limit three minutes) ADDITIONAL AGENDA ITEMS OF BUSINESS 8:35 p.m. 17. Additional Items County Manager County Commissioners Clerk to the Board County Attorney 8:45 p.m. 18. ADJOURN Note: Times listed for each item are estimated, and if a preceding item takes less time, the Board will move forward until the agenda is completed. Board of Commissioners Meeting 06/03/2013 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 CONSENT ITEM. DEPARTMENT: PRESENTER(S): Chairman White CONTACT(S): Sheila L. Schult, Clerk to the Board SUBJECT: Approval of Minutes BRIEF SUMMARY: Approve minutes from the following meetings: Agenda Review Meeting held on May 16, 2013 Regular Meeting held on May 20, 2013 STRATEGIC PLAN ALIGNMENT: Superior Public Health, Safety and Education • Keep the public informed on important information RECOMMENDED MOTION AND REQUESTED ACTIONS: Approve minutes. COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 1 -0 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 CONSENT ITEM. 2 DEPARTMENT: PRESENTER(S): Commissioner Wolfe CONTACT(S): Commissioner Wolfe SUBJECT: Approval of the Adoption of the ABC Board's Travel Policy BRIEF SUMMARY: At their May 21, 2013 board meeting,the ABC Board reviewed and updated its travel policy to conform with the revisions made to the County's travel policy. In accordance with NCGS 1813-700, the ABC Board is requesting the approval of the adoption of its travel policy. STRATEGIC PLAN ALIGNMENT: Productive Strategic Partnerships • Develop appropriate public/private partnerships RECOMMENDED MOTION AND REQUESTED ACTIONS: Approve the ABC Board's adoption of its Travel Policy. ATTACHMENTS: ABC Board Travel Policy COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 2-0 NHC ABC BOARD—EXECUTIVE SUMMARY Item # 4b Meeting Date: 05/21/2013 Open Session Contact: Dan Sykes Subject: Travel Policy Attachment(s): h "A"—NHC ABC Board Travel Policy, Dated 10/15/2012. "B"—NC GS 18B-700,paragraph(g2) Travel Allowance and Per Diem Rates "C"—NC GS 138-6—Travel Allowances of State officers and employees "D"—04 NCAC 02R.0909 Travel Policies Brief Summary/Explanations: 1. The Board's Travel Policy (Attachment"A") is being reviewed in accordance NC GS 18B-700(g2) (Attachment `B"). NC GS 139-6 (Attachment "C") and the County Travel Policy (Attachment "D") are being provided for reference purposes. I 2. Subsequent to the Board's approval, the Board's Travel policy is to be re- presented to Board of County Commissioners (BOCC) for their approval. According to Laurie Lee at the NC ABC Commission, "It is not the op licy that the appointing authority is approving; it is adoption of their policy (versus the State's policy)that is being approved". Action Requested: 1. Review and discuss as necessary. 2. Suggested motion—Motion to accept the revised Travel Policy as written(or with specific changes) to become effective upon approval of the Board of County Commissioners. 3. Assuming the travel policy is re-approved by the ABC Board, it must then go the County Commissioners for re-approval (to ensure the ABC Board can follow the County's travel policy as opposed to the State policy). Please contact me if you have any questions and I will try to address the issues prior to the meeting. I Board of CP s1i(0CJsp g 06/03/2013 2- 1 - 1 New Hanover County ABC Board Travel Policy October 15,2012 3 Travel Policy' 1. Overview: a. The Board's Travel Policy provides for reimbursement to Board members and employees for approved expenses that are incurred as part of their responsibilities which would not be incurred otherwise. It is the intent of the Board to encourage members and employees to take advantage of opportunities that will enhance their growth and contribution to the Board, and to pay for reasonable and necessary expenses for approved Board travelers attending training sessions, conferences, seminars, business meetings, and similar. j b. Each individual who travels on official business of the Board has a responsibility to the citizens to make use of the most economically feasible modes of transportation and lodging. Travel expense reports are open to the public. Individuals are expected to exercise prudent judgment and all expenses should be able to sustain the test of public review. 1 c. Travel is a privilege and out-of-County travel must be approved in advance. All members/employees must use a Travel Advance Request to obtain 1 approval prior to travel. All approved expenses must be in accordance with the Board's budget. d. This policy is designed to accomplish the following: i. Ensure all members/employees have a clear and consistent understanding of the policies and procedures for business travel and expenses. ii. Ensure members/employees are reimbursed for legitimate business travel expenses. iii. Provide members/employees with a reasonable level of service and comfort at the least possible cost. iv. Ensure adherence of mandates. v. Provide the appropriate level of accounting and business controls for the Board to ensure that expenses are reviewed and approved by the appropriate person(s). 2. Mandates: a. NC GS 18B-700(g2), states, "Travel Allowance and Per Diem Rates: Approved travel on official business by members and employees of local boards shall be reimbursed pursuant to G.S. 138-62 unless the local board 1 This Travel policy supersedes all prior Travel policies enacted by the New Hanover County ABC Board. This policy was approved by the ABC Board September 25 2012; it was later approved by the New Hanover County Board of Commissioners on October 15,2012. 2 G.S. 138-6.Travel allowances of State officers and employees.The ABC Board has elected to adopt the travel policy that conforms to the appointing authority's(which is the policy used by the County employees). Page 1 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -2 New Hanover County ABC Board Travel Policy October 15,2012 adopts a travel policy that conforms to the travel policy of the appointing authority and such policy is approved by the appointing authority. The local Board shall annually provide the appointing authority's written confirmation of such approval to the Commission and a copy of the travel policy authorized by the appointing authority. Any excess expenses not covered by the local board's travel policy shall be paid with the written authorization of the appointing authority's finance officer. A copy of the written authorization for excess expenses shall be submitted to the Commission by the local board within 30 days of approval." b. NC Administrative Code (4 NCAC 2R.0909) established Travel Policy requirements which supplement the General Statutes mentioned above. Refer to this Rule for details. c. Although not specifically mentioned above, the ABC Commission expects the following from the local ABC board: i. Ensure the ABC Board's policy is amended as necessary each time the County's policy is amended. ii. Obtain approval from the NHC Board of County Commissioners (BOCC) allowing the ABC Board to adopt the County's travel policy (as opposed to the State's travel policy) at least annually (about June) even if there are no changes to either policy. iii. Re-submit the following documentation to the ABC Commission each year about July (even if there are no changes to the County's policy or the Board's policy): 1. The County's travel policy. 2. The ABC Board's travel policy. 3. The BOCC's written approval allowing the ABC Board to adopt the County's travel policy (as opposed to the State's policy). 3. Scope: These policies apply to all Board members and employees (hereafter referred to as"Board travelers"). 4. Responsibilities of the: a. Board Traveler i. Attend all pertinent sessions of conferences. ii. Maintain a receptive attitude. iii. Be a knowledgeable and creditable representative of the Board. iv. Spend allotted travel funds in a reasonable manner. v. Submit all required receipts with the Travel Expense Report within ten (10) days from return date of travel. b. Finance Officer: i. Ensure availability of funds when processing Travel Advance Requests. ii. Ensure the travel policy is properly administered. iii. Review travel-related forms for completeness and accuracy. Page 2 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -3 New Hanover County ABC Board Travel Policy October 15,2012 `g iv. Bring any abnormalities to the attention of the Chair (for Board members) and to the attention of the CEO (for Board employees). c. Chief Executive Officer: i. Ensure sufficient funds are budgeted each year. ii. Review travel-related forms for completeness and accuracy. iii. Ensure Board's travel policy conforms to the County's travel policy. Update travel policy and related forms as needed and obtain necessary approvals. iv. Request NHC BOCC approval as per"Mandates" above. v. Transmit required information to ABC Commission per "Mandates" above. d. Board: i. Fund out-of-county travel to those training sessions, conferences, conventions, and other authorized meetings which will promote the professional development of the traveler and therefore benefit the Board. ii. Adequately fund authorized out-of-county travel so that the traveler will not undergo financial hardship from attending conferences and meetings. iii. Paying all pertinent registration and conference fees, providing payment for approved and suitable lodging, and paying approved expenses. iv. Providing reimbursement for food in accordance with established rates. v. Providing transportation to and from travel destinations and intermediate ground transportation. 5. In-County Transportation Policy: In-County mileage reimbursement for use of private vehicle will be paid as follows: a. Only certain employees are authorized to drive Board-owned vehicles due to insurability. If an employee is authorized to operate an appropriate Board vehicle, but chooses to use his/her personal vehicle when a Board vehicle is available and appropriate for travel, the employee will not be reimbursed for his/her travel expense. b. If a Board traveler is paid an automobile allowance, no additional payment will be made for in-town travel. c. All Board travelers, except those mentioned in paragraphs above, will be paid a rate per mile reimbursement for any required in-county travel when using their private vehicle. The rate of reimbursement will be at the established Internal Revenue Service business rate on dates of travel. The same guidelines for determining allowable mileage as used by IRS will be used by the Board. Page 3 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -4 � I i New Hanover County ABC Board Travel Policy October 15,2012 d. Travel from home to work is NOT allowable mileage unless the employee is in a call-back status. e. Voluntary travel for personal benefit (for example, health clinic, wellness program, etc.) is NOT allowable mileage. f. In order to process reimbursement, completed mileage sheets or notation of mileage payable with authorized signatures must be included with the employee's time sheet. Board members attending to Board business must submit completed mileage sheets monthly as a minimum. 6. Out-of-the County Travel Policy: a. This policy establishes Board traveler and Board responsibilities related to out-of-County travel for Board business and related expenses. i. Full Reimbursement: If a Board traveler is in travel status and the Board is receiving a benefit from the travel, the Board traveler is entitled to full reimbursement for the approved expenses incurred (within this established policy). ii. Availability of Funds: Approval of any travel is contingent upon adequate funding being available. b. At least ten (10) work days prior to the trip, and before any Board funds are committed, trip approval must be obtained. The purpose and estimated information must be provided by the Board traveler using a Travel Advance Request form. The request must then be approved by the Finance Officer (or Deputy Finance Officer) and Board Chair(or Chief Executive Officer). c. Travel Advance: i. Travel advance funds can be requested for any approved travel when the amount involved is anticipated to be more than $75 for out-of- county travel. ii. Travel advance funds will not be issued if prior expense reports outstanding more than thirty (30) days have not been completed and turned in to the Finance Office. iii. Travel advance requests must be received by the Finance Office at least ten (10) work days prior to the first date of travel. Travel destinations outside a 300 mile radius of ABC Board's main office require approval by the Chair or CEO before Board funds are committed. d. Persons Accompanying Board Travelers: i. Relatives and/or Friends: The Board pays only for authorized business-related expenses of Board members/employees. Expenses of Page 4 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -5 New Hanover County ABC Board Travel Policy October 15, 2012 others (for example spouses, dependents, friends, etc.) will not be reimbursed. Lodging will be reimbursed at the single rate only. Board- owned vehicles are not to be used to transport non-Board members/employees unless approved by the Chair. Hitch-hikers are not to ride in Board-owned vehicles. ii. Business Associates: If approved by the Chair, employees of other government or business entities may ride in Board vehicles if traveling on official business. Costs should be shared and split accordingly. Only certain Board members/employees are authorized to drive a vehicle owned by, or rented by, the Board. e. Travel Expense Reports: A completed Travel Expense Report, with required receipts, should be submitted to the Finance Office within ten (10) work days from the date the Board traveler returns from the trip. f. Refunds due Board: In the event money is owed to the Board after completion of travel, the refund should be submitted with a copy of the completed Travel Expense Report noting the actual costs of travel and include required receipts. If the refund due the Board is greater than $5.00, the traveler should submit a personal check, money order, or cashier's check made payable to "New Hanover County ABC Board". Any cash payments should be made directly to the Finance Officer or his/her designee. g. Review and approval of Travel Expense Reports: The Finance Officer will review the expense reports for completeness and accuracy. They will then be submitted to the Chair(CEO) for approval. 7. Travel Requirements and Procedures a. Determining Mode of Transportation: In determining the mode of transportation to be used for travel, the following procedures apply: i. For travel outside a radius of 300 miles from the Board's main office, the Board will pay the lesser of the amount of the Internal Revenue Service business mileage rate, cost of air fare at tourist rate, or similar i fare for other modes of transportation (i.e. rail). Any cost such as additional meals or lodging expense incurred due to a longer travel stay will not be reimbursed. ii. Travel by Board vehicle or rental vehicle is encouraged when it proves cost effective for the Board. Mileage reimbursement and rental fees should be compared when determining the mode of transportation. iii. When more than one Board traveler is attending a function, carpooling is encouraged. The Chair or CEO should determine the most suitable travel mode, based upon factors such as convenience and time. When a private vehicle is chosen for travel, only the owner of the private vehicle is to be reimbursed the applicable mileage rate. l � Page 5 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -6 New Hanover County ABC Board Travel Policy October 15,2012 iv. A Board traveler may choose to fly or use a personal or Board vehicle for travel. The mode of transportation chosen should be the least expensive available to the destination when all costs including lodging and meals are considered. b. Passenger Vehicles: (3.2.2 A) i. The Board will reimburse a Board traveler in accordance with the established Internal Revenue Service business rate in effect on the date(s) of travel. When air travel is chosen the fare shall not exceed tourist or coach rates. If a Board traveler chooses to drive a personal vehicle where air travel is the least expensive mode, the reimbursement amount will be equal to air fare plus ground transportation(bus,taxi or rental car)to the destination and return. ii. The Chair or CEO will determine the mode of transportation when more than one Board traveler is attending a meeting based upon factors such as convenience and time. Non-exempt employees in travel status will be compensated in accordance with the Board's personnel policy and the Fair Labor Standards Act. iii. Private Vehicle: 1. Mileage: a. The rate for the use of personal vehicles is the established Internal Revenue Service business rate on the date(s) of travel. Reimbursement will be made on actual miles driven in conjunction with the authorized travel. b. Mileage will be measured from the closer of the duty station or the point of departure to the destination and return. c. A MapQuest printout must be included with the Travel Expense Report calculating the shortest distance. iv. Passenger Car Rental: The Chair or CEO must specifically approve the use of a rental car as a necessary and unavoidable travel expense. Passenger Car Rental from a recognized car rental agency (such as Hertz, National, Budget, Enterprise, etc.) will be reimbursed at actual cost, including insurance and other add-on costs, in situations where a reliable personal car is not available or use of a private vehicle is inappropriate for out-of-town travel. v. Other Travel/Parking: Taxi fare, bus fare, toll costs, parking etc. will be reimbursed at actual costs incurred. Receipt is required. Valet parking is considered to be an excessive expense and is not eligible for full reimbursement unless the Board traveler can prove a physical disability. Page 6 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -7 New Hanover County ABC Board Travel Policy October 15,2012 vi. Tickets: Traffic violations received while on Board-related business are the responsibility of the Board traveler. c. Airline: i. Air fare, including intermediate ground transportation — no first class 4 rates will be paid. A receipt noting payment must be submitted with the Travel Expense Report. ii. Discounted Airfare: If a discount airfare is available because travel is on certain weekend days, the employee is still allowed to deduct up to the amount of the regular air fare toward personal expenses incurred by early arrival (i.e. hotel and meal expense). Board traveler must have prior approval of Chair or CEO in order for this option to be considered. In determining the regular air fare amount, the lowest cost of a tourist or coach ticket to arrive at the latest possible time to participate in conference or meeting should be used. Cost comparisons must be made using information from airlines or travel agents attained on the same day. Supporting documentation must be submitted with the expense report. 8. Meals: a. Board travelers will not be reimbursed for alcoholic beverages. b. Board travelers must be in travel status at the following times to be reimbursed for meals: i. Breakfast: 7:00 AM ii. Lunch: 11:00 AM iii. Dinner: 7:00 PM c. Travel status for meals is defined as when a Board traveler is required to travel to a location more than 50 miles from the ABC Board's Main Office. Meals that do not require an overnight stay are generally considerable taxable to the Board traveler. d. Meals will be reimbursed at actual costs to the Board traveler up to a maximum of forty-six dollars ($46) per day, including any tips. Receipts are not required if the daily maximum is not exceeded. e. If the amount spent for meals exceeds the daily maximum, a receipt for the meal exceeding the meal allowance must be attached to the report. A receipt does not guarantee reimbursement for any overages. Approval for reimbursement over the established per diem amount must be made by the NHC Board of County Commissioners. The Board traveler is responsible for obtaining approval. I Page 7 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -8 New Hanover County ABC Board Travel Policy October 15,2012 f. If a Board traveler is not in travel status at the times detailed above, the daily maximum rate will be adjusted based on the following: i. Breakfast $10.00 ii. Lunch $13.00 iii. Dinner $23.00 9. Hotel/Motel Lodging: a. Lodging at a single room rate (unless sharing with another Board traveler) should be reserved in advance at the Conference hotel or at a similar, lower priced hotel. b. A receipt must be presented with completed Travel Expense Report. The receipt must show all charges and payments and reflect a zero balance. A receipt for prepayment of the room is not acceptable. If a receipt is lost for an expense greater than $10.00 a duplicate receipt must be obtained. c. When two or more Board travelers share a room, all room expenses shall be on one of the travelers' expense report. 10. Tips: Tips for meals are included in the per diem rates and reimbursed as outlined in the "Meals" paragraph to this policy. Any tips for doormen, bell hops, etc are elective and are not reimbursable. 11. Registration: Actual cost will be reimbursed. A receipt should accompany the Travel Expense Report. Documentation should be included to show the meals that are included in the registration fee. If meals are included, no additional reimbursement for those meals will be provided as per diem. If registration was prepaid, attach a copy of prepayment form to the Travel Expense Report. 12. Telephone: Telephone calls related to Board business will be reimbursed at actual cost including any connection fees charged by the hotel/motel with the submission of a detailed listing of call, associated fees, number called and nature of the call. 13. Dry Cleaning: Should a Board traveler be in travel status five (5) days, the Board will reimburse up to $10.00 for dry cleaning services. A receipt must be submitted. 14. Miscellaneous: Other required Board-related expenses may be reimbursed at actual cost. Receipts and justification must be submitted. Page 8 of 8 Board of Commissioners Meeting 06/03/2013 2- 1 -9 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 CONSENT ITEM. 3 DEPARTMENT: PRESENTER(S): Sheila L. Schult, Clerk to the Board CONTACT(S): Sheila L. Schult, Clerk to the Board SUBJECT: Approval of April 2013 Records Retention and Disposition Schedule as Presented by the N.C. Division of Archives and History BRIEF SUMMARY: In April 2013, the N.C. Division of Archives and History issued a new Records Retention and Disposition Schedule - County Management to replace the April 2006 Schedule. By State Statutes the schedule must be approved by the Board of Commissioners before distributing to departments for retention and disposal of records. A copy of the schedule, comprised of 140 pages,is on file in the Governing Body Office for review. STRATEGIC PLAN ALIGNMENT: Superior Public Health, Safety and Education • Keep the public informed on important information RECOMMENDED MOTION AND REQUESTED ACTIONS: Approve the April 2013 Records Retention and Disposition Schedule and authorize the Chairman to sign the approval sheet. ATTACHMENTS: Approval Sheet for 2013 County Management-Records Retention and Disposition Schedule.pdf COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 3-0 3 a RECORDS RETENTION AND DISPOSITION SCHEDULE t a I COUNTY MANAGEMENT z 9 S 3 f i i b R 06 � q, s 3 0 i E 7 i f f Issued By: NORTH CAROLINA DEPARTMENT OF C U LTU PAL r RESOURCES P North Carolina Department of Cultural Resources I Division of Archives and Records State Archives of North Carolina Government Records Section April 15, 2013 Board of Commissioners Meeting 06/03/2013 3- 1 - 1 a County Management Records Retention and Disposition Schedule The records retention and disposition schedule and retention periods governing the records series listed herein are hereby approved. In accordance with the provision of Chapters 121 and 132 of the General Statutes of North Carolina,it is agreed that the records do not and will not have further use or value for official business,research, or reference purposes after the respective retention periods specified herein and are authorized to be destroyed or otherwise disposed of by the agency or official having custody of them without further reference to or approval of either party to this agreement. The local government agency agrees to comply with 07 NCAC 04M.0510 when deciding on a method of destruction. Confidential records will be destroyed In such a manner that the records cannot be practicably read or reconstructed. However, records subject to audit or those legally required for ongoing official proceedings must be retained until released from such audits or official proceedings, notwithstanding the Instructions of this schedule. Public records, Including electronic records, not listed In this schedule are not authorized to be destroyed. This local government agency and the Department of Cultural Resources agree that certain records series possess only brief administrative,fiscal,legal,research,and reference value. These records series have been designated by retention periods which allow these records to be destroyed when "administtative value ends.' The local government agency hereby agrees that it will establish and enforce Internal policies setting minimum retention periods for the records that Cultural Resources has scheduled with the disposition Instruction "destroy when administrative value ends." if a county does not establish Internal policies and retention periods,the county Is not complying with the provisions of this retention schedule and Is not authorized by the Department of Cultural Resources to destroy the records with the disposition Instruction 'destroy when administrative value ends." The local government agency and the Department of Cultural Resources concur that the long-term and/or permanent preservation of electronic records require additional commitment and active management by the agency. The agency agrees to comply with all policies,standards,and best practices published by the Department of Cultural Resources regarding the creation and management of electronic records. It Is further agreed that these records may not be destroyed prior to the time periods stated; however, for sufficient reason they may be retained for longer periods. This schedule Is to remain In effect from the date of approval until it Is reviewed and updated. APPROVAL RECOMMENDED Chief Administrative Officer/ Sarah E. Koonts, Director County Manager Division of Archives and Records APPROVED 'LIU Chairman,Bd.County Commissioners Susayn W. Kluttz,Secretary Department of Cultural Resources County: April 15,2013 Board of Commissioners Meeting 06/03/2013 3- 1 -2 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 CONSENT ITEM. 4 DEPARTMENT: PRESENTER(S): Sheila L. Schult, Clerk to the Board CONTACT(S): Sheila L. Schult, Clerk to the Board SUBJECT: Adoption of State Road Resolution BRIEF SUMMARY: NCDOT is considering the addition of the following roads and requesting the Board to adopt a resolution in support of adding the roads to the state system: Deer Hill Drive and New Hope Place located within the Deer Crossing Subdivision in New Hanover County (Division File No. 1193-N) . STRATEGIC PLAN ALIGNMENT: Superior Public Health, Safety and Education • Keep the public informed on important information RECOMMENDED MOTION AND REQUESTED ACTIONS: Adopt SR-2 resolution. ATTACHMENTS: NCDOT Request Letter SR-2 Resolution COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 4-0 : „s ANFo j • . . RECEIVED L MAY 17 2013 STATE OF NORTH CAROLINA D E P A R T M E N T O F T R A N S P O R T A T I O N N H C B O C C PAT MCCRORY ANTHONY J.TATA 'g GOVERNOR SECRETARY May 13, 2013 Ms. Sheila Schult, Clerk to the Board New Hanover County Board of Commissioners 230 Government Center Drive, Suite 175 Wilmington, NC 28403 Subject: Proposed Addition to the State System of Highways; Deer Hill Drive & New Hope Place (Div. File No: 1193-N) Y E f Dear Ms. Schult: This office is considering adding Deer Hill Drive and New Hope Place. Request for the I roadway additions located within Deer Crossing subdivision in New Hanover County to the state system. After the Board's consideration, if they concur with our recommendation, please furnish this office with the current county resolution and official road name for our further handling. 3 If I may be of further assistance, please advise. 5 Sin erely, Anthony tL District Engineer AW L:jdd I Attachments: Copy of SR-1 Road Petition request form and locator map District Office 300 251-2655 Fax(910)251-2759 06/03/2013 4- 1 - 1 NORTH CAROLINA STATE DEPARTMENT OF TRANSPORTATION REQUEST FOR ADDITION TO STATE MAINTAINED SECONDARY ROAD SYSTEM North Carolina County of New Hanover Road(s) Description:Deer Hill Drive and New Hope Place located within the Deer Crossing Subdivision in New Hanover County (Division File No. 1193-N). WHEREAS, a petition has been filed with the Board of County Commissioners of the County ofNew Hanover requesting that the above described road(s), the location of which has been indicated on a map, he added to the Secondary Road System; and WHEREAS, the Board of County Commissioners is of the opinion that the above described road(s) should he added to the Secondary Road System, if the road(s) meets minimum standards and criteria established by the Division ofHighways of the Department of Transportation for the addition of roads to the System. NOW, THEREFORE, he it resolved by the Board of Commissioners of the County of New Hanover that the Division of Highways is hereby requested to review the above described road(s), and to take over the road(s)for maintenance if they meet established standards and criteria. CERTIFICATE The foregoing resolution was duly adopted by the Board of Commissioners of the County of New Hanover at a meeting on the 3rd day of June, 2013. WITNESS my hand and official seal this the 3rd day of June, 2013. Sheila L. Schult, Clerk to the Board New Hanover County Board of Commissioners Form SR-2 Please Note: Forward directly to the District Engineer,Division of Highways. Board of Commissioners Meeting 06/03/2013 4-2- 1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 CONSENT ITEM. 5 DEPARTMENT: PRESENTER(S): Capt. Mark Vincent, Sheriffs Office CONTACT(S): Capt. Mark Vincent, Sheriffs Office SUBJECT: Approval of Ordinance Addressing Alcohol Use in County Buildings BRIEF SUMMARY: The County may reduce liability and enhance public safety by prohibiting use of alcohol in buildings it owns or occupies as a tenant. The proposed ordinance would allow alcohol use only on such occasions as may be authorized in writing by the County Manager. Civil and/or criminal sanctions are available for enforcement. STRATEGIC PLAN ALIGNMENT: Effective County Management • Increase efficiency and quality of key business processes RECOMMENDED MOTION AND REQUESTED ACTIONS: Consider enacting ordinance. ATTACHMENTS: Ordinance COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 5-0 NEW HANOVER COUN TY BOARD OF COMMISSIONERS ORDINANCE AMENDING NEW HANOVER COUNTY CODE CHAPTER 38 The Board of County Commissioners of New Hanover County hereby ordains and decrees that New Hanover County, Chapter 38, Offenses and Miscellaneous Provisions, Article II, Offenses Against Property, is amended as follows: Add Section 38-33, Consumption of Alcoholic Beverages in County Buildings Prohibited. (a) No person shall drink or possess a bottle, can, or container of any intoxicating liquor, wine, malt or other alcoholic beverage as defined in General Statute 18B-101 (4) while in any public building owned or controlled by County as lessee, including but not limited to any county parking deck, unless specifically authorized in writing by the County Manager. (b) All alcoholic beverages or intoxicating liquors being possessed or used in violation of this section may be seized and destroyed. (c) This section shall not prohibit consumption or possession of unfortified alcoholic beverages within County parks or gardens, consistent with any applicable parks and garden rules, policies or procedures. (d) Anyone violating this section shall be liable for a civil citation fine of not more than one-hundred dollars ($100.00)for each violation, or (e) Anyone violating this section shall be guilty of a misdemeanor, punishable upon conviction by a fine not exceeding $100.00 or imprisonment not exceeding 30 days, as provided by G.S. 14-4. Except as specifically amended above, Chapter 38 shall remain unaltered and in full force and effect. ADOPTED this the day of June 2013. NEW HANOVER COUNTY Woody White, Chairman ATTEST: Sheila L. Schult, Clerk to the Board Board of Commissioners Meeting 06/03/2013 5- 1 - 1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 CONSENT ITEM: 6 DEPARTMENT: County Attorney PRESENTER(S): Kemp Burpeau, Deputy County Attorney CONTACT(S): Kemp Burpeau,Deputy County Attorney SUBJECT: Approval of EPA Consent Decree BRIEF SUMMARY: In 2007, the U.S. Environmental Protection Agency brought action against the City of Wilmington, New Hanover County, and the New Hanover County Water and Sewer District alleging that various sanitary sewer overflows constituted a violation of the Clean Water Act. The City and County, and their successor in ownership, the Cape Fear Public Utility Authority,have worked with the EPA and the Department of Justice to resolve outstanding issues through a Consent Decree. The Decree requires system inventory, monitoring,improvements, and payment of a civil penalty in the amount of$300,000. That sum is to be paid out of utility enterprise funds retained and held by the City. In addition to the $300,000 the County is holding $1 million dollars in retainage which will not be distributed until all consent order obligations have been performed. This money will not be distributed without Board approval. The Authority has in large part implemented the required work. Under the Interlocal Agreement creating the CFPUA, the Authority will be responsible for all such compliance and costs though indemnity provisions with the City and County. All parties are agreeable to executing the Consent Decree to finalize the outstanding litigation. STRATEGIC PLAN ALIGNMENT: RECOMMENDED MOTION AND REQUESTED ACTIONS: Approve Consent Decree and authorize the Manager's execution. ATTACHMENTS: Consent Degree Appendix A& C COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS:(only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 6-0 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION UNITED STATES OF AMERICA, ) Plaintiff, ) V. ) Civil Action No. CONSENT DECREE CITY OF WILMINGTON, ) NEW HANOVER COUNTY, AND ) CAPE FEAR PUBLIC UTILITY ) AUTHORITY ) Defendants, ) THE STATE OF ) NORTH CAROLINA, ) Necessary Party required by ) 33 U.S.0 § 1319(e) ) Board of Commissioners Meeting 06/03/2013 6- 1 - 1 TABLE OF CONTENTS L JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 IL APPLICABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 III. OBJECTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 IV. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 V. REVIEW,APPROVAL AND IMPLEMENTATION OF DELIEVERABLES. . . 15 VI. COMPLIANCE REQUIRMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 VII. CIVIL PENALTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 VIII. REPORTING REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 IX. STIPULATED PENALTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 X. FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 XI. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 XIL RIGHT OF ENTRY AND INFORMATION COLLECTION AND RETENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 XIIL EFFECT OF SETTLEMENT/RESERVATION OF RIGHTS. . . . . . . . . . . . . . 38 XIV. COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 XV. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 XVI. EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 XVIL RETENTION OF JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 XVIII. MODIFICATION. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 XIX. FINAL REPORT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 -ii- Board of Commissioners Meeting 06/03/2013 6- 1 -2 XX. PUBLIC PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 XXL SIGNATORIES/SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 XXII. INTEGRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 XXIII. FINAL JUDGMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 XXIV. APPENDICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 -iii- Board of Commissioners Meeting 06/03/2013 6- 1 -3 WHEREAS, Plaintiff, the United States of America("United States"), by the authority of the Attorney General of the United States and through its undersigned counsel, acting at the request and on behalf of the United States Environmental Protection Agency ("EPA"), filed a Complaint(the "Complaint") concurrently with the lodging of this Consent Decree alleging that Defendants (the City of Wilmington, North Carolina (the "City"); New Hanover County, North Carolina(the"County"); and Cape Fear Public Utility Authority (the "Authority")) have experienced a number of sanitary sewer overflows ("SSOs")that the EPA contends are violations of Section 301 of the Clean Water Act, 33 U.S.C. § 1311 ("CWA"), and certain terms and conditions of its applicable National Pollutant Discharge Elimination System ("NPDES")permits issued under Section 402 of the CWA, 33 U.S.C. § 1342; WHEREAS, the State of North Carolina (the "State")was named as a necessary party in the Complaint and is joined as a necessary party to this Consent Decree under Section 309(e) of the CWA, 33 U.S.C. § 1319(e), which requires the state in which a municipality is located to be joined as a party whenever the municipality is a party to a civil action brought by the United States under Section 309 of the CWA and which further provides that"[s]uch state shall be liable for payment of any judgment, or any expenses incurred as a result of complying with any judgment, entered against the municipality in such action to the extent that the laws of that [s]tate prevent the municipality from raising revenues needed to comply with such judgment."; WHEREAS, the State has been authorized by EPA to administer the NPDES program pursuant to Section 402(b) of the CWA, 33 U.S.C. § 1342(b); WHEREAS, each of the Defendants is a"municipality" pursuant to Section 502 of the CWA, 33 U.S.C. § 1362; WHEREAS, the City owned and operated certain municipal wastewater collection, retention and transmission systems which are designed to collect and convey municipal sewage (domestic, commercial and -4- Board of Commissioners Meeting 06/03/2013 6- 1 -4 industrial)to its former M'Kean Maffitt Wastewater Treatment Plant(the"Southside WWTP") and its former James A. Loughlin Wastewater Treatment Plant(the "Northside WWTP")until such municipal wastewater collection, retention and transmission systems and WWTPs were conveyed to the Authority on July 1, 2008; WHEREAS, the County owned and operated certain municipal wastewater collection, retention and transmission systems which are designed to collect and convey municipal sewage (domestic, commercial and industrial)to its former Walnut Hills Subdivision Wastewater Treatment Plant(the "Walnut Hills WWTP") and to the Southside and Northside WWTPs until such municipal wastewater collection, retention and transmission systems and WWTPs were conveyed to the Authority on July 1, 2008; WHEREAS, the New Hanover County Water and Sewer District(the"District") owned and operated certain municipal wastewater collection, retention and transmission systems which are designed to collect and convey municipal sewage (domestic, commercial and industrial)to the Southside WWTP, the Northside WWTP and the Walnut Hills WWTP until such municipal wastewater collection, retention and transmission systems and WWTPs were conveyed to the Authority on July 1, 2008; WHEREAS, the Authority is now the owner and operator of the municipal wastewater collection, retention and transmission systems and WWTPs (the "Sewer System")formerly owned and operated by the City, the County and/or the District; WHEREAS, the Authority now operates the Southside WWTP, the Northside WWTP and the Walnut Hills WWTP pursuant to NPDES permits issued by the State and numbered NC0023973, NC0023965, and NC0039527, respectively (collectively referred to as the "NPDES Permits"); WHEREAS, the State's Department of Environment and Natural Resources ("DENR")reviewed and fined the City and the County for a number of SSOs prior to September 14, 2007 and entered into a Special Order by Consent("SOC")with the City that became effective September 14, 2007 that required the City to -5- Board of Commissioners Meeting 06/03/2013 6- 1 -5 implement flow control associated with the Northeast Interceptor and set forth a series of actions that had to be undertaken within the collection system. On March 12, 2008, DENR recommended that the SOC be terminated because the activities associated with the SOC had been accomplished. WHEREAS, this Consent Decree requires the Defendants through the actions of the Authority to develop, submit, finalize, and implement certain additional plans for the continued improvement of its Sewer System; WHEREAS, the City contends that it had a goal to create a plan of action for ongoing collection system rehabilitation and maintenance and to develop a recommended capital improvement plan for wastewater collection system projects and subsequently completed a Sanitary Sewer Condition Assessment Project in 2007. The City and the Authority contend that they have since used this program to guide the identification and prioritization of rehabilitation needs, and the Authority contends it has implemented a"find it-fix it" approach that combines inspection, repair and rehabilitation activities to prioritized areas; WHEREAS, the City and the Authority in response to EPA and DENR enforcement efforts developed, implemented and completed numerous capital improvement projects within the Sewer System to address SSOs as more particularly described on Appendix A, attached hereto and incorporated herein; WHEREAS, the City also voluntarily developed and submitted a Management, Operation, and Maintenance ("MOM") evaluation in 2006 using EPA Guidance documents and the Authority has subsequently, in 2010, expanded the program to a Capacity, Management, Operations, and Maintenance ("CMOM") evaluation and to include portions of the Sewer System that was previously owned and operated by the County and the District and is currently updating it to include the 2012 status of CMOM programs and activities; WHEREAS, the Plaintiff and the Defendants to this Consent Decree have negotiated in good faith and have reached a settlement of the issues raised in the Complaint; -6- Board of Commissioners Meeting 06/03/2013 6- 1 -6 WHEREAS, the Defendants' agreement to this Consent Decree is not an admission of liability, and except for the Defendants' consent to jurisdiction and venue as provided in Section I of this Consent Decree, nor is it an adjudication or admission of any fact or law; WHEREAS, the Plaintiff and the Defendants recognize, and the Court by entering this Consent Decree finds, that this Consent Decree has been negotiated by the Plaintiff and the Defendants in good faith and will avoid litigation between the Plaintiff and the Defendants and that this Consent Decree is fair, reasonable, and in the public interest; NOW THEREFORE, with the consent of the Plaintiff and the Defendants, it is hereby ORDERED, ADJUDGED and DECREED as follows: L JURISDICTION AND VENUE 1. This Court has jurisdiction over the subject matter of this action, pursuant to 28 U.S.C. §§ 1331, 1345, and 1355, and Section 309(b) of the CWA, 33 U.S.C. § 1319(b), and over the Parties. Venue is proper in the Eastern District of North Carolina pursuant to Section 309(b) of the CWA, 33 U.S.C. § 1319(b), and 28 U.S.C. §§ 1391(b) and 1395(a), because the violations alleged in the Complaint are alleged to have occurred in this judicial district. For purposes of this Consent Decree, or any action to enforce this Consent Decree, the Defendants consent to the Court's jurisdiction over this Consent Decree and any such action and over the Defendants and consent to venue in this judicial district. II. APPLICABILITY 2. The obligations of this Consent Decree apply to and are binding upon the United States, the State (to the extent that its laws prevent the Defendants from raising revenues needed to comply with this Consent -7- Board of Commissioners Meeting 06/03/2013 6- 1 -7 Decree as set forth in Section 309(e) of the CWA, 33 USC § 1319 (e)), and upon the Defendants and any successors, assigns, or other entities or persons otherwise bound by law. 3. No transfer of ownership or operation of the Sewer System, whether in compliance with the procedures of this Paragraph or otherwise, shall relieve the Defendants of its obligation to ensure that the terms of this Consent Decree are implemented. At least thirty (30)Days prior to such transfer, the Authority shall provide a copy of this Consent Decree to the proposed transferee and shall simultaneously provide written notice of the prospective transfer, together with a copy of the proposed written agreement, to EPA and the United States Department of Justice, in accordance with Section XV of this Consent Decree (Notices). The Authority shall require, as a condition of any sale or transfer, that the purchaser or transferee agrees in writing to be bound by this Consent Decree and submit to the jurisdiction of the Court for its enforcement. Any attempt to transfer ownership or operation of the Sewer System without complying with this Paragraph constitutes a violation of this Consent Decree. 4. The Defendants shall provide a copy of this Consent Decree to all officers, employees, and agents whose duties might reasonably include compliance with any provision of this Consent Decree, as well as to any contractor retained to perform work required under this Consent Decree. The Defendants shall condition any such contract upon performance of the work in conformity with the terms of this Consent Decree. 5. In any action to enforce this Consent Decree, the Defendants shall not raise as a defense the failure by any of its officers, directors, employees, agents, or contractors to take any actions necessary to comply with the provisions of this Consent Decree. III. OBJECTIVES 6. All plans, measures, reports, construction, maintenance, operational requirements, and other obligations in this Consent Decree or resulting from the activities required by this Consent Decree shall have the -8- Board of Commissioners Meeting 06/03/2013 6- 1 -8 objective of causing the Sewer System to achieve and maintain the goals of(1)full compliance with the CWA and the NPDES Permits and (2)the elimination of all SSOs. IV. DEFINITIONS 7. Terms used in this Consent Decree that are defined in the CWA or in regulations promulgated pursuant to the CWA shall have the meanings assigned to them in the CWA, 33 U.S.C. §§ 1251 et seq., and regulations promulgated under the CWA, unless otherwise provided in this Consent Decree. Whenever the terms set forth below are used in this Consent Decree, the following definitions shall apply: (a). The"Authority" shall mean the Cape Fear Public Utility Authority, including all of its departments, agencies, instrumentalities, and any successor thereto. (b) "Building Backup" shall mean a wastewater release or backup into a building that is caused by blockages, flow conditions, or other malfunctions in the Authority's WCTS. A wastewater backup or release that is caused by blockages, flow conditions, or other malfunctions of a Private Lateral or other piping/conveyance system that is not owned by the Authority is not a Building Backup. (c). "Certification" or"Certify" when used in this Consent Decree shall require the Defendants to comply with Paragraph 14 of this Consent Decree. (d). "City" shall mean the City of Wilmington, North Carolina, including all of its departments, agencies, instrumentalities, and any successor thereto. (e). "CMOM" or"Capacity, Management, Operations, and Maintenance" shall mean a program of accepted industry practices to properly manage, operate and maintain sanitary wastewater collection, transmission and treatment systems, investigate capacity-constrained areas of these systems, and respond to SSO events. (f). "Complaint" shall mean the complaint filed by the United States in this action. -9- Board of Commissioners Meeting 06/03/2013 6- 1 -9 (g). "Consent Decree" shall mean this Consent Decree and all appendices attached hereto(listed in Section XXIV.). In the event of a conflict between this document and any appendix,this document shall control. (h). "County" shall mean New Hanover County,North Carolina,including all of its departments, agencies, instrumentalities, and any successor thereto. 0). "CWA" shall mean the Clean Water Act, as amended, 33 U.S.C. §§ 1251, etseq. (k). "Date of Lodging" shall mean the date this Consent Decree is filed for lodging with the Clerk of the Court for the United States District Court for the Eastern District of North Carolina. (1). "Day" shall mean a calendar day unless expressly stated to be a business day. In computing any period of time under this Consent Decree, where the last day would fall on a Saturday, Sunday, or federal holiday, the period shall run until the close of business of the next business day. (m). "Defendants" shall mean the City, the County, the Authority, and/or any successors thereto. (n). "Deliverable" shall mean any written document required to be prepared and/or submitted by or on behalf of the Defendants pursuant to this Consent Decree. (o). "District" shall mean the New Hanover County Water and Sewer District, including all of its departments, agencies, instrumentalities, and any successor thereto. (p). "DOY shall mean the United States Department of Justice. (q). "EPA" shall mean the United States Environmental Protection Agency and any of its successor departments or agencies. (r). "Effective Date" shall have the definition provided in Section XVI. (s). "Force Main" shall mean any pipe that receives and conveys, under pressure, wastewater from the discharge side of a pump. A Force Main is intended to convey wastewater under pressure. -10- Board of Commissioners Meeting 06/03/2013 6- 1 - 10 (t). "Gravity Sewer Line" or"Gravity Sewer" shall mean a pipe that receives, contains and conveys wastewater not normally under pressure, but is intended to flow unassisted under the influence of gravity. (u). "Infiltration" as defined by 40 C.F.R. § 35.2005(b)(20) shall mean water other than wastewater that enters the WCTS (including sewer service connections and foundation drains)from the ground through such means as defective pipes, pipe joints, connections, or manholes. (v). "Inflow" as defined by 40 C.F.R. § 35.2005(b)(21) shall mean water other than wastewater that enters the WCTS (including sewer service connections)from un-metered sources such as, but not limited to, roof leaders, cellar drains, yard drains, area drains, drains from springs and swampy areas, manhole covers, cross connections between storm sewers and sanitary sewers, catch basins, cooling towers, storm water, surface runoff, street wash waters, or drainage. (w). "I/r' shall mean the total quantity of water from inflow, infiltration, and rainfall induced inflow and infiltration without distinguishing the source. (x). "Month" shall mean shall mean one calendar month running from the numbered day to the same numbered day of the following calendar month, regardless of whether the particular month has 28, 29, 30 or 31 days. In the event a triggered event would occur on a day of the month which does not exist(for example, on February 30), then the event shall be due on the first day of the following month(for example, March 1). (y). "NPDES" shall mean the National Pollutant Discharge Elimination System authorized under Section 402 of the CWA, 33 U.S.C. § 1342. (z). "NPDES Permit(s)" shall mean NPDES permits issued to the Authority by the State pursuant to Section 402 of the Clean Water Act, 33 U.S.C. § 1342, for the M'Kean Maffitt Wastewater -11- Board of Commissioners Meeting 06/03/2013 6- 1 - 11 Treatment Plant(the"Southside WWTP"), the James A. Loughlin Wastewater Treatment Plant(the"Northside WWTP"), and the Walnut Hills subdivision Wastewater Treatment Plant(the "Walnut Hills WWTP"), numbered NC0023973,NC0023965, and NC0039527, respectively, and any future extended, modified, or reissued permits. (aa). "Paragraph" shall mean a portion of this Consent Decree identified by an arabic numeral. (bb). "Parties" shall mean the United States of America on behalf of EPA, the City, the County, the Authority, and the State. (cc). "Plaintiff' shall mean the United States of America on behalf of EPA. (dd). "Private Lateral" shall mean that portion of a sanitary sewer conveyance pipe that extends from the wastewater tap to the single-family, multi-family, apartment, or other dwelling unit or commercial or industrial structure to which wastewater service is or has been provided. (ee). "Pump Station" shall mean facilities comprised of pumps which lift wastewater to a higher hydraulic elevation, including all related electrical, mechanical, and structural systems necessary to the operation of that pump station. (ft). "Sanitary Sewer Overflow" or"SSO" shall mean any discharge of wastewater to waters of the United States from the Authority's WCTS through a point source not permitted in any NPDES permit, as well as any overflow, spill, or release of wastewater to public or private property from the WCTS that may not have reached waters of the United States, including all Building Backups. (gg). "Section" shall mean a portion of this Consent Decree identified by a roman numeral. (hh). "Sewer System" shall mean the WCTS and the WWTPs. (ii). "State" shall mean the State of North Carolina, including all of its departments, agencies, and instrumentalities -12- Board of Commissioners Meeting 06/03/2013 6- 1 - 12 0j). "Subparagraph" shall mean a portion of a paragraph identified by lowercase letters. (kk). "Timely" when applied to the submittal of a Deliverable shall mean submitted no later than the deadline established in this Consent Decree (or in a document approved pursuant to this Consent Decree) and containing all of the elements pertaining to the submittal as set forth in this Consent Decree (or in a document approved pursuant to this Consent Decree). "Timely," when applied to the implementation of any Work shall mean implemented no later than the deadline established in this Consent Decree (or in a document approved pursuant to this Consent Decree) and in accordance with the elements pertaining to such Work as set forth in this Consent Decree (or in a document approved pursuant to this Consent Decree). (11). "United States" shall mean the United States of America, acting on behalf of EPA, including its departments, agencies, and instrumentalities. (mm). "Wastewater Collection and Transmission System" or"WCTS" shall mean the wastewater collection, retention, and transmission systems, including all pipes, Force Mains, Gravity Sewer Lines, Pump Stations, manholes and appurtenances thereto, owned or operated by the Authority designed to collect and convey municipal sewage (domestic, commercial and industrial)to the Authority's WWTPs, including, without limitation, all wastewater collection, retention, and transmission systems and WTTPs formerly owned and operated by the City, the County and/or the District and which were conveyed by such entities to the Authority on July 1, 2008. (nn). "Wastewater Treatment Plant" or"WWTP" shall mean devices or systems used in the storage, treatment, recycling, and reclamation of municipal wastewater. For purposes of this Consent Decree, this definition shall include all facilities owned, managed, operated, and maintained by the Authority, including but not limited to the Southside WWTP, the Northside WWTP and the Walnut Hills WWTP, and all components of those plants. -13- Board of Commissioners Meeting 06/03/2013 6- 1 - 13 (oo). "Work" shall mean all activities the Defendants are required to perform under this Consent Decree. V. REVIEW,APPROVAL AND IMPLEMENTATION OF DELIVERABLES 8. EPA Action on Deliverables. After review of any Deliverable that is required to be submitted by the Authority pursuant to this Consent Decree, EPA shall in writing: (a). approve the submission; (b). approve part of the submission and disapprove the remainder; or (c). disapprove the submission. 9. Approved Deliverables. If a Deliverable is approved by EPA pursuant to Subparagraph 8.(a)., the Authority shall take all actions required by the Deliverable in accordance with the schedules and requirements of the Deliverable as approved. If the Deliverable is approved only in part pursuant to Subparagraph 8.(b)., the Authority shall, upon written direction from EPA, take all actions required by the approved plan, report, or other item that EPA, determines are technically severable from any disapproved portions, subject to the Authority's right to dispute only the specified conditions or the disapproved portions, under Section XI of this Consent Decree (Dispute Resolution). Following EPA approval of any Deliverable or portion thereof, such Deliverable or portion thereof so approved shall be incorporated into and become enforceable under this Consent Decree. 10. Disapproved Deliverables. If the Deliverable is disapproved in whole or in part pursuant to Subparagraph 8.(b). or(c)., the Authority shall, within thirty (30)Days or such other time as EPA and the Authority agree to in writing, correct all deficiencies and resubmit to EPA the Deliverable, or disapproved portion thereof, for approval, in accordance with Paragraph 8. If the resubmission is approved in whole or in part, the Authority shall proceed in accordance with Paragraph 9. -14- Board of Commissioners Meeting 06/03/2013 6- 1 - 14 11. Stipulated Penalties Accruing. Any stipulated penalties applicable to the original Deliverable, as provided in Section IX of this Consent Decree, shall accrue during the thirty (30)-Day period or other specified period, but shall not be payable unless the resubmitted Deliverable is not Timely or is disapproved in whole or in part; provided that, if the original submission was so deficient as to constitute a material breach of the Authority's obligations under this Consent Decree, the stipulated penalties applicable to the original submission shall be due and payable notwithstanding any subsequent resubmission. 12. Timing of Review of Deliverables. EPA agrees to use best efforts to expeditiously review and comment on Deliverables. If EPA issues written comments and decisions on the Deliverables more than one- hundred and twenty (120)Days after receipt of such submission, any subsequent deadline or milestone that is dependent upon such comments or decisions shall be extended. The length of the extension shall be determined by calculating the number of Days between EPA's receipt of the submission and the date of EPA's written response, less one-hundred and twenty (120)Days. Within thirty (30)Days of the date that the Authority knows or should know of a deadline or milestone that the Authority believes is extended under this Paragraph, the Authority shall inform EPA, in writing, of its belief and the amount of time the Authority believes the deadlines or milestones are extended. If EPA disagrees with the Authority's determination that a deadline is dependent upon such comments or decisions, EPA shall inform the Authority in writing. The Authority may dispute EPA's conclusion regarding whether a deadline is dependent upon such comments or decisions pursuant to Section XI(Dispute Resolution). 13. Revisions to Deliverables. The Plaintiff recognizes that the Authority may need or want to revise certain Deliverables during the term of this Consent Decree. Such revisions shall not be considered modifications to the Consent Decree for purposes of Section XVIII(Modification). The Authority must obtain EPA's prior written approval of any revision to the substance of a Deliverable. -15- Board of Commissioners Meeting 06/03/2013 6- 1 - 15 14. Certification. All Deliverables, notices, documents or reports submitted to the United States and EPA pursuant to this Consent Decree by a Defendant, shall, by a senior management official of that Defendant, be signed and certified as follows: I certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering such information, the information submitted is, to the best of my knowledge and belief, true, accurate and complete. I am aware that there are significant penalties for submitting false information, including the possibility of fine and imprisonment for knowing violations. VL COMPLIANCE REQUIREMENTS 15. Obligation to Perform Work. Upon the Effective Date of this Consent Decree, the Authority shall implement the Work pursuant to this Section of the Consent Decree. The Authority is responsible for ensuring that any contractors hired to perform Work pursuant to this Section of the Consent Decree comply with all applicable laws and with this Consent Decree. All Work shall be performed using sound engineering practices, which may include appropriate provisions of the Handbook: Sewer System Infrastructure Analysis and Rehabilitation, EPA/625/6-91/030, 1991; and Existing Sewer Evaluation and Rehabilitation, WEF MOP FD-6, 1994. 16. Specific CMOM Program Development. The Authority shall develop and implement the specific CMOM programs for the WCTS as provided below. All CMOM programs shall be developed in accordance with EPA Region IV guidance, as set forth in the CDROM disk attached hereto as Appendix B. The Authority shall ensure that each CMOM program has written, defined purpose(s); written, defined goal(s); is documented -16- Board of Commissioners Meeting 06/03/2013 6- 1 - 16 in writing with specific details; is implemented by well trained personnel; has established performance measures; and has written procedures for periodic review. (a). Inter-Jurisdictional Agreement Program. Within six (6)Months after the Effective Date of the Consent Decree, the Authority shall submit to EPA for review and approval an Inter-Jurisdictional Agreement Program, including a schedule for full implementation of the program, for when the Authority renews existing agreements or enters into new agreements that cover the collection, conveyance, and treatment of sewage by the Authority from other municipal satellite sewer systems. The Inter-Jurisdictional Agreement Program shall include, at a minimum, the following components: i. A delineation of the minimum provisions to be set forth in these inter jurisdictional agreements with which the contracting municipality must comply. Such provisions shall include, but not be limited to, the following: (A) Requirements on the contracting party to properly manage, operate, and maintain its sewage collection and conveyance systems so as to minimize peak flows into the Authority's WCTS by excluding, to the maximum extent, the intrusion of surface and ground water and other extraneous flows; (B) Any necessary, specific flow limitations or allocation; and (C) Requirements on the contracting party to ensure compliance with the legal authorities required in 40 C.F.R. § 403.8(f)with regard to equivalent control, monitoring and enforcement of industrial use dischargers into the Authority's WCTS from other municipal satellite sewer systems. ii. A delineation of provisions addressing the term or life of these agreements; mechanisms for appropriate modification of the agreements; and mechanisms for enforcement of the agreements (including a description of the legal support necessary to develop, oversee and enforce the -17- Board of Commissioners Meeting 06/03/2013 6- 1 - 17 agreements) such as provisions permitting termination of the agreement and physical disconnection from the Authority's WCTS within a reasonable time not exceeding two (2)years upon the failure of the contracting party to comply with its capacity, management, operations, and maintenance obligations. iii. Provision that when any of the Authority's currently existing agreements expire or terminate, the Authority may, but shall not be required to, renew any such agreement or enter into a new agreement covering the collection, conveyance, and treatment of sewage from such other municipal satellite sewer system. In the event the Authority does renew such an agreement or enters into any such new agreement, each agreement shall be consistent with the requirements of the Inter-Jurisdictional Agreement Program. (b). Continuing Sewer System Assessment Program ("CSSAP")for the WCTS. Within six (6)Months after the Effective Date of this Consent Decree, the Authority shall submit to EPA for review and approval a CSSAP to analyze the infrastructure of the WCTS. The CSSAP shall establish procedures for setting priorities and schedules for undertaking the continual WCTS assessment components set forth in Subparagraphs (b).i. through (b).vii. below. The CSSAP shall develop these priorities and schedules taking into consideration the nature and extent of customer complaints; flow monitoring, including flow isolation studies; location and cause of SSOs; and any other relevant information. The CSSAP shall include standard procedures for a CSSAP information management system and performance goals for each component of the CSSAP set forth in Subparagraphs (b).i. through (b).vii. below. Upon approval, the Authority shall implement the CSSAP and such assessment components in accordance with the schedules established pursuant to the CSSAP to analyze the infrastructure of the WCTS. i. Dyed Water Flooding. The Dyed Water Flooding component of the CSSAP shall establish standard procedures for conducting dyed water testing to locate sources of I/I to the WCTS. The Dyed Water Flooding component shall include standard forms -18- Board of Commissioners Meeting 06/03/2013 6- 1 - 18 for Private Laterals and manholes. ii. Corrosion Defect Identification. The Corrosion Defect Identification component of the CSSAP shall establish standard procedures for inspecting and identifying sewer infrastructure that is either corroded or at risk of corrosion. The Corrosion Defect Identification component shall include a system for prioritizing repair of corrosion defects, corrosion identification forms, and procedures for a corrosion defect analysis. iii. Routine Manhole Inspection. The Routine Manhole Inspection component of the CSSAP shall establish standard procedures for routine inspection of all manholes within the WCTS. The Routine Manhole Inspection component shall include a system for prioritizing repair of manhole defects, manhole inspection forms, and procedures for a manhole defect analysis. iv. Flow Monitoring. The Flow Monitoring component of the CSSAP shall establish standard procedures for routine flow monitoring during dry and wet weather to support engineering analyses related to sewer system capacity and peak flow studies. Dry weather monitoring shall be carried out so as to allow the characterization of base flows and I/I rates. Wet weather monitoring shall be conducted periodically during events of sufficient duration and intensity that cause significant I/I into the WCTS. The Flow Monitoring component shall identify areas susceptible to I/I into the WCTS. The Flow Monitoring Program shall establish a process for determining the number and locations of permanent and temporary flow meters; a program for sewer cleaning associated with flow monitoring; and a procedure for adequate rainfall measurement. v. Closed Circuit Television ("CCTV"). The CCTV component of the CSSAP shall establish standard procedures for routine use of CCTV to support sewer -19- Board of Commissioners Meeting 06/03/2013 6- 1 - 19 assessment activities, and shall include procedures for CCTV cleaning and a process for the retention and access of CCTV data. vi. Gravity System Defect Analysis. The Gravity System Defect Analysis component of the CSSAP shall establish standard procedures for analysis of gravity sewer system defects. Such procedures shall include Private Lateral investigations to identify sources of PI to the WCTS. The Gravity System Defect Analysis component shall establish standard defect codes; defect identification procedures and guidelines; and a standardized process for cataloging gravity system defects. vii. Smoke Testing. The Smoke Testing component of the CSSAP shall establish standard procedures for smoke testing of the gravity sewer system to identify sources of PI to the WCTS, including cross connections and other unauthorized connections. Such procedures shall include Private Lateral investigations to identify sources of PI to the WCTS. The Smoke Testing component shall include smoke testing forms and procedures for smoke testing defect analysis. (c). Continuing Infrastructure Rehabilitation Program ("CIRP")for the WCTS. No later than three (3)Months after EPA approval of the CSSAP, the Authority shall submit to EPA for review and approval a CIRP. The CIRP shall employ the components identified in Subparagraphs (c).i. through(c).iv. below to, among other things, address III and the other conditions causing SSOs, with the goal of eliminating future SSOs. The CIRP shall take into account all information gathered pursuant to the CSSAP. The CIRP shall include standard procedures for a CIRP information management system and procedures for analysis of the effectiveness of completed rehabilitation for each component of the CIRP set forth in Subparagraphs (c).i. through (c).iv. below. Upon approval, the Authority shall implement the CIRP and its components in -20- Board of Commissioners Meeting 06/03/2013 6- 1 -20 accordance with the schedules established pursuant to the CIRP to rehabilitate the infrastructure of the WCTS. Those schedules shall require the CIRP and its components to be implemented as soon as practicable. i. Gravity Line Rehabilitation. The Gravity Line Rehabilitation component of the CIRP shall require rehabilitation of all gravity sewer lines and related appurtenances that have been identified as in need of rehabilitation under the CSSAP. The Gravity Line Rehabilitation component shall establish a process for setting gravity line rehabilitation priorities and schedules; shall establish an ongoing inventory of gravity line rehabilitation, including identification of the rehabilitation techniques used; shall require an analysis of the effectiveness of completed rehabilitation; and shall identify currently scheduled gravity line rehabilitation. ii. Manhole Rehabilitation. The Manhole Rehabilitation component of the CIRP shall require rehabilitation of all manholes that have been identified as in need of rehabilitation under the CSSAP. The Manhole Rehabilitation component shall establish a process for setting manhole rehabilitation priorities and schedules; shall establish an ongoing inventory of manhole rehabilitation, including identification of the rehabilitation techniques used; and shall identify currently scheduled manhole rehabilitation. iii. Pump Station Rehabilitation. The Pump Station Rehabilitation component of the CIRP shall require rehabilitation of all pump stations that have been identified as in need of rehabilitation under the CSSAP. The Pump Station Rehabilitation component shall establish a process for setting pump station rehabilitation priorities and schedules; shall establish an ongoing inventory of pump station rehabilitation, including identification of the rehabilitation techniques used; and shall identify currently scheduled pump station rehabilitation. iv. Force Main Rehabilitation. The Force Main Rehabilitation component of the CIRP shall require rehabilitation of all force mains and related appurtenances that have been identified as in need of rehabilitation under the CSSAP. The Force Main Rehabilitation component shall establish a process for setting -21- Board of Commissioners Meeting 06/03/2013 6- 1 -21 force main rehabilitation priorities and schedules; shall establish an ongoing inventory of force main rehabilitation, including identification of the rehabilitation techniques used; and shall identify currently scheduled force main rehabilitation. 17. Specific Capital Improvement Projects. Based on previous investigations, the Authority has identified certain rehabilitation projects that are intended to address conditions currently causing SSOs in the WCTS. These specific capital improvement projects are identified and described in Appendix C, attached hereto and incorporated herein. The Authority shall complete each of these capital improvement projects in accordance with the schedules set forth in Appendix C. VII. CIVIL PENALTY 18. Within thirty (30)Days after the Effective Date of this Consent Decree, the Defendants shall pay to the United States the sum of$300,000 as a civil penalty by FedWire Electronic Funds Transfer("EFT")to the U.S. Department of Justice in accordance with written instructions to be provided to the Defendants, following lodging of the Consent Decree, by the Financial Litigation Unit of the U.S. Attorney's Office for the Eastern District of North Carolina, Southern Division, 2 Princess Street Wilmington, NC 2840, (910) 815-4933. At the time of payment, the Defendants shall send a copy of the EFT authorization form and the EFT transaction record, together with a transmittal letter, which shall state that the payment is for the civil penalty owed pursuant to the Consent Decree in United States v. City of Wilmington et al., and shall reference the civil action number and DOJ case number 90-5-1-1-09405, to the United States in accordance with Section XV of this Consent Decree (Notices); by email to acctsreceivable.CIN WDgepa.gov; and by mail to: EPA Cincinnati Finance Office 26 Martin Luther King Drive Cincinnati, Ohio 45268 -22- Board of Commissioners Meeting 06/03/2013 6- 1 -22 In the event that full cash payment to the United States is not made within thirty (30)Days of the Effective Date, the Defendants shall pay to the United States interest on the balance due from the original due date to the date of payment, at the rate calculated pursuant to 28 U.S.C. § 1961. VIII. REPORTING REQUIREMENTS 19. Quarterly S SO Reports. Beginning thirty(30)Days after the first full three(3)Month period after the Effective Date of this Consent Decree, and thirty(30)Days after each subsequent three(3)Month period thereafter until termination of the Consent Decree,the Authority shall submit a Quarterly S SO Report to EPA. Each Quarterly SSO Report shall include the date,location, source,time reported,time stopped, estimated volume,receiving water (if any), cause, and actions taken to repair or otherwise resolve the cause of all SSOs occurring in the WCTS within the applicable three (3)Month period in a tabulated electronic format. 20. Semi-Annual Reports. Beginning thirty(30)Days after the first full six (6)Month period after the Effective Date of this Consent Decree, and thirty (30) Days after each subsequent six (6) Month period until termination of the Consent Decree, the Authority shall submit a Semi-Annual Report to EPA for review and comment to ensure consistency with reporting requirements of this Paragraph. Each Semi-Annual Report shall include, at a minimum: (a). A summary description of projects and significant activities completed and deadlines achieved during the previous applicable six (6)Month period pursuant to the requirements of this Consent Decree,in Gantt chart or similar format, including a summary of any missed deadline required by this Consent Decree and, if applicable, the reasons for missing such deadline. If any missed deadline cannot be fully explained at the time the report is due, the Authority shall include a statement to that effect in the report. The Authority shall investigate to determine the cause of the missed deadline and then shall submit an amendment to the report, including a full -23- Board of Commissioners Meeting 06/03/2013 6- 1 -23 explanation of the cause of the missed deadline,within thirty(30)Days after submission of the Semi-Annual Report. (b). A summary of projects and significant activities anticipated to be performed, and deadlines anticipated to be achieved,in the successive applicable six(6)Month period to comply with the requirements of this Consent Decree, in Gantt chart or similar format. (c). A narrative summary of progress made, including key accomplishments and significant activities,under the CMOM programs implemented or modified pursuant to this Consent Decree for the most recent six (6)Month period. (d). A trends analysis of the number,volume, average duration, and cause of the County's SSOs for the previous twenty-four(24)Month period. 21. Compliance with this Section does not relieve the Authority of any other reporting obligations required by the Clean Water Act or its implementing regulations, or by any other Federal, State, or local law, regulation, permit, or other requirement, including the NPDES Permits. 22. Notification to EPA pursuant to this Section shall not by itself or otherwise satisfy the notification requirements set forth in Section X(Force Maj eure). 23. Any information provided pursuant to this Consent Decree may be used by the United States in any proceeding to enforce the provisions of this Consent Decree and as otherwise permitted by law. IX. STIPULATED PENALTIES 24. The Authority shall be liable for stipulated penalties to the United States for violations of this Consent Decree as specified below, unless excused under Section X(Force Majeure). A violation includes failing to perform any obligation required by the terms of this Consent Decree, including any work plan or -24- Board of Commissioners Meeting 06/03/2013 6- 1 -24 schedule approved under this Consent Decree, according to all applicable requirements of this Consent Decree and within the specified time schedules established by or approved under this Consent Decree. 25. If the Defendants fail to pay the civil penalty required to be paid under Section VII of this Consent Decree (Civil Penalty)when due, the Authority shall pay a stipulated penalty of$1,000 per day for each day that the payment is late. 26. The following stipulated penalties shall accrue for each violation indentified below: (a). For each failure to Timely submit any of the Deliverables required in Section VI (Compliance Requirements), a stipulated penalty for each day the Authority remains out of compliance for failure to Timely submit any such Deliverable may be assessed as follows: Period of Noncompliance: Penalty Per Violation Per DaX: 1-30 days $500 More than 30 days $1,000 (b). For each day the Authority fails to Timely implement any Work required in Section VI (Compliance Requirements), daily stipulated penalties may be assessed for each such item of Work as follows: Period of Noncompliance: Penalty Per Violation Per DaX: 1-30 days $500 31-60 days $1,500 More than 60 days $2,000 (c). For each SSO in the WCTS that reaches waters of the United States, a stipulated penalty may be assessed as follows: If SSO Occurs: Penalty Per SSO: Within 2 years from the Effective Date $250 for SSO 5,000 gallons or below -25- Board of Commissioners Meeting 06/03/2013 6- 1 -25 $1,000 for SSO over 5,000 gallons Between 2 and within 4 years $500 for SSO 5,000 gallons or below from the Effective Date $1,500 for SSO over 5000 gallons 4 years or more from the Effective Date $1,000 for SSO 5000 gallons or below $3,000 for SSO over 5000 gallons 27. Stipulated penalties under this Section shall begin to accrue on the day after performance is due or on the day a violation occurs, whichever is applicable, and shall continue to accrue until performance is satisfactorily completed or until the violation ceases. Stipulated penalties shall accrue simultaneously for separate violations of this Consent Decree. 28. The Authority shall pay stipulated penalties to the United States within thirty (30)Days of a written demand by EPA. 29. The United States may in the unreviewable exercise of its discretion, reduce or waive stipulated penalties otherwise due it under this Consent Decree. 30. Stipulated penalties shall continue to accrue as provided in Paragraph 27, during any Dispute Resolution, but need not be paid until the following: (a). If the dispute is resolved by agreement or by a decision of EPA that is not appealed to the Court, the Authority shall pay accrued penalties determined to be owing, together with interest, to the United States within thirty (30)Days of the effective date of the agreement or the receipt of EPA's decision or order. (b). If the dispute is appealed to the Court and the United States prevails in whole or in part, the Authority shall pay all accrued penalties determined by the Court to be owed, together with interest, within sixty (60)Days of receiving the Court's decision or order, except as provided in Subparagraph(c)., below. -26- Board of Commissioners Meeting 06/03/2013 6- 1 -26 (c). If the District Court's decision is appealed, the Authority shall pay all accrued penalties determined to be owed, together with interest, within fifteen (15)Days of receiving the final appellate court decision. 31. The Authority shall pay stipulated penalties owing to the United States in the manner set forth and with the confirmation notices required by Paragraph 18, except that the transmittal letter shall state that the payment is for stipulated penalties and shall state for which violation(s)the penalties are being paid. 32. If the Authority fails to pay stipulated penalties according to the terms of this Consent Decree, the Authority shall be liable for interest on such penalties, as provided for in 28 U.S.C. § 1961, accruing as of the date payment became due. Nothing in this Paragraph shall be construed to limit the United States from seeking any remedy otherwise provided by law for the Authority's failure to pay any stipulated penalties. 33. Subject to the provisions of Section XIH of this Consent Decree (Effect of Settlement/Reservation of Rights), the stipulated penalties provided for in this Consent Decree shall be in addition to any other rights, remedies, or sanctions available to the United States for the Defendants' violation of this Consent Decree or applicable law. Where a violation of this Consent Decree is also a violation of the Clean Water Act, the Authority shall be allowed a credit for any stipulated penalties paid against any statutory penalties imposed by the United States for such violation. X. FORCE MAJEURE 34. "Force maj eure," for purposes of this Consent Decree, is defined as any event arising from causes beyond the control of the Defendants, of any entity controlled by the Defendants, or of the Defendants' consultants and contractors, that delays or prevents the performance of any obligation under this Consent Decree despite the Defendants' best efforts to fulfill the obligation. The requirement that the Defendants exercise "best efforts to fulfill the obligation" includes using best efforts to anticipate any potential force majeure event and -27- Board of Commissioners Meeting 06/03/2013 6- 1 -27 best efforts to address the effects of any such event(a) as it is occurring and (b) after it has occurred to prevent or minimize any resulting delay to the greatest extent possible. "Force Maj eure" does not include the Defendants' financial inability to perform any obligation under this Consent Decree. 35. If any event occurs or has occurred that may delay the performance of any obligation under this Consent Decree, whether or not caused by a force maj eure event, the Defendants shall provide notice orally or by electronic or facsimile transmission to EPA, within seventy-two (72) hours of when the Defendants first knew that the event might cause a delay. Within seven (7)Days thereafter, the Defendants shall provide in writing to EPA an explanation and description of the reasons for the delay; the anticipated duration of the delay; all actions taken or to be taken to prevent or minimize the delay; a schedule for implementation of any measures to be taken to prevent or mitigate the delay or the effect of the delay; the Defendants' rationale for attributing such delay to a force maj eure event if it intends to assert such a claim; and a statement as to whether, in the opinion of the Defendants, such event may cause or contribute to an endangerment to public health, welfare or the environment. The Defendants shall include with any notice all available documentation supporting the claim that the delay was attributable to a force maj eure event. Failure to comply with the above requirements shall preclude the Defendants from asserting any claim of force majeure for that event for the period of time of such failure to comply, and for any additional delay caused by such failure. The Defendants shall be deemed to know of any circumstance of which the Defendants, any entity controlled by the Defendants, or the Defendants' contractors knew or should have known. 36. If EPA agrees that the delay or anticipated delay is attributable to a force majeure event, the time for performance of the obligations under this Consent Decree that are affected by the force maj eure event will be extended by EPA for such time as is necessary to complete those obligations. An extension of the time for performance of the obligations affected by the force maj eure event shall not, of itself, extend the time for -28- Board of Commissioners Meeting 06/03/2013 6- 1 -28 performance of any other obligation. EPA will notify the Defendants in writing of the length of the extension, if any, for performance of the obligations affected by the force majeure event. 37. If EPA does not agree that the delay or anticipated delay has been or will be caused by a force majeure event, EPA will notify the Defendants in writing of its decision. 38. If the Defendants elect to invoke the dispute resolution procedures set forth in Section X1 (Dispute Resolution), it shall do so no later than fifteen (15)Days after receipt of EPA's notice. In any such proceeding, the Defendants shall have the burden of demonstrating by a preponderance of the evidence that the delay or anticipated delay has been or will be caused by a force majeure event, that the duration of the delay or the extension sought was or will be warranted under the circumstances, that best efforts were exercised to avoid and mitigate the effects of the delay, and that the Defendants complied with the requirements of Paragraphs 34 and 35 above. If the Defendants carry this burden, the delay at issue shall be deemed not to be a violation by the Defendants of the affected obligation of this Consent Decree identified to EPA and the Court. XI. DISPUTE RESOLUTION 39. Unless otherwise expressly provided for in this Consent Decree, the dispute resolution procedures of this Section shall be the exclusive mechanism to resolve disputes arising under or with respect to this Consent Decree. The Defendants' failure to seek resolution of a dispute under this Section shall preclude the Defendants from raising any such issue as a defense to an action by the United States to enforce any obligation of the Defendants arising under this Consent Decree. 40. Informal Dispute Resolution. Any dispute subject to Dispute Resolution under this Consent Decree shall first be the subject of informal negotiations. The dispute shall be considered to have arisen when the Defendants send the United States a written Notice of Dispute. Such Notice of Dispute shall state clearly the matter in dispute. The period of informal negotiations shall not exceed twenty (20)Days from the date the -29- Board of Commissioners Meeting 06/03/2013 6- 1 -29 dispute arises, unless that period is modified by written agreement between the United States and the Defendants. If the United States and the Defendants cannot resolve a dispute by informal negotiations, then the position advanced by the United States shall be considered binding unless, within forty-five (45)Days after the conclusion of the informal negotiation period, the Defendants invoke formal dispute resolution procedures as set forth below. 41. Formal Dispute Resolution. The Defendants shall invoke formal dispute resolution procedures, within the time period provided in the preceding Paragraph, by serving on the United States a written Statement of Position regarding the matter in dispute. The Statement of Position shall include, but need not be limited to, any factual data, analysis, or opinion supporting the Defendants' position and any supporting documentation relied upon by the Defendants. The United States shall serve its Statement of Position within one hundred (100) Days of receipt of the Defendants' Statement of Position. The United States' Statement of Position shall include, but need not be limited to, any factual data, analysis, or opinion supporting that position and any supporting documentation relied upon by the United States. The United States' Statement of Position shall be binding on the Defendants, unless the Defendants file a motion for judicial review of the dispute in accordance with the following Paragraph. 42. Judicial Dispute Resolution. The Defendants may seek judicial review of the dispute by filing with the Court and serving on the United States, in accordance with Section XV of this Consent Decree (Notices), a motion requesting judicial resolution of the dispute. The motion must be filed within twenty (20) Days of receipt of the United States' Statement of Position pursuant to the preceding Paragraph. The motion shall contain a written statement of the Defendants' position on the matter in dispute, including any supporting factual data, analysis, opinion, or documentation, and shall set forth the relief requested and any schedule within which the dispute must be resolved for orderly implementation of the Consent Decree. The United States shall -30- Board of Commissioners Meeting 06/03/2013 6- 1 -30 respond to the Defendants' motion within the time period allowed by the Local Rules of this Court. The Defendants may file a reply memorandum, to the extent permitted by the Local Rules. 43. Standard of Review. (a). Disputes Concerning Matters Accorded Record Review. Except as otherwise provided in this Consent Decree, in any dispute brought under Paragraphs 40 and 41 pertaining to the adequacy or appropriateness of plans, procedures to implement plans, schedules or any other items requiring approval by EPA under this Consent Decree; the adequacy of the performance of work undertaken pursuant to this Consent Decree; and all other disputes that are accorded review on the administrative record under applicable principles of administrative law, the Defendants shall have the burden of demonstrating, based on the administrative record, that the position of the United States is arbitrary and capricious or otherwise not in accordance with law. (b). Other Disputes. Except as otherwise provided in this Consent Decree, in any other dispute brought under Paragraphs 40 and 41, the Defendants shall bear the burden of demonstrating that its position complies with this Consent Decree and furthers the objectives of the Consent Decree. 44. The invocation of dispute resolution procedures under this Section shall not, by itself, extend, postpone, or affect in any way any obligation of the Defendants under this Consent Decree, unless and until final resolution of the dispute so provides. Stipulated penalties with respect to the disputed matter shall continue to accrue from the first day of noncompliance, but payment shall be stayed pending resolution of the dispute as provided in Paragraph 30. If the Defendants do not prevail on the disputed issue, stipulated penalties shall be assessed and paid as provided in Section IX (Stipulated Penalties). XIL RIGHT OF ENTRY AND INFORMATION COLLECTION AND RETENTION -31- Board of Commissioners Meeting 06/03/2013 6- 1 -31 45. The United States and its representatives, including attorneys, contractors, and consultants, shall have the right of entry into any facility covered by this Consent Decree, at all reasonable times, upon presentation of credentials, to: (a). monitor the progress of activities required under this Consent Decree; (b). verify any data or information submitted to the United States in accordance with the terms of this Consent Decree; (c). obtain samples and, upon request, splits of any samples taken by the Defendants or its representatives, contractors, or consultants; (d). obtain documentary evidence, including photographs and similar data; and (e). assess the Defendants' compliance with this Consent Decree. 46. Upon request, the Defendants shall provide EPA or their authorized representatives splits of any samples taken by the Defendants. Upon request, EPA shall provide the Defendants splits of any samples taken by EPA. 47. Until five (5)years after the termination of this Consent Decree, the Defendants shall retain, and shall instruct its contractors and agents to preserve, all non-identical copies of all documents, records, or other information (including documents, records, or other information in electronic form)in its or its contractors' or agents' possession or control, or that come into its or its contractors' or agents' possession or control, and that relate in any manner to the Defendants' performance of its obligations under this Consent Decree. This information-retention requirement shall apply regardless of any contrary corporate or institutional policies or procedures. At any time during this information-retention period, upon request by the United States, the Defendants shall provide copies of any documents, records, or other information required to be maintained under this Paragraph. -32- Board of Commissioners Meeting 06/03/2013 6- 1 -32 48. At the conclusion of the information-retention period provided in the preceding Paragraph, the Defendants shall notify the United States at least ninety (90)Days prior to the destruction of any documents, records, or other information subject to the requirements of the preceding Paragraph and, upon request by the United States, the Defendants shall deliver any such documents, records, or other information to EPA. The Defendants may assert that certain documents, records, or other information is privileged under the attorney- client privilege or any other privilege recognized by federal law. If the Defendants assert such a privilege, it shall provide the following: (a). the title of the document, record, or information; (b). the date of the document, record, or information; (c). the name and title of each author of the document, record, or information; (d). the name and title of each addressee and recipient; (e). a description of the subject of the document, record, or information; (f). the privilege asserted by the Defendants. However, no documents, records, or other information created or generated pursuant to the requirements of this Consent Decree shall be withheld on grounds of privilege. 49. The Defendants may also assert that information required to be provided under this Section is protected as Confidential Business Information ("CBP')under 40 C.F.R. Part 2. As to any information that the Defendants seeks to protect as CBI, the Defendants shall follow the procedures set forth in 40 C.F.R. Part 2. 50. This Consent Decree in no way limits or affects any right of entry and inspection, or any right to obtain information, held by the United States or the State pursuant to applicable federal or state laws, regulations, or permits, nor does it limit or affect any duty or obligation of the Defendants to maintain documents, records, or other information imposed by applicable federal or state laws, regulations, or permits. -33- Board of Commissioners Meeting 06/03/2013 6- 1 -33 XIIL EFFECT OF SETTLEMENT/RESERVATION OF RIGHTS 51. This Consent Decree resolves the civil claims of the United States for the violations alleged in the Complaint filed in this action through the Date of Lodging of this Consent Decree. 52. The United States reserves all legal and equitable remedies available to enforce the provisions of this Consent Decree, except as expressly stated in Paragraph 51. This Consent Decree shall not be construed to limit the rights of the United States to obtain penalties or injunctive relief under the CWA or their implementing regulations, or under other federal or state laws, regulations, or permit conditions, except as expressly specified in Paragraph 51. The United States further reserves all legal and equitable remedies to address any imminent and substantial endangerment to the public health or welfare or the environment arising at, or posed by, the Sewer System, whether related to the violations addressed in this Consent Decree or otherwise. 53. In any subsequent administrative or judicial proceeding initiated by the United States for injunctive relief, civil penalties, other appropriate relief relating to the Sewer System or the Defendants' violations, the Defendants shall not assert, and may not maintain, any defense or claim based upon the principles of waiver, res judicata, collateral estoppel, issue preclusion, claim preclusion, claim-splitting, or other defenses based upon any contention that the claims raised by the United States in the subsequent proceeding were or should have been brought in the instant case, except with respect to claims that have been specifically resolved pursuant to Paragraph 51 of this Section. 54. This Consent Decree is not a permit, or a modification of any permit, under any federal, State, or local laws or regulations. The Defendants are responsible for achieving and maintaining complete compliance with all applicable federal, State, and local laws, regulations, and permits; and the Defendants' compliance with this Consent Decree shall be no defense to any action commenced pursuant to any such laws, regulations, or permits, except as set forth herein. The United States does not, by their consent to the entry of this Consent -34- Board of Commissioners Meeting 06/03/2013 6- 1 -34 Decree, warrant or aver in any manner that the Defendants' compliance with any aspect of this Consent Decree will result in compliance with provisions of the CWA or with any other provisions of federal, State, or local laws, regulations, or permits. 55. This Consent Decree does not limit or affect the rights of the Defendants or of the United States or the State against any third parties, not party to this Consent Decree, nor does it limit the rights of third parties, not party to this Consent Decree, against the Defendants, except as otherwise provided by law. 56. This Consent Decree shall not be construed to create rights in, or grant any cause of action to, any third party not party to this Consent Decree. XIV. COSTS 57. The Parties shall bear their own costs of this action, including attorneys' fees, except that the United States shall be entitled to collect the costs (including attorneys' fees)incurred in any action necessary to collect any portion of the civil penalty or any stipulated penalties due but not paid by the Defendants. XV. NOTICES 58. Unless otherwise specified herein, whenever notifications, submissions, or communications are required by this Consent Decree, they shall be made in writing and addressed as follows: To the United States: Chief, Environmental Enforcement Section Environment and Natural Resources Division U.S. Department of Justice Box 7611 Ben Franklin Station Washington, D.C. 20044-7611 Re: DOJ No. 90-5-1-1-09405 -35- Board of Commissioners Meeting 06/03/2013 6- 1 -35 Bill Weinischke Environmental Enforcement Section U.S. Department of Justice Box 7611 Ben Franklin Station Washington, D.C. 20044-7611 and Chief, Clean Water Enforcement Branch Water Protection Division ATTN: Brad Ammons U.S Environmental Protection Agency, Region 4 61 Forsyth Street, S.W. Atlanta, GA 30303 (404) 562-9761 To EPA: Chief, Clean Water Enforcement Branch Water Protection Division ATTN: Brad Ammons U.S Environmental Protection Agency, Region 4 61 Forsyth Street, S.W. Atlanta, GA 30303 (404) 562-9761 To the State: Lacy M. Presnell, III General Counsel N.C. Department of Environment and Natural Resources 1601 Mail Service Center(Mailing Address) Raleigh, NC 27699-1601 217 W. Jones Street(Physical Address) Raleigh, NC 27603 919-707-8616 (Phone/Fax) lacy_presnellgncdenr.gov -36- Board of Commissioners Meeting 06/03/2013 6- 1 -36 Kathryn Jones Cooper Special Deputy Attorney General Water and Land Section Environmental Division North Carolina Department of Justice Post Office Box 629 Raleigh, NC 27602-0629 (919) 716-6600 (main telephone number) (919) 716-6960 (direct dial) (919) 716-6766 (fax) kcoopergncdoi.gov To the Defendants: Matthew W. Jordan, CEO CFPUA 235 Government Center Drive Wilmington, NC 24803 910-332-6542 Linda A. Miles, the Miles Firm, PLLC Attorney for CFPUA 1704 North Lumina Avenue Wrightsville Beach, NC 28480 910-256-9513 Chris Coudriet, County Manager New Hanover County 230 Government Center Drive, Suite 195 Wilmington, NC 28403 910-798-7184 Wanda Copley Attorney for New Hanover County 230 Government Center Drive, Suite 125 Wilmington, NC 28403 910-798-7153 Kemp Burpeau, Deputy County Attorney New Hanover County 230 Government Center Drive, Suite 125 -37- Board of Commissioners Meeting 06/03/2013 6- 1 -37 Wilmington, NC 28403 910-798-7153 Sterling Cheatham, Manager City of Wilmington P.O. Box 1810, 102 N. Third Street Wilmington, NC 28402 910-341-7810 Bill Wolak City of Wilmington Attorney P.O. Box 1810, 305 Chestnut Street Wilmington, NC 28402 910-341-7820 Joseph E. Betts City of Wilmington Assistant Attorney P.O. Box 1810, 305 Chestnut Street Wilmington, NC 28402 910-341-7820 59. Any Party may, by written notice to the other Parties, change its designated notice recipient or notice address provided above. 60. Notices submitted pursuant to this Section shall be deemed submitted upon mailing, unless otherwise provided in this Consent Decree or by mutual agreement of the Parties in writing. XVL EFFECTIVE DATE 61. The Effective Date of this Consent Decree shall be the date upon which this Consent Decree is entered by the Court or a motion to enter the Consent Decree is granted, whichever occurs first, as recorded on the Court's docket. XVIL RETENTION OF JURISDICTION 62. The Court shall retain jurisdiction over this case until termination of this Consent Decree, for the purpose of resolving disputes arising under this Consent Decree or entering orders modifying this Consent -38- Board of Commissioners Meeting 06/03/2013 6- 1 -38 Decree, pursuant to Sections XI and XVIII, or effectuating or enforcing compliance with the terms of this Consent Decree. XVIIL MODIFICATION 63. The terms of this Consent Decree, including any attached appendices, may be modified only by a subsequent written agreement signed by the Plaintiff and the Defendants. Where the modification constitutes a material change to this Consent Decree, it shall be effective only upon approval by the Court. Non-material changes to this Consent Decree (including appendices) may be made by written agreement of the Plaintiff and the Defendants without court approval, and the Plaintiff and the Defendants may by mutual agreement determine whether a modification is non-material. 64. Any disputes between the Plaintiff and the Defendants concerning modification of this Consent Decree shall be resolved pursuant to Section XI of this Consent Decree (Dispute Resolution), provided, however, that, instead of the burden of proof provided by Paragraph 43, the entity seeking the modification bears the burden of demonstrating that it is entitled to the requested modification in accordance with Federal Rule of Civil Procedure 60(b). XIX. FINAL REPORT AND TERMINATION 65. Within sixty (60) days after the Authority has (a)properly implemented for a period of twenty- four(24)Months all the CMOM programs set forth in Paragraph 16 of this Consent Decree and (b) completed the specific capital improvement projects set forth in Paragraph 17 of this Consent Decree, the Authority shall submit to EPA a Final Report that includes a description of all of the actions that have been taken toward achieving compliance with this Consent Decree and an assessment of the effectiveness of such actions in eliminating SSOs. -39- Board of Commissioners Meeting 06/03/2013 6- 1 -39 66. If EPA determines, after review of the Final Report, that(a) any CMOM program as set forth in Paragraph 16 of this Consent Decree has not been properly implemented for a period of twenty-four(24) Months in accordance with this Consent Decree or(b)that any specific capital improvement project set forth in Paragraph 17 of this Consent Decree has not been completed, EPA will notify the Defendants, provide a list of the deficiencies, and may require the Authority to modify the applicable CMOM program(s) as appropriate in order to correct such deficiencies. If so required, the Authority shall implement the modified CMOM program(s) and shall submit a modified Final Report on behalf of the Defendants in accordance with the EPA notice, subject to the Defendants' right to invoke Dispute Resolution pursuant to Section XI of this Consent Decree. 67. This Consent Decree shall be subject to termination when the United States determines that: (a). The Authority has properly implemented for a period of twenty-four(24) months the CMOM program as set forth in Paragraph 16 and/or made any corrections required by EPA under Paragraph 66; (b). The Authority has completed the specific capital improvement projects set forth in Paragraph 17; and (c). The Defendants have fulfilled all other obligations of this Consent Decree, including payment of the civil penalty under Section VII of this Consent Decree and any accrued stipulated penalties as required by Section IX of this Consent Decree not waived or reduced by the United States. 68. The Defendants shall serve upon the United States a Request for Termination, certifying that the Defendants have satisfied those requirements, together with all necessary supporting documentation. 69. Following receipt by the United States of the Defendants' Request for Termination, the United States and the Defendants shall confer informally concerning the Request and any disagreement that they may have as to whether the Defendants have satisfactorily complied with the requirements for termination of this -40- Board of Commissioners Meeting 06/03/2013 6- 1 -40 Consent Decree. If the United States agrees that this Consent Decree may be terminated, the United States and the Defendants shall submit, for the Court's approval, a joint stipulation terminating the Consent Decree. 70. If the United States does not agree that this Consent Decree may be terminated, the Defendants may invoke Dispute Resolution under Section XI of this Consent Decree. However, the Defendants shall not seek Dispute Resolution of any dispute regarding termination, under Paragraph 43 of Section XI, until one hundred-twenty (120)Days after service of its Request for Termination. XX. PUBLIC PARTICIPATION 71. This Consent Decree shall be lodged with the Court for a period of not less than thirty (30)Days for public notice and comment in accordance with 28 C.F.R. § 50.7. The United States reserves the right to withdraw or withhold its consent if the comments regarding the Consent Decree disclose facts or considerations indicating that the Consent Decree is inappropriate, improper, or inadequate. The Defendants each consent to entry of this Consent Decree without further notice and agrees not to withdraw from or oppose entry of this Consent Decree by the Court or to challenge any provision of the Consent Decree, unless the United States has notified the Parties in writing that it no longer supports entry of the Consent Decree. XXL SIGNATORIES/SERVICE 72. Each undersigned representative of the Plaintiff and the Defendants certifies that he or she is fully authorized to enter into the terms and conditions of this Consent Decree and to execute and legally bind the Party he or she represents to this document. 73. This Consent Decree may be signed in counterparts, and its validity shall not be challenged on that basis. The Defendants agree to accept service of process by mail with respect to all matters arising under or relating to this Consent Decree and to waive the formal service requirements set forth in Rules 4 and 5 of the -41- Board of Commissioners Meeting 06/03/2013 6- 1 -41 Federal Rules of Civil Procedure and any applicable Local Rules of this Court including, but not limited to, service of a summons. XXIL INTEGRATION 74. This Consent Decree constitutes the final, complete, and exclusive agreement and understanding between the Plaintiff and the Defendants with respect to the settlement embodied in this Consent Decree and supersedes all prior agreements and understandings, whether oral or written, concerning the settlement embodied herein. Other than Deliverables that are subsequently submitted and approved pursuant to this Consent Decree, no other document, nor any representation, inducement, agreement, understanding, or promise, constitutes any part of this Consent Decree or the settlement it represents, nor shall it be used in construing the terms of this Consent Decree. XXIIL FINAL JUDGMENT 75. Upon approval and entry of this Consent Decree by the Court, this Consent Decree shall constitute a final judgment of the Court as to the United States, the State, and the Defendants. The Court finds that there is no just reason for delay and therefore enters this judgment as a final judgment under Fed. R. Civ. P. 54 and 58. XXIV. APPENDICES 76. The following appendices are attached to and part of this Consent Decree: "Appendix A" is a list of completed capital improvement projects. "Appendix B" is the CDROM disk containing US EPA Region IV CMOM guidance; "Appendix C" is the list of Specific Capital Improvement Projects; and -42- Board of Commissioners Meeting 06/03/2013 6- 1 -42 Dated and entered this_ day of � I UNITED STATES DISTRICT JUDGE Eastern District of North Carolina -43- Board of Commissioners Meeting 06/03/2013 6- 1 -43 WE HEREBY CONSENT to the entry of this Consent Decree, subject to the public notice and comment provisions of 28 C.F.R. § 50.7: FOR PLAINTIFF UNITED STATES OF AMERICA: IGNACIA S. MORENO Assistant Attorney General U.S. Department of Justice Environment and Natural Resources Division WILLIAM A. WEINISCHKE Senior Trial Attorney U.S. Department of Justice Environment and Natural Resources Division Environmental Enforcement Section P.O. Box 7611 Ben Franklin Station Washington, D.C. 20044-7611 Telephone: 202-514-4592 Facsimile: 202-514-2583 -44- Board of Commissioners Meeting 06/03/2013 6- 1 -44 WE HEREBY CONSENT to the entry of this Consent Decree, subject to the public notice and comment provisions of 28 C.F.R. § 50.7: FOR PLAINTIFF UNITED STATES OF AMERICA (Continued): THOMAS G. WALKER United States Attorney Eastern District of North Carolina Southern Division RUDY RENFER Assistant United States Attorney 2 Princess Street Wilmington, NC 28401 Telephone: (910) 815-4933 Facsimile: -45- Board of Commissioners Meeting 06/03/2013 6- 1 -45 WE HEREBY CONSENT to the entry of this Consent Decree, subject to the public notice and comment provisions of 28 C.F.R. § 50.7: FOR PLAINTIFF UNITED STATES OF AMERICA (Continued): V. ANNE HEARD Acting Regional Counsel United States Environmental Protection Agency Region 4 61 Forsyth Street Atlanta, GA 30303 OF COUNSEL: WILLIAM B. BUSH, JR. Associate Regional Counsel United States Environmental Protection Agency Region 4 61 Forsyth Street Atlanta, GA 30303 Telephone: 404-562-9538 Facsimile: 404-562-9486 -46- Board of Commissioners Meeting 06/03/2013 6- 1 -46 WE HEREBY CONSENT to the entry of this Consent Decree, subject to the public notice and comment provisions of 28 C.F.R. § 50.7: FOR PLAINTIFF UNITED STATES OF AMERICA (Continued): SUSAN SHINKMAN Director Office of Civil Enforcement Office of Enforcement and Compliance Assurance United States Environmental Protection Agency MARK POLLINS Division Director Water Enforcement Division Office of Civil Enforcement Office of Enforcement and Compliance Assurance United States Environmental Protection Agency ROBERT D. FENTRESS Water Enforcement Division Office of Civil Enforcement Office of Enforcement and Compliance Assurance United States Environmental Protection Agency 1200 Pennsylvania Ave.,NW (2243A) Washington, DC 20460 Telephone: 202-564-7023 Facsimile: 202-564-0024 -47- Board of Commissioners Meeting 06/03/2013 6- 1 -47 FOR DEFENDANT NEW HANOVER COUNTY: CHRIS COUDRIET Manager New Hanover County 230 Government Center Drive Suite 125 Wilmington, N.C. 28403 -48- Board of Commissioners Meeting 06/03/2013 6- 1 -48 FOR DEFENDANT CAPE FEAR PUBLIC UTILITY AUTHORITY: MATTHEW JORDAN Chief Executive Officer Cape Fear Public Utility Authority 235 Government Center Drive Wilmington, N.C. 28403 -49- Board of Commissioners Meeting 06/03/2013 6- 1 -49 FOR DEFENDANT CITY OF WILMINGTON: STERLING B. CHEATHAM City Manager City Hall 102 N. Third Street Wilmington, N.C. 28402 -50- Board of Commissioners Meeting 06/03/2013 6- 1 -50 APPENDIX A SPECIFIC CAPITAL IMPROVEMENT PROJECTS COMPLETED 1. Project Northeast Interceptor (NEI)Assessment PROJECT SUMMARY Evaluate the capacity, condition, and reliability of the Northeast Interceptor(NEI) system, and provide recommendations for proposed improvements. SCHEDULE COMPLETE PROJECT COST $462,928 2. Northeast Interceptor (NEI) Phase 1 Improvements PROJECT SUMMARY Rehabilitation of NEI components identified in the Northeast Interceptor Improvements Preliminary Engineering Report prepared by Kimley Horn and Associates in 2007 as "in urgent need of repair", to include rehabilitation of approximately 2,000 linear feet of 20-inch force main along Greenville Loop Road, rehabilitation/replacement of gravity sewer sections directly upstream of the Hewlett's Creek Pump Station, replacement of the junction box at Hewlett's Creek Pump Station, and replacement of all air release valve assemblies on the Northeast Interceptor between Bradley Creek Pump Station and the Southside Waste Water Treatment Plant. SCHEDULE COMPLETE PROJECT COST $3,357,984 3. Bradley Creek Junction Box Replacement PROJECT SUMMARY Replacement of the junction box and connecting pipe segments at the Bradley Creek Pump Station. SCHEDULE COMPLETE PROJECT COST $1,002,225 4. Pump Station 34 and 35 Electrical Improvements PROJECT SUMMARY Board of Commissioners Meeting 06/03/2013 6-2- 1 Replacement of electrical, pump, and control components at the Hewlett's Creek(Pump Station 34) and Bradley Creek(Pump Station 35)Pump Stations, to include variable frequency drives, applicable pump and motor components, and associated control programming. SCHEDULE COMPLETE PROJECT COST $3,252,497 5. Interim Pump Station Capacity Improvements PROJECT SUMMARY Installation of interim diesel-powered pumps with temporary piping connections at Hewlett's Creek and Bradley Creek Pump Station, to increase pumping capacity to meet interim peak flow needs in the Northeast Interceptor system. SCHEDULE COMPLETE PROJECT COST $1,474,685 6. Northeast Interceptor (NEI) 24-Inch Force Main Relocation PROJECT SUMMARY Installation of approximately 7,000 linear feet of 24-inch force main to replace a portion of existing 24-inch Northeast Interceptor Force Main that ran along Hewlett's Creek. SCHEDULE COMPLETE PROJECT COST $2,243,124 7. Northeast Interceptor (NEI) Odor and Corrosion Control Program (OCCP) Improvements PROJECT SUMMARY Chemical dosing facility improvements to improve the effectiveness of the OCCP chemical dosing to better reduce odor and corrosion to prolong the life of the sewer infrastructure, and improve the reliability of the Northeast Interceptor force main system. Modifications to the system include the installation of 9 chemical dosing facilities that can support the use of multiple chemicals and the installation of 7 hydrogen sulfide monitoring units. SCHEDULE COMPLETE PROJECT COST $1,436,860 8. Pump Station 35 Expansion Board of Commissioners Meeting 06/03/2013 6-2-2 PROJECT SUMMARY Upgrade the Bradley Creek Pump Station to increase capacity and rehabilitate aging infrastructure. Upgrades include replacing two existing pumps with 400-horsepower pumps, associated variable frequency drives and pump station controls; pipe modifications to provide for connection to the Northeast Interceptor Northside Force Main; replacing the emergency generator; and rehabilitating the mechanical bar screen and bar screen structure. SCHEDULE COMPLETE PROJECT COST $3,023,860. 9. Olden Interceptor Replacement PROJECT SUMMARY Replace approximately 8670 feet of 48 & 36 -inch gravity sanitary sewer. SCHEDULE COMPLETE PROJECT COST (Construction Cost) $5,590,000 10. Northeast Interceptor (NEI) Northside Force Main (CONTRACT 1A) PROJECT SUMMARY Installation of approximately 23,400 feet of 24-inch force main from station 17+27 located at Bradley Creek Pump Station to station 169 +96 near Clear Run Drive and including Construction of a 24-inch force main interconnect from station 800+00 to station 881+35 as referenced on the Northeast Interceptor Northside Force Main Project Contract Drawings prepared by Kimley Horn and Associates. SCHEDULE COMPLETE PROJECT COST $5,318,398 Board of Commissioners Meeting 06/03/2013 6-2-3 APPENDIX C SPECIFIC CAPITAL IMPROVEMENT PROJECTS TO BE COMPLETED For the purpose of this Consent Decree, a Capital Improvement Project identified in this Appendix to be completed shall be considered complete when a Certificate of Substantial Completion has been certified and issued by a North Carolina Professional Engineer for the project. A Certificate of Substantial Completion shall not be issued until the improvements have been designed and constructed in substantial conformance with the project plans and specifications and is available for use for the purpose intended. 1. Northeast Interceptor (NEI) Northside Force Main (CONTRACT 1B) PROJECT SUMMARY Installation of approximately 29,167 feet of 24-inch force main to connect the James A. Loughlin (Northside) Wastewater Treatment Plant at station 461+63.95 to the previously installed portion of the Nothhside Force Main at station 169+96 as referenced on the Northeast Interceptor Northside Force Main Project Contract Drawings prepared by Kimley Horn and Associates. SCHEDULE Contract 1B Design August 31, 2012 Award Construction Contract 1B November 30, 2013 Contract 1B Construction Completion April 30, 2015 PROJECT COST $13,422,260 2. Northeast Interceptor (NEI) Rehabilitation Phase 2 PROJECT SUMMARY Replacement of approximately 4,800 linear feet of 20-inch force main between the Bradley Creek and Hewlett's Creek Pump Stations. Pipe segments to be rehabilitated or replaced generally are aligned with the following stations: Station 10+38 to station 16+ 95; Station 66 + 50 to station 90 +14 Station 111+54 to station 117 +00; Station 126 + 00 to station 134 + 50 and, Station 149 + 50 to station 153 +50. SCHEDULE Board of Commissioners Meeting 06/03/2013 6-2-4 Design July 31, 2013 Award November 30, 2013 Construction Completion April 30, 2015 PROJECT COST (ESTIMATE:DESIGN AND CONSTRUCTION) $3,559,900 Board of Commissioners Meeting 06/03/2013 6-2-5 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 7 DEPARTMENT: PRESENTER(S): Chris Coudriet, County Manager CONTACT(S): Cam Griffin,Budget Director SUBJECT: Public Hearing on the Fiscal Year 2013-2014 Recommended Budget BRIEF SUMMARY: The Board of County Commissioners will review the Fiscal Year 2013-2014 recommended funding with specific organizations and hold a public hearing at 6:00 p.m.,or thereafter,to receive public comments on the Fiscal Year 2013-2014 Recommended Budget. STRATEGIC PLAN ALIGNMENT: Effective County Management • Understand and act on citizen needs • Deliver value for taxpayer money RECOMMENDED MOTION AND REQUESTED ACTIONS: Conduct public hearing. COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Conduct public hearing. COMMISSIONERS'ACTIONS: Conducted public hearing. Board of Commissioners Meeting 06/03/2013 7-0 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 8 DEPARTMENT: County Manager PRESENTER(S): Anthony W. Law,NCDOT District Engineer CONTACT(S): Chris Coudriet, County Manager SUBJECT: Public Hearing on the NCDOT Secondary Road Construction Program and Consideration of a Resolution in Support of the Program BRIEF SUMMARY: Anthony Law will provide a presentation on the NCDOT Secondary Road Construction Program. A public hearing is required to receive public input on expenditures of secondary road construction funds in New Hanover County. The Board is also requested to adopt a resolution in support of the program. STRATEGIC PLAN ALIGNMENT: Superior Public Health, Safety and Education • Keep the public informed on important information RECOMMENDED MOTION AND REQUESTED ACTIONS: Conduct public hearing and adopt the resolution. ATTACHMENTS: NCDOT Documents NCDOT Map NCDOT Resolution COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Conduct public hearing and adopt the resolution. COMMISSIONERS'ACTIONS: Conducted public hearing and adopted the resolution 4-0. Board of Commissioners Meeting 06/03/2013 8-0 STATE OF NORTH CAROLINA DEPARTMENT OF TRANSPORTATION PAT MCCRORY ANTHONY J.TATA GOVERNOR SECRETARY May 14, 2013 Ms. Sheila Schult, Clerk to Board New Hanover County Board of Commissioners 230 Government Center Drive, Suite 175 Wilmington,NC 28403 SUBJECT: Request for Public Hearing and Adoption Resolution I am requesting approval to set a public hearing for 6:00 p.m. on June 3,2013 to receive public input on expenditures of secondary road construction funds for improvements of secondary roads in New Hanover County. Please find attached copies of 2011-2013 Secondary Road Construction information. I would appreciate if NCDOT could be on the agenda at the beginning of the meeting. This hearing will be advertised accordingly by North.Carolina Department of Transportation. Sincerely, Anthony District Engineer AWL: kls cc: Karen E. Fussell, P.E., Division Engineer Gerard Taylor,New Hanover County Maintenance Engineer File 300 Division Drive, Wilmingt6ftaT W VVR2 M�2�LS1655; Fax(910) 251-2759 8- 1 - 1 e �9W+� STATE OF NORTH CAROLINA DEPARTMENT OF TRANSPORTATION PAT MCCRORY ANTHONY J.TATA GOVERNOR SECRETARY May 7, 2013 Mr. Woody White, Chairman New Hanover County Board of Commissioners 230 Government Center Drive, Suite 175 Wilmington,NC 28403 Subject: Secondary Road Construction Program Dear Commissioners: As required by General Statute 136-44.5, before July 1 each calendar year,the Department of Transportation shall make a study of all state maintained unpaved roads in order to determine the unpaved mileage in each county and the total in the state. Each county's allocation is determined by dividing the total allocation by the statewide mileage times the number of miles in each county. Secondary road construction allocations are based upon the amount of revenue generated by the gasoline tax. The final total was determined at the end of the last fiscal year, ending rune 30, 2012 taking into consideration the number of unpaved miles remaining for programming in New Hanover County(0 miles). Should there be a significant change in the county allocation, we will inform you of any adjustment in the Secondary Road Construction Program for 2012-2013. As of June 2012, there were approximately 0.6 miles of an unpaved road in New Hanover County. This road was previously programmed and funds have been allocated for construction and paving. The North Carolina Board of Transportation has elected to improve the roads that are listed in our proposed program. The projects consist of widening of existing roads and storm pipe replacements throughout the county. The program being presented covers fiscal years 2011 through 2013. Allocations are as indicated on the attached program documents. In compliance with our Board's directives,while addressing overall county needs, we submit the following proposal for expenditure of secondary road construction funds for New Hanover County, for the period through June 2013. 5501 Barbados Blvd., Castle liayneof W;3( 6TM-2000; Fax(910) 675-0143 8- 1 -2 Secondary Road Construction Program Page 2 In compliance with our Board's directives, while addressing overall county needs, we submit the following proposal for expenditure of estimated secondary road construction funds for New Hanover County, for the period through June 2013. This proposal will be presented in a public hearing at your regularly scheduled meeting on June 3, 2013 at 6:00 p.m. as follows: Note: See Attached Page for Summation of Fund Distribution A copy of this proposed program is posted on a map at the New Hanover County Courthouse for public review. This program is subject to availability of funding,right of way, and environmental review. We wish to point out the amount used in the cost of each of these priorities is an estimate and is subject to variations due to inflation, cost of materials, equipment rate changes, and so forth. We appreciate the opportunity to meet with you,the Board, and the public, to present this program. Recommended deviations from this submission by the Board of Commissioners must be in compliance with General Statute 136.44.8. In the event the right of way for any of the proposals above is not available, it is our plan to proceed with the next priority until right of way is acquired and funds are expended. You will be notified of changes in this program. In addition, at the end of each calendar year you will be presented a detailed report of work accomplished and funds expended. Very truly yours, Very truly yours, Michael Lee Karen OE. Fussell,P. Member, Board of Transportation Division Engineer KEF/AWL: Us cc: Anthony W. Law, District Engineer Gerard Taylor,New Hanover County Maintenance Engineer File Board of Commissioners Meet' 5501 Barbados Blvd., Castle Hayne,N��(910) 34�I-2000; Fax (910) 675-0143 8- 1 -3 New Hanover County County Construction Revised 6-26-2012 New Hanover County Paved Road Im rovement Pra'ects FY 2011 Allocations Highway Funds(paved road improvements) Hi hway Funds standard) $ 295,929.13 Trust Funds standard) $ 355,430.32 Running Balance Grand Total of Estimated Funds Available: $ 651,359.45 Paved Road Im rovement Pro'ects Route Name Description Running Balance $ 651,359.45 SR 1175 N. Kerr Ave. Widen 2'each side $ 255,000.00 $ 396,359.45 SR 1335 Parmele Rd. Widen 2'each side $ 280,000.00 $ 116,359.45 SR 1342 Blossom St. Widen to two lanes $ 170,000.00 $ (53,640.55) New Hanover County Paved Road Im roverent Prom cts FY 2012 Allocations Highway Funds(paved road im rovements) Highway Funds standard $ 308,600.43 Trust Funds (standard) $ 231,806.83 Running Balance Grand Total of Estimated Funds Available: $ 540,407.26 Paved Road Im rovement Pro! cts Route Name Descri t� ion Running Balance $ 540,407.26 SR 1342 Complete St.Blossom Widen to two lanes $ 53,640.55 $ 486,766.71 SR 1573 Dow Rd. Widening $ 300,000.00 $ 186,766.71 SR 1400 Futch Creek Rd. Wider(2bb§ctPsid6oners Me t$g 220,000.00 $ (33,233.29) 8- 1 -4 New Hanover County County Construction Revised 6-26-2612 New Hanover County Paved Road Improvement Pro! cts FY 2013 Allocations Highway Funds (paved road improvements) Highwa Funds (standard) $ 154,296.80 Trust Funds standard) $ 204,705.05 Running Balance Grand Total of Estimated Funds Available: $ 359,001.85 Paved Road Improvement Promects Route Name Description Running Balance $ 359,001.85 Creek Rdd.e SR 1400 Complete Teach each side $ 33,233.29 $ 325,768.56 Cre SR 1327 Farley Rd. Widen 2'each side $ 85,000.00 $ 240,768.56 Replace Exist. Pipe on SR 1492 Myrtle Grove Rd. Myrtle Grove Rd. &upgrade $ 50,000.00 $ 190,768.56 to a larger size Replace Exist. Pipe on SR 1518 Whipporwill L.n. Whipporwill Ln. & upgrade to $ 50,000.00 $ 140,768.56 a larger size Replace Exist. Pipe on Egret SR 1338 Eggret Avenue Point Rd. &upgrade to a $ 50,000.00 $ 90,768.56 larger size Replace Exist. Pipe on SR 1525 Patalanda Rd. Patalanda Rd. & upgrade to $ 75,000.00 $ 15,768.56 a iar er size Various Routes Right of way, surveys,Fire $ 15,768 56 $ Depts, Rescue Squads Board of Commissioners Meeting 06/03/2013 8- 1 -5 Secondary Road Construction New Hanover County SR 1342(Blossom Rd.) Pavement Widening SR 1338(Eggret Ave.) Pipe Replacement i SR 1335(Parmele Rd.) 2 Widenin g _. p SR 1400(Futch Creek Rd.) as n D 2'Widening 117 ---- ----- 17 421 S SR 1175(N Kerr Ave.) 2 Widening 9 t /1r SR 1327(Farley Rd.) 11 s J ( V1 i 11 st it 1i X111 i 1 1�r 2 Widening f f1 V� 74 i i��ilJil r 1 �tf 11 fi4 �� i 1��ti �i fi -{ r 1i11r tai 11 (ir 1 ti.si��i�t r� rl� tAfs +t� y i t 1 it - Iti\ ��r�if� 1 �11 ti1 6 f' 1�ij i A�1}i�tiU11t ) �i 177t1i� �Jt 1�7S�li �1 S{r 111 it 3�i s '�1 t 76 SR 1518(Whipporwill Ln.) Pipe Replacement 1 iUtiti fl � 421 SR 1525(Patalanda Rd.) SR 1492(Myrtle Grove Rd.) ! Pipe Replacement Pipe Replacement � I J SR 1573(Dow Rd.) Pavement Widening �'1 1 Legend t; Major Roads �1P LRS ROUTE NHC Municipal Boudaries -� N 0 New Hanover County i w e Brunswick County IN, S 0 5,0000,000 20,000 30,000 40,000 Feet Board of Commissioners Meeting 06/03/2013 8-2-1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS RESOLUTION IN SUPPORT OF SECONDARY ROAD CONSTRUCTION PROGRAM WHEREAS, the New Hanover County Board of Commissioners conducted a Public Hearing on the planned construction of Secondary Roads in New Hanover County on June 3, 2013; and WHEREAS, presented at the meeting were the North Carolina Department of Transportation's plans for Secondary Roads to be scheduled for pavement in the near future, said plans presented in a document published at that meeting and naming the various roads and their location; and WHEREAS, the allocation for New Hanover County is estimated to be $1,550,768.56 and was to include rural roads that will serve the citizens of New Hanover County; and WHEREAS, the Public Hearing gave the Commissioners and the citizens of New Hanover County an opportunity to inquire and have explained to them the particular facets of the Secondary Road Improvements in the County; and WHEREAS, the Commissioners found the plans satisfactory for the immediate future of New Hanover County, hoping that progress for road improvements in New Hanover County would continue to expand. NOW, THEREFORE, BE IT RESOLVED by the New Hanover County Board of Commissioners, that the Secondary Road Construction Program devised for Fiscal Years 2011-2013 and endeavors to have all roads in New Hanover County meet the needs of its citizens and visitors was approved at the June 3, 2013 meeting. ADOPTED,this the 3rd day of June, 2013. NEW HANOVER COUNTY Woody White, Chairman Attest: Sheila L. Schult, Clerk to the Board Board of Commissioners Meeting 06/03/2013 8-3- 1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 9 DEPARTMENT: County Manager PRESENTER(S): Scott Satterfield, CEO,Wilmington Business Development CONTACT(S): Chris Coudriet, County Manager SUBJECT: Public Hearing and Consideration of an Industrial Investment Grant to General Electric Company BRIEF SUMMARY: The purpose of the grant is to encourage GE to further invest in its aviation manufacturing facility in New Hanover County, Wilmington,North Carolina,promote the purpose of increasing the tax base of the County, and create high-quality,well-paying jobs. STRATEGIC PLAN ALIGNMENT: Intelligent Growth and Economic Development • Attract and retain new and expanding businesses RECOMMENDED MOTION AND REQUESTED ACTIONS: Conduct public hearing and adopt the resolution to approve the grant. ATTACHMENTS: Notice of Public Hearing GE Resolution COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Conducted public hearing and adopted the resolution 4-0. Board of Commissioners Meeting 06/03/2013 9-0 NOTICE OF PUBLIC HEARING Notice on Consideration of Industrial Investment Grant Pursuant to G.S. 158-7.1 Please take notice that the New Hanover County Board of Commissioners will hold a public hearing on Monday, June 3, 2013 at 6:00 p.m. in the Assembly Room of the New Hanover County Historic Courthouse, 24 North Third Street, Room 301, Wilmington, North Carolina for the purpose of receiving public comment on a proposed industrial investment grant to General Electric Company (through its GE Aviation business unit) or associated entities (hereinafter "GE"). The source of funding for the grant will be from the General Fund of the County. The proposed amount of the grant is up to $175,000 per year for a total of five years (not to exceed $875,000). The purpose of the grant is to encourage GE to further invest in its aviation manufacturing facility in New Hanover County-Wilmington, North Carolina, promote the purpose of increasing the tax base of the County, and create high-quality, well-paying jobs. The grant would be subject to appropriation of the then sitting New Hanover County Board of Commissioners and after GE having committed taxable improvements in the form of real and personal property of at least $63 million dollars over 5 years at the New Hanover County-Wilmington facility, and GE having added an additional 35 new jobs at said facility over that same period of time. Payout of incentives will be based on negotiated performance metrics and timelines as agreed to by New Hanover County and GE. The grant is pursuant to GS 158-7.1. The New Hanover County Board of Commissioners will receive public comment on the proposed grant at the above stated time and place. May 24, 2013 Sheila L. Schult Clerk, Board of Commissioners New Hanover County, North Carolina Board of Commissioners Meeting 06/03/2013 9- 1 - 1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS RESOLUTION AUTHORIZING NEW HANOVER COUNTY TO PAY ECONOMIC DEVELOPMENT INCENTIVES WHEREAS, General Electric Company, or its associated entities ("Company') proposes to expand its aviation business facility and staffing in Wilmington, NC; WHEREAS, the project will include facility improvements and equipment and hiring of additional employees; WHEREAS, in connection with the development of the project, the Company shall invest at least 63 million dollars in the improvements and facilities that will be located on the property (collectively, the "Facility") and to employ 35 new hires, together with the current staffing over five years; WHEREAS, payments for facility improvements and acquisition of personal property will be contingent upon securing a certificate of occupancy, bills of sale, and other appropriate documentation; WHEREAS, under a required incentive Agreement ("Agreement"), the County would agree not to award the economic development incentive grants until the Company reaches the jobs and facilities investment benchmarks, as those terms shall be defined in the required Agreement; WHEREAS, the Company's location of the project at the Facility would, in addition to bringing the jobs described above, produce revenue for local business and the County due to the employment of individuals and the spending of the Company; WHEREAS, the Company's investment at the Facility would substantially enhance the County's property tax base and increase the County's property tax revenues; WHEREAS, the employment of 35 new full-time persons at the Facility would create jobs for the area and provide a positive economic impact for the County; WHEREAS, pursuant to the provisions of North Carolina General Statutes §158-7.1, this Board of Commissioners deems it is desirable and in the best interest of the County and its businesses and residents to offer certain economic development incentives to the Company and to enter into an Agreement with the Company; and WHEREAS, this Board of Commissioners has organized and approved the holding of a public hearing at the Board's June 3, 2013 regular meeting, to discuss and approve certain economic development incentives to the Company. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of New Hanover County, as follows: 1. The Board of Commissioners approves appropriating and spending from the County's general fund amounts to make cash grants of $175,000 annually, totaling $875,000 over a period of five years, contingent upon the Company improving and equipping Facility costing at least 63 million dollars and hiring 35 new full time employees in addition to the current staffing. Page 1 of 2 Board of Commissioners Meeting 06/03/2013 9-2- 1 2. To implement these incentives, the Board of Commissioners hereby authorizes County staff to prepare an Incentive Agreement and authorizes the Chairman of the Board of Commissioners and/or the County Manager to execute that Incentive Agreement on the County's behalf and to take all actions necessary to implement the actions and grants required by that Agreement. 3. By and with the approval of the County Attorney, the Chairman and/or County Manager is hereby authorized, empowered and directed to do any and all other acts and to execute any and all other documents deemed necessary and appropriate to consummate the transactions contemplated by this Resolution, including without limitation to negotiate and approve changes to that Agreement's language that does not increase the amounts of the cash grants the County is required to pay the Company, or decrease the amount the Company is required to refund the County under the Agreement, except that none of the above shall be authorized or empowered to do anything or execute any document which is in contravention, in any way, of the specific provisions of this Resolution. This the 3rd day of June, 2013 NEW HANOVER COUNTY (SEAL) Woody White, Chairman ATTEST: Sheila L. Schult, Clerk to the Board Page 2 of 2 Board of Commissioners Meeting 06/03/2013 9-2-2 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 10 DEPARTMENT: County Manager PRESENTER(S): Commissioner Barfield CONTACT(S): Commissioner Barfield SUBJECT: Consideration of a Resolution Recognizing the Arts Council of Wilmington and New Hanover County BRIEF SUMMARY: Commissioner Barfield is bringing forward a resolution to officially recognize the Arts Council of Wilmington and New Hanover County. STRATEGIC PLAN ALIGNMENT: Superior Public Health, Safety and Education • Keep the public informed on important information RECOMMENDED MOTION AND REQUESTED ACTIONS: Adopt the resolution. ATTACHMENTS: Arts Council Resolution COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Approved 4-0. Board of Commissioners Meeting 06/03/2013 10-0 NEW HANOVER COUNTY BOARD OF COMMISSIONERS RESOLUTION RECOGNIZING THE ARTS COUNCIL OF WILMINGTON AND NEW HANOVER COUNTY WHEREAS,New Hanover County had been without the leadership and support of an arts council for a decade before the launch of the Arts Council of Wilmington and New Hanover County in 2011;and WHEREAS, the creation of the Arts Council of Wilmington and New Hanover County means that all of the top 10 most populous counties in North Carolina now have local arts councils that are catalysts for economic development;and WHEREAS,the Arts Council of Wilmington and New Hanover County is the Designated County Partner for the North Carolina Arts Council;and WHEREAS,the Arts Council of Wilmington and New Hanover County will administer the Grassroots Grant Program and Regional Artist Project Grant Program for the North Carolina Arts Council;and WHEREAS, arts and cultural organizations in New Hanover County have $5.7 million in direct expenditures annually, with$15.1 million in event-related spending by arts and culture audiences(excluding the cost of admission);and WHEREAS,arts and culture organizations and their audiences support 799 full-time equivalent jobs in New Hanover County;and WHEREAS, spending by arts and culture organizations and their audiences generate more than$1 million in government revenue; and WHEREAS,the Arts Council of Wilmington and New Hanover County will work: • to establish the region as an arts destination, • to promote arts-driven economic development, • to significantly contribute to quality of life in the region, • to provide a stream of funding to support the sustainability of artists and arts organizations, • to facilitate communication and collaboration within the arts community,and • to advocate for the arts at the local, state and national levels. NOW,THEREFORE,BE IT RESOLVED,that the New Hanover County Board of Commissioners hereby officially recognizes the Arts Council of Wilmington and New Hanover County;and BE IT FURTHER RESOLVED, that the Arts Council of Wilmington and New Hanover County, through public-private partnerships, will ensure that all citizens have access to a wide range of arts experiences, including literary, visual, performing, and traditional arts. ADOPTED this the 3 d day of June,2013. NEW HANOVER COUNTY Woody White, Chairman ATTEST: Sheila L. Schult, Clerk to the Board Board of Commissioners Meeting 06/03/2013 10- 1 - 1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 11 DEPARTMENT: PRESENTER(S): Chris O'Keefe,Planning& Inspections Director (Planning Board Rep: Richard Collier, Chairman) CONTACT(S): Shawn Ralston,Planning Manager and Chris O'Keefe,Planning& Inspections Director SUBJECT: Public Hearing Rezoning Request (Z-925, 05113) - Request by Cindee Wolf, Design Solutions, on Behalf of College Road Development Partners, LLC to Rezone 8.05 Acres Located at 2530, 2600, 2608, 2612, & 2616 North College Road from B-2 Highway Business and R-15 Residential to CUD(B-2) Conditional Use District B-2 BRIEF SUMMARY: The petitioner has requested a continuance of this item until the July 1, 2013 meeting. This is a petition to rezone 8.05 acres located at 2530, 2600, 2608, 2612, & 2616 North College Road from B-2 Highway Business and R-15 Residential to CUD(B-2) Conditional Use District B-2. The proposed project includes a mixed commercial and residential development with a 123-unit apartment complex and 6,400 square feet of commercial uses on the first floor of the apartment complex. At their May 2, 2013 meeting, the Planning Board voted 6-0 to recommend approval of both the rezoning and conditional use permit with conditions. Two nearby residents expressed concerns about traffic congestion in the area. The site is classified as Transition and Conservation according to the 2006 CAMA Land Use Plan. Subject parcels are located along an identified rouite included in the 2013 Wilmington-New Hanover County Comprehensive Greenway Plan. STRATEGIC PLAN ALIGNMENT: Intelligent Growth and Economic Development • Attract and retain new and expanding businesses • Implement plans for land use, economic development,infrastructure and environmental programs • Understand and act on citizen needs RECOMMENDED MOTION AND REQUESTED ACTIONS: Staff recommends approval with conditions. ACTION #1 Needed: Adopt a statement in accordance with NCGS 153A-341 describing whether the petition is consistent with an adopted comprehensive plan and explaining why the board considers the action taken to be reasonable and in the public interest. Board of Commissioners Meeting 06/03/2013 11 -0 EXAMPLE for approval: The County Commissioners find that this request for zoning map amendment from B-2 Highway Business district and R-15 Residential to CUD (B-2)Conditional Use Highway Business as described is: 1. Consistent with the purpose and intent of several of the policies outlined in the 2006 CAMA Land Use Plan,including Policy 4.3,which details the intent to maximize the effectiveness of commercial uses by assuring that land is available for commercial uses within close proximity to the markets they serve and by ensuring that such commercial uses do not diminish the quality of life in nearby residential districts. 2. Reasonable and in the public interest to rezone 8.05 acres from B-2 Highway Business and R-15 Residential to CUD (B-2)Conditional Use Highway Business in this location in order to promote a mix of uses in an area already identified as a commercial node. ACTION#2 Needed: Note: A Special Use Permit is a quasi-judicial action requiring an evidentiary hearing and findings of fact. Use the Script/Worksheet to make findings and: 1. Grant the special use; or 2. Add conditions to the special use; or 3. Deny the special use on the grounds that the findings of fact violate one or more of the four criteria. ATTACHMENTS: Z-925 Request For Continuance Z-925 Script Z-925 Staff Summary Z-925 Petition Summary Z-925 B-1 Permitted Uses Z-925 Adjacent Property Owners Map Z-925 Zoning-Aerial Map Z-925 Traffic Impact Worksheet Z-925 TIA Approval Letter Z-925 CFPUA Comments Z-925 NHC Fire Services Comments Z-925 Applicant Materials COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) COMMISSIONERS'ACTIONS: Continued to July 1, 2013 by a vote of 4-0. Board of Commissioners Meeting 06/03/2013 11 -0 1l/ R it4�4 � dl May 21, 2013 Mr. Chris Coudriet New Hanover County Manager Re: Case No. Z-925, 05/13 p/o 2530, p/o 2600, 2608, 2612 & 2616 North College Road Dear Mr. Coudriet: The referenced petition is currently scheduled for hearing by the Board of Commissioners on their Monday, June 3rd, agenda. However, the attorney who will be representing the owner in the hearing, Michael Lee, has an unavoidable conflict. On behalf of the owner of the referenced property, we respectfully request that the item be continued to the from the Monday, July 1 st, Board of Commissioners meeting. Please do not hesitate to contact me if you have any questions or need additional information. Thank you. Respectfully, Cindee Wolf- Authorized Agent cc: Mr. Chris O'Keefe - Planning & Inspections Director P.O. Sox 7221, Wilmington, NC 22406 * Telephone: 910-620-2374 * Email: cwolf @lobodemar.biz Board of Commissioners Meeting 06/03/2013 11 - 1 - 1 ITEM# SCRIPT FOR CONDITIONAL REZONING (Z-925 05/13) Request by Cindee Wolf, Design Solutions, on behalf of College Road Development Partners, LLC to rezone 8.05 acres located at 2530, 2600, 2608, 2612, & 2616 North College Road from B-2 Highway Business and R-15 Residential to CUD (B-2) Conditional Use District B-2. The site is classified as Transition and Conservation Area according to the 2006 CAMA Land Use Plan. The subject properties are also located within the Wilmington/New Hanover County Comprehensive Greenway Plan. Open the hearing and announce that this request requires a quasi-judicial hearing and therefore the Clerk to the Board must swear in any person wishing to testify. All persons who signed in or want to present testimony should step forward to be sworn in. 1. This is a public hearing. We will hear a presentation from staff. Then the applicant and any opponents will each be allowed 15 minutes for their presentation and an additional 5 minutes for rebuttal. 2. Public Hearing a. Staff Presentation b. Applicant's Presentation (up to 15 minutes) C. Opponent's Presentation (up to 15 minutes) d. Applicant's cross examination/rebuttal (up to 5 minutes) e. Opponent's cross examination/rebuttal (up to 5 minutes) 3. Close the Public Hearing 4. If a rezoning is denied a new application may only be submitted within 12 months of the denial if there is a substantial change in the original petition for rezoning. Do you wish to proceed or do you wish to continue the matter? 5. Ask Applicant whether he/she agrees with staff findings and any proposed condition. 6. Vote on rezoning(fire vote) 7. Vote on the companion special use permit. (second vote) 0 Motion to grant the permit-All findings are positive. 0 Motion to grant the permit, subject to conditions specified below: (State Conditions) 13 Motion to deny because, if completed as proposed,the development more probably than not: a. Will endanger the public health or safety for the following reasons: b. Cannot not meet all required conditions and specifications, in particular: C. Will injure the value of adjoining or abutting property in the following way: d. Will not be in harmony with the area in which it is located for the following reasons: Board of Commissioners Meeting 06/03/2013 11 -2- 1 CASE: Z-925,05/13 PETITIONER: Cindee Wolf, Design Solutions on behalf of College Road Development Partners, LLC REQUEST: Rezone from B-2 Highway Business and R-15 Residential to CUD (B-2), Conditional Use Highway Business District ACREAGE: Approximately 8.05 Acres LOCATION: 2530, 2600, 2608 (2 parcels), 2612, & 2616 North College Road LAND CLASS: Transition and Conservation Area STAFF SUMMARY: PLANNING BOARD ACTION: The Planning Board voted 6-0 at their May 2, 2013 meeting to recommend approval of both the rezoning and conditional use permit, subject to the conditions recommended by staff, as well as a condition to relocate the proposed dumpster pad in a manner to minimize the disturbance of the adjacent residential district to the east which the applicant has provided in a revised site plan submitted with this proposal. LOCATION OF SUBJECT PARCELS: The subject properties are located approximately 230 feet north of the Long Ridge Drive/North College Road intersection. The proposal includes six parcels with a combined area of 8.05 acres. Five of the six parcels are split zoned B-2 Highway Business and R-15 Residential and have direct access to North College Road. The proposed Conditional Use Highway Business District includes all of parcels 2608 (2 parcels with this address), 2612, and 2616 North College Road. Also included in the proposed conditional use district are the R-15 Residential portions of 2530 (depth of 60-feet) and 2600 (depth of 85-feet) North College Road. HISTORY OF ZONING ON SUBJECT PARCELS: The original B-2 zoning was established in 1972 at a depth of 300' fronting Murrayville Road to 2600 North College Road, and included 2530 North College Road of this petition. The western property with the 2608 address, 2612, and 2616 North College Road were also partially zoned B-2 to a depth of 300 feet, per a July 13, 1998 rezoning. The remainder of the properties remained R-15 Residential since that rezoning. Case Z-925, (05/2013) Page 1 Board of Commissioners Meeting 06/03/2013 11 -3- 1 sy T ^uqt, " f i; CASE MAP Z-925,195113 h \0 \ 2.8'255' ' J. ra aV 1 N.- �` i j d Request to rezone 7.'10 acres �0 1 o'o' ( t-� from 9�and R-1510 CUDf6-2{ Conditional Use District 0.2 –wq r r 7 F6ghway Bushes. 260B,2612 2614 R-15 _616 and?610 ! P1 \'� North College Road . � Applicant. Clnd-Wolf Desl9n Solutions on behalf of College Road Developrhahl Plift—s.LLC NNy r 1 r m4, PaNnse �µ54� / R 15 0 400 900 d :�_�' k¢e L. 1 /.F _�a '. Feet The subject parcels are identified as Z-925 in the area outlined in blue. The current zoning is depicted on this map. CHARACTER OF THE AREA: Current Zoning:The purpose of the R-15 Residential District is to insure that residential development not having access to public water and dependent upon septic tanks for sewage disposal will occur at sufficiently low densities to insure a healthful environment. The purpose of the B-2 district is to provide for the proper grouping and development of roadside business uses which will best accommodate the needs of the motoring public and businesses demanding high volume traffic. The subject site is situated within an existing commercial node. North of the proposal is Laney High School. South of the subject properties, at the corner of Long Ridge Drive and North College Road, plans have been approved to construct a Dollar General. Southwest is a Conditional Use District B-2 which is subject to an approved master plan for Northside Baptist Church and the recent constructed McDonalds located at 2519 North College Road. Directly west is an R-15 Residential district that is currently vacant, as well as a pocket of 0&1 Office and Institutional, that contains a real estate office and beauty salon. East of the subject properties the zoning is R-15 Residential. Proposed Zoning: The proposal is CUD (B-2) Conditional Use Highway Business. The Conditional Use District (CUD) procedure is established to address situations where a particular land use would be consistent with the New Hanover County Land Use Plan and the objectives of the Zoning Ordinance, but none of the general zoning district classifications would allow the proposed use as acceptable. The purpose of the B-2 district is to provide for the proper grouping and development of roadside business uses which will best accommodate the needs of the motoring public and businesses demanding high volume traffic. Case Z-925, (05/2013) Page 2 Board of Commissioners Meeting 06/03/2013 11 -3-2 In this case, the petition is for a 123-unit apartment complex with 6,400 square feet of commercial uses on the first floor of the apartment complex. Uses proposed in the commercial portion of the structure will be limited to uses permitted by right in a B-1 Business District per Section 72-38 of the Zoning Ordinance. The apartments will be a combination of one (61) and two bedroom (62) units. Traffic: North College Road is an urban principal arterial roadway.The average daily trip count on North College Road at the Long Ridge Drive intersection is 23,000 vehicles. This intersection is currently operating at a Level of Service F, meaning the traffic counts exceed the capacity of the roadway. The traffic impact worksheet prepared by the WMPO estimates that the proposed project will produce an AM peak hour of 93 trips and a PM peak hour of 182 trips. Therefore, a full traffic impact analysis (TIA) was required per Section 61.4 of the New Hanover County Zoning Ordinance. The TIA (which included 120 units and 6400' of commercial space as opposed to the 123 units and 6400' of commercial space submitted in this application) also included a B-2 outparcel to the south which is not part of this application. According to the TIA, the outparcel is anticipated to include a 4,500 square foot fast food restaurant. Recommendations within the TIA are based on traffic counts taken during the period of Wednesday, February 6, 2013. The TIA indicates a trip generation of approximately 2,159 net trips per day, with a.m. peak hour of 94 vehicles entering and 115 vehicles exiting. The study also estimates a p.m. peak hour of 109 vehicles entering and 131 vehicles exiting. The WMPO, New Hanover County Planning and the NCDOT staff have each reviewed the TIA report, and the report has been accepted. Required Improvements include: 1. North College Road at Proposed North Access: • Extend the two-way left turn lane to tie into the existing dedicated left turn lane at the intersection of New Village Way. • Provide a left turn lane with 100 feet of storage and appropriate taper into the site. • Provide one lane for exiting traffic. • Provide a 100' internal protected stem. 2. North College Road at Proposed South Access: • Extend the two-way left turn lane to tie into existing two-way left turn lane to the north on North College Road. • Restripe the outer northbound lane, currently striped as right turn lane, to a through lane. • Provide a right turn lane with 100 feet of storage and appropriate taper into the site. • Provide a left turn lane with 100 feet of storage and appropriate taper into the site. • Provide two lanes for exiting traffic, one left turn lane and one right turn lane. • Provide a 100' internal protected stem. 3. North College Road at Long Ridge Drive: • None identified. 4. North College Road at Murrayville Road/ Bavarian Lane: Case Z-925, (05/2013) Page 3 Board of Commissioners Meeting 06/03/2013 11 -3-3 • If not already existing at the time this development is constructed, extend the southbound left turn lane and tie into the two-way left turn lane. • If not already existing at the time this development is constructed, modify traffic signal operations to eight phases and remove split side phasing. COMMUNITY SERVICES: Water/Sewer: Water is currently available; however, an extension may be required from a 12" main across North College Road if additional flow is needed. Sewer would require an extension of a main line. At this time there are no capacity issues per CFPUA. Fire Protection: The property will be served by New Hanover County Fire Services. A fire hydrant layout will be required and shall at a minimum include three (3) hydrants to provide water to the facility, in addition to sprinkling the entire structure. Schools: School districts are determined by the New Hanover County Board of Education. Currently, the subject properties would fall within the Castle Hayne Elementary School, Trask Middle School, and Laney High School districts.The following capacity information is available for those jurisdictions: • Castle Hayne Elementary School, admission 460, capacity 595, per 2011-12 year • Trask Middle School, admission 693, capacity 728, per 2011-12 year • Laney High School, admission 1,826, capacity 1,535, over capacity per 2011-12 year COUNTY'S POLICIES FOR GROWTH AND DEVELOPMENT: CAMA Land Classification: The subject properties are located within a Conservation area and Transition area according to the 2006 CAMA Land Classification Map. The Conservation area runs consistent with the flood lines and is proposed to remain in a vegetated state. All new development would be contained within the Transition area.The purpose of the Transition class is to provide for future intensive urban development on lands that have been or will be provided with necessary urban services. The location of these areas is based upon land use planning policies requiring optimum efficiency in land utilization and public service delivery. ENVIRONMENTAL CONSIDERATIONS:The subject properties are located within the Smith Creek watershed which is classified as C; SW. The soil maps indicate Murville Fine Sand, Baymeade Fine Sand, Seagate Fine Sand, and Johnston Soils. Murville fine sand is a Class III soil. It has severe limitations and requires extensive modification and intensive maintenance. Baymeade fine sand and Seagate fine sands are Class II soils. They contain moderate limitations and require moderate modification and maintenance. Johnston soils are Class IV soils and are unsuitable for septic tanks. Case Z-925, (05/2013) Page 4 Board of Commissioners Meeting 06/03/2013 11 -3-4 ACTION 1: REZONING STAFF'S POSITION FOR REZONING: The mixed use proposal is consistent with the County's Land Use Plan and meets the requirements of the Ordinance. A culmination of several factors has increased traffic in an area that already experiences a degraded level of service. While this project will increase the amount of traffic in the area, the TIA includes several improvements that are proposed to alleviate the current traffic burden by decreasing traffic impacts on congestion and improving safety on the roadway. Additionally, the proposal includes amenities to encourage pedestrian traffic as opposed to motoring traffic, including the construction of an external sidewalk fronting North College Road and the connection of internal sidewalks to adjacent services. Further, the proposal limits the commercial uses to only those allowed within a B-1 zoning district that is more accommodating and appropriate to serve a neighborhood residential project. Therefore, Staff is recommending approval. Adopt a statement in accordance with NCGS 153A-341 describing whether the petition is consistent with an adopted comprehensive plan and explaining why the board considers the action taken to be reasonable and in the public interest. Staff suggested motion for approval: The County Commissioners find that this request for zoning map amendment from B-2 Highway Business district and R-15 Residential to CUD (B-2) Conditional Use Highway Business as described is: 1. Consistent with the purpose and intent of several of the policies outlined in the 2006 CAMA Land Use Plan, including Policy 4.3, which details the intent to maximize the effectiveness of commercial uses by assuring that land is available for commercial uses within close proximity to the markets they serve and by ensuring that such commercial uses do not diminish the quality of life in nearby residential districts. 2. Reasonable and in the public interest to rezone 8.05 acres from B-2 Highway Business and R-15 Residential to CUD (B-2) Conditional Use Highway Business in this location in order to promote a mix of uses in an area already identified as a commercial node. Case Z-925, (05/2013) Page 5 Board of Commissioners Meeting 06/03/2013 11 -3-5 ACTION 2: SPECIAL USE PERMIT Note:A Special Use Permit is a quasi-judicial action requiring an evidentiary hearing and findings of fact. PRELIMINARY FINDINGS OF FACT: Finding 1. The Board must find that the use will not materially endanger the public health or safety where proposed and developed according to the plan as submitted and approved. A. Water is available currently; however, an extension may be required from a 12" main located across North College Road, if additional flow is needed. Sewer would require an extension of a main line. At this time there are no capacity issues. B. Fire Service is provided by New Hanover County Fire Services. A fire hydrant layout will be required and shall at a minimum include three (3) hydrants to provide water to the facility, in addition to sprinkling the entire structure. C. The subject properties are partially located within the special flood hazard area; however, all development will be located outside of this area. D. The current Level of Service for the closest intersection is F, meaning the traffic counts exceed the capacity of the roadway. However, the recommended transportation improvements are demonstrated to decrease traffic impacts on congestion and improve safety on the roadway. Staff Suggestion: Evidence in the record at this time supports a finding that the use will not materially endanger the public health or safety where proposed road improvements required by NCDOT are implemented. Finding 2. The Board must find that the use meets all required conditions and specifications of the Zoning Ordinance. A. Conditional use districts are designed for firm development proposals and not for tentative development. The applicant is proposing a mixed use development consisting of a 123-unit residential apartment complex with 6,400 square feet of commercial space on the first floor, consistent with Section 72-38(1). The apartment complex will contain sixty-one (61) one bedroom units and sixty-two (62) two bedroom units. B. The commercial portion of the structure will be limited to uses permitted by right in a B-1 Business District, consistent with Section 72-38(2). C. The applicant has provided conceptual elevations indicating proposed architecture style per Section 72-38(3). D. Sidewalks are proposed along the front of the subject properties, connecting internal sidewalks to adjacent services and are consistent with Section 72-38(4) and with the intent of the City-County Comprehensive Greenway Plan. E. The applicant proposes two hundred sixty-two (262) shared parking spaces to accommodate the mix of uses, consistent with Sections 81-1 and 72-38(5). F. The site plan proposes 3.67 acres of Park and Recreation Area, consistent with Section 72-38(6). G. The site plan includes a conceptual lighting plan, consisting of eleven (11) decorative light posts, not to shine or reflect directly onto any adjacent residential property, consistent with Section 72- 38(7). Case Z-925, (05/2013) Page 6 Board of Commissioners Meeting 06/03/2013 11 -3-6 H. Residential uses are proposed within the same building as the commercial uses, consistent with Section 72-38(8). Staff Suggestion: Evidence in the record at this time supports a finding that the use can meet all required conditions and specifications of the Zoning Ordinance. Finding 3. The Board must find that the use will not substantially injure the value of adjoining or abutting property or that the use is a public necessity. A. No evidence has been submitted that this project will decrease property values of residents who live nearby. Staff Suggestion: The evidence in the record at this time supports a finding that the use will not substantially injure the value of adjoining or abutting property. Finding 4. The Board must find that the location and character of the use if developed according to the plan as submitted and approved will be in harmony with the area in which it is to be located and in general conformity with the plan of development for New Hanover County. A. The 2006 Land Use Plan Update identifies the majority of the subject property as Transition. The transition designation is to provide for further intensive urban development on lands that have been or will be provided with necessary urban services.The location of these areas is based upon land use planning policies requiring optimum efficiency in land utilization and public service delivery. B. Policy 4.3 of the 2006 CAMA Land Use Update outlines the desire to maximize effectiveness of commercial uses by assuring that land is available for commercial uses within close proximity to the markets they serve and by ensuring that such commercial nodes do not diminish the quality of life in nearby residential areas. Staff Suggestion: Evidence in the record supports a finding that the use will be in harmony with the area and in general conformity with the plan of development for New Hanover County. STAFF'S POSITION FOR SPECIAL USE PERMIT: The proposal meets the requirements for B-2 Highway Business and Conditional Use districts, all proposed development is located within a Transition land classification, and the proposal is in compliance with additional restrictions imposed on residential uses within a commercial district. Further, roadway improvements required as part of the TIA approval will mitigate the impacts of additional traffic in the area. Staff suggests that the four findings of fact are positive; however, would propose the following conditions be imposed which the petitioner/property owner must agree to for the permit to be valid: Case Z-925, (05/2013) Page 7 Board of Commissioners Meeting 06/03/2013 11 -3-7 Condition 1. All improvements recommended in the final WMPO approval must be installed for the Conditional Use Permit to be valid; Condition 2. Extension of pedestrian connections to the undeveloped outparcel at both access points; Condition 3. Tract A remain undeveloped and the applicant shall supplement the existing vegetation in accordance with the buffer requirements of Section 62.1-4; Condition 4. Work in coordination with the CFPUA to determine if a recorded utility access easement is necessary to maintain water and sewer connections; Condition 5. A fire hydrant layout and sprinkling plan be approved by County Fire Services. ACTION: Use the Script/Worksheet to make findings and: 1. Grant the special use; or 2. Add conditions to the special use; or 3. Deny the special use on the grounds that the findings of fact violate one or more of the four criteria. Staff suggested motion: Grant the special use permit with the five conditions listed above. Case Z-925, (05/2013) Page 8 Board of Commissioners Meeting 06/03/2013 11 -3-8 Case Z-925 (05/13) Request to rezone approximately 8.05 acres from B-2 Highway Business and R-15 Residential to CUD (B-2) Conditional Use District Highway Business Petition Summary Data 2530, 2600, 2608(2 parcels with this address), 2612, & 2616 North College Road Owner/Petitioner: Cindee Wolf, Design Solutions, on behalf of College Road Development Partners, LLC Existing Land Use: All of the subject properties contain split zoning of approximately 300' of B-2 Highway Business, along North College Road frontage and the rear of properties contain R-15 Residential. Three dilapidated duplex structures exist on sites currently. Zoning History: Area 813, July 7, 1972 Land Classification (by address): • 2530: North College Road frontage is classified as Conservation Area; however, the rear is identified as Transition. • 2600: North College Road frontage is classified as Conservation Area; however, the rear is identified as Transition. • 2608 (2 properties with this address): Majority of properties classified as Transition; however, there are pockets of Conservation Area, consistent with AE flood lines. • 2612: Majority of property is classified as Conservation Area; however, there is a small pocket of Transition, fronting North College Road. • 2616:The subject property is entirely located within the Conservation Area. Water Type: Public water is available; however, an extension may be required from a 12" main across North College Road, if additional flow is needed. Sewer Type: An extension of a main line would be required from the manhole located at Laney High School. At this time there are no capacity issues. Recreation Area: Castle Hayne Elementary School Castle Hayne Park Access &Traffic Volume: The North College Road/ Long Ridge Drive intersection currently operates at a LOS of F during the AM and PM peaks. The ITE Trip Generation, referenced in the Traffic Impact Analysis (TIA) indicates that the proposed site plan and future development of adjacent B-2 Highway Business out parcel have the trip generation potential of 2,159 net trips per day. The net trip generation includes an AM peak of 317 total trips and a PM peak of 380 total trips. Fire District: New Hanover County Fire Service District Watershed &Water Quality Classification: Smith Creek (C; SW 303d) Aquifer Recharge Area: Secondary recharge areas for Castle Hayne or Peedee where occurring near land surface under water-table conditions. Conservation/Historic/Archaeological Resources (by address): Z-925, 05/13 Page 1 Board of Commissioners Meeting 06/03/2013 11 -4- 1 • 2530: North College Road frontage is located within the AE floodplain; however, the rear of the property lies outside of the floodplain. • 2600: North College Road frontage is located within the AE floodplain; however, the rear of the property lies outside of the floodplain. • 2608 (2 properties): The majority of the properties lie outside of the floodplain; however, the northern edge contains AE floodplain. • 2612: The majority of the property is located within the AE floodplain; however, there is a pocket at the southern boundary of the property outside of the floodplain,fronting North College Road. • 2616:The entire property is located within the AE floodplain. Soils (by address): • 2530: Murville Fine Sand &Seagate Fine Sand • 2600: Murville Fine Sand, Baymeade Fine Sand, & Seagate Fine Sand • 2608(2 properties): Murville Fine Sand, Baymeade Fine Sand (1 to 6 percent slopes), & Seagate Fine Sand • 2612: Baymeade fine sand (1 to 6 percent slopes) • 2614: Murville Fine Sand & Baymeade fine sand (1 to 6 percent slopes) • 2616: Murville Fine Sand &Johnston Soils Septic Suitability: Murville fine sand is a Class III soil. It has severe limitations and requires extensive modification and intensive maintenance. Baymeade fine sand and Seagate fine sands are Class II soils. They contain moderate limitations and require moderate modification and maintenance.Johnston soils are Class IV soils and are unsuitable. Schools: Castle Hayne Elementary School, admission 460, capacity 595, per 2011-12 year Trask Middle School, admission 693, capacity 728, over capacity per 2011-12 year Laney High School, admission 1,826, capacity 1,535, over capacity per 2011-12 year Planning Areas: 2006 CAMA Land Use Plan Wilmington/New Hanover County Comprehensive Greenway Plan Z-925, 05/13 Page 2 Board of Commissioners Meeting 06/03/2013 11 -4-2 Section 54 B-1 Business District 54.1:The purpose of this District shall be to provide convenient shopping facilities primarily of necessity goods and personal services required to serve a neighborhood.The district's principal means of ingress and egress shall be along collector roads, minor arterials, and/or major arterials as designated on the County's Thoroughfare Classification Plan. (8/4/86) No B-1 Business District shall be less than two (2) acres in area. 54.2: DELETED (1/5/81) 54.3: DELETED (1/5/81) 54.4: Dimensional Requirements: (1) Minimum Lot Area— None (2) Minimum Front Yard - Fifty (50)feet along US and NC numbered highways and major thoroughfares as designated by the Wilmington Area Thoroughfare Plan.Thirty-five (35)feet along all other public highways or streets. (3) Minimum side and rear yards for property abutting residential districts: (A) Required minimum setbacks for structures shall be calculated in accordance with Section 69.11. (B) Buffering and landscaping shall meet the requirements of Section 67-4. (3/9/88) (4) Maximum Building Height-Thirty-five (35)feet (12/13/82) 54.5: Parking- Parking and loading shall be provided in accordance with the provisions of Article VIII. 54.6:Signs-Signs shall be in accordance with Article IX. 54.7: DELETED (3/9/88) B-1 DISTRICT USES PERMITTED(from Table of Permitted Uses) Permitted by Right 1. Agricultural Uses 2. Kennels 3. Veterinaries 4. Wholesale Nurseries& Greenhouses 5. Special Trade& General Contractors with no Outside Storage 6. Electric/Gas& Sanitary Services 7. Electric Substations Permitted by Right (Continued) 8. Telephone&Telegraph Facilities 9. Antenna &Towers Less Than 70 Ft. In Height&Ancillary to the Principle Use 10. Cellular& PCS Antennas 11. Amateur Radio Antennas (Up to 90 Ft.) 12. Wholesaling Seafood With Water Frontage 13. Apparel &Accessory Store Board of Commissioners Meeting 06/03/2013 11 -5- 1 14. Automobile Dealers&Truck Sales 15. Convenience Food Store 16. Drug Store 17. Eating and Drinking Places 18. Entertainment Establishments, Bars, Cabarets, in a Shopping Center 19. Food Stores 20. Fruit&Vegetable Stand Produced on Same Parcel as Offered for Sale 21. Furniture, Home Furnishing& Equipment 22. General Merchandise Stores 23. Handcrafting Small Articles 24. Hardware 25. Miscellaneous Retail 26. Retail Nurseries 27. Historic restaurants 28. Banks, Credit Agencies, Savings & Loans 29. Barber/Beauty Shop 30. Business Services Including Printing 31. Dry Cleaning/Laundry Plant 32. Funeral Home 33. Indoor& Outdoor Recreation Establishments 34. Parks& Recreation Areas 35. Personal Services 36. Watch, Clock,Jewelry Repair 37. Children's Day Care 38. Libraries 39. Museums 40. Churches 41. Lodges, Fraternal & Social Organizations 42. Fraternities/Sororities, Residential 43. Accessory Buildings or Uses, clearly incidental to the Permitted Use or Building 44. Christmas Tree Sales Permitted by Right (Continued) 45. Private Residential Boating Facility 46. Demolition-Landscape Landfill 47. Evangelistic and Religious Assemblies not Conducted at a Church 48. Government Offices& Buildings 49. Offices for Private Business& Professional Activities 50. Outdoor Bazaars excluding Yard Sales 51. Pumpkin Sales 52. Principal Use Sign 53. Special Fund Raising for Non-Profit Organizations 54. Temporary Sign 55. Recycling Facilities-Small Collection Board of Commissioners Meeting 06/03/2013 11 -5-2 Special Use Permit Required 1. Commercial Marina with Floating Structures 2. Commercial Marina 3. Other Communication Facilities Including Towers 4. Entertainment Establishments, Bars, Cabarets, Discos 5. Dwelling Unit Contained within Principal 6. Senior Living: Continuing Care Retirement Community or Life Care Community 7. Single Family Dwelling 8. Single Family Dwelling-Attached 9. Recycling Facilities-Large Collection Board of Commissioners Meeting 06/03/2013 11 -5-3 co c'4 = o R n § t0S 00 \§ « K 0/; , \e} \\ a ,« o °®A � '� §% DC4 � R22 § °�_ \ \§ 7� \j\ / 04 0 q LD kR=� , o\m\ =£ oo ' LL « o c ! -j < ,\ [ N El « U • - , 0 _ N 79] f § �} fit ° /00 \ 0j o LID 04 LD < 0 f k # 04 ® a) ~ ° � aQn � - N ¥. - - k �. �a PS . 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V t St\k {a5•,' G,,�.. t, Traffic t Worksheet Prior to submission of o r si e ' l site plan, this worksheet must be prepared. Traffic Impact Analysis wX be requiredfor allprojects generating a r trips or more. The scope of the TL4 shaff he determined concurrence of the a i Director, the MPO coordinator and NCDOT trark engineer.Any mitigation measures required t he included in e final site plan submitted for review. PROJECTNAME, ®vim. PROJECT • q ,- TIN �° d , • a y . •v GROSS FLOOR AREA sq. ft. INTERSECTION NEAREST ' BEFORE PROPOSED PROJECT Average Daily Traffic (Date) LEVEL OF SERVICE (LOS) ITE MANUAL TRAFFIC ESTIMATE: *ITE Manual available at Planning Department o VARIABLES:USE AND fi (Example: cuet Club; co ; tur y peaks) AM PEAK HOUR TRIPS PM PEAK HOUR TRIPS (Traffic c ener ' n of 100 peak hour trips will require Traffic Impact Analysis Scoping meeting with Planning Department) 1 v ° Person Providing Estimat Si ature Peak Hour estimate confirmed by Planning&Zoning on (Date) By Board of Commissioners Meeting 06/03/2013 11 -8- 1 _ X WILMINGTON URBAN AREA f' r Metropolitan Planning Organization « ` P.O. Box 1810 Wilmington, North Carolina 28402 910 341 3258 910 341 7801 FAX Members: To: Mr.Dan Cumbo, PE City of From: Mrs.Tara Murphy,Assoc.Transportation Planner,Wilmington MPO WILMINGTON Cc: Ms. Nicole Dreibelbis, Planner, New Hanover County Lead Planning Agency r. Mike Kozlosy, Executive Director,Wilmington MPO Town of Mrs. Katie Hite, Division Traffic Engineer, NCDOT CAROLINA BEACH Ms.Jessi Booker,Assistant Division Engineer, NCDOT Town of r.Anthony Law, District Engineer, NCDOT KURE BEACH : Approval of the Traffic Impact Analysis (TIA)associated with the proposed Town of North College Road Mixed Use it i WRIGHTSVILLE BEACH New Hanover County, NC NEW HANOVER County Date: April 15,2012 Town of ELVILLE The WMPO, North Carolina Department of Transportation ( CT)and New Hanover Town of County Planning staff have reviewed the North College Road Mixed Use Building Traffic LELAND Impact Analysis(TIA) report dated January 28th,2012.The report has been accepted and appears to meet the minimum requirements for TIA submittal. Town of NAVASSA As per WMPO, NCDOT and New Hanover County review,the developer is responsible BRUNSWICK for constructing the following improvements: County A. North College Road at Proposed North Access: PENDER ■ Extend the two-way left turn lane to tie into the existing dedicated left County turn lane at the intersection of New Village Way. FEAR ■ Provide a left turn lane with 100 feet of storage and appropriate taper CAPE Public Transportation into the site. Authority ■ Provide one lane for exiting traffic. ■ Provide a 100' internal protected stem. North Carolina BOARD F B. North College Road at Proposed South Access: TRANSPORTATION ■ Extend the two-way left turn lane to tie into existing two-way left turn lane to the north on North College Road. • Restripe the outer northbound lane,currently striped as right turn lane, to a through lane. • Provide a right turn lane with 100 feet of storage and appropriate taper into the site. • Provide a left turn lane with 100 feet of storage and appropriate taper into the site. Board of Commissioners Meeting 06/03/2013 11 -9- 1 ■ Provide two lanes for exiting traffic,one left turn lane and one right turn lane. ■ Provide a 100'internal protected stem. C. North College Road at Long Ridge Drive: ■ None identified. D. North College Road at Murrayville Road/Bavarian Lane: * if not already existing at the time this development is constructed, extend the southbound left turn lane and tie into the two-way left turn lane. ■ If not already existing at the time this development is constructed, modify traffic signal operations to eight phases and remove split side phasing. Please note that an additional internal connection to the proposed fast food use shall be made to the rear portion (east)of the site. The applicant is required to obtain an NCDOT driveway permit for access to the state road network.All applicable NCDOT driveway access technical standards and policies shall apply. Comments from New Hanover County technical review shall also apply. If changes are made to the proposed site driveways and/or use,the current trip distribution may need to be modified and would require a revised Traffic impact Analysis to be submitted for review by NCDOT and the WIVIPO- This approval would become null and void. Please contact me at 910.341.4661 with any further questions regarding this approval. Board of Commissioners Meeting 06/03/2013 11 -9-2 Request for Information (RFI): Cape Fear Public Utility Authority Return To: Customer Service CFPUA,Phone(910)_332-6550,Fax(91 0)799-6066 235 Government Center Drive,Wilmington,NC 28403 Reg nested By: Requested On: 11/13/2012 ZDesign Engineer Contact Name: Firm Name: FIDeveloper Garry Pape GSP Consulting E]Agent/Broker Phone: Fax ElAppraiser 910-442-7870 E]Other Email Address: gpape@gsp-consulting.com Describe the land you are reguesting information about fone RFI per R03408-001-003-000 2608 N. College Road 3.67 Parcel ID Street Address Acres Property Owner: Bradley Point,LLC Multiple adjoining parcels? ZYes E]No If yes,submit one RFI per parcel. 9 What do you plan to do... OSubdivide Single Family Approx#Units: ZMulti-family Approx#Units: 100 OCommercial Describe Use: ❑Construct a Home Comment: [—]Other Comment: What information do you need?: ZConnection availability and requirements for closest CF`PUA sewer ZConnection availability and requirements for closest CFPUA water Other: CAPE FEAR PUBLIC UTILITY AUTHORITY(Allow 2 to 4 working days): All costs for extensions oft a water ors er systems in the CFPUA astem are at the cost of the developer(including design, permitting,easements, construction,ins ection conveyance',ec.l The information provided in this response needs to be verified for accuracy by the reguester's licensed professional engineer. CFPUA does not guar ntee its accuragy or completeness. E]If checked,the following notice applies to development oft is parcel: Treatment capacity at the of side and South side waste water treatment facilities is limited,and completion oft is for does not guarantee connection. Final apl!rovaI and connection is subject to State and Local reviews and approval and subject to acceptance b the CFPUA. All activities in New over County and the City of Wilmington must comply with the entirety oft a code of ordinance located along with other information at Board of Commissioners Meeting 06/03/2013 11 - 10- 1 CFPUA RESPONSE TO REAL ESTATE AGENT OR DEVELOPERS RF1(cont'd) SEWER: Off checked,the CFPUA sewer system does not extend t o t his area. E]If checked,the project is in an area that would require the installation of a regional lift station at the developer's cost. The sewage at this project would be treated at: E North side Plant El South side Plant General Sewer Comments: This would require a main line extension. At this time,there are no know capacity issues. WATER: E]If checked,the water CFPUA system does not extend t o t his area. General Water Comments: CFPUA water is available; may have to extend from 1211 main across the street if additional flow is needed. ADDITIONAL INFORMATION: Info Taken By: BSJ Contact Date: 11/13/2012 Forwarded To: BSJ Contact Date: 11/13/2012 CFPUA Contact:Bernice S.Johnson Contact Date: CFPUA Contact: Contact Date: 2 Board of Commissioners Meeting 06/03/2013 11 - 10-2 CF`PUA RESPONSE TO DESIGN ENGINEER'S RF1(cont'd) SEWER: SSMH: Invert: CFPUA Project#: Sheet#: SSMH is located at: SSMH is approximately: FT from the closest point on the parcel and leads to a-- G.S. main. THIS INFORMATION MUST BE FIELD VERIFIED BY THE DESIGN ENGINEER AND CAPACITY OF THE RECEIVING SYSTEM MUST BE ASSESSED BY THE DESIGN ENGINEER PRIOR TO TIME OF SEWER APPLICATION. 01f checked,the project is in an area that would likely require the installation of a regional lift station at the developer's cost. The sewage at this project would be treated at: D North side Plant 0 out side Plant General Sewer Comments: WATER: []If checked,the CFPUA water system does not extend t o t his area. A water system extension t o t his parcel would be required from the -- main Located at: Water is approximately: FT from the closest it on the parcel. General Water Comments ADDITIONAL INFORMATION: CFPUA Contact: Contact Date: 3 Board of Commissioners Meeting 06/03/2013 11 - 10-3 — � �kjt 1 t� i 'SC5 ti'3`� p x 1 a., { r , r !! i } 2.- t t f, t t 1t t a "� ,•,;�"� �-- tt,'` ,`1.t � a1�2r,1��i�i�ntS,1!1�}i4�551���12sz�� ,.,1�'1 sS.��� 1)���,-.;� �t,,�1l�1 1lt'�i`i1���tT` - s-- 06/03/2013 11 - 10-4 Williams-Rowland, Jackie From: Griswold, Raymond Sent: Tuesday, April 23, 2013 9:07 AM To: Dreibelbis, Nicole Subject: N. COLLEGE MIXED USE Sam— I have reviewed the "Conditional District Site Plan" for the 2600 block of North College Road.The following items are in need of discussion.They are: 1. The building is to be fully sprinklered. Is their enough water supply for this project???? I suggest they connect to the far side of the street, as the side they are on is an older fire line and not cross connected. It dead-ends at Laney High School. Fire flow requirements are to be provided. 2. A fire hydrant layout is required with a minimum 3 fire hydrants providing water to this facility. Both fire lines could be used to establish this. 3. What type construction will be used in this project??? These are the requirements/information I will need for this project to procede in the building of this site. As far as rezoning the driveway layout meets the fire code. If you need further, please contact me at any time. Raymond Griswold Deputy Fire Marshal New Hanover County Fire Services 910-798-7448(off.) Raymond Griswold I Fire Marshal, Deputy Fire Services I New Hanover County 230 Government Center Drive, Suite 130 Wilmington, NC 28403 (910) 798-7448 p 1 (910) 798-7052 f i Board of Commissioners Meeting 06/03/2013 11 - 11 - 1 NEW HANOVER COUNTY 230 Government Center Drive Suite 110 :f PLANNING & INSPECTIONS _" Wilmington,NC 28403 "0, �i DEPARTMENT 910-798-7165 phone CONDITIONAL USE ZONING DISTRICT 910-798-7053 fax www.nhcgov.com Petitioner Information Property Owner(s) Subject Property If different than Petitioner Name Owner Name Address p/o 2530, p/o 2600, 2608, Cindee Wolf College Road Dev Partners, LLC 2612&2616 N. College Road Company Owner Name 2 Parcel ID Design Solutions Adam Sosne (Parcels listed on Site Plan) Address Address Area P.O. Box 7221 6626-C Gordon Rd 8.05 Ac.+/- City,State,Zip City,State,Zip Existing Zoning and Use Wilmington, NC 28406 Wilmington, NC 28411 B-2 & R-15/Vacant homes Phone Phone Proposed Zoning and Use 910-620-2374 910-264-4824 Mixed-Use/Bus& Residential Email Email Land Classification cwolf @lobodemar.biz asosne @yahoo.com Transition SUBMISSION REQUIREMENTS PLEASE READ ALL OF SECTION 55.2 OF THE COUNTY ZONING ORDINANCE PRIOR TO SUBMITTING YOUR APPLICATION! Petitions must be reviewed by Planning&Zoning for completeness prior to acceptance. For petitions involving five (5) acres or less, a fee of$500.00 will be charged; for those of greater than five (5)acres a fee of$600.00 will be charged. This fee,payable to New Hanover County,MUST accompany this petition. In addition to the attached site plan check list,the following supplemental information is required: 1. Copy of the New Hanover County Tax Map,which delineates the property requested for rezoning. 2. Legal description(by metes and bounds)of property requested for rezoning. 3. Copy of the subdivision map or recorded plat which delineates the property. 4. Site Plan as outlined in section 60.1. For plans larger than 11x17,please provide ten(10)copies for the Planning Board meeting. You will be asked for an additional thirteen(13)copies of your site plan if your proposal moves forward to the County Commissioners. Also,please include one(1)reduced copy of the site plan.Digital submission may be substituted when accurate scaling can be assured. 5. Authority for Appointment of Agent form(if applicable).The owner or authorized agent is required to attend the Planning Board meeting. The owner or an attorney is required to attend the County Commissioners meeting. 6. Requirements of Article VII for the companion special use permit. 7. Applicant's answers to the questions on this application. 8. Signed site plan check list. 9. A report of the required public information meeting outlined in Section 111-2.1. REVIEW PROCEDURES Petitions for conditional change of zoning are first referred to the New Hanover County Planning Board and then acted upon by the New Hanover County Board of Commissioners. Complete petitions and all supplementary information must be accepted by Planning&Zoning twenty(20)working days before the Planning Board meeting to allow adequate time for processing and advertisement as required by the North Carolina General Statutes. Page 1 of 4 3/13 Board of Commissioners Meeting 06/03/2013 11 - 12- 1 Planning Board meetings are held at 6:OOPM in the Commissioner's Assembly Room in the Old County Courthouse,at Third and Princess Streets,Wilmington,North Carolina,on the first Thursday of each month. If the Planning Board approves your petition,the request will automatically be referred to the Board of County Commissioners.If your petition is denied,you may appeal to the Board of Commissioners.Planning&Zoning can advise you regarding appeal procedures. Uses and Development Requirements:Within a Conditional Use District,no use is allowed except by Special Use Permit.The permit may specify additional conditions and requirements,which represent greater restrictions on development and use of the tract than the corresponding General Use District regulations,or other limitations on land which may be regulated by state law or local ordinance. Such conditions and requirements shall not specify ownership status,race,religion,character or other exclusionary characteristic of occupant,shall be objective,specific and detailed to the extent necessary to accomplish their purpose,and shall relate rationally to making the permit compatible with the New Hanover County Land Use Plan,the requirements for a Special Use Permit and other pertinent requirements of the Zoning Ordinance,and to securing the public health,safety,morals,and welfare. WHAT YOU MUST ESTABLISH FOR A CHANGE OF ZONING Conditional Use District Zoning is established to address situations where a particular land use would be consistent with the New Hanover County Land Use Plan and the Zoning Ordinance objective but for which none of the general zoning classifications which would allow that use are acceptable.You must explain in the space below how your request satisfies each of the following requirements: (attach additional sheets if necessary) 1. How would the requested change be consistent with the County's Policies for Growth and Development? The location of this project adheres to land use planning policies for optimum efficiency in land utilization and public service delivery. It is located with easy access to the interstate highway, downtown Wilmington, and to the existing commercial node at Murrayville Road. The policies for growth and development encourage safe and affordable housing to be available to every citizen. Approval of this property for a higher-density of residential development would be consistent with the concept of transitioning uses, and in-filling vacant parcels where existing utilities can readily be extended and urban services are available. 2. How would the requested zone change be consistent with the property's classification on the Land Classification Map? The CAMA Land Classification is primarily"Transition," but includes some"Conservation" along the watercourse traversing the northern portion of the tract. The transition classification is intended for future intensive urban development on lands that have been, or will be provided with urban services, while minimizing environmental impacts and providing adequate open space. Only a small area within the conservation classification is impacted by some parking and will be preserved for recreational activities. 3. What significant neighborhood changes have occurred to make the original zoning inappropriate,or how is the land involved unsuitable for the uses permitted under the existing zoning? This area of the County has grown over the years with a lot of residential development to the East off of Murrayville Road -which currently dead-ends. The intersection of Murrayville Road & N. College Road has become a commercial node. There are also extensive commercial services in the NorthChase planned development. The majority of the project area is already zoned for business uses. The requested rezoning to a conditional district would provide for a more attractive development scheme and offer conditions to mitigate impacts- rather than the possibility of traditional commercial strip development. 4. List proposed conditions and restrictions that would mitigate the impacts of the proposed use(s). Reference the attached plan and narrative for conditions and restrictions. Page 2 of 4 3/13 Board of Commissioners Meeting 06/03/2013 11 - 12-2 WHAT YOU MUST ESTABLISH FOR A SPECIAL USE PERMIT Authority to grant a Special Use Permit is contained in the Zoning Ordinance,pursuant to section 71.The Zoning Ordinance imposes the following General Requirements on the use requested by the applicant.Under each requirement,the applicant should explain,with reference to attached plans,where applicable,how the proposed use satisfies these requirements: (Attach additional pages if necessary) General Requirement#1 The Board must find"that the use will not materially endanger the public health or safety if located where proposed and developed according to the plan as submitted and approved." The project would be accessed from two driveways onto N. College Road (NC Hwy 132), a 200' public R/W, maintained by NCDOT. NCDOT approval will be required for final permitting of the driveways and additional roadway improvements will be determined by the recommendations from a Traffic Impact Analysis. The project would be serviced by the Murrayville Fire Station. The structure would have a sprinkler system. Water and sanitary sewer service will be provided by extension of public mains to the CFPUA system. Permitting by all State and County agencies will be required prior to onset of construction. The housing facilities have on-site management and maintenance to assure safety and compliance to rules and regulations. General Requirement#2 The Board must find"that the use meets all required conditions and specifications"of the Zoning Ordinance. The development has direct access to an existing major arterial roadway. The CAMA Land Classification is Transition, intended for future intensive urban development on lands that have been, or will be provided with urban services, while minimizing environmental impacts and providing adequate open space. Public water&sewer service and piped storm drainage are proposed. Impervious coverage is less than the 50%. General Requirement#3 The Board must find"that the use will not substantially injure the value of adjoining or abutting property or that the use is a public necessity." The project is proposed on a busy roadway, along a commercial corridor. The adjacent properties on three sides include middle & high schools, church and commercial uses. A large wooded buffer is being provided for screening and separation of the proposed project from the residential uses to the rear. The majority of the land area is already zoned for business use. The project would improve the conditions of the area with sidewalks and landscaping. General Requirement#4 The Board must find"that the location and character of the use if developed according to the plan as submitted and approved will be in harmony with the area in which it is to be located and in general conformity with the plan of development for New Hanover County." The location of this project adheres to land use planning policies for optimum efficiency in land utilization and public service delivery. It is located with easy access to the interstate highway, downtown Wilmington, and to the existing commercial node at Murrayville Road. The policies for growth and development encourage safe and affordable housing to be available to every citizen. Approval of this property for a higher-density of residential development would be consistent with the concept of transitioning uses, and in-filling vacant parcels where existing utilities can readily be extended and urban services are available. Page 3 of 4 3/13 Board of Commissioners Meeting 06/03/2013 11 - 12-3 SITE PLAN CHECKLIST (section 60.1) Check each item to confirm that is included. The application will not be deemed complete without all items being addressed. Tract boundaries and total area,plus location of adjoining land parcels and roadways. Existing zoning of the tract and neighboring parcels and proposed tract zoning. Proposed use of land,structures and other improvements.For residential uses,this shall include number,height and type of units and site plan outlining area to be occupied by each structure and/or subdivided lot boundaries.For non- residential uses,this shall include approximate square footage and height of each structure,an outline of the area it will occupy and the specific purpose for which it will be used. Development schedule including proposed phasing. (Development as soon as permitted /no phasing) Traffic and Parking Plan to include a statement of impact concerning local traffic near the tract,proposed right-of-way dedication,plans for access to and from the tract,location,width and right-of-way for internal streets and location, arrangement and access provision for parking areas. All existing and proposed easements,reservations,required setbacks,rights-of-way,buffering and signage. The one hundred(100)year floodplain line,if applicable (No significant trees Location and sizing of trees required to be protected under Section 62 of the Zoning Ordinance. within dev area) Any additional conditions and requirements,which represent greater restrictions on development and use of the tract than the corresponding General Use District regulations,which are the minimum requirements in the Conditional Use District,or other limitations on land which may be regulated by State law or Local Ordinance. Any other information that will facilitate review of the proposed change(Ref.Article VII,as applicable). By my signature below,I certify that I have read Section 55.2 of the Zoning Ordinance.I understand and accept all of the conditions,limitations and obligations of the Conditional District zoning for which I am applying.I understand that the existing official zoning map is presumed to be correct.I understand that I have the burden of proving why this requested change is in the public interest.I further understand the singling out of one parcel of land for special zoning treatment unrelated to County policies and the surrounding neighborhood would probably be illegal.I certify that this application is complete and that all information presented in this application is accurate to the best of my knowledge,information, and belief. Cindee Wolf-Authorized Agent for Owner Signature of Petitioner and/or Property Owner Print Name Page 4 of 4 3/13 Board of Commissioners Meeting 06/03/2013 11 - 12-4 3 - 3 'x' e888ahh 6's $ U � �� & °' � E qa•z S �� 3000000 b h ., .. _ sag F �g a ' p$` S� d H sg IY s.x - or`a a 3 Q) �gs� - -- s�� / W$XU u%da°:e m iP •L \ / (M/2!-!!9 .09) •.IQ sap!N BU0.1 !� � III �3r / Ea�t A 8 Z��n .6'°ppS� �• �'F 6tl��� LL3 I N z m 5~i. A area ` ----7— : a l _ Al 777-777'777 LL2 ��/• � I N8 u ISO � 8 / Lm Ada m€ °9aGm.„9y LM- �A l f 1 ,■1111111 ■1 :: HSI ■I r. rY a I"U6. NON -, ;�:, �;�� Is IIIIIII�IIIpIIII �?Y 11, � �. 11111111 I1�� = '1� �I,'�r IId,n*�II� ��■ ^. 1� - 111 'tip 1111111 _ .fl�lp[I ��FI�[����gpI a �tllll II '•I�U#iiWl�61``� IIIIIII�I f� Illf�lll B I�IIIBIII�IIII�bi Ilolnn�l uiiuu Itip�i y load �f ■ ■ �w■I i 41111 III ,R`m•I�l�ll i.s� ll l4lll :a■ MI um iiimiu '■ 'F:� ME II 111111 ����I�11h111 �' II II II lll�llf� �II�III IIIIIIII�-� algiu�l � �u®11111 II lV�l`I 66��IIf�II,�E I I I�I�II�,I]III�I� 'a'at �� 6.�d lI �C■I 11111111 81111[� i�lllno I ulif it niu ���iii ,� � � III. ■��III�I���"�I�1 .#■r, i r• gip,u 1. 1 1 ». r II I to q 1 i r I Partial Elevation Z:3' .� .. Yr � �I __ SC-_ _ � �L C- C 'y r- -i �..� - a rI� u r r Lr T A L Planworx N ARCHITECTURE, . . Raleigh,SIC 919-846-8100 10- 2- Copyright C�Pisaatwnfl•x Architecture, P.A. 2011 Board of Commissioners Meeting 06/03/2013 11 - 12-7 Narrative for Conditional District Rezoning of p/o 2530, p/o 2600, 2608, 2612 & 2616 N. College Road This area of the County, along North College Road, has become a major growth corridor. The location of the schools, NorthChase housing, commercial and industrial park development, and Olsen Park recreation facilities are just a few of the various reasons. The primary area of the tract is classified by the County as "transition." The transition classification is to provide for future intensive urban development on lands that have been, or will be provided with necessary urban services. The location of these areas in based upon land use planning policies requiring optimum efficiency in land utilization and public service delivery. Demographic studies are suggesting that aging, empty-nester, and single-person households will dominate America's future housing markets. This all adds up to the potential for important changes in housing demand that planners need to anticipate. Shifting housing preferences and tightening of financial regulations suggest that higher-density housing options appear to be outpacing the demand for detached houses. Mixed-use projects provide innovative opportunities for integrating diverse but compatible uses into a single development or building. Providing convenient services in proximity of housing facilities increases pedestrian activity and decreases reliance on individual vehicles. Building up instead of sprawling out with vast land coverage of a site enhances environmental quality. The proposed project is an up-scale apartment complex with up to 123, one- & two-bedroom, units. There will be elevators, recreation amenities and on-site management to assure safety, security and rules compliance for the residents. The first floor on the N. College Road building facade will house up to 6400 square feet of commercial uses that could compliment the resident facilities - uses like a coffee shop, pizza delivery, sub shop, etc. The large area along the creek will be preserved for passive recreation. A footbridge over the creek will provide access to the schools and their active recreation facilities. Sidewalk will be installed along the entire road frontage, and provide pedestrian interconnectivity as other properties develop along the corridor. A Traffic Impact Analysis will be completed as a part of the approval process, and any road improvements made as required by NCDOT. Utilities will be connected to the public system. The building will have a fire sprinkler system. Storm water management will be provided by a combi- nation of low-impact practices within the parking area and a detention pond to the rear of the site. Existing vegetation around the tract perimeter will be left undisturbed, and supplemented with evergreen plantings along the highway frontage to screen the views and noise for the project residents. A large buffer of existing wooded area along the eastern boundary will be left undisturbed to provide screening for the residential lots along Long Ridge Drive. Streetyard, interior parking area and foundation plantings will add to the visual appeal of the project. The County's policies for growth and development encourage safe and affordable housing to be available to every citizen. Infill of vacant properties where services, jobs, and easy traffic circulation to other points in the County is an excellent opportunity for good economic development and increased tax base. We believe that this project meets those criteria and presents sensible density with an attractive design. Board of Commissioners Meeting 06/03/2013 11 - 12-8 Legal Description for Conditional District Rezoning of p/o 2530, p/o 2600, 2608, 2612 & 2616 N. College Road Beginning at a point in the eastern boundary of N. College Road (NC Hwy. 132), a 200' public right-of-way; said point being located North 18 021'47" West, 370.00 feet from its intersection with the northern boundary of Long Ridge Drive, a 60' public right-of-way; and running thence with the N. College Road right-of-way, North 18 021'47" West, 602.02 feet to a point; thence North 78 022'26" East, 601.05 feet to a point; thence South 00 028'59" East, 139.50 feet to a point; thence North 67 037'59" East, 66.67 feet to a point; thence North 73 019'43" East, 33.87 feet to a point; thence North 65 010'37" East, 17.69 feet to a point; thence North 53 059'58" East, 31.06 feet to a point; thence North 61 031'50" East, 20.98 feet to a point; thence South 13 004'48" West, 652.92 feet to a point; thence South 71034'16" West, 82.52 feet to a point; thence North 18 021'47" West, 140.00 feet to a point; thence South 71034'16" West, 299.14 feet to the point and place of beginning, containing 8.05 acres, more or less. Board of Commissioners Meeting 06/03/2013 11 - 12-9 AUTHORITY FOR APPOINTMENT OF AGENT do(es) hereby it Desi n Solutions / Cindee i r, or its exclusive for the r petitioning r: ) change to i ng map; b) approval of a special use permit; approval of a conditional use district, applicable to r described in petition. owner The does hereby v with New Hanover County that said rit the II i if of the owner: (1) To submit a proper petition and the required I materials; ( public i iv representation commitments on behalf of the r; and (3) In the case of a special use permit, to accept conditions r recommendations made for the issuance of the ci permit property.owners ( ) To act on the owner's I i limitations wi regard to any and II things directly or indirectly connected i arising t of any petition. This r II continue in it final disposition petition it in conjunction i this i . Date: � Agent's Name, Address i : A Sbsne for 7221 College Road Development Partners,L.L.C. Wilmington, I. 910-620-237 Board of Commissioners Meeting 06/03/2013 11 - 12- 10 REPORT OF COMMUNITY MEETING REQUIRED BY NEW HANOVER COUNTY ZONING ORIDINANCE FOR CONDITIONAL DISTRICT REZONINGS To: Clerk to New Hanover County Planning Board Case No.: Z-925, 05/13 Location: p/o 2530, p/o 2600, 2608, 2612 & 2616 North College Road Proposed Zoning: Conditional District B-2 for a Mixed-use Business / Residential Dev. The undersigned hereby certifies that written notice of a community meeting on the above zoning application was given to the adjacent property owners set forth on the attached list by first class mail on (date) January 30, 2013 . A copy of the written notice is also attached. The meeting was held at the following time and place: Carolina BBQ, 2307 N. College Road, 6:00 p.m., Wednesday, February 13, 2013 The persons in attendance at the meeting were: Reference Attached List The following issues were discussed at the meeting: Project introduction was given with exhibits of the site layout and preliminary building elevations. Open questions were primarily about traffic, what was happening with the McDonalds, under construction, and the possibility of a traffic signal at Long Ridge Drive. As a result of the meeting, the following changes were made to the rezoning petition: None. Date: March 6, 2013 Applicant: Design Solutions By: Cindee Wolf Soarci of ommissioners 171eeting 06/03/2013 11 - 12- 11 e4w 6t IVI rPW 1V7,4W/- O&z-� ew cou f lye 64t.�t'21 Z or . n Board of Commissioners Meeting 11 - 12- 12 Lu >1 0 4-) 0 0 L 0 0(N q) 0- II Q) + X u CL of U 0 6 L 0 u 0- 4-) q) 0 L c: o c 3 11§6 O x x ca CO 0 CL 04 po fog X M 04 .......... 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College Mixed-Use Project The owners of lands along N. College Road, between Long Ridge Drive & the Trask/Laney Schools, are interested in developing it for a mixture of neighborhood commercial and multi-family residential uses. This proposal would require a Conditional District rezoning approval from New Hanover County. A Conditional Zoning District allows particular uses to be established only in accordance with specific standards and conditions pertaining to each individual development project. Essentially, this means that only that use, structures and layout of an approved proposal can be developed. I have enclosed a preliminary plan of the project layout, and an exhibit of the style of the buildings. The County requires that the developer hold a meeting for all property owners immediate adjacent to the tract boundary, and any and all other interested parties. This provides neighbors with an opportunity for explanation of the proposal and for questions to be answered concerning project improvements, benefits and impacts. This meeting is going to be held at the Carolina BBQ, 2307 N. College Road, 6:00 p.m., Wednesday, February 13th. If you cannot attend, you are also welcome to contact me at telephone # 620-2374, or email cwolf @lobodemar.biz with comments and/or questions. We appreciate your interest in the project and look forward to being a good neighbor and an asset to the community. P.O. 13ox 7221, Wilmington, NC 22406 * Telephone: 910-620-2374 * Email: cwolf @lobodemar.biz Board of Commissioners Meeting 06/03/2013 11 - 12- 16 � �\ y� \ . . \� ^ - ^ � : / ^ < !� .. �,, 4 , 6, � �� � . y< : � - � : . . , 4 - ` `�� �\\ z � m ®* \ � \ «- . a ° , - - � ± . , a . , , \y\ � ± ° � : ����` . \ : �/ NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 12 DEPARTMENT: PRESENTER(S): Ken Vafier, Senior Zoning Compliance Official and Chris O'Keefe,Planning& Inspections Director(Planning Board Rep: Richard Collier, Chairman) CONTACT(S): Ken Vafier, Senior Zoning Compliance Official; Shawn Ralston,Planning Manager; and Chris O'Keefe; Planning& Inspections Director SUBJECT: Public Hearing Text Amendment (A-412, 05113)- Request by Staff to Amend Section 71-1(9) of the Zoning Ordinance to Provide Clarification as to Who has the Authority to Approve an Administrative Approval and Qualifying Modifications BRIEF SUMMARY: It is becoming more common for development proposals to utilize our conditional zoning tools. These tools require that a site plan be approved as the zoning district ordinance. Currently small changes to approved setbacks require applicants to undergo a complete review through public hearings at both Planning Board and County Commission meetings. Staff proposes that for changes that amount to 10%or less than the approved setback, staff may approve the change provided it meets the minimum setbacks prescribed in the ordinance. At their May 2, 2013 meeting,the Planning Board voted 6-0 to recommend approval of the text amendment. No one from the public spoke in support or in opposition of the proposed amendment. STRATEGIC PLAN ALIGNMENT: Intelligent Growth and Economic Development • Implement plans for land use, economic development,infrastructure and environmental programs • Understand and act on citizen needs Effective County Management • Increase efficiency and quality of key business processes • Understand and act on citizen needs • Deliver value for taxpayer money RECOMMENDED MOTION AND REQUESTED ACTIONS: Staff recommends approval. ACTION NEEDED: 1. Approve as recommended; or Board of Commissioners Meeting 06/03/2013 12-0 2. Approve with changes; or 3. Continue for further information; or 4. Deny the amendment. ATTACHMENTS: A-412 Script A-412 Staff Summary COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) COMMISSIONERS'ACTIONS: Continued to a date to be determined by a vote of 4-0. Board of Commissioners Meeting 06/03/2013 12-0 SCRIPT FOR TEXT AMENDMENT A-412, 05/13 REQUEST BY STAFF TO AMEND SECTION 71-1 (9) OF THE ZONING ORDINANCE TO PROVIDE CLARIFICATION AS TO WHO HAS THE AUTHORITY TO APPROVE AN ADMINISTRATIVE APPROVAL AND QUALIFYING MODIFICATIONS. CHAIRMAN 1. This is a public hearing. We will first hear a presentation from staff. Then proponents of the text amendment and opponents of the text amendment will each be allowed 15 minutes total to speak. An additional 5 minutes of rebuttal will be allowed for each side. 2. Open the public hearing. a. Staff Presentation b. Proponent's presentation (up to 15 minutes) C. Opponent's presentation (up to 15 minutes) d. Proponent's rebuttal (up to 5 minutes) e. Opponent's rebuttal (up to 5 minutes) 3. Close the public hearing. 4. Commissioner discussion 5. Is there a motion to find that this text amendment to the ordinance is consistent with the land use plan and is reasonable and in the public interest and should be adopted? Motion: Second: Vote: Board of Commissioners Meeting 06/03/2013 12- 1 - 1 A 412 AMENDMENT TO THE NEW HANOVER COUNTY ZONING ORDINANCE APPLICANT: STAFF Staff proposes to amend Sections 71-1 and 112-7 to clarify what modifications can be handled administratively. Proposed changes are in red. The Planning Board voted 6-0 to recommend approval of the amendment during their May 2, 2013 meeting. Section 71: Special Use Permits Issued by the Board of County Commissioners 71-1: General Requirements (9) The original applicant(s), their successors or their assignee may make minor changes in the location and/or size of structures provided the necessity for these changes is clearly demonstrated. Minor changes shall be reviewed by the Planning and Inspections Department and upon favorable recommendation by the Planning and Inspections Director may be approved by the - � : Zoi-6 r' dirii a strato.-. Such approval shall not be granted should the proposed revisions cause or contribute to: (A) A change in the character of the development. (B) A change of design for, or an increase in the hazards to pedestrian and vehicle traffic circulation, or (C) A d pi irt« ificatio b in the originally approved setbacks from roads and/or property lines e x cep i b tel i pe-ce bt. (5/4/81) Section 112-7: Administrative Review r 1, )Jila«.- iaai-lig s iriade to aia app.-ov «a iti«aa6 Zo ai aEr istri t., «ia itioi-lia6 Use District, Exceptioi-li li DesiEr a Zoi-6 lig District, llai-lad D eliop118e at District, o.- Rl elf-olat )J1xed Use District lv[as`'t.'' be oi-'side.-ed ?la t le l;airie iria H-W..-as t[aat used fo.— Speciali Use Pe.-rnits as set 1«.til ill `se ti«1a '71-1(9), (2I Ai-liy ..-eque vt fo.-a cl' a-Te to a1a appl-ove o1a ltioi-li�.' Zoo-61aEr District., .'oia ltioi-li li Use District, Exceptioi-li�.' DesiEr a Zoi-6 lig District, Pllai-H-Wd D eliop118e at District, o.- Rivelf-«lat )Jixed Use District ffiat does laot ua lip as 61 clam-Erg u a e.- ffi zoo-HlT iria } airieiidiriei t appliicat1ola. 1 Board of Commissioners Meeting 06/03/2013 12-2- 1 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 13 DEPARTMENT: PRESENTER(S): Kemp Burpeau, Deputy County Attorney CONTACT(S): Kemp Burpeau,Deputy County Attorney SUBJECT: Consideration of Public Records Request Policy BRIEF SUMMARY: It is useful for the County to adopt a public records policy to implement General Statutes requirements. The policy addresses the custodian's role, copyrighted material, charges for records when extensive use of resources is necessary, and the process for addressing records production disputes. STRATEGIC PLAN ALIGNMENT: Effective County Management • Increase efficiency and quality of key business processes RECOMMENDED MOTION AND REQUESTED ACTIONS: Adopt the Public Records Request Policy. ATTACHMENTS: Public Records Request Policy COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Adopted the policy 4-0. Board of Commissioners Meeting 06/03/2013 13-0 NEW HANOVER COUNTY RECORDS REQUEST POLICY 1. Responding to a Record Request The law requires every record custodian to permit the inspection of any public, non-protected record in the custodian's custody at reasonable times and under reasonable supervision, and to furnish copies as promptly as possible after payment of any applicable fee. (See Section 4 of this Policy for more information on fees employees and officials may charge to produce records in response to a record request.) Persons requesting to inspect a record cannot be required to disclose their purpose or motive for wanting the record, nor can they be required to give their name or address, or show an ID, or sign for a record. However, according to N.C.G.S. 132-10, employees and officials may require the requesting party to agree in writing that geographical information system databases and data files will not be resold or used for trade or commercial purposes. Also, we may require computer database requests be in writing according to N.C.G.S. 132-6.2. Persons should make record requests to the official custodian. The custodian who receives the request should confirm that the requester has fully and clearly identified the record(s) sought. Asking for, but not requiring,the request to be in writing may facilitate obtaining clear requests. The custodian shall provide notice of any record request to the County Public and Legislative Affairs Department. The custodian should make or direct a thorough search for the record and provide one of the following responses: (1) inform the requester that more time is needed to respond to the request and provide an estimated timeframe for the response; (2) make the record available for inspection or copying (redacted, if necessary—see Section 2 of this Policy for more information on redaction), taking necessary precautions to ensure the records are not at risk of being lost, damaged or destroyed; (3) if there is no record, provide a written statement that you "as custodian" have made a search of the records in your custody and have found no record (the law does not require record custodians to create a new record to satisfy a request); or(4) if the County Attorney concurs with denying the record request, or portions thereof, provide a written explanation of the basis for the denial. In some cases,the custodian may be able to simply forward a copy of the requested record(s)to the requester. In other cases, the record custodian may make the records available for inspection and only copy those records identified for copying by the requester. Copies of public records should be provided to the requesting party in the medium of the requester's choice, provided that the County is capable of satisfying the request in that particular medium (i.e., paper, CD/DVD, etc.). The primary custodian should communicate the cost and obtain approval from the requesting party prior to producing any records in response to the record request. The requesting party shall pay any cost prior to employees and officials reproducing records or at the time of receiving the records. If the requesting party does not concur with paying the fees, then the employee or official will make other arrangements for the inspection of records. Employees and officials should immediately advise the Public Information Officer of any record request from the media. 1 of 2 2. Redacting Protected Information If a record subject to a record request is a protected record, you likely will not have to make that record available for inspection and copying. In some cases, however, a public record will contain information that is protected, but the Board of Commissioners Meeting 06/03/2013 13- 1 - 1 entire record is not protected. In those cases,the protected information should be deleted in a manner that shows that a deletion was made. For example, if the record is a printed record, make a copy of the record, tape over the protected information with white correction tape, then use a black painter pen to completely mark over the tape. The marked up record should then be copied and the new redacted copy made available for inspection and copying. If a primary custodian is providing an electronic copy that includes protected information that must be redacted, the custodian should save the electronic document as a new file name, and from the new file, use the electronic "cut" feature to eliminate the protected text and show in the revised document where text has been "cut". It is the primary custodian's responsibility to ensure that protected information remains protected. 3. Copyrighted Records There are records in the County's custody that may be copyrighted material and protected by copyright laws. If a record request is made for a record that is protected by copyright, employees and officials should make the record available to the requester for inspection. No person should copy records known to be copyrighted in response to a records request. The use, reproduction, downloading or distribution of copyrighted materials and works may subject the offender to applicable penalties and damages under state and federal laws. 4. Charging for Producing Records The law permits the County to charge a fee for copy of a record that recovers the actual cost of duplicating the record. In some cases, providing public records may require extensive use of information technology resources or clerical and/or supervisory assistance. In these cases,the official custodian may assess a reasonable service charge based on the County's actual costs. This reasonable service charge must be approved by the Department Director and the County Attorney. An estimate of the charges should be given to the requester and approval obtained prior to responding to the request. All fees and charges should be collected before producing the records or at the time the records are delivered. S. Disputed Records Requests The law provides a mediation process for resolving lawsuits regarding public records disputes. Should you disagree with the County's determination as to the availability of a record,time for production, or cost of production, you may contact the State Chief Information Officer at 919-754-6000 or scio.nc.gov. The County Attorney may obtain an Attorney General Opinion whether a specific request addresses public records as defined by statute and case law. 2 of 2 Board of Commissioners Meeting 06/03/2013 13- 1 -2 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 14 DEPARTMENT: County Attorney PRESENTER(S): Lisa Wurtzbacher,Finance Director CONTACT(S): Lisa Wurtzbacher,Finance Director SUBJECT: Consideration of Resolutions Authorizing the Issuance of Hospital Revenue Bonds, Adopting a Series Resolution and Certain Related Matters BRIEF SUMMARY: The Board of Commissioners has determined that it is advisable to (a)provide for the current refunding of all of the County's outstanding Variable Rate Hospital Revenue Refunding to fix the interest rates related thereto, (b)finance certain termination payments in connection with interest rate hedging agreements entered into by the New Hanover Regional Medical Center relating to the Refunded Bonds and (c) pay certain costs of issuance. The refunding will provide an estimated present value savings of$2,390,000, or 4.08%. The Board must adopt the Series Resolution and authorize the County Manager, the Finance Director and the County Attorney of the County to take actions in connection of the County's issuance of its hospital revenue refunding bonds to refund the Refunded Bonds and to take all other necessary action. STRATEGIC PLAN ALIGNMENT: Strong Financial Performance • Deliver value for taxpayer money RECOMMENDED MOTION AND REQUESTED ACTIONS: Adopt resolutions. ATTACHMENTS: Resolution Adopting Series Resolution Series Resolution Eighth Lease Amendment Preliminary Official Statement Draft Appendix A Bond Purchase Agreement COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. Board of Commissioners Meeting 06/03/2013 14-0 COMMISSIONERS'ACTIONS: Adopted the resolutions 4-0. Board of Commissioners Meeting 06/03/2013 14-0 RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE COUNTY OF NEW HANOVER,NORTH CAROLINA AUTHORIZING THE ISSUANCE OF HOSPITAL REVENUE REFUNDING BONDS, ADOPTING A SERIES RESOLUTION AND CERTAIN RELATED MATTERS WHEREAS, the Board of Commissioners (the "Board') of the County of New Hanover, North Carolina (the "County") has determined that it is advisable to (a) provide for the current refunding of all of the County's outstanding Variable Rate Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2005A-1, Series 2005A-2, Series 200513-1 and Series 200513-2 (collectively,the "Refunded Bonds")to generate debt service savings and to fix the interest rates related thereto, (b) finance certain termination payments in connection with interest rate hedging agreements entered into by the New Hanover Regional Medical Center (the "Corporation") relating to the Refunded Bonds (collectively,the "Swaps")and(c)pay certain costs of issuance; WHEREAS,the Board desires to adopt the Series Resolution set forth below and to authorize the County Manager, the Finance Director and the County Attorney of the County to take certain actions in connection of the County's issuance of its hospital revenue refunding bonds (the "Refunding Bonds")to refund the Refunded Bonds and to take all other action necessary in connection therewith. Now, THEREFORE BE1TRESOLVEVbythe Board, as follows: Section 1. The Board hereby authorizes the issuance and sale of not exceeding $60,000,000 aggregate principal amount of the County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013. In connection therewith, the Series Resolution presented to the Board and named as follows is hereby adopted by the Board: "SERIES RESOLUTION AUTHORIZING AND APPROVING THE ISSUANCE AND SALE OF NOT EXCEEDING $60,000,000 AGGREGATE PRINCIPAL AMOUNT OF THE COUNTY OF NEW HANOVER, NORTH CAROLINA HOSPITAL REVENUE REFUNDING BONDS(NEW HANOVER REGIONAL MEDICAL CENTER) SERIES 2013 FOR THE PURPOSE OF PROVIDING FUNDS, TOGETHER WITH ANY OTHER AVAILABLE FUNDS, TO CURRENTLY REFUND ALL OR A PORTION OF THE COUNTY'S OUTSTANDING VARIABLE RATE HOSPITAL REVENUE REFUNDING BONDS (NEW HANOVER REGIONAL MEDICAL CENTER) SERIES 2005, AUTHORIZING THE DISTRIBUTION OF THE PRELIMINARY OFFICIAL STATEMENT, AND AUTHORIZING AND APPROVING THE FORM AND TERMS OF THE OFFICIAL STATEMENT,AN EIGHTH AMENDMENT TO THE LEASE AGREEMENT AND THE BOND PURCHASE AGREEMENT AND THE EXECUTION AND DELIVERY OF THE OFFICIAL STATEMENT,AN EIGHTH AMENDMENT TO THE LEASE AGREEMENT AND THE BOND PURCHASE AGREEMENT AND THE DISTRIBUTION AND USE OF THE PRELIMINARY OFFICIAL STATEMENT AND THE OFFICIAL STATEMENT IN CONNECTION WITH THE PUBLIC OFFERING OF SUCH REFUNDING BONDS AND SUCH OTHER MATTERS RELATED THERETO" Section 2. That the County Manager,the Finance Director,the Clerk and the County Attorney of the County (together with any officers of the Corporation) are hereby authorized and directed to take all such action as set forth in the Series Resolution to complete the issuance and sale of the Refunding Bonds, Including, without limitation, executing and delivering for and on behalf of the County any and all additional certificates, documents, opinions or other papers and perform all other acts as may be required or advisable by the Series Resolution or as they may deem necessary or appropriate to implement and carry out the intent and purposes of this Resolution. Section 3. That this Resolution shall become effective on the date of its adoption. PPAB 2087235v1 Board of Commissioners Meeting 06/03/2013 14- 1 - 1 Adopted,this the 3rd day of June 2013. NEW 14ANOVER COUNTY (SEAL) WOODY WHITE,CHAIRMAN ATTEST: SHEILA L. SCHULT,CLERK TO THE BOARD STATE OF NORTH CAROLINA ) SS: COUNTY OF NEw HANOVER ) I, Sheila L. Schult, Clerk to the Board of Commissioners of the County of New Hanover, North Carolina, DO HEREBY CERTIFY that the foregoing is a true and exact copy of the resolutions titled "RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE COUNTY OF NEW HANOVER, NORTH CAROLINA AUTHORIZING THE ISSUANCE OF HOSPITAL REVENUE REFUNDING BONDS, ADOPTING A SERIES RESOLUTION AND CERTAIN RELATED MATTERS" adopted by the Board of Commissioners of the County of New Hanover, North Carolina in regular session convened on the 3rd day of June, 2013, as recorded in the minutes of the Board of Commissioners of the County of New Hanover, North Carolina. WITNESS my hand and the seal of the County of New Hanover,North Carolina,this the 3rd day of June, 2013. (SEAL) Sheila L. Schult, Clerk to the Board of Commissioners County of New Hanover,North Carolina PPAB 2087235v1 2 Board of Commissioners Meeting 06/03/2013 14- 1 -2 BOARD APPROVAL DRAFT COUNTY OF NEW HANOVER, NORTH CAROLINA SERIES RESOLUTION Adopted June 3,2013 PPAB 2072845v7 Board of Commissioners Meeting 06/03/2013 14-2- 1 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS..........................................................................................................................2 Section 1.01 Meaning of Words and Terms ...............................................................................2 Section 1.02 Rules of Construction............................................................................................6 ARTICLE II THE SERIES 2013 BONDS ...................................................................................................6 Section 2.01 Authority for and Issuance of Series 2013 Bonds..................................................6 Section 2.02 Maturity; Interest Rates .........................................................................................6 Section 2.03 Payment of Principal of and Interest on the Series 2013 Bonds............................6 Section 2.04 Defaulted Interest...................................................................................................7 Section 2.05 Temporary Series 2013 Bonds...............................................................................7 Section 2.06 Mutilated, Lost, Stolen or Destroyed Bonds..........................................................7 Section 2.07 Transfer and Exchange of Series 2013 Bonds; Persons Treated as Owners..........7 Section 2.08 Book-Entry Only System.......................................................................................8 Section 2.09 Successor Securities Depository; Transfers Outside Book-Entry Only System....9 Section 2.10 Payments and Notices to Cede &Co.....................................................................9 Section 2.11 Conditions Precedent to Initial Delivery of Series 2013 Bonds. ...........................9 Section 2.12 Authorization of Refunding and Optional Redemption of Series 2005 Bonds.... 11 ARTICLE III REDEMPTION OF BONDS ............................................................................................... 11 Section 3.01 Redemption Dates and Prices. ............................................................................. 11 Section 3.02 Notice of Redemption; Selection of Series 2013 Bonds for Redemption; and Cancellation...................................................................................................... 12 ARTICLE IV APPLICATION OF SERIES 2013 BOND PROCEEDS .................................................... 14 Section4.01 Deposit of Funds.................................................................................................. 14 Section4.02 Expense Fund....................................................................................................... 14 ARTICLE V SECURITY; FUNDS AND ACCOUNTS............................................................................ 14 Section 5.01 Security for the Series 2013 Bonds...................................................................... 14 Section 5.02 Establishment of Funds and Accounts................................................................. 14 Section 5.03 Principal Account................................................................................................ 15 Section 5.04 Interest Account................................................................................................... 15 Section 5.05 Sinking Fund Account......................................................................................... 15 Section 5.06 Redemption Fund................................................................................................. 15 ARTICLE VI DEPOSITORIES OF MONEY, SECURITY FOR DEPOSITS, INVESTMENT OF FUNDS .......................................................................................................................................... 15 Section 6.01 Security for Deposits ........................................................................................... 15 Section 6.02 Investment of Money........................................................................................... 16 Section6.03 Valuation.............................................................................................................. 17 ARTICLE VII EVENTS OF DEFAULT.................................................................................................... 17 Section 7.01 Events of Default................................................................................................. 17 ARTICLE VIII THE TRUSTEE................................................................................................................. 17 Section 8.01 Acceptance of Duties by Trustee......................................................................... 17 ARTICLE IX SUPPLEMENTAL SERIES RESOLUTIONS.................................................................... 17 Section 9.01 Procedure for Adoption of Supplemental Series Resolutions.............................. 17 i Board of Commissioners Meeting 06/03/2013 14-2-2 Page Section 9.02 Exclusion of Series 2013 Bonds.......................................................................... 17 ARTICLE X DEFEASANCE..................................................................................................................... 18 Section 10.01 Cessation of Interest of Holders and Repeal of Series Resolution....................... 18 ARTICLE XI MISCELLANEOUS PROVISIONS.................................................................................... 18 Section 11.01 Manner of Giving Notice..................................................................................... 18 Section 11.02 Trustee, County, Corporation and Holders Alone Have Rights Under Series Resolution......................................................................................................... 19 Section 11.03 Effect of Partial Invalidity ................................................................................... 19 Section 11.04 Effect of Covenants ............................................................................................. 19 Section 11.05 Dealing in Series 2013 Bonds.............................................................................. 19 Section 11.06 Approval of Purchase Agreement and Eighth Amendment to Lease Agreement 20 Section 11.07 Approval of Preliminary Official Statement and Official Statement...................20 Section 11.08 Appointment of County Representative and Authorization for Other Acts.........20 Section 11.09 No Recourse Against Commissioners, Directors, Officers or Employees of County, Corporation or Local Government Commission.................................20 Section11.10 Headings..............................................................................................................21 Section 11.11 Continuing Disclosure .........................................................................................21 Section11.12 Arbitrage..............................................................................................................21 Section11.13 Tax Covenant.......................................................................................................21 Section 11.14 Notice to Local Government Commission and Rating Agencies........................21 Section 11.15 Provisions Relating to Local Government Commission......................................21 Section 11.16 Amended and Restated Series Resolution Effective............................................21 EXHIBIT A FORM of SERIES 2013 BoNDS.......................................................................................A-1 PPAB 2072845v7 ii Board of Commissioners Meeting 06/03/2013 14-2-3 SERIES RESOLUTION AUTHORIZING AND APPROVING THE ISSUANCE AND SALE OF NOT EXCEEDING $60,000,000 AGGREGATE PRINCIPAL AMOUNT OF THE COUNTY OF NEW HANOVER, NORTH CAROLINA HOSPITAL REVENUE REFUNDING BONDS(NEW HANOVER REGIONAL MEDICAL CENTER) SERIES 2013 FOR THE PURPOSE OF PROVIDING FUNDS, TOGETHER WITH ANY OTHER AVAILABLE FUNDS, TO CURRENTLY REFUND ALL OR A PORTION OF THE COUNTY'S OUTSTANDING VARIABLE RATE HOSPITAL REVENUE REFUNDING BONDS (NEW HANOVER REGIONAL MEDICAL CENTER) SERIES 2005, AUTHORIZING THE DISTRIBUTION OF THE PRELIMINARY OFFICIAL STATEMENT, AND AUTHORIZING AND APPROVING THE FORM AND TERMS OF THE OFFICIAL STATEMENT,AN EIGHTH AMENDMENT TO THE LEASE AGREEMENT AND THE BOND PURCHASE AGREEMENT AND THE EXECUTION AND DELIVERY OF THE OFFICIAL STATEMENT,AN EIGHTH AMENDMENT TO THE LEASE AGREEMENT AND THE BOND PURCHASE AGREEMENT AND THE DISTRIBUTION AND USE OF THE PRELIMINARY OFFICIAL STATEMENT AND THE OFFICIAL STATEMENT IN CONNECTION WITH THE PUBLIC OFFERING OF SUCH REFUNDING BONDS AND SUCH OTHER MATTERS RELATED THERETO RECITALS WHEREAS, the County of New Hanover, North Carolina (the "County") is a political subdivision of the State of North Carolina,which owns New Hanover Regional Medical Center,a public general acute-care hospital facility; WHEREAS,the County is empowered, under the Constitution and laws of the State of North Carolina,particularly The State and Local Government Revenue Bond Act, Article 5, Chapter 159 of the General Statutes of North Carolina, as amended(herein called the "Act"),to undertake the obligations and commitments on its part set forth herein; WHEREAS,the Board of Commissioners of the County (the "Board") adopted a Bond Order on October 6, 1993, as amended by a First Supplemental Bond Order adopted by the Board on February 5, 1999 and a Second Supplemental Bond Order adopted by the Board on December 7, 2005 (collectively, the "Bond Order"), authorizing the issuance of hospital revenue bonds; WHEREAS, under the Bond Order and pursuant to a Series Resolution adopted by the Board on December 7, 2005, the County issued its $79,070,000 Variable Rate Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2005A-1, Series 2005A-2, Series 2005B-1 and Series 2005B-2 (collectively, the "Series 2005 Bonds"), of which$58,560,000 remain outstanding; WHEREAS, the County has deemed it advisable to adopt this Series Resolution (this "Series Resolution") and to issue its Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 (the "Series 2013 Bonds"), as in this Series Resolution hereinafter provided, for the purpose of providing funds, together with any other available funds,to (a) currently refund all or a portion of the outstanding Series 2005 Bonds, (b) finance certain required to termination in whole or in part of certain interest rate hedging agreements entered into by New Hanover Regional Medical Center (the "Corporation") relating to the Refunded Bonds (collectively, the "Swaps" and as further defined below)and(c)pay certain expenses of issuing the Series 2013 Bonds; WHEREAS, the County has determined that the issuance of the Series 2013 Bonds is in the best interest of the County; and WHEREAS, the County has determined that the Series 2013 Bonds, the Certificate of the Local Government Commission and the Certificate of Authentication to be endorsed by the Trustee on all Series 2013 Bonds as provided herein shall be, respectively, substantially in the forms, with such variations, omissions and insertions as may be specified by the County or otherwise required or permitted by this Series Resolution, attached hereto as Exhibit A;now therefore, BEITRESOLVEDby the Board of Commissioners of the County of New Hanover,North Carolina: Board of Commissioners Meeting 06/03/2013 14-2-4 ARTICLE I DEFINITIONS Section 1.01 Meaning of Words and Terms. Unless otherwise required by the context,words and terms used herein which are defined in the Bond Order shall have the meanings assigned to them therein, except as hereinafter set forth: Affiliate"means a corporation, limited liability company, partnership,joint venture, association,business trust or similar entity (i)which controls, is controlled by or is under common control with, directly or indirectly, a Person; or(ii) a majority of the members of the governing body of which are members of the governing body of a Person. For the purposes of this definition, control means with respect to: (a) a corporation having stock, the ownership, directly or indirectly, of more than 50%of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the governing body of such corporation; (b)a non-profit corporation not having stock, having the power to elect or appoint, directly or indirectly, a majority of the members of the governing body of such corporation; or (c) any other entity, the power to direct the management of such entity through the ownership of at least a majority of its voting securities or the right to designate or elect at least a majority of the members of its governing body, by contract or otherwise. For the purposes of this definition, "governing body" means with respect to: (a) a corporation having stock, such corporation's board of directors and the owners, directly or indirectly, of more than 50%of the securities (as defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporation's directors (both of which groups shall be considered a governing body); (b) a non-profit corporation not having stock, such corporation's members if the members have complete discretion to elect the corporation's directors, or the corporation's directors if the corporation's members do not have such discretion or if such corporation has no members; and(c) any other entity, its governing board or body. For the purposes of this definition, all references to directors and members shall be deemed to include all entities performing the function of directors or members however denominated. "Authorized Denomination"means denominations of$5,000 and any whole multiple thereof. "Board"has the meaning set forth in the Preamble hereof. "Bond Counsel"means any nationally recognized municipal bond counsel acceptable to the County. "Bond Fund"means the Fund by that name created under Section 5.02(a)hereof. "Bond Order" means the bond order adopted by the Board on October 6, 1993, as supplemented by a first supplemental bond order adopted by the Board on February 5, 1999 and a second supplemental bond order adopted by the Board on December 7, 2005. "Bond Register" means the registration books of the County kept by the Trustee to evidence the registration and transfer of Series 2013 Bonds. "Bondholder," "holder," "Holder," "Owner" or"owner of the Series 2013 Bonds"means the registered owner of any Series 2013 Bond and does not mean any beneficial owner of a Series 2013 Bond whether through a book-entry system or otherwise. "Business Day"means a day which is not(a) a Saturday, Sunday or legal holiday on which banking organizations in the State of New York or the city in which the Principal Office of the Trustee is located are authorized by law to close and on which such entity is in fact closed or(b) a day on which the New York Stock Exchange is closed. "Closing Date" means June 27, 2013 (or such other date that is specified in the Issuance, Sale or Closing Certificate),the date of issuance and delivery of the Series 2013 Bonds. "County"has the meaning set forth in the Preamble hereof. PPAB 2072845v7 2 Board of Commissioners Meeting 06/03/2013 14-2-5 "County Attorney" means the County Attorney of the County, the person performing the duties of the County Attorney or the official succeeding to the County Attorney's principal functions. "County Manager" means the County Manager of the County, the person performing the duties of the County Manager or the official succeeding to the County Manager's principal functions. "Date of Original Issuance"means the Closing Date. "Defaulted Interest"means interest on any Series 2013 Bond which is payable but not duly paid on the date due. "Eighth Amendment to Lease Agreement" means the Eighth Amendment to Lease Agreement, dated as of June 1, 2013,by and between the County and the Corporation. "Expense Fund"means the fund by that name created under Section 4.02 hereof. "Finance Director" means the Finance Director of the County, the person performing the duties of the Finance Director or the official succeeding to the Finance Director's principal functions. "Fitch" means Fitch, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Corporation by written notice to the County and the Trustee and acceptable to the Local Government Commission. "Fund"means any of the funds established pursuant to this Series Resolution. "Immediate Notice" means notice by telephone, email transmission or telecopier to such address as the addressee shall have provided in writing, promptly followed by written notice by first class mail, postage prepaid; provided, however, that if any Person required to give an Immediate Notice shall not have been provided with the necessary information as to the telephone, email transmission or telecopier number of an addressee, Immediate Notice shall mean written notice by first class mail,postage prepaid. "Independent Counsel" means an attorney duly admitted to practice law before the highest court of any state and, without limitation,may include independent legal counsel for the Corporation,the County or the Trustee. "Interest Account"means the account by that name created in the Bond Fund under Section 5.02 hereof. "Interest Payment Date"means April 1 or October 1, as the case may be. "Interested Parties" means the County, the Corporation, the Trustee, the Paying Agent (if any), and the Bondholders. "Investment Grade" means (i)that rating of any Rating Agency with a rating then in effect with respect to the Series 2013 Bonds that represents the lowest rating that any of such Rating Agencies recognizes as being investment grade and(ii) each rating above such rating. "Investment Obligations"means, for purposes of this Series Resolution, any form of investment now or hereafter allowed by Section 159-30 of the General Statutes of North Carolina, as amended, or any successor statute. "Issuance, Sale and Closing Certificate"means the certificate of the Finance Director filed pursuant to this Series Resolution with the Trustee on the Closing Date setting forth certain details of the Series 2013 Bonds and other terms and provisions relating to the sale and issuance of the Series 2013 Bonds as provided for herein together with such other details,terms and provisions as the Finance Director may determine. PPAB 2072845v7 3 Board of Commissioners Meeting 06/03/2013 14-2-6 "Letter of Representations" means the Blanket Letter of Representations from the County to DTC dated August 21, 1995. "Local Government Commission"means the Local Government Commission of North Carolina, a division of the Department of State Treasurer, established by Section 159-3 of the General Statutes of North Carolina, and any successor or successors thereto. "Maturity Date"means the date or dates on which the Series 2013 Bonds mature, as set forth in the Issuance, Sale and Closing Certificate. Woody's" means Moody's Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Corporation by written notice to the County and the Trustee and acceptable to the Local Government Commission. "Official Statement" means an Official Statement prepared in connection with the issuance and sale of the Series 2013 Bonds. "Opinion of Bond Counsel" means a written opinion of Bond Counsel in form and substance acceptable to the County and the Trustee which opinion may be based on a ruling or rulings of the Internal Revenue Service. "Opinion of Counsel"means a written opinion of counsel who is acceptable to the County in form and substance acceptable to the County and the Trustee. "Outstanding Series 2013 Bonds" or "Series 2013 Bonds Outstanding" means all Series 2013 Bonds which have been duly authenticated and delivered by the Trustee under this Series Resolution, except: (a) Series 2013 Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity; (b) Series 2013 Bonds for the payment or redemption of which cash or Government Obligations shall have been theretofore deposited with the Trustee (whether upon or prior to the maturity or redemption date of any such Series 2013 Bonds) in accordance with the Series Resolution; provided that if such Series 2013 Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Trustee shall have been filed with the Trustee; and (c) Series 2013 Bonds in lieu of which others have been authenticated under the Series Resolution. "Paying Agent" means the bank or banks, if any, designated pursuant to this Series Resolution to receive and disburse the principal of and interest on the Series 2013 Bonds. "Person" means any natural person, firm, joint venture, association, partnership, business trust, corporation, public body, agency or political subdivision thereof or any other similar entity. "Preliminary Official Statement" means a Preliminary Official Statement prepared in connection with the issuance and sale of the Series 2013 Bonds. "Principal Account"means the account by that name created in the Bond Fund under Section 5.02 hereof. "Principal Office" means, when used with respect to the Trustee, the corporate trust office of the Trustee identified as such for the performance of the functions in question, and,when used with respect to any other entity,means the principal office of such entity or such other office of such entity as may be designated by that entity in writing to the Trustee. PPAB 2072845v7 4 Board of Commissioners Meeting 06/03/2013 14-2-7 "Purchase Agreement" means the bond purchase agreement for the Series 2013 Bonds among the County, the Corporation,the Local Government Commission and the purchasers named therein. "Rating Agency"means Moody's, Fitch or Standard&Poor's, and their respective successors and assigns. "Record Date"means the fifteenth(15th) day (whether or not a Business Day) of the calendar month immediately preceding such Interest Payment Date. "Redemption Date" means, when used with respect to any Series 2013 Bond to be redeemed, the date fixed for such redemption pursuant to Article III hereof. "Redemption Fund"means the fund created and so designated by Section 5.06 of this Series Resolution. "Redemption Price" means, with respect to any Series 2013 Bond (or portion thereof), the price to be paid upon redemption as set forth in Article III of this Series Resolution. "Securities Depository" means The Depository Trust Company, New York, New York or other recognized securities depository selected by the County at the request of the Corporation, which maintains a book-entry system in respect of the Series 2013 Bonds, and shall include any substitute for or successor to the securities depository initially acting as Securities Depository. "Securities Depository Nominee" means, as to any Securities Depository, such Securities Depository or the nominee of such Securities Depository in whose name there shall be registered on the registration books maintained by the Trustee the Series 2013 Bond certificates to be delivered to and immobilized at such Securities Depository during the continuation with such Securities Depository of participation in its book-entry system. "Serial Bonds" means the Series 2013 Bonds that are designated as Serial Bonds in the Issuance, Sale and Closing Certificate. "Series 2005 Bonds"has the meaning set forth in the Recitals hereof. "Series 2013 Bonds"has the meaning set forth in the Recitals hereof. "Series Resolution"means this Series Resolution,including any amendments or supplements hereto. "Sinking Fund Account" means the account by that name created in the Bond Fund under Section 5.02 hereof to which amounts are to be deposited in accordance with Section 5.05 hereof. "Sinking Fund Requirements" means, with respect to the Series 2013 Bonds, the Sinking Fund Requirement provided in the Issuance, Sale and Closing Certificate relating to the Term Bonds. "Special Record Date" means the date fixed by the Trustee pursuant to Section 2.04 of this Series Resolution for the payment of Defaulted Interest. "Standard & Poor's" or "S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, a subsidiary of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Standard&Poor's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Corporation by written notice to the County and the Trustee and acceptable to the Local Government Commission. "Swaps" means, individually and collectively, (a)the ISDA Master Agreement and related Schedule dated as of October 17, 2005 between the Royal Bank of Canada and the Corporation; (b)the transaction Confirmation thereunder dated as of October 17, 2005 between the Royal Bank of Canada and the Corporation with a term expiring October 1, 2023; (c) the transaction Confirmation thereunder dated as of October 17, 2005 between the Royal Bank of Canada and PPAB 2072845v7 5 Board of Commissioners Meeting 06/03/2013 14-2-8 the Corporation with a term expiring October 1, 2026; (d) the ISDA Master Agreement and related Schedule dated as of October 17, 2005 between Merrill Lynch Capital Services Inc. and the Corporation; (e)the transaction Confirmation thereunder dated October 17, 2005 between Merrill Lynch Capital Services, Inc. and the Corporation with a term expiring as of October 1, 2023; and (f) the transaction Confirmation thereunder dated as of October 17, 2005 between Merrill Lynch Capital Services, Inc. and the Corporation with a term expiring October 1, 2026. "Tax Compliance Certificate" means the Arbitrage and Tax Regulatory Agreement dated the Date of Original Issuance of the Series 2013 Bonds and issued by the County and the Corporation. "Term Bonds"means the Series 2013 Bonds that are designated as Terms Bonds, if any, in the Issuance, Sale and Closing Certificate. Section 1.02 Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, the words "Bond", "owner", "Holder"and "Person" shall include the plural as well as the singular number. ARTICLE II THE SERIES 2013 BoNDs Section 2.01 Authority for and Issuance of Series 2013 Bonds. (a)No Series 2013 Bonds may be issued under the provisions of this Series Resolution except in accordance with this Article. There is hereby authorized under Chapter 159, Article 5 of the General Statutes of North Carolina,the Bond Order and this Series Resolution one Series of bonds designated the "County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013." The principal amount for the Series 2013 Bonds that may be issued hereunder shall not exceed$60,000,000. (b) Except as otherwise provided in this Series Resolution,the Series 2013 Bonds shall be substantially in the form attached hereto as Exhibit A, subject to any changes thereto as may be necessary to incorporate the details set forth in the Issuance, Sale and Closing Certificate. The Series 2013 Bonds shall bear interest from their respective dates and shall be issuable as registered bonds in Authorized Denominations. Unless the County shall otherwise direct, the Series 2013 Bonds shall be numbered from R-1 upward. The Series 2013 Bonds, as initially issued, will be dated as of their Date of Original Issuance. Section 2.02 Maturity;Interest Rates. (a) The Series 2013 Bonds shall bear interest(calculated on the basis of a 360-day year consisting of twelve 30-day months) at the rates, shall consist of Serial Bonds and Term Bonds and shall mature (subject to the right of prior redemption as hereinafter set forth) on the Maturity Dates set forth in the Issuance, Sale and Closing Certificate; provided, however, that the final maturity of the Series 2013 Bonds shall not be later than on October 1, 2026. (b) The principal of, premium, if any, and interest on and the Redemption Price of the Series 2013 Bonds shall be payable in any currency of the United States of America which,at the respective dates of payment thereof,is legal tender for the payment of public and private debts. Section 2.03 Payment of Principal of and Interest on the Series 2013 Bonds. The principal or Redemption Price of the Series 2013 Bonds shall be payable by check in lawful money of the United States of America upon presentation at the Principal Office of the Trustee to the registered owners of the Series 2013 Bonds on such date. Interest on the Series 2013 Bonds shall be paid to the Person whose name appears on the Bond Register as the Holder thereof as of the close of business on the Record Date for each Interest Payment Date. Payment of the interest shall be made by check mailed by first class mail to such Holder at its address as it appears on such registration books, or, upon the written request of any Holder of at least $1,000,000 in aggregate principal amount of the Series 2013 Bonds, submitted to the Trustee at least five Business Days prior to the Record Date,by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. As long as Cede & Co. is the Holder of the Series 2013 Bonds, said principal or Redemption Price and interest payments shall be made to Cede & Co. by wire transfer in PPAB 2072845v7 6 Board of Commissioners Meeting 06/03/2013 14-2-9 immediately available funds. CUSIP number identification shall accompany all payments of principal or Redemption Price and interest whether by check or by wire transfer. Section 2.04 Defaulted Interest. Defaulted Interest with respect to any Series 2013 Bond shall cease to be payable to the holder of such Series 2013 Bond on the relevant Record Date and shall be payable to the holder in whose name such Series 2013 Bond is registered at the close of business of the Trustee on the special record date (the "Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The County shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Series 2013 Bond and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and at the same time the County shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the holders of the Series 2013 Bonds entitled to such Defaulted Interest as provided in this Section. Following receipt of such funds the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the County and the Corporation of such Special Record Date and, in the name and at the expense of the County and the Corporation, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid,to each holder of a Series 2013 Bond at the address of such holder as it appears on the registration books kept by the Trustee not less than 10 days prior to such Special Record Date. Such Defaulted Interest shall be paid to the holders of the Series 2013 Bonds on which such Defaulted Interest is to be paid in whose names such Series 2013 Bonds are registered on such Special Record Date. Section 2.05 Temporary Series 2013 Bonds. Series 2013 Bonds may be initially issued in temporary form exchangeable for definitive Series 2013 Bonds of the same Series, if any, when ready for delivery. The temporary Series 2013 Bonds shall be of such denomination or denominations as may be determined by the County and may contain such reference to any of the provisions of this Series Resolution as may be appropriate. Every temporary Series 2013 Bond shall be executed by the County and be authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Series 2013 Bonds. If the County issues temporary Series 2013 Bonds it will execute and furnish definitive Series 2013 Bonds without delay and thereupon the temporary Series 2013 Bonds may be surrendered for cancellation in exchange therefor at the Principal Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Series 2013 Bonds an equal aggregate principal amount of definitive Series 2013 Bonds of the same subseries, if any, and maturity of authorized denominations. Until so exchanged,the temporary Series 2013 Bonds shall be entitled to the same benefits under this Series Resolution as definitive Series 2013 Bonds authenticated and delivered hereunder. Section 2.06 Mutilated,Lost, Stolen or Destroyed Bonds. In the event a temporary or definitive Series 2013 Bond is mutilated, lost, stolen or destroyed,the County may execute and the Trustee may authenticate a new Series 2013 Bond of like form, date, subseries, maturity and denomination as that mutilated, lost, stolen or destroyed;provided that, in the case of any mutilated Series 2013 Bond, such mutilated Series 2013 Bond shall first be surrendered to the Trustee, and in the case of any lost, stolen or destroyed Series 2013 Bond,there shall be first furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the County and the Trustee, together with indemnity satisfactory to them. In the event any such Series 2013 Bond shall have matured, instead of issuing a duplicate Series 2013 Bond, the County or the Trustee may pay the same without surrender thereof The County and the Trustee may charge the holder or owner of such Series 2013 Bond with their reasonable fees and expenses in this connection. Section 2.07 Transfer and Exchange of Series 2013 Bonds;Persons Treated as Owners. The County shall cause the Bond Register to be kept by the Trustee at its Principal Office. Upon surrender for transfer of any Series 2013 Bond at the Principal Office of the Trustee, the County shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new fully registered Series 2013 Bond or Series 2013 Bonds of the same subseries and maturity and of authorized denomination for the aggregate principal amount which the registered owner is entitled to receive. Any Series 2013 Bond or Series 2013 Bonds may be exchanged at said office of the Trustee for a like aggregate principal amount of Series 2013 Bond or Series 2013 PPAB 2072845v7 7 Board of Commissioners Meeting 06/03/2013 14-2- 10 Bonds of the same maturity of other authorized denominations. The execution by the County of any Series 2013 Bond shall constitute full and due authorization of such Series 2013 Bond, and the Trustee shall thereby be authorized to authenticate, date and deliver such Series 2013 Bond. On each date on which the Trustee authenticates and delivers a Series 2013 Bond, it shall complete the information required to be inserted by the form of Series 2013 Bond and shall keep a record of such information. All Series 2013 Bonds presented for transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the Trustee, duly executed by the registered owner or by such owner's duly authorized attorney. No service charge shall be imposed upon the owner for any exchange or transfer of Series 2013 Bonds. The County,the Corporation and the Trustee may, however, require payment by the person requesting an exchange or transfer of Series 2013 Bonds of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto, except in the case of the issuance of a Series 2013 Bond or Series 2013 Bonds for the unredeemed portion of a Series 2013 Bond surrendered for redemption. The County, the Trustee and any Paying Agent shall not be required to register the transfer or exchange of any Series 2013 Bond (i) after notice calling such Series 2013 Bond or portion thereof for redemption has been mailed or (ii) during the fifteen day period next preceding the mailing of a notice of redemption of the Series 2013 Bonds of the same Series, if any, and maturity. New Series 2013 Bonds delivered upon any transfer or exchange shall be valid obligations of the County, evidencing the same debt as the Series 2013 Bonds surrendered, shall be secured by the Bond Order and this Series Resolution and shall be entitled to all of the security and benefits hereof to the same extent as the Series 2013 Bond surrendered. The County, the Trustee and any Paying Agent may treat the registered owner of any Series 2013 Bond as the absolute owner thereof for all purposes,whether or not such Series 2013 Bond shall be overdue, and shall not be bound by any notice to the contrary. All payments of or on account of the principal of and premium, if any, and interest on any such Series 2013 Bond as herein provided shall be made only to or upon the written order of the registered owner thereof or his legal representative, but such registration may be changed as herein provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2013 Bond to the extent of the sum or sums so paid. Any Series 2013 Bond surrendered for the purpose of payment or retirement or for exchange or transfer or for replacement pursuant to this Section 2.07 shall be cancelled upon surrender thereof to the Trustee or any Paying Agent. Any such Series 2013 Bonds cancelled by any Paying Agent other than the Trustee shall be promptly transmitted by such Paying Agent to the Trustee. Certification of Series 2013 Bonds cancelled by the Trustee and Series 2013 Bonds cancelled by a Paying Agent other than the Trustee which are transmitted to the Trustee shall be made to the County and to the Corporation. Cancelled Series 2013 Bonds may be destroyed by the Trustee unless instructions to the contrary are received from the County and the Corporation. Section 2.08 Book-Entry Only System. It is intended that the Series 2013 Bonds be registered so as to participate in a securities depository system with the Securities Depository, as set forth herein. The Series 2013 Bonds shall be initially issued in the form of a separate single fully registered Series 2013 Bond for each date on which the Series 2013 Bonds are stated to mature. Upon initial issuance, the ownership of each such Series 2013 Bond shall be registered on the Bond Register in the name of Cede & Co., or any successor thereto, as nominee for the Securities Depository. The County's Letter of Representations is on file with the Securities Depository. With respect to Series 2013 Bonds registered in the Bond Register in the name of Cede & Co., as nominee of the Securities Depository,the County and the Trustee shall have no responsibility or obligation to any broker-dealer, bank or other financial institution for which the Securities Depository holds Series 2013 Bonds from time to time as securities depository (each such broker-dealer, bank or other financial institution being referred to herein as a "Depository Participant") or to any person on behalf of whom such a Depository Participant holds an interest in the Series 2013 Bonds (each such person being herein referred to as an "Indirect Participant" and,together with a Depository Participant, "DTC PPAB 2072845v7 8 Board of Commissioners Meeting 06/03/2013 14-2- 11 Participants"). Without limiting the immediately preceding sentence, the County and the Trustee shall have no responsibility or obligation with respect to (a)the accuracy of the records of the Securities Depository, Cede & Co., any Depository Participant or any Indirect Participant with respect to the ownership interest in the Series 2013 Bonds, (b)the delivery to any Depository Participant or any Indirect Participant or any other person, other than a registered owner of a Series 2013 Bond as shown in the Bond Register, of any notice with respect to the Series 2013 Bonds, including any notice of redemption, (c)the payment to any Depository Participant or Indirect Participant or any other person, other than a registered owner of a Series 2013 Bond as shown in the Bond Register, of any amount with respect to principal of, premium, if any, or interest on, the Series 2013 Bonds, (d)any consent given by the Securities Depository as registered owner, or (e) subject to Article III hereof,the selection by the Securities Depository or any Depository Participant of any beneficial owners to receive payment if Series 2013 Bonds are redeemed in part. While in the Securities Depository System, no person other than Cede & Co., or any successor thereto, as Securities Depository Nominee for the Securities Depository, shall receive a Series 2013 Bond certificate with respect to any Series 2013 Bond. Upon delivery by the Securities Depository to the Trustee of written notice from the Securities Depository to the effect that the Securities Depository has determined to substitute a new Security Depository Nominee in place of Cede & Co., and subject to the provisions hereof with respect to the payment of interest by the mailing of checks or drafts to the registered owners of Series 2013 Bonds at the close of business on the Record Date applicable to any interest payment date,the name "Cede & Co."in this Series Resolution shall refer to such new Securities Depository Nominee of the Securities Depository. Section 2.09 Successor Securities Depository; Transfers Outside Book-Entry Only System. In the event that (a)the Trustee determines that the Securities Depository is incapable of discharging its responsibilities described herein and in the Letter of Representations, (b)the Letter of Representations shall be terminated for any reason or(c)the Corporation or the County determines that it is in the best interests of the beneficial owners of the Series 2013 Bonds that they be able to obtain certificated Series 2013 Bonds, the County shall (i)appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify the Securities Depository and the DTC Participants of the appointment of such successor securities depository and transfer one or more separate Series 2013 Bond certificates to such successor securities depository or(ii)notify the Securities Depository of the availability through the Securities Depository of Series 2013 Bond certificates and transfer one or more separate Series 2013 Bond certificates to DTC Participants having Series 2013 Bonds credited to their Securities Depository accounts. In such event, the Series 2013 Bonds shall no longer be restricted to being registered on the Bond Register in the name of Cede & Co., as nominee of the Securities Depository but may be registered in the name of the successor security depository, or its nominee, in whatever name or names registered owners of Series 2013 Bonds transferring or exchanging Series 2013 Bonds shall designate, in accordance with the provisions hereof. Section 210 Payments and Notices to Cede & Co. Notwithstanding any other provision of this Series Resolution to the contrary, so long as any Series 2013 Bond is registered in the name of Cede & Co., as nominee of the Securities Depository, all payments with respect to principal of, premium, if any, and interest on such Series 2013 Bond and all notices with respect to such Series 2013 Bond shall be made and given, respectively, in the manner provided in the Letter of Representations. Section 2.11 Conditions Precedent to Initial Delivery of Series 2013 Bonds. The Series 2013 Bonds shall be deposited with the Trustee for authentication, but before the Series 2013 Bonds shall be delivered by the Trustee,there shall be filed with the Trustee the documents required by Section 208 of the Bond Order and the following: (a) a copy, duly certified by the Clerk to the Board of Commissioners of the County to be a true and correct copy, of the Bond Order,this Series Resolution and the Eighth Amendment to Lease Agreement; (b) a copy, duly certified by the Secretary or Assistant Secretary of the Corporation to be a true and correct copy, of the resolutions adopted by the Board of Trustees of the Corporation authorizing the execution, delivery and performance of the Eighth Amendment to the Lease Agreement and the Purchase Agreement and approving this Series Resolution,the issuance and sale of the Series 2013 Bonds,the Preliminary Official Statement and the Official Statement related to the Series 2013 Bonds; PPAB 2072845v7 9 Board of Commissioners Meeting 06/03/2013 14-2- 12 (c) an Opinion of Counsel for the County to the effect that (i)the County or the Corporation has obtained from such governmental authorities,boards, agencies, or commissions having jurisdiction over the Health Care System all approvals, consents, authorizations, certifications, and other orders that are necessary for the operation of the Health Care System that reasonably could have been obtained as of the date of delivery of the Series 2013 Bonds and that if further approvals, consents, authorizations, certifications, and orders are necessary for the operation of the Health Care System such counsel has no reason to believe that the County or the Corporation will not be able to obtain the same, when required, (ii)the Bond Order, this Series Resolution and all other resolutions relating to the issuance of the Series 2013 Bonds have been duly adopted at meetings of the Board duly called and held in accordance with law and at which quorums were present and acting throughout, and that the Bond Order, this Series Resolution and such other resolutions remain in full force and effect and have not been amended or modified in any respect, (iii)the form,terms, execution and issuance of the Series 2013 Bonds have been duly authorized, (iv)the form and terms of the Bond Order and this Series Resolution for the Series 2013 Bonds have been duly authorized, (v) each of the Bond Order, this Series Resolution constitutes a binding and valid agreement of the County that is enforceable in accordance with its terms, (vi)no provision of the Bond Order, this Series Resolution or the Purchase Agreement violates any federal or North Carolina statutory or constitutional provision, including without limitation, any provisions of the Act or results in or constitutes a default under or conflicts with any agreement, indenture, or other instrument to which the County is a party or by which it may be bound, or any current order, rule, regulation, decree, or ordinance of any court, government, governmental authority or body having jurisdiction over the County or its property, and of which she has knowledge after due inquiry, (vii)the adoption of the Bond Order and this Series Resolution is not subject to any authorization, consent, approval, or review of any governmental body, public officer, or regulatory authority required on the date of her opinion and not theretofore obtained or effected, (viii)there is no litigation, proceeding, or governmental investigation pending or threatened before any court or governmental agency or body challenging the validity of the Bond Order,this Series Resolution,the Purchase Agreement or the Eighth Amendment to Lease Agreement or the transactions contemplated therein, or of the Series 2013 Bonds, or the corporate existence or the boundaries of the County or the title of any of the officers of the County to their respective offices,and(ix)all conditions precedent to the delivery of the Series 2013 Bonds have been fulfilled; (d) an Opinion of Counsel for the Corporation to the effect that (i)the County or the Corporation has obtained from such governmental authorities, boards, agencies, or commissions having jurisdiction over the Health Care System all approvals, consents, authorizations, certifications, and other orders that are necessary for the operation of the Health Care System that reasonably could have been obtained as of the date of delivery of the Series 2013 Bonds and that if further approvals, consents, authorizations, certifications, and orders are necessary for the operation of the Health Care System such counsel has no reason to believe that the County or the Corporation will not be able to obtain the same, when required, (ii)the Bond Order, this Series Resolution and all other resolutions relating to the issuance of the Series 2013 Bonds have been duly approved at meetings of the Board of Trustees of the Corporation duly called and held in accordance with law and at which quorums were present and acting throughout, (iii)the execution, delivery and performance of the Eighth Amendment to Lease Agreement and the Purchase Agreement have been duly approved at meetings of the Board of Trustees of the Corporation duly called and held in accordance with law and at which quorums were present and acting throughout, and (iv)there is no litigation, proceeding, or governmental investigation pending or threatened before any court or governmental agency or body challenging the validity of the Bond Order, this Series Resolution, the Eighth Amendment to Lease Agreement, the Purchase Agreement or the transactions contemplated therein, or of the Series 2013 Bonds, or the corporate existence of the Corporation or the title of any of the officers of the Corporation to their respective offices; (e) an Opinion of Bond Counsel to the effect that the issuance of the Series 2013 Bonds has been duly authorized, that the Series 2013 Bonds constitute valid and binding special obligations of the County in accordance with their terms and that assuming compliance with the requirements of the Code and certain covenants in this Series Resolution and the Tax Compliance Certificate, under existing law interest on the Series 2013 Bonds is excluded from gross income for federal income tax purposes and is exempt from North Carolina income taxes; (f) an Issuance, Sale and Closing Certificate setting forth the following: (1) the aggregate principal amount of Series 2013 Bonds to be issued, not in excess of the maximum amount previously established in Section 2.0 1, (2) the designation of and the schedule of maturities and amounts of the Serial Bonds, PPAB 2072845v7 10 Board of Commissioners Meeting 06/03/2013 14-2- 13 (3) the designation of and the Sinking Fund Requirements for an amount of the Term Bonds, if any, (4) the rates of interest for each of the Serial Bonds and the Term Bonds,if any, (5) the optional redemption dates, if any, and the redemption premium, if any, and (6) the amount of net proceeds to be paid to the parties as set forth in Section 4.01; and (g) evidence of compliance with Section 1201 of the Bond Order. When the documents mentioned in Section 208 of the Bond Order and paragraphs (a) to (g), inclusive, of this Section shall have been filed with the Trustee and when the Series 2013 Bonds shall have been executed and authenticated as required by this Series Resolution and the Bond Order, the Trustee shall deliver the Series 2013 Bonds at one time to the State Treasurer for delivery to the Securities Depository,but only upon payment to the Trustee of the purchase price of the Series 2013 Bonds. Section 2.12 Authorization of Refunding and Optional Redemption of Series 2005Bonds. Upon the direction of a Corporation Representative, the County Manager and the Finance Director are each hereby authorized to determine on the date of sale of the Series 2013 Bonds whether it is in the best interests of the County to refund or not to refund all or any portion of the outstanding Series 2005 Bonds and which subseries of the outstanding Series 2005 Bonds are to be so refunded. Upon the direction of a Corporation Representative,the Board hereby directs that the Series 2005 Bonds be called for optional redemption on July 1, 2013, subject to the refunding of such Series 2005 Bonds in connection with the issuance of the Series 2013 Bonds. The distribution of a conditional notice of redemption of such Series 2005 Bonds in the manner set forth therein and in the Series Resolution authorizing the issuance of the Series 2005 Bonds is hereby ratified, authorized and approved. ARTICLE III REDEMPTION OF BONDS Section 3.01 Redemption Dates and Prices (a) Extraordinary Redemption. The Series 2013 Bonds are subject to redemption by the County at the direction of the Corporation in whole or in part on any date at a Redemption Price equal to 100% of the principal amount thereof, without premium, plus accrued interest to the Redemption Date, to the extent available, from Net Proceeds (as defined in the Bond Order) resulting from insurance carried or maintained with respect to the Health Care System as required by clauses (ii) and (v) of Section 608(a) of the Bond Order, and Net Proceeds resulting from Eminent Domain(as defined in the Bond Order) proceedings, pursuant to Section 609 of the Bond Order, to the extent such Net Proceeds exceed 10% of Net Book Value (as defined in the Bond Order). The Series 2013 Bonds are also subject to mandatory redemption in whole only on any date to the extent available from money deposited by the Corporation in the Redemption Fund at a Redemption Price equal to 100%of the principal amount thereof, without premium, plus accrued interest to the Redemption Date in the event that, by reason of any change in any federal or State law or of any legislative, administrative or judicial action or administrative failure of action, (i)the Lease becomes unenforceable or impossible to perform without unreasonable delay or(ii)unreasonable burdens or excessive liabilities are imposed on the County or the Corporation, including, without limitation, the imposition of federal, state or other ad valorem property, income or other taxes not being imposed on the date of the Lease. PPAB 2072845v7 11 Board of Commissioners Meeting 06/03/2013 14-2- 14 (b) Terms of Redemption. (1) Optional Redemption of Series 2013 Bonds. The Series 2013 Bonds shall be subject to redemption at the option of the County, at the direction of the Corporation, in the manner and upon the terms set forth in the Issuance, Sale and Closing Certificate. (2) Sinking Fund Account Redemption. The Series 2013 Bonds designated as Term Bonds, if any, in the Issuance, Sale and Closing Certificate shall be redeemed pursuant to mandatory sinking fund redemption on October 1 in the year or years and principal amounts as set forth in the Issuance, Sale and Closing Certificate, at a Redemption Price equal to 100%of the principal amount of such Series 2013 Bonds to be redeemed,plus accrued interest to the Redemption Date. (3) Minimum Redemption Amount. No redemption of less than all of the Series 2013 Bonds of a Series at the time outstanding shall be made pursuant to the provisions of Section 3.01 unless (i)the aggregate principal amount of such Series 2013 Bonds to be redeemed is equal to or greater than $100,000 and (ii)the Series 2013 Bonds are redeemed in Authorized Denominations. (c) Purchase in Lieu of Redemption. (1) In lieu of redeeming Series 2013 Bonds pursuant to Section 3.01(a) or Section 3.01(b)(2), the Trustee may, at the request of the County,upon the direction of the Corporation, use such funds otherwise available hereunder for redemption of Series 2013 Bonds to purchase Series 2013 Bonds identified by the County, upon the direction of the Corporation, at a price specified by the County, upon the direction of the Corporation, not exceeding the Redemption Price then applicable hereunder. hl the case of any extraordinary redemption or any purchase and cancellation of Series 2013 Bonds, the Trustee shall apply as a credit against the required Sinking Fund Account deposits with respect to such Term Bonds the amount of such Term Bonds in such order as the County, upon the direction of the Corporation, elects in writing prior to such extraordinary redemption or purchase and cancellation or, if no election is made, in the inverse order thereof. To exercise such right to purchase the Series 2013 Bonds pursuant to this Section 3.01(b)(c)(1), the County, at the direction of the Corporation, will give written notice of its intent to purchase such Series 2013 Bonds to the Trustee not later than 12:00 noon, New York City time, no later than the Business Day immediately preceding the applicable redemption date, and the County shall promptly confirm its purchase thereof in a written notice delivered to the Trustee. The Trustee shall cancel all such Series 2013 Bonds purchased pursuantto this Section 3.01(c)(1). (2) In lieu of redeeming Series 2013 Bonds pursuant to Section 3.01(b)(1),the Trustee may, at the request of the County, upon the direction of the Corporation, use such funds otherwise available hereunder for redemption of Series 2013 Bonds to purchase Series 2013 Bonds identified by the County, upon the direction of the Corporation, at a price specified by the County, upon the direction of the Corporation, not exceeding the Redemption Price then applicable hereunder. Any such Series 2013 Bonds to be purchased pursuant to this Section 3.01(b)(c)(2) may, at the option of the County, at the direction of the Corporation, remain outstanding or be cancelled. To exercise such right to purchase the Series 2013 Bonds pursuant to this Section 3.01(b)(c)(2),the County, at the direction of the Corporation, will give written notice of its intent to purchase such Series 2013 Bonds to the Trustee not later than 12:00 noon, New York City time, no later than the Business Day immediately preceding the applicable redemption date, which notice will state whether such Series 2013 Bonds are to remain outstanding or be cancelled, and the County shall promptly confirm its purchase thereof in a written notice delivered to the Trustee. Section 3.02 Notice of Redemption; Selection of Series 2013 Bonds for Redemption; and Cancellation. (a)Not less than thirty (30) days but not more than sixty (60) days before the redemption date of any Series 2013 Bonds, whether such redemption be in whole or in part,the Trustee shall cause a notice of any redemption signed by the Trustee to be mailed, postage prepaid, to all Holders owning Series 2013 Bonds to be redeemed in whole or in part provided that notice to the Securities Depository shall be sent in accordance with the Securities Depository's policies and procedures. Failure to mail any such notice to any Holder or any defect in any notice so mailed shall not affect the validity of the proceedings for the redemption of the Series 2013 Bonds of any other Holders to whom notice was properly given. Each such notice shall set forth: the CUSIP numbers and, if the Series 2013 Bonds are certificated bonds, the bond certificate numbers of the Series 2013 Bonds to be redeemed,the interest rate of the Series 2013 Bonds to be redeemed,the Date of Original Issuance of the Series 2013 Bonds to be redeemed, the Redemption Date, the Redemption Price to be paid, the PPAB 2072845v7 12 Board of Commissioners Meeting 06/03/2013 14-2- 15 maturities of the Series 2013 Bonds to be redeemed and, in the case of Series 2013 Bonds to be redeemed in part only,the portion of the principal amount thereof to be redeemed, the address and telephone number of the Trustee, the date of the redemption notice, and that on the Redemption Date the Series 2013 Bonds called for redemption will be payable at the designated corporate trust office of the Trustee,that from that date interest will cease to accrue and be payable and that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Series 2013 Bonds. If any Series 2013 Bond is to be redeemed in part only, the notice of redemption shall state also that on or after the Redemption Date,upon surrender of such Series 2013 Bond, a new Series 2013 Bond in principal amount equal to the unredeemed portion of such Series 2013 Bond will be issued. Any notice of redemption, except a notice of redemption in respect of a mandatory sinking fund redemption, at the direction of the Corporation, may state that the redemption to be effected is conditioned upon the receipt by the Trustee on or prior to the Redemption Date of moneys sufficient to pay the principal of and premium, if any, and interest on the Series 2013 Bonds or portions thereof to be redeemed, and if such moneys are not so received, such notice shall be of no force or effect and such Series 2013 Bonds shall not be required to be redeemed. In the event that such notice contains such a condition and moneys sufficient to pay the principal of and premium, if any, and interest on such Series 2013 Bonds are not received by the Trustee on or prior to the Redemption Date,the redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. In addition, at least 30 days before the Redemption Date, such notice shall be given by first class mail, postage prepaid,to the Local Government Commission. Neither failure to give any such notice nor any defect in any such notice so given to the Local Government Commission shall affect the sufficiency of the proceedings for the redemption of such Series 2013 Bonds. Notice of redemption of Series 2013 Bonds shall be given by the Trustee, at the expense of the Corporation, for and on behalf of the County. (b) The Series 2013 Bonds shall be redeemed only in Authorized Denominations. If less than all the Series 2013 Bonds are called for redemption, the Series 2013 Bonds of each maturity to be so redeemed shall be called for redemption in the manner set forth in a certificate of the Corporation filed with the Trustee. If less than all of the Series 2013 Bonds of any one maturity are to be called for redemption, the Trustee shall select the Series 2013 Bonds of each such maturity to be redeemed by lot, each $5,000 portion of principal being counted as one Series 2013 Bond for this purpose;provided, however,that so long as the only Owner of the Series 2013 Bonds is a Securities Depository Nominee, such selection shall be made by the Securities Depository by lot in accordance with its operating rules and procedures. (c) If less than all of a Series 2013 Bond is selected for redemption, the Owner thereof shall present and surrender such Series 2013 Bond to the Trustee for payment of the principal amount thereof so called for redemption, and the redemption premium, if any, on such principal amount, and the County shall, if necessary, execute and the Trustee shall authenticate and deliver to or upon the order of such Owner, without charge, for the unredeemed portion of the principal amount of the Series 2013 Bond so surrendered, a new Series 2013 Bond of the same maturity and designation, bearing interest at the same rate of any Authorized Denominations. (d) Series 2013 Bonds presented and surrendered in accordance with the provisions of this Section shall be canceled upon the surrender thereof. (e) On or before the date upon which Series 2013 Bonds are to be redeemed, the County shall deposit, or cause to be deposited,with the Trustee money or Defeasance Obligations, or a combination of both,that will be sufficient to pay on the Redemption Date the Redemption Price of, and interest accruing on, the Series 2013 Bonds or portions thereof to be redeemed on such Redemption Date. On the Redemption Date, notice having been given in the manner and under the conditions hereinabove provided, the Series 2013 Bonds or portions thereof called for redemption shall be due and payable at the Redemption Price provided therefor, plus accrued interest to such date (except in the case of a conditional redemption authorized by Section 302(a) if moneys are not so available), and if moneys sufficient to pay the Redemption Price of the Series 2013 Bonds or portions thereof to be redeemed plus accrued interest thereon to the Redemption Date are held by the Trustee in PPAB 2072845v7 13 Board of Commissioners Meeting 06/03/2013 14-2- 16 trust for the owners of the Series 2013 Bonds or portions thereof to be redeemed, interest on the Series 2013 Bonds or portions thereof called for redemption shall cease to accrue on such Redemption Date; such Series 2013 Bonds or portions thereof shall cease to be entitled to any benefits or security under the Bond Order or this Series Resolution or to be deemed Outstanding; and the owners of such Series 2013 Bonds or portions thereof shall have no rights in respect thereof except to receive payment of the Redemption Price thereof,plus accrued interest to the Redemption Date. ARTICLE IV APPLICATION OF SERIES 2013 BOND PROCEEDS Section 4.01 Deposit of Funds (a) The net proceeds from the sale of the Series 2013 Bonds shall be applied as follows: (i) To the Trustee, the Redemption Price of the Series 2005 Bonds, less the amount available from existing debt service funds,to be paid to the Holders of the Series 2005 Bonds; (ii) To Swaps counterparties, the termination payments due in connection on the portions of the Swaps to be terminated; and (iii) To the Trustee, the balance of the proceeds to be deposited to the Expense Fund to pay the costs of issuance of the Series 2013 Bonds. The specific amounts to be deposited pursuant to clauses (i) to (iii) above will be set forth in the Issuance, Sale and Closing Certificate. Section 4.02 Expense Fund. The County shall establish with the Trustee a separate fund to be known as the "Expense Fund—New Hanover Regional Medical Center—Series 2013" (the "Expense Fund'). Amounts on deposit in the Expense Fund shall be disbursed upon the written request of the Corporation and the County for the payment of expenses for any recording, trustee's and depository's fees and expenses, accounting and legal fees, financing costs, and other fees and expenses incurred or to be incurred by or on behalf of the County or the Corporation in connection with or incident to the issuance and sale of the Series 2013 Bonds and the refunding of the outstanding Series 2005 Bonds. At such time as the Trustee is furnished with a written notice of the Corporation stating that all such fees and expenses have been paid,the Trustee shall, upon the written request of the Corporation, transfer any moneys remaining in the Expense Fund to the Interest Account and the Trustee shall close the Expense Fund. ARTICLE V SECURITY; FUNDS AND ACCOUNTS Section 5.01 Security for the Series 2013 Bonds. In addition to the security for the Series 2013 Bonds granted by the County pursuant to Section 405 of the Bond Order, the County hereby grants to the Holders and to the Trustee, on behalf of the Holders, a pledge of the money and securities in the funds and accounts established under this Series Resolution, and the income from the temporary investment thereof. Section 5.02 Establishment of Funds and Accounts. There are hereby established with the Trustee the following funds and accounts: (a) The New Hanover County 2013 New Hanover Regional Medical Center Revenue Bond Fund in which there are established three special accounts to be known as the Principal Account, Interest Account and, in the case that any Series 2013 Bonds are Term Bonds,the Sinking Fund Account; and (b) The New Hanover County 2013 New Hanover Regional Medical Center Redemption Fund. PPAB 2072845v7 14 Board of Commissioners Meeting 06/03/2013 14-2- 17 Section 5 03 Principal Account. On or prior to three Business Days next preceding each October 1, the Trustee shall deposit in the Principal Account, beginning on the date set forth in the Issuance, Sale and Closing Certificate, such amounts as shall be sufficient to make full and timely payments of the principal of all Serial Bonds due on the next ensuing October 1; provided, however, that no deposit pursuant to this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Principal Account for that purpose. If sufficient funds to make the transfers described in this Section 5.03 are not available in the Bond Fund on the third Business Day preceding each October 1, the Trustee will give Immediate Notice thereof to the County, Corporation and the Local Government Commission,promptly confirmed in writing. Section 5.04 Interest Account. On or prior to three Business Days next preceding each Interest Payment Date,the Trustee shall deposit in the Interest Account an amount which will be equal to the interest to become due on the Series 2013 Bonds on such Interest Payment Date; provided, however,that no deposit pursuant to this paragraph need be made to the extent that there is a sufficient amount already on deposit in the Interest Account for that purpose. If sufficient funds to make the transfers described in this Section 5.04 are not available in the Bond Fund on the third Business Day preceding an Interest Payment Date, the Trustee will give Immediate Notice thereof to the County and the Corporation,promptly confirmed in writing. Section 5.05 Sinking Fund Account. On or prior to three Business Days preceding each Maturity Date and each mandatory Sinking Fund Account Redemption Date, the Trustee shall deposit in the Sinking Fund Account an amount which is equal to the principal of the Series 2013 Bonds next to become due by maturity or mandatory Sinking Fund Account redemption. No such deposit need be made,however,to the extent that there is a sufficient amount already on deposit and available for such purpose in the Sinking Fund Account to be applied to such next maturity or mandatory Sinking Fund Account redemption payment. If sufficient funds to make the transfers to the Sinking Fund Account described in this Section 5.05 are not available on the third Business Day preceding any Maturity Date or mandatory Sinking Fund Account Redemption Date, the Trustee will give Immediate Notice thereof to the County and the Corporation. Moneys on deposit in the Sinking Fund Account, other than income earned thereon which is to be transferred to other funds created hereunder and except as otherwise provided in the Bond Order, shall be applied by the Trustee to pay principal on the Series 2013 Bonds as it becomes due and to redeem the Series 2013 Bonds in accordance with the mandatory Sinking Fund Account redemption schedule provided for in Section 3.01 hereof. In lieu of such mandatory Sinking Fund Account redemption, the Trustee shall, at the written request of the Corporation, purchase for cancellation an equal principal amount of Series 2013 Bonds of the Series and maturity to be redeemed in the open market identified by the Corporation at prices specified by the Corporation not exceeding the principal amount of the Series 2013 Bonds being purchased plus accrued interest with such interest portion of the purchase price to be paid from the Interest Account and the principal portion of such purchase price to be paid from the Sinking Fund Account. In addition, the amount of Series 2013 Bonds to be redeemed on any date pursuant to the mandatory Sinking Fund Account redemption schedule shall be reduced by the principal amount of Series 2013 Bonds of the Series and maturity required to be redeemed which are acquired by the County or the Corporation and delivered to the Trustee for cancellation. Section 5.06 Redemption Fund. In the event of a deposit with the Trustee by the County of moneys from any other source for redeeming Series 2013 Bonds or the purchase of Series 2013 Bonds for cancellation, except as otherwise provided in this Series Resolution, such moneys shall be deposited in the Redemption Fund. Moneys on deposit in the Redemption Fund shall be used for the redemption or purchase of Series 2013 Bonds in accordance with the provisions of Article III hereof. ARTICLE VI DEPOSITORIES OF MONEY, SECURITY FOR DEPOSITS,INVESTMENT OF FUNDS Section 6.01 Security for Deposits. Any and all money deposited or caused to be deposited by the County with the Trustee (or one or more other Depositaries as provided in the Bond Order), except for the amounts in the Operating Fund to be used to pay Operating Expenses, shall be trust funds under the terms hereof and shall not be subject PPAB 2072845v7 15 Board of Commissioners Meeting 06/03/2013 14-2- 18 to any lien or attachment by any creditor of the County or the Corporation. Such money shall be held in trust and applied in accordance with the provisions of this Series Resolution and the Bond Order. Until money deposited with the Trustee or any other Depositary hereunder is invested in Investment Obligations, the amount of money in excess of the amount guaranteed by the Federal Deposit Insurance Corporation or other federal agency shall be continuously secured, for the benefit of the County and the Holders, either (a)by lodging with a bank or trust company chosen by the Trustee as custodian or, if then permitted by law, by setting aside under control of the trust department of the bank holding such deposit, as collateral security, Government Obligations or other marketable securities eligible as security for the deposit of trust funds under regulations of the Comptroller of the Currency of the United States or applicable State law or regulations, having a market value (exclusive of accrued interest) not less than the amount of such deposit, or(b) if the furnishing of security as provided in clause (a) above is not permitted by applicable law,then in such other manner as may then be required or permitted by applicable State or federal laws and regulations regarding the security for, or granting a preference in the case of, the deposit of trust funds; provided, however, that it shall not be necessary for the Trustee to give security for the deposit of any money with it for the payment of the principal of or the redemption premium or the interest on any Series 2013 Bonds, or for the Trustee or any Depositary to give security for any money that shall be represented by obligations purchased under the provisions of this Article as an investment of such money. All money deposited with the Trustee or any Depositary shall be credited to the particular fund or account to which such money belongs. Section 6.02 Investment of Money. Money held for the credit of all funds and accounts created under this Series Resolution or the Bond Order shall be continuously invested and reinvested at the direction of the County or the Corporation (given in writing or orally, confirmed in writing) by the Trustee in Investment Obligations to the extent practicable. Any such Investment Obligations shall mature not later than the respective dates when the money held for the credit of such funds or accounts will be required for the purposes intended. Notwithstanding the foregoing,no Investment Obligations in any fund or account may mature beyond the latest maturity date of any Series 2013 Bonds Outstanding at the time such Investment Obligations are deposited. For the purposes of this Section, the maturity date of repurchase agreements is the maturity date of such repurchase agreements and not the maturity date of the underlying obligations. The County or the Corporation may at any time give to the Trustee written directions respecting the investment of any money required to be invested hereunder, subject,however,to the provisions of this Article, and the Trustee shall then invest such money under this Section as so directed by the County or the Corporation. The Trustee may request, in writing, direction or authorization of the County or the Corporation with respect to the proposed investment of money under the provisions of this Series Resolution. Upon receipt of such request, accompanied by a memorandum setting forth the details of any proposed investment, the County or the Corporation will either approve such proposed investment or will give written directions to the Trustee respecting the investment of such money and, in the case of such directions, the Trustee shall then, subject to the provisions of this Article, invest such money in accordance with such directions. Investment Obligations acquired with money and credited to any fund or account established under this Series Resolution or the Bond Order shall be held by or under the control of the Trustee and while so held shall be deemed at all times to be part of such fund or account in which such money was originally held, and the interest accruing thereon and any profit or loss realized upon the disposition or maturity of such investment shall be credited to or charged against such fund or account. The Trustee shall reduce to cash a sufficient amount of such Investment Obligations whenever it shall be necessary so to do in order to provide moneys to make any payment or transfer of moneys from any such fund or account. The Trustee shall not be liable or responsible for any loss resulting from any such investment. Whenever a payment or transfer of money between two or more of the funds or accounts established pursuant to this Series Resolution or the Bond Order is permitted or required, such payment or transfer may be made in whole or in part by transfer of one or more Investment Obligations at a value determined in accordance with this ARTICLE VI, provided that the Investment Obligations transferred are those in which moneys of the receiving fund or account could be invested at the date of such transfer. The Trustee shall not be held accountable for any depreciation in the valued Investment Obligations or for any losses incurred upon any authorized disposition thereof. PPAB 2072845v7 16 Board of Commissioners Meeting 06/03/2013 14-2- 19 Section 6 03 Valuation. For the purpose of determining the amount on deposit to the credit of any such fund or account, Investment Obligations in which money in any fund or account is invested shall be valued (a) at cost if such Investment Obligations mature within six months from the date of valuation thereof, and (b) if such Investment Obligations mature more than six months after the date of valuation thereof, at the price at which such Investment Obligations are redeemable by the holder at his option if so redeemable, or, if not so redeemable, at the lesser of(i)the cost of such Investment Obligations minus the amortization of any premium or plus the amortization of any discount thereon and(ii)the market value of such Investment Obligations. The Investment Obligations in such funds and accounts shall be valued at any time requested by the County Representative or the Corporation Representative on reasonable notice to the Trustee (which period of notice may be waived or reduced by the Trustee); provided, however, that the Trustee shall not be required to value the Investment Obligations more than once in any calendar month. ARTICLE VII EVENTS OF DEFAULT Section 7.01 Events of Default. The events of default set forth in Section 701 of the Bond Order shall each constitute an Event of Default under this Series Resolution, and the Trustee shall have all rights and remedies hereunder as set forth in the Bond Order. ARTICLE VIII THE TRUSTEE Section 8.01 Acceptance of Duties by Trustee. The Trustee shall signify its acceptance of the duties and obligations and the trusts imposed upon it by this Series Resolution and the Bond Order by execution of the certificate of authentication on the Series 2013 Bonds. ARTICLE IX SUPPLEMENTAL SERIES RESOLUTIONS Section 9.01 Procedure for Adoption of Supplemental Series Resolutions. The County may, from time to time and at any time, adopt such resolutions amending and supplementing the provisions of this Series Resolution in the same manner as is provided in Sections 1001 and 1002 of the Bond Order for the adoption of supplemental bond orders and the provisions of said Sections 1001 and 1002 are hereby incorporated herein and made applicable hereto in the same manner as if herein set forth. Any amendment to the provisions set forth in Articles II and III, shall require the prior approval of the Local Government Commission. Section 9.02 Exclusion of Series 2013 Bonds. Series 2013 Bonds owned or held by or for the account of the County or the Corporation or any Affiliate shall not be deemed Outstanding Bonds for the purpose of any consent or other action or any calculation of Outstanding Bonds provided for in this Article, or Articles VII, VIII, X or XI of the Bond Order, and neither of such parties as Holders of such Series 2013 Bonds shall be entitled to consent or take any other action provided for in this Article, or Articles VII, VIII, X or XI of the Bond Order. At the time of any consent or other action taken under this Article, or Articles VII, VIII, X or XI of the Bond Order, the County or the Corporation shall furnish the Trustee a certificate signed by a County Representative or a Corporation Representative, upon which the Trustee may rely, describing all Series 2013 Bonds so to be excluded. PPAB 2072845v7 17 Board of Commissioners Meeting 06/03/2013 14-2-20 ARTICLE X DEFEASANCE Section 10.01 Cessation of Interest of Holders and Repeal of Series Resolution. If, when (a)the Series 2013 Bonds shall have become due and payable in accordance with their terms or shall have been duly called for redemption, or (b) irrevocable instructions to pay such Series 2013 Bonds at their respective maturities or to call such Series 2013 Bonds for redemption, shall have been given by the County to the Trustee,the whole amount of the principal and the interest and premium, if any, so due and payable upon all Series 2013 Bonds shall be paid or if the Trustee shall hold sufficient money or noncallable Defeasance Obligations the principal of and the interest on which, when due and payable, will provide sufficient money to pay the principal of, and the interest and redemption premium, if any, on all Series 2013 Bonds then Outstanding to the maturity date or dates of such Series 2013 Bonds or to the date or dates specified for the redemption thereof, (c) sufficient funds shall also have been provided or provision made for paying all other obligations payable hereunder by the County, in connection with a refunding as shown by a verification report of an Accountant as to the adequacy of the escrow, which is delivered to the Trustee, and (d)an Opinion of Counsel is delivered to the Trustee stating to the effect that the Series 2013 Bonds are deemed paid and no longer Outstanding,then and in that case the right, title and interest of the Trustee hereunder and the obligations of the County hereunder shall thereupon cease, and the County shall repeal this Series Resolution and the Trustee, on demand of the County, shall distribute any surplus in any and all balances remaining in all funds and accounts, other than money held for the redemption or payment of Series 2013 Bonds. Otherwise,this Series Resolution shall be, continue and remain in full force and effect; provided that, in the event Defeasance Obligations shall be deposited with and held by the Trustee as hereinabove provided, (i)in addition to the requirements set forth in Article III of this Series Resolution, the Trustee, within thirty (30) days after such Defeasance Obligations shall have been deposited with it, shall cause a notice signed by the Trustee to be mailed, postage prepaid,to all Holders setting forth (a)the date or dates, if any, designated for the redemption of the Series 2013 Bonds, (b)a description of the Defeasance Obligations so held by it, and (c)that this Series Resolution has been repealed in accordance with the provisions of this Section, but failure to mail any such notice to any Holder shall not affect the validity of the defeasance of the Series 2013 Bonds pursuant to this Section and (ii) (a)the Trustee shall nevertheless retain such rights, powers and privileges under this Series Resolution and the Bond Order as may be necessary and convenient in respect of the Series 2013 Bonds for the payment of the principal, interest and any premium for which such Defeasance Obligations have been deposited and (b)the Trustee shall retain such rights, powers and privileges under this Series Resolution and the Bond Order as may be necessary and convenient for the registration, transfer and exchange of Series 2013 Bonds. All money and Defeasance Obligations held by the Trustee pursuant to this Section shall be held in trust and applied to the payment,when due, of the obligations payable therewith. ARTICLE XI MISCELLANEOUS PROVISIONS Section 11.01 Manner of Giving Notice. All notices, demands and requests to be given to or made hereunder by the County and the Trustee shall be given or made in writing and shall be deemed to be properly given or made if sent by United States registered mail, return receipt requested,postage prepaid, addressed as follows: (a) As to the County-- County of New Hanover 230 Governmental Center Drive, Suite 165 Wilmington,North Carolina 28403 Attention: Finance Director PPAB 2072845v7 18 Board of Commissioners Meeting 06/03/2013 14-2-21 (b) As to the Corporation-- New Hanover Regional Medical Center 2131 S. 17th Street Wilmington,North Carolina 28401 Attention: Chief Financial Officer (c) As to the Trustee-- U.S. Bank National Association Corporate Trust Services 5540 Centerview Drive, Suite 200 Raleigh,North Carolina 27606 Attention: Shawna L. Hale (d) As to the Local Government Commission-- Local Government Commission of North Carolina 4505 Fair Meadow Lane, Suite 102 Raleigh,North Carolina 27607 Attention: Secretary Any such notice, demand or request may also be transmitted to the appropriate above-mentioned parry by telegram,telecopy or telephone and shall be deemed to be properly given or made at the time of such transmission if, and only if, such transmission of notice shall be confirmed in writing and sent as specified above. Any of such addresses may be changed at any time upon written notice of such change sent by United States registered mail,postage prepaid,to the other parties by the party effecting the change. Section 11.02 Trustee, County, Corporation and Holders Alone Have Rights Under Series Resolution. Except as herein otherwise expressly provided, nothing in this Series Resolution, express or implied, is intended or shall be construed to confer upon any person, firm or corporation, other than the Trustee, the County, the Corporation and the Holders, any right, remedy or claim, legal or equitable, under or by reason of this Series Resolution or any provision hereof,this Series Resolution and all its provisions being intended to be and being for the sole and exclusive benefit of the Trustee,the County,the Corporation and the Holders. Section 11.03 Effect of Partial Invalidity. In case anyone or more of the provisions of this Series Resolution or the Series 2013 Bonds shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions of this Series Resolution or the Series 2013 Bonds, but this Series Resolution and the Series 2013 Bonds shall be construed and enforced as if such illegal or invalid provisions had not been contained therein. In case any covenant, stipulation, obligation or agreement contained in the Series 2013 Bonds or this Series Resolution shall for any reason be held to be in violation of any law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the County to the full extent permitted by law. Section 11.04 Effect of Covenants. All covenants, stipulations, obligations and agreements of the County contained in this Series Resolution shall be deemed to be covenants, stipulations, obligations and agreements of the County to the full extent permitted by the Constitution and laws of the State. This Series Resolution is adopted with the intent that the laws of the State shall govern its construction. Section 11.05 Dealing in Series 2013 Bonds. The Trustee and any bank or trust company acting as Depositary under this Series Resolution and its directors, officers, employees or agents, and any officer, employee or agent of the Trustee, may in good faith, buy, sell, own, hold and deal in any Series 2013 Bonds issued under the provisions of this Series Resolution and may join in any action which any Holder may be entitled to take with like effects as if such Trustee were not a trustee and such bank or trust company were not a Depositary under this Series Resolution. PPAB 2072845v7 19 Board of Commissioners Meeting 06/03/2013 14-2-22 Section 11.06 Approval of Purchase Agreement and Eighth Amendment to Lease Agreement. The form, terms and provisions of the Purchase Agreement, relating to the Series 2013 Bonds and the Eighth Amendment to Lease Agreement, are hereby approved, and the Chairman or Vice Chairman of the Board of the County and the County Manager are hereby authorized and directed to execute and deliver the Purchase Agreement and the Eighth Amendment to Lease Agreement in the forms presented at this meeting together with such changes, modifications and additions as he, with the advice of counsel, may deem necessary and appropriate; such execution shall be conclusive evidence of the authorization and approval thereof by the County. Section 11.07 Approval of Preliminary Official Statement and Official Statement. The Chairman or Vice Chairman of the Board of the County and the County Manager are hereby authorized and directed to execute and deliver the Official Statement, to be dated as of the date of distribution thereof, relating to the Series 2013 Bonds, in the form presented at this meeting together with such changes, modifications, and additions as he, with the advice of counsel, may deem necessary and appropriate; such execution and delivery shall be conclusive evidence of the approval and authorization in all respects by the County of the form and content thereof. The County hereby approves distribution of the Preliminary Official Statement relating to the Series 2013 Bonds, authorizes and approves the execution and distribution of the Official Statement and approves and consents to the use and distribution of copies of such Official Statement, the Bond Order and this Series Resolution by the underwriters in connection with the public offering of the Series 2013 Bonds. Section 11.08 Appointment of County Representative and Authorization for OtherActs. (a) The Chairman and the Vice Chairman of the Board of the County, the County Manager, the Finance Director and the County Attorney are hereby appointed County Representatives with full power to carry out the duties set forth in the Bond Order and this Series Resolution. (b) The members of the Board of the County and the agents and employees of the County and the officers and agents of the Trustee are hereby authorized and directed to do all acts and things required of them by the provisions of the Series 2013 Bonds,the Eighth Amendment to Lease Agreement,the Bond Order and the Purchase Agreement for the full,punctual and complete performance of the terms, covenants,provisions and agreements of the same and also to do all acts and things required of them by the provisions of this Series Resolution. (c) The Chairman,the Vice Chairman and the Clerk to the Board of the County, and the County Manager,the Finance Director and the County Attorney, or any of them, are further authorized and directed (without limitation except as may be expressly set forth herein) to take such action and to execute and deliver any such documents, deeds, certificates, undertakings, agreements or other instruments as they, with the advice of counsel, may deem necessary or appropriate to effect the transactions contemplated by the Series 2013 Bonds, the Eighth Amendment to Lease Agreement,the Bond Order,this Series Resolution and the Purchase Agreement. Section 11.09 No Recourse Against Commissioners, Directors, Officers or Employees of County, Corporation or Local Government Commission. No recourse, under or upon any statement, obligation, covenant or agreement contained in this Series Resolution, in any Series 2013 Bond hereby secured or in any document or certification whatsoever, or under any judgment obtained against the County, the Corporation or the Local Government Commission, or by the enforcement of any assessment, or by any legal or equitable proceeding by virtue of any constitution or statute or otherwise, or under any circumstances, shall be had against any commissioner, director, officer or employee, as such, of the County, the Corporation or the Local Government Commission, either directly or through the County, the Corporation, the Local Government Commission, or otherwise, for the payment, for or to the County or the Corporation, or any receiver of the County or the Corporation, or for or to any Holder, or otherwise, of any sum that may be due and unpaid upon any such Series 2013 Bond. Any and all personal liability of every nature, whether at common law or in equity or by statute or by constitution or otherwise, of any such commissioner, director, officer or employee, as such, to respond, by reason of any act or omission on his or her part or otherwise, for the payment, for or to the County, the Corporation,the Local Government Commission, or any receiver of the County,the Corporation or the Local Government Commission, or for or to any Holder, or otherwise, of any sum that may remain due and unpaid upon the Series 2013 Bonds hereby secured or any of them, is hereby expressly waived and released as an express condition of, and in consideration for,the adoption of this Series Resolution and the issuance of the Series 2013 Bonds. PPAB 2072845v7 20 Board of Commissioners Meeting 06/03/2013 14-2-23 Section 11.10 Headings. Any heading preceding the text of the several articles hereof, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Series Resolution,nor shall they affect its meaning, construction or effect. Section 11.11 Continuing Disclosure. The County covenants and agrees that in the event of the termination of the Lease it shall impose upon any successor lessee of the Existing Facilities or the Health Care System the same continuing disclosure obligations, or if the County shall operate the Existing Facilities or the Health Care System, the County shall assume and perform the same continuing disclosure obligations, imposed upon the Corporation under the Lease. If the County fails to comply with the undertaking described above, the Trustee or any beneficial owner of the Series 2013 Bonds then Outstanding may take action to protect and enforce the rights of beneficial owners with respect to such undertaking, including an action for specific performance; provided, however, that failure to comply with such undertaking shall not be an Event of Default and shall not result in any acceleration of payment of the Series 2013 Bonds. Section 11.12 Arbitrage The County agrees that money on deposit in any fund or account maintained in connection with the Series 2013 Bonds, whether or not such money was derived from the proceeds of the sale of the Series 2013 Bonds or from any other sources, and whether or not the Series 2013 Bonds are Outstanding hereunder, (i)will not be used in a manner that would cause the Series 2013 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and applicable regulations thereunder and (ii)will be used in a manner that will cause the Series 2013 Bonds not to be "arbitrage bonds" within the meaning of Section 148 of the Code and applicable regulations thereunder. The County shall observe and not violate the requirements of Section 148 of said Code and any such applicable regulations. In the event the County is of the opinion that it is necessary to restrict or limit the yield on the investment of money held by the Trustee pursuant to this Series Resolution, or to use such money in certain manners, in order to avoid the Series 2013 Bonds being considered "arbitrage bonds" within the meaning of Section 148 of the Code and the regulations thereunder as such may be applicable to the Series 2013 Bonds at such time,the County may issue to the Trustee a written certificate to such effect and appropriate instructions, in which event the Trustee shall take such action as is necessary to restrict or limit the yield on such investment or to use such money in accordance with such certificate and instructions,irrespective of whether the Trustee shares such opinion. Section 11.13 Tax Covenant The County covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion of interest paid on the Series 2013 Bonds from gross income of the owners thereof for federal income tax purposes; provided, however, that the County shall have no obligation to pay any amounts necessary to comply with this covenant other than from Net Revenues or money received by the County from the Corporation. Section 11.14 Notice to Local Government Commission and Rating Agencies. The Local Government Commission and each Rating Agency then rating the Series 2013 Bonds shall receive notice from the Trustee of the following events: any change in the Trustee; any material change in the Bond Order or this Series Resolution; any acceleration of the Series 2013 Bonds; and any redemption or defeasance of the Series 2013 Bonds. Section 1135 Provisions Relating to Local Government Commission. The provisions contained herein relating to any notice to, approval of or other action by the Local Government Commission may not be amended, modified or supplemented without the prior written consent of the Local Government Commission. Any such reference in this Series Resolution to the Local Government Commission shall include, in each case, any authorized representative of the Local Government Commission. Section 11.16 Amended and Restated Series Resolution Effective. This Series Resolution shall take effect immediately upon its adoption. PPAB 2072845v7 21 Board of Commissioners Meeting 06/03/2013 14-2-24 EXHIBIT A [FORM OF SERIES 2013 BONDS] UNITED STATES OF AMERICA STATE OF NORTH CAROLINA COUNTY OF NEW HANOVER,NORTH CAROLINA HOSPITAL REVENUE REFUNDING BOND NEW HANOVER REGIONAL MEDICAL CENTER) SERIES 2013 R- $ DATED OF ORIGINAL INTEREST RATE MATURITY ISSUANCE CUSIP PRINCIPAL SUM: REGISTERED OWNER: CEDE&CO. THE COUNTY oFNEwHANovER(the "County"), a political subdivision of the State of North Carolina,for value received, hereby promises to pay, solely from the sources and in the manner hereinafter provided,to the registered owner identified above, or registered assigns, on the maturity date set forth above (or earlier as hereinafter referred to), upon the presentation and surrender hereof at the designated corporate trust office of U.S. Bank National Association, in Raleigh, North Carolina as Paying Agent(the "Paying Agent")under the Bond Order and the Series Resolution(both as hereinafter defined), the principal sum set forth above. The County also promises to pay, but solely from the sources hereinafter provided, interest on this bond (calculated on the basis of a 360-day year consisting of twelve 30-day months) from the interest payment date next preceding the date on which it is authenticated,unless it is authenticated on an interest payment date, in which event it shall bear interest from such interest payment date, or it is authenticated prior to October 1, 2013, in which event it shall bear interest from its date, payable on April 1 and October 1 of each year, beginning October 1, 2013, at the rate per annum set forth above until the principal sum hereof is paid. Capitalized terms not defined herein shall have the meanings set forth in the Bond Order adopted by the Board of Commissioners of the County (the "Board') on October 6, 1993, as amended by the First Supplemental Bond Order adopted by the Board on February 5, 1999 and the Second Supplemental Bond Order adopted by the Board on December 7, 2005 (collectively,the "Bond Order") and the Series Resolution adopted by the Board on June 3, 2013 (the "Series Resolution"). Reference is made to the Bond Order and the Series Resolution for a more complete statement of the provisions thereof and of the rights of the County,the Corporation,the Trustee and the registered owners of the Series 2013 Bonds. Copies of the Bond Order and the Series Resolution are on file and may be inspected at the designated corporate trust office of the Trustee. By the purchase and acceptance of this Bond the registered owner hereof signifies assent to all of the provisions of the Bond Order and the Series Resolution. This Bond is a special obligation of the County under the Act. This Bond is secured by a pledge of, and the principal of, the premium, if any, and interest on this Bond are payable solely from the Net Revenues and the County's right to receive Net Revenues. This Bond is also secured by the money and securities in the funds and accounts held by the Trustee under the Series Resolution, and the income from the temporary investment thereof. This Bond does not constitute a debt of the County for which the faith and credit and taxing power of the County are pledged, and the issuance of this Bond will not directly or indirectly or contingently obligate the County to levy any tax or pledge any form of taxation for the payment hereof. A-1 Board of Commissioners Meeting 06/03/2013 14-2-25 This Bond is one of a duly authorized series of hospital revenue bonds of the County, designated "County of New Hanover,North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013" (the "Series 2013 Bonds"), issued pursuant to the Act,the Bond Order and the Series Resolution for the purpose of providing funds, together with other available funds, to currently refund all of the outstanding Series 2005 Bonds and pay certain related swap termination payments and certain expenses of issuing the Series 2013 Bonds. In addition to the Series 2013 Bonds, the County has heretofore issued under the Bond Order (a) $120,000,000 Variable Rate Hospital Revenue Bonds (New Hanover Regional Medical Center Project) Series 2006A and Series 2006B, $116,015,000 of which are currently outstanding, (b) $40,000,000 Variable Rate Hospital Revenue Bonds (New Hanover Regional Medical Center Project) Series 2008A and Series 2008B, $37,020,000 of which are currently outstanding and (c) $93,965,000 Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2011, $90,835,000 of which are currently outstanding. The Series 2013 Bonds shall be issuable as registered bonds in Authorized Denominations. The Series 2013 Bonds will be dated as of the Date of Original Issuance. This Bond is registered on the Bond Register and may be transferred by the registered owner hereof at the written request of such registered owner in person or by his duly authorized attorney, but only in the manner, subject to the limitations and upon the payment of the charges provided in the Series Resolution and upon surrender and cancellation of this Bond. Upon such transfer, a new fully registered bond or bonds, without coupons, of the same maturity and of authorized denominations for the same aggregate principal amount,will be issued to the transferee in exchange therefor. The County, the Trustee and any Paying Agent may treat the registered owner of any Series 2013 Bond as the absolute owner thereof for all purposes,whether or not such Series 2013 Bond shall be overdue, and shall not be bound by any notice to the contrary. All payments of or on account of the principal of and premium, if any, and interest on any such Bond as herein provided shall be made only to or upon the written order of the registered owner thereof or his legal representative,but such registration may be changed as herein provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2013 Bond to the extent of the sum or sums so paid. The County, the Trustee and any Paying Agent shall not be required to register the transfer or exchange of any Series 2013 Bond (i) after notice calling such Series 2013 Bond or portion thereof for redemption has been mailed or (ii) during the fifteen day period next preceding the mailing of a notice of redemption of the Series 2013 Bonds of the same Series, if any, and maturity. The principal of, premium, if any, and interest on and the Redemption Price of the Series 2013 Bonds shall be payable in currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts. The principal or Redemption Price of the Series 2013 Bonds shall be payable by check in lawful money of the United States of America upon presentation at the Principal Office of the Paying Agent to the Holders of the Series 2013 Bonds on such date. Interest on the Series 2013 Bonds shall be paid to the Person whose name appears on the Bond Register as the Holder thereof as of the close of business on the Record Date for each Interest Payment Date. Payment of the interest on the Series 2013 Bonds shall be made by check mailed by first class mail to such Holder at its address as it appears on such registration books, or,upon the written request of any Holder of at least$1,000,000 in aggregate principal amount of the Series 2013 Bonds, submitted to the Trustee at least five Business Days prior to the Record Date, by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. The Series 2013 Bonds are being issued by means of a book-entry system with no physical distribution of bond certificates to be made except as provided in the Series Resolution. One bond certificate with respect to each date on which the Series 2013 Bonds are stated to mature, in the aggregate principal amount of the Series 2013 Bonds stated to mature on such date and registered in the name of Cede &Co., as nominee of The Depository Trust Company,New York, New York ("DTC"), is being issued and required to be deposited with DTC and immobilized in its custody. The book- entry system will evidence ownership of the Series 2013 Bonds in the principal amount of$5,000 or any whole multiple thereof, with transfers of ownership effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. Transfer of principal, interest and any redemption premium payments to beneficial owners of the Series 2013 Bonds by participants of DTC will be the responsibility of such participants and other nominees of such beneficial owners. The County will not be responsible or liable for such transfers of payments or PPAB 2072845v7 A-2 Board of Commissioners Meeting 06/03/2013 14-2-26 for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. While Cede & Co. is the registered owner of this Bond, notwithstanding the provisions hereinabove contained, payments of principal of or redemption premium, if any, and interest on this Bond shall be made in accordance with the existing arrangements between the Trustee and DTC. Defaulted Interest. Defaulted Interest with respect to any Series 2013 Bond shall cease to be payable to the holder of such Series 2013 Bond on the relevant Record Date and shall be payable to the holder in whose name such Series 2013 Bond is registered at the close of business of the Trustee on the Special Record Date for the payment of such Defaulted Interest,which shall be fixed as provided in the Series Resolution. Extraordinary Redemption. The Series 2013 Bonds are subject to redemption by the County at the direction of the Corporation in whole or in part on any date at a Redemption Price equal to 100% of the principal amount thereof, without premium, plus accrued interest to the Redemption Date, from Net Proceeds resulting from insurance carried or maintained with respect to the Health Care System as required by the Bond Order, and Net Proceeds resulting from Eminent Domain proceedings, pursuant to the Bond Order, to the extent such Net Proceeds exceed 10% of Net Book Value. The Series 2013 Bonds are also subject to mandatory redemption in whole only on any date from money deposited by the Corporation in the Redemption Fund at a Redemption Price equal to 100%of the principal amount thereof, without premium, plus accrued interest to the Redemption Date in the event that, by reason of any change in any federal or State law or of any legislative, administrative or judicial action or administrative failure of action, (i)the Lease becomes unenforceable or impossible to perform without unreasonable delay or (ii)unreasonable burdens or excessive liabilities are imposed on the County or the Corporation, including, without limitation, the imposition of federal, state or other ad valorem property, income or other taxes not being imposed on the date of the Lease. [Optional Redemption. The Series 2013 Bonds maturing on or after October 1, _will be subject to redemption by the County, at the direction of the Corporation, in whole or in part on any date on or after October 1, _, at a Redemption Price equal to 100% of the principal amount of the Series 2013 Bonds to be redeemed,together with interest accrued thereon to the Redemption Date, all in the manner provided in the Bond Order and the Series Resolution. Mandatory Sinking Fund Redemption. The Series 2013 Bonds shall be redeemed pursuant to mandatory sinking fund redemption on the first Business Day of October in the following years and amounts at a Redemption Price equal to 100%of the principal amount of such Series 2013 Bonds to be redeemed,plus accrued interest to the Redemption Date: PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT The amounts referred to above shall be reduced (i)by the amount of Series 2013 Bonds acquired and delivered in accordance with the Series Resolution in satisfaction of such Sinking Fund Account requirements and (ii)in connection with a partial redemption of Series 2013 Bonds if the Corporation elects to reduce mandatory Sinking Fund Account redemptions for the Series 2013 Bonds in the manner provided in the Series Resolution. Payment or redemption of the Series 2013 Bonds through the Sinking Fund Account shall be without premium. The Series 2013 Bonds shall be redeemed by the Trustee pursuant to the provisions of this paragraph without any notice from or direction by the County or the Corporation.] Purchase in Lieu of'Redemption. In lieu of redeeming Series 2013 Bonds,the Trustee may, at the request of the County, upon the direction of the Corporation, use such funds otherwise available hereunder for redemption of Series 2013 Bonds to purchase Series 2013 Bonds identified by the County, upon the direction of the Corporation, in the open market for cancellation at a price specified by the County, upon the direction of the Corporation, not exceeding the PPAB 2072845v7 A-3 Board of Commissioners Meeting 06/03/2013 14-2-27 Redemption Price then applicable hereunder. The procedures for purchasing the Series 2013 Bonds in lieu of redeeming the same are set forth in the Series Resolution. Such purchased Series 2013 Bonds may, in the case of optional redemption, remain outstanding or otherwise shall be cancelled, all as provided in the Series Resolution. General Redemption Provisions. Not less than 30 days but not more than 60 days before the redemption date of any Series 2013 Bonds, whether such redemption be in whole or in part, the Trustee shall cause a notice of any redemption signed by the Trustee to be mailed, postage prepaid,to all Holders owning Series 2013 Bonds to be redeemed in whole or in part provided that notice to the Securities Depository shall be sent in accordance with the Securities Depository's policies and procedures. Failure to mail any such notice to any Holder or any defect in any notice so mailed shall not affect the validity of the proceedings for the redemption of the Series 2013 Bonds of any other Holders to whom notice was properly given. Each such notice shall set forth: the CUSIP numbers and, if the Series 2013 Bonds are certificated bonds, the bond certificate numbers of the Series 2013 Bonds to be redeemed, the interest rate of the Series 2013 Bonds to be redeemed, the Date of Original Issuance of the Series 2013 Bonds to be redeemed, the Redemption Date, the Redemption Price to be paid, the maturities of the Series 2013 Bonds to be redeemed and, in the case of Series 2013 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed, the address and telephone number of the Trustee, the date of the redemption notice, and that on the Redemption Date the Series 2013 Bonds called for redemption will be payable at the designated corporate trust office of the Trustee, that from that date interest will cease to accrue and be payable and that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Series 2013 Bonds. If any Series 2013 Bond is to be redeemed in part only,the notice of redemption shall state also that on or after the Redemption Date, upon surrender of such Series 2013 Bond, a new Series 2013 Bond in principal amount equal to the unredeemed portion of such Series 2013 Bond will be issued. Any notice of redemption[, except a notice of redemption in respect of a mandatory sinking fund redemption,] at the direction of the Corporation, may state that the redemption to be effected is conditioned upon the receipt by the Trustee on or prior to the Redemption Date of moneys sufficient to pay the principal of and premium, if any, and interest on the Series 2013 Bonds or portions thereof to be redeemed, and if such moneys are not so received, such notice shall be of no force or effect and such Series 2013 Bonds shall not be required to be redeemed. In the event that such notice contains such a condition and moneys sufficient to pay the principal of and premium, if any, and interest on such Series 2013 Bonds are not received by the Trustee on or prior to the Redemption Date,the redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. The Series 2013 Bonds shall be redeemed only in Authorized Denominations. If less than all the Series 2013 Bonds are called for redemption,the Series 2013 Bonds of each maturity to be so redeemed shall be called for redemption in the manner set forth in a certificate of the Corporation filed with the Trustee. If less than all of the Series 2013 Bonds of any one maturity are to be called for redemption,the Trustee shall select the Series 2013 Bonds of each such maturity to be redeemed by lot, each$5,000 portion of principal being counted as one Series 2013 Bond for this purpose;provided, however, that so long as the only Owner of the Series 2013 Bonds is a Securities Depository Nominee, such selection shall be made by the Securities Depository by lot in accordance with its operating rules and procedures. No redemption of less than all of the Series 2013 Bonds of a series at the time outstanding shall be made pursuant to the Series Resolution unless (i)the aggregate principal amount of such Series 2013 Bonds to be redeemed is equal to or greater than $100,000 and (ii)the Series 2013 Bonds are redeemed in Authorized Denominations. If less than all of a Series 2013 Bond is selected for redemption, the Owner thereof shall present and surrender such Series 2013 Bond to the Trustee for payment of the principal amount thereof so called for redemption, and the redemption premium, if any, on such principal amount, and the County shall, if necessary, execute and the Trustee shall authenticate and deliver to or upon the order of such Owner, without charge, for the unredeemed portion of the principal amount of the Series 2013 Bond so surrendered, a new Series 2013 Bond of the same maturity and designation, bearing interest at the same rate of any Authorized Denominations. Series 2013 Bonds presented and surrendered in accordance with the provisions hereof shall be canceled upon the surrender thereof. PPAB 2072845v7 A-4 Board of Commissioners Meeting 06/03/2013 14-2-28 On or before the date upon which Series 2013 Bonds are to be redeemed,the County shall deposit, or cause to be deposited, with the Trustee money or Defeasance Obligations, or a combination of both, that will be sufficient to pay on the Redemption Date the Redemption Price of, and interest accruing on, the Series 2013 Bonds or portions thereof to be redeemed on such Redemption Date. On the Redemption Date, notice having been given in the manner and under the conditions hereinabove provided, the Series 2013 Bonds or portions thereof called for redemption shall be due and payable at the Redemption Price provided therefor, plus accrued interest to such date (except in the case of a conditional redemption authorized by the Series Resolution if moneys are not so available), and if moneys sufficient to pay the Redemption Price of the Series 2013 Bonds or portions thereof to be redeemed plus accrued interest thereon to the Redemption Date are held by the Trustee in trust for the owners of the Series 2013 Bonds or portions thereof to be redeemed, interest on the Series 2013 Bonds or portions thereof called for redemption shall cease to accrue on such Redemption Date; such Series 2013 Bonds or portions thereof shall cease to be entitled to any benefits or security under the Bond Order or the Series Resolution or to be deemed Outstanding; and the owners of such Series 2013 Bonds or portions thereof shall have no rights in respect thereof except to receive payment of the Redemption Price thereof,plus accrued interest to the Redemption Date. The Bond Order provides for the issuance from time to time under the conditions, limitations and restrictions therein set forth of additional Indebtedness, including Indebtedness secured pari passu with the Series 2013 Bonds and all other Outstanding Bonds issued under the Bond Order as to the pledge, charge and lien upon the Net Revenues. The registered owner of this Bond shall have no right to enforce the provisions of the Bond Order or the Series Resolution, or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Bond Order or the Series Resolution, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Bond Order or the Series Resolution; provided, however, that any registered owner may institute action to enforce the payment of the principal of or the interest on this Bond. Upon the occurrence of certain events, and on the conditions, in the manner and with the effect set forth in the Bond Order, the principal of all Series 2013 Bonds then Outstanding under the Bond Order may become or may be declared due and payable before the respective stated maturities thereof,together with the interest accrued thereon. Modifications or alterations of the Bond Order or any bond order supplemental thereto, or the Series Resolution or any series resolution supplemental thereto, may be made only to the extent and in the circumstances permitted by the Bond Order and the Series Resolution. This Bond, notwithstanding the provisions for registration of transfer stated herein and contained in the Bond Order and the Series Resolution, at all times shall be and shall be understood to be an investment security within the meaning of and for all the purposes of Article 8 of the Uniform Commercial Code of North Carolina. This Bond is issued with the intent that the laws of the State of North Carolina shall govern its construction. All acts, conditions and things required to happen, exist and be performed precedent to and in the issuance of this Bond and the adoption of the Bond Order and the Series Resolution have happened, exist and have been performed as so required. Neither the members or officers of the County nor any person executing this Bond is liable personally hereon or subject to any personal liability or accountability by reason of the issuance thereof This Bond shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Bond Order or the Series Resolution until it shall have been authenticated by the execution by the Trustee of the certificate of authentication endorsed hereon. PPAB 2072845v7 A-5 Board of Commissioners Meeting 06/03/2013 14-2-29 IN WITNESS WHEREOF, the County of New Hanover has caused this Bond to be executed by the manual signatures of the Chairman of its Board of Commissioners and the Clerk to said Board and its official seal to be impressed hereon all as of the_day of June, 2013. COUNTY OF NEW HANOVER,NORTH CAROLINA By: Chairman of the Board of Commissioners By: Clerk to the Board of Commissioners (SEAL) PPAB 2072845v7 A-6 Board of Commissioners Meeting 06/03/2013 14-2-30 CERTIFICATE OF AUTHENTICATION Date of Authentication: This Bond is one of the Series 2013 Bonds designated and described in the provisions of the within-mentioned Bond Order and Series Resolution. U.S.BANK NATIONAL ASSOCIATION,Trustee By: Authorized Signatory PPAB 2072845v7 A-7 Board of Commissioners Meeting 06/03/2013 14-2-31 CERTIFICATE OF LOCAL GOVERNMENT COMMISSION The issuance of the within-mentioned Series 2013 Bonds has been approved under the provisions of The State and Local Government Revenue Bond Act of North Carolina, as amended. LOCAL GOVERNMENT COMMISSION OF NORTH CAROLINA By: Secretary PPAB 2072845v7 A-8 Board of Commissioners Meeting 06/03/2013 14-2-32 [FORM OF ASSIGNMENT] FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Please print or typewrite Name and Address, including Zip Code, and Federal Taxpayer Identification or Social Security Number of Assignee) the within Bond and all rights thereunder,and hereby irrevocably constitutes and appoints Attorney to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature guaranteed by: NOTICE: Signature must be guaranteed by a NOTICE: The signature to this assignment must Participant in the Securities Transfer Agent correspond with the name as it appears on the Medallion Program ("Stamp") or similar face of the within Bond in every particular, program. without alteration, enlargement or any change whatever. TRANSFER FEE MAY BE REQUIRED PPAB 2072845v7 A-9 Board of Commissioners Meeting 06/03/2013 14-2-33 BOARD APPROVAL DRAFT EIGHTH AMENDMENT TO LEASE AGREEMENT By and Between COUNTY OF NEW HANOVER, NORTH CAROLINA and NEW HANOVER REGIONAL MEDICAL CENTER Dated as of June 1, 2013 PPAB 2073610v4 Board of Commissioners Meeting 06/03/2013 14-3- 1 EIGHTH AMENDMENT TO LEASE AGREEMENT THIS EIGHTH AMENDMENT TO LEASE AGREEMENT, dated as of June 1, 2013 (this "Amendment"), is made by and between the COUNTY OF NEw HANOVER,NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), and NEw HANOVER REGIONAL MEDICAL CENTER, a nonprofit corporation organized and existing under the General Statutes of North Carolina (the "Corporation"), and amends the Lease Agreement dated as of October 1, 1993, by and between the County and the Corporation, as previously amended by the First Amendment to Lease Agreement dated as of June 15, 1996, the Second Amendment to Lease Agreement dated as of February 15, 1999, the Third Amendment to Lease Agreement dated as of December 1, 2005, the Fourth Amendment to Lease Agreement dated as of September 1, 2006, the Fifth Amendment to Lease Agreement dated as of October 1, 2008, a Sixth Amendment to Lease Agreement dated as of June 1, 2009 and a Seventh Amendment to Lease Agreement dated as of September 1, 2011 (as so amended,the "Lease"). WITNESSETH: WHEREAS,the County proposes to issue its Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 (the "Series 2013 Bonds") to currently refund the County's outstanding Variable Rate Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2005A-1, Series 2005A-2, Series 2005B-1 and Series 2005B-2 (collectively,the "Series 2005 Bonds"); and WHEREAS, under The State and Local Government Revenue Bond Act, Article 5, as amended, of Chapter 159 of the General Statutes of North Carolina (the "Act"), the County is authorized and empowered to issue revenue bonds for such purposes; and WHEREAS, the County adopted a Bond Order on October 6, 1993 authorizing the issuance of hospital revenue bonds, which was amended by a First Supplemental Bond Order adopted by the County on February 5, 1999, and a Second Supplemental Bond Order adopted by the County on December 7, 2005 (as so amended,the "Bond Order"); and WHEREAS, the County has determined that it is consistent with the purposes of the Act and in the public interest (a)to issue the Series 2013 Bonds pursuant to the Bond Order and a Series Resolution adopted by the County on June 6, 2013, for the purposes stated above and(b)to enter into this Amendment; and WHEREAS, the execution and delivery of this Amendment have been duly authorized by the County and the Corporation; and WHEREAS, all acts, notices and things required by the constitution and laws of the State and the Bylaws of the Corporation to happen, exist and be performed precedent to and in the execution and delivery of this Amendment have happened, exist and have been performed as so required, in order to make this Amendment a valid and binding agreement in accordance with its terms; and WHEREAS, each of the parties hereto represents that it is fully authorized to enter into and perform and fulfill the obligations imposed upon it under this Amendment and the Lease, and the parties are now prepared to execute and deliver this Amendment; Now, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration paid by each of the parties to the other, the receipt of which is hereby acknowledged, the County and the Corporation hereby agree as follows: PPAB 2073610v4 Board of Commissioners Meeting 06/03/2013 14-3-2 ARTICLE I DEFINITIONS Section 1.01 Definitions Unless elsewhere defined in this Amendment, all capitalized terms used in this Amendment shall have the meanings ascribed thereto in the Lease. The following terms shall have the following meanings herein and in the Lease as amended hereby: "Series 2013 Bonds"means the Bonds so designated by and issued under the Bond Order and the Series 2013 Resolution. "Series 2013 Resolution" means the Series Resolution adopted by the Board of Commissioners of the County on June 3, 2013. ARTICLE II REPRESENTATIONS Section 2.01 Representations by the County. The County represents that it has the power to enter into the transactions contemplated by this Amendment and to carry out its obligations hereunder; and that by proper action of its Board of Commissioners, the County has been duly authorized to execute and deliver this Amendment. The County further represents that it proposes to issue the Series 2013 Bonds that will mature, bear interest, be redeemable and have the other terms and provisions set forth in the Bond Order and the Series 2013 Resolution. Section 2.02 Representations by the Corporation The Corporation represents that it is a nonsectarian, nonprofit corporation, no part of the net earnings of which inures to the benefit of any private member or individual; that it has authority to lease the Existing Facilities and operate the Health Care System, and, by proper corporate action, has been duly authorized to execute and deliver this Amendment; and that the execution and delivery of this Amendment, its consummation of the transactions contemplated hereby and fulfillment of or compliance with the terms and conditions of this Amendment, do not conflict with or result in a breach of any of the terms, conditions or provisions of any corporate restriction, or any agreement or instrument to which the Corporation is now a party or by which it is bound, and do not constitute a default under any of the foregoing, or result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any of the property or assets of the Corporation under the terms of any instrument or agreement (other than this Amendment and the Bond Order). ARTICLE III AMENDMENTS TO LEASE Section 3.01 Amendment of Section 4.25 of the Lease- Section 4.25 of the Lease is hereby amended in its entirety to read as follows: Section 4.25. Secondary Market Disclosure. The Corporation agrees, for the benefit of the beneficial owners of the Series 2013 Bonds,to provide to the Municipal Securities Rulemaking Board(the WSRB"): (a) by not later than seven months after the end of each Fiscal Year of the Corporation, beginning with the Fiscal Year ending September 30, 2013 with respect to the Series 2013 Bonds, the audited financial statements of the Corporation for such Fiscal Year, if available, prepared in accordance with Section 159-39 of the General Statutes of North Carolina, as amended from time to time, or with any successor statute; or if such audited financial statements are not available by seven months after the end of such Fiscal Year, the unaudited financial statements of the Corporation for such Fiscal Year to be replaced subsequently by the audited financial statements of the Corporation to be delivered within 15 days after such audited financial statements become available for distribution; PPAB 2073610v4 2 Board of Commissioners Meeting 06/03/2013 14-3-3 (b) by not later than seven months after the end of each Fiscal Year, beginning with the Fiscal Year ending September 30, 2013 with respect to the Series 2013 Bonds,the financial and statistical data as of a date not earlier than the end of the preceding Fiscal Year for the type of information included under the following headings in Appendix A to the Official Statement dated the date of distribution thereof relating to the Series 2013 Bonds,to the extent such items are not included in the financial statements referred to in (a) above: (1) "Facilities and Services" (tables relating to the New Hanover Regional Medical Center therein); (2) "Medical Staff'; (3) "Utilization Statistics' (4) "Historical Long-Term Debt Service Coverage Ratios"; (5) "Liquidity"; (6) "Debt-to-Capitalization"; and (7) "Third-Party Reimbursement and Sources of Payment"; (c) in a timely manner not in excess of ten business days after the occurrence of the event, notice of any of the following events with respect to the Series 2013 Bonds, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults,if material; (3) unscheduled draws on any debt service reserves reflecting financial difficulties; (4) unscheduled draws on any credit enhancements reflecting financial difficulties; (5) substitution of any credit or liquidity providers,or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability,Notices of Proposed Issue (IRS From 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2013 Bonds, or other events affecting the tax status of the Series 2013 Bonds; (7) modification to the rights of the beneficial owners of the Series 2013 Bonds,if material; (8) call of any of the Series 2013 Bonds for redemption, other than mandatory sinking fund redemption, if material, and tender offers; (9) defeasances of any of the Series 2013 Bonds; (10) release, substitution or sale of any property securing repayment of the Series 2013 Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Corporation; (13) the consummation of a merger, consolidation, or acquisition involving the Corporation or the sale of all or substantially all of the assets of the Corporation, other than in the ordinary course of PPAB 2073610v4 3 Board of Commissioners Meeting 06/03/2013 14-3-4 business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; (14) appointment of a successor or additional Trustee or the change of name of the Trustee; and (d) in a timely manner, notice of a failure of the Corporation to provide required annual financial information described in (a) or(b)above on or before the date specified. The Corporation shall provide the documents referred to above to the MSRB in an electronic format as prescribed by the MSRB and accompanied by identifying information as prescribed by the MSRB. The Corporation may discharge its undertaking described above by transmitting the documents referred to above to any entity and by any method authorized or required by the U.S. Securities and Exchange Commission. If the Corporation fails to comply with the undertakings described above, the Trustee or any beneficial owner of the Series 2013 Bonds then outstanding may take action to protect and enforce the rights of all beneficial owners with respect to such undertakings, including an action for specific performance; provided, however,that failure to comply with such undertakings shall not be an Event of Default under the Lease, the Bond Order or the Series 2013 Resolution and shall not result in any acceleration of payment of the Series 2013 Bonds. All actions shall be instituted, had and maintained in the manner provided in this paragraph for the benefit of all beneficial owners of the Series 2013 Bonds then outstanding. The Corporation reserves the right to modify from time to time the information to be provided to the extent necessary or appropriate in the judgment of the Corporation,provided that: (a) any such modification may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, composition, nature or status of the Corporation; (b) the information to be provided, as modified, would have complied with the requirements of Rule 15c2-12 issued under the Securities Exchange Act of 1934 ("Rule 1.5c2-12") as of the date of the Official Statement with respect to the Series 2013 Bonds after taking into account any amendments or interpretations of Rule 15c2-12, as well as any changes in circumstances; and (c) any such modification does not materially impair the interests of the beneficial owners of the Series 2013 Bonds as determined either by parties unaffiliated with the Corporation (such as bond counsel), or by the approving vote of the registered owners of a majority in principal amount of the Series 2013 Bonds then Outstanding pursuant to the terms of the Bond Order and the Series 2013 Resolution as they may be amended from time to time. Any annual financial information containing the modified operating data or financial information is required to explain, in narrative form, the reasons for the amendments and the impact of the change in the type of operating data or financial information being provided. The undertaking described in this Section will terminate upon payment, or provision having been made for payment in a manner consistent with Rule 15c2-12, in full of the principal of and interest on all of the Series 2013 Bonds. ARTICLE IV MISCELLANEOUS Section 4.01 Multiple Counterparts This Amendment may be executed in multiple counterparts, each of which shall be regarded for all purposes as an original, constituting but one and the same instrument. PPAB 2073610v4 4 Board of Commissioners Meeting 06/03/2013 14-3-5 Section 4.02 Severability. If any one or more of the covenants, agreements or provisions of this Amendment shall be determined by a court of competent jurisdiction to be invalid, the invalidity of such covenants, agreements and provisions shall in no way affect the validity or effectiveness of the remainder of this Amendment or the Lease, as amended hereby, and this Amendment and the Lease, as amended hereby, shall continue in force to the fullest extent permitted by law. Section 4.03 Recordation of Amendment The Corporation covenants that it will cause this Amendment to be recorded and filed in the office of the New Hanover County Register of Deeds. Section 4.04 State Law Controlling. This Amendment shall be construed and enforced in accordance with the laws of the State of North Carolina. Section 4.05 Effective Date of this Amendment Notwithstanding that this Amendment is dated as of June 1, 2013, this Amendment shall take effect when it is fully executed and has been delivered to the parties hereto contemporaneously with the delivery of and payment for the Series 2013 Bonds. No obligation shall be imposed on the Corporation prior to the effective date of this Amendment. PPAB 2073610v4 5 Board of Commissioners Meeting 06/03/2013 14-3-6 IN WITNESS WHEREOF,the County has caused these presents to be signed in its name and on its behalf by the Chairman of its Board of Commissioners and its official seal to be hereunto affixed and attested by the Clerk to said Board,thereunto duly authorized; and the Corporation has caused these presents to be signed in its name and on its behalf by its President and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the 27th day of June, 2013. COUNTY OF NEW HANOVER,NORTH CAROLINA [SEAL] By: Chairman of the Board of Commissioners ATTEST: Clerk to the Board of Commissioners NEW HANOVER REGIONAL MEDICAL CENTER [SEAL] By: President and Chief Executive Officer ATTEST: Secretary PPAB 2073610v4 6 Board of Commissioners Meeting 06/03/2013 14-3-7 ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF THE COUNTY STATE OF NORTH CAROLINA COUNTY OF NEW HANOVER I, , a Notary Public of New Hanover County and State of North Carolina, Do HEREBY CERTIFY THAT[Woody White] and Sheila L. Schult ("Signatories"), personally came before me this day and acknowledged that they are the Chairman of the Board of Commissioners and Clerk to the Board of Commissioners, respectively, of the County of New Hanover, North Carolina, and that they, as Chairman of the Board of Commissioners and Clerk to the Board of Commissioners, respectively, being authorized to do so, executed the foregoing instrument on behalf of said County. I certify that the Signatories personally appeared before me this day, and (check one of the following) (I have personal knowledge of the identity of the Signatories); or (I have seen satisfactory evidence of the Signatories' identity, by a current state or federal identification with the Signatories' photograph in the form of (check one of the following) a driver's license or in the form of ); or (a credible witness has sworn to the identity of the Signatories). The Signatories acknowledged to me that he voluntarily signed the foregoing document for the purpose stated therein and in the capacity indicated. WITNESSmy hand and official stamp or seal this day of 12013. Notary Public Print Name: [Note: Notary Public must sign exactly as on notary seal] My Commission Expires: [NOTARY SEAL] (MUST BE FULLY LEGIBLE) PPAB 2073610v4 7 Board of Commissioners Meeting 06/03/2013 14-3-8 ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF THE CORPORATION STATE OF NORTH CAROLINA COUNTY OF NEW HANOVER I, , a Notary Public of New Hanover County and State of North Carolina, Do HEREBY CERTIFY THAT John K. Barto and Nancy S. Marks ("Signatories"), personally came before me this day and acknowledged that they are the President and Chief Executive Officer and Secretary, respectively of New Hanover Regional Medical Center, a North Carolina nonprofit corporation, and that they, as the President and Chief Executive Officer and Secretary, respectively, being authorized to do so, executed the foregoing instrument on behalf of said Corporation. I certify that the Signatories personally appeared before me this day, and (check one of the following) (I have personal knowledge of the identity of the Signatories); or (I have seen satisfactory evidence of the Signatories' identity, by a current state or federal identification with the Signatories' photograph in the form of (check one of the following) a driver's license or in the form of ); or (a credible witness has sworn to the identity of the Signatories). The Signatories acknowledged to me that he voluntarily signed the foregoing document for the purpose stated therein and in the capacity indicated. WITHSSmy hand and official stamp or seal this day of 12013. Notary Public Print Name: [Note: Notary Public must sign exactly as on notary seal] My Commission Expires: [NOTARY SEAL] (MUST BE FULLY LEGIBLE) PPAB 2073610v4 8 Board of Commissioners Meeting 06/03/2013 14-3-9 Draft No. 2 May 3, 2013 F'IFI~:LIMP,,'ARY OF..F°IC IAL s`F'1 `rEME�,.."r DA,r D 1 JF,v _a20 1: New Issue/Book-Entry-Only Ratings: Moody's: S&P: (See "RATINGS" herein.) In the opinion of Parker Poe Adams & Bernstein LLP, Bond Counsel, under existing law and assuming compliance by the County and the Corporation with certain requirements of the Internal Revenue Code of 1986, as amended, (1) interest on the Series 2013 Bonds (a) is excludable from gross income for federal income tax purposes and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (2) interest on the Series 2013 Bonds is exempt from State of North Carolina income taxation. See "TAX TREATMENT"herein. County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 [Hospital Logo] Dated: Date of Delivery Due: October 1,as shown on the inside cover The bonds being offered hereby (the "Series 2013 Bonds") are special obligations of the County of New Hanover, North Carolina (the "County") secured by a pledge of the Net Revenues (as defined herein) and the County's rights to receive Net Revenues. The Series 2013 Bonds are also secured by the money and securities in the funds and accounts held by U.S. Bank National Association (successor to First-Citizens Bank & Trust Company), as trustee (the "Trustee"), pursuant to a Bond Order adopted by the Board of Commissioners of the County on October 6, 1993, as amended (the "Bond Order"), and a Series Resolution adopted by said Board pursuant to the Bond Order on June 6, 2013 (the "Series Resolution"). The Series 2013 Bonds are being issued for the purpose of providing funds, together with other available funds,to (a) currently refund all of the outstanding Series 2005 Bonds (as defined herein), (b) finance certain termination payments in connection with the termination in whole or in part of certain interest rate hedging agreements entered into by New Hanover Regional Medical Center (the "Corporation") relating to the Series 2005 Bonds and (c) pay the costs incurred in connection with the sale and issuance of the Series 2013 Bonds. THE SERIES 2013 BONDS DO NOT CONSTITUTE A DEBT OF THE COUNTY FOR WHICH THE FAITH AND CREDIT AND TAXING POWER OF THE COUNTY ARE PLEDGED, AND THE ISSUANCE OF THE SERIES 2013 BONDS WILL NOT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATE THE COUNTY TO LEVY ANY TAX OR PLEDGE ANY FORM OF TAXATION FOR THE PAYMENT THEREOF. The Series 2013 Bonds will be initially issued as fully registered bonds and, when delivered, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York ("DTC"). So long as Cede & Co. is the registered owner of the Series 2013 Bonds, as nominee for DTC, references herein to registered owners or Holders shall mean Cede &Co. and shall not mean the beneficial owners of the Series 2013 Bonds. So long as Cede &Co. is the registered owner of the Series 2013 Bonds,the principal of and interest on the Series 2013 Bonds will be payable by the Trustee to Cede & Co., as nominee for DTC, which will in turn remit such principal and interest to the DTC participants for subsequent disbursement to the beneficial owners. See Appendix F hereto. Interest on the Series 2013 Bonds is payable semiannually on each April 1 and October 1, beginning October 1, 2013, at the rates shown on the inside front cover. The Series 2013 Bonds are subject to optional, extraordinary [and mandatory sinking fund] redemption prior to their maturity all as described herein. Board of Commissioners Meeting 06/03/2013 14-4- 1 The Series 2013 Bonds are offered subject to prior sale, when, as and if issued by the County and accepted by the Underwriters, subject to the approval of their validity by Parker Poe Adams & Bernstein LLP, Raleigh, North Carolina, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the County by Wanda M. Copley, Esq., Wilmington, North Carolina, County Attorney; for New Hanover Regional Medical Center (the "Corporation') by Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., Raleigh, North Carolina, counsel to the Corporation; and for the Underwriters by Womble Carlyle Sandridge &Rice, LLP, Raleigh, North Carolina, counsel to the Underwriters. It is expected that the Series 2013 Bonds will be available for delivery through the facilities of DTC on or about June 27, 2013. RBC CAPITAL MARKETS BofA MERRILL LYNCH June , 2013 * Preliminary; subject to change. Cover-2 Board of Commissioners Meeting 06/03/2013 14-4-2 MATURITY SCHEDULE* $ Serial Bonds Maturity Date Principal Interest (October 1) Amount Rate Yield CUSIP Number' [$ %Term Bonds due October 1, —Yield %, CUSIP Number' ] *Preliminary; subject to change. ' CUSIP® is a registered trademark of the American Bankers Association (the "ABA"). CUSIP based identifiers are assigned by CUSIP Global Services. CUSIP Global Services is managed on behalf of the ABA by Standard& Poor's Financial Services, LLC. The CUSIP numbers have been assigned by an organization not affiliated with the County, the Corporation, the Underwriters or the Trustee, and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of holders, and no representation is made as to the correctness of the CUSIP numbers printed above. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such issue or the use of secondary market financial products. None of the County, the Corporation, the Underwriters or the Trustee has agreed to, nor is there any duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers printed above. Board of Commissioners Meeting 06/03/2013 14-4-3 No dealer, broker, salesman or other person has been authorized to give any information or to make any representation other than those contained in this Official Statement in connection with the offering described herein, and, if given or made, such other information or representation must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the Series 2013 Bonds offered hereby, nor shall there be any offer or solicitation of such offer or sale of the Series 2013 Bonds in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. Neither the delivery of this Official Statement nor the sale of any of the Series 2013 Bonds implies that the information herein is correct as of any date subsequent to the date thereof. The information contained herein has been obtained from the County and the Corporation and other sources believed to be reliable. The information contained herein is subject to change after the date of this Official Statement, and this Official Statement speaks only as of its date. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The Underwriters intend to offer the Series 2013 Bonds to the public initially at the offering prices set forth on the inside cover page of this Official Statement, which may subsequently change without any requirement of prior notice. The Underwriters reserve the right to join with dealers and other underwriters in offering the Series 2013 Bonds to the public. The Underwriters may offer and sell the Series 2013 Bonds to certain dealers (including dealers depositing the Series 2013 Bonds into investment trusts) at prices lower than the public offering price. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2013 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. i Board of Commissioners Meeting 06/03/2013 14-4-4 TABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................................... THESERIES 2013 BONDS........................................................................................................................... Authorization............................................................................................................................................ General ..................................................................................................................................................... RedemptionProvisions............................................................................................................................. SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2013 BONDS......................................... General ..................................................................................................................................................... Pledgeof Net Revenues............................................................................................................................ Fundsand Accounts ................................................................................................................................. Applicationof Revenues .......................................................................................................................... LeaseAgreement...................................................................................................................................... AdditionalIndebtedness........................................................................................................................... REPLACEMENT MASTER AGREEMENT................................................................................................. PLANOF FINANCE...................................................................................................................................... ESTIMATED SOURCES AND USE OF FUNDS......................................................................................... ANNUAL DEBT SERVICE REQUIREMENTS........................................................................................... THECOUNTY............................................................................................................................................... BONDHOLDERS' RISKS............................................................................................................................. General ..................................................................................................................................................... Mergers,Acquisitions and Other Affiliations .......................................................................................... Substitutionof Security............................................................................................................................ HealthCare Reform.................................................................................................................................. Third-Party Payors.................................................................................................................................... Indigent Care and Uninsured and Underinsured Patients......................................................................... HealthCare Regulations........................................................................................................................... Civil and Criminal Enforcement Efforts .................................................................................................. Maintenanceof Tax-Exempt Status ......................................................................................................... Malpractice Claims and General Liability Insurance............................................................................... Staffing..................................................................................................................................................... Certificates of Need, Licenses, Certifications and Accreditations........................................................... UnionActivity.......................................................................................................................................... Other Factors Related to Health Care Facilities....................................................................................... VariableRate Indebtedness...................................................................................................................... Interest Rate Swap Transactions............................................................................................................... LITIGATION.................................................................................................................................................. LEGALMATTERS........................................................................................................................................ TAXTREATMENT....................................................................................................................................... General ..................................................................................................................................................... OriginalIssue Discount............................................................................................................................ OriginalIssue Premium............................................................................................................................ CONTINUINGDISCLOSURE...................................................................................................................... LEGALITY FOR INVESTMENT.................................................................................................................. UNDERWRITING ......................................................................................................................................... RATINGS ....................................................................................................................................................... INDEPENDENTAUDITORS........................................................................................................................ MISCELLANEOUS ....................................................................................................................................... ii Board of Commissioners Meeting 06/03/2013 14-4-5 Appendix A Certain Information Concerning the Corporation and the Health Care System Appendix B Audited Financial Statements of New Hanover Regional Medical Center Appendix C Definitions and Summary of Certain Provisions of the Bond Order,the Series Resolution and the Lease Agreement Appendix D The North Carolina Local Government Commission Appendix E Form of Opinion of Bond Counsel Appendix F DTC's Book-Entry-Only System in Board of Commissioners Meeting 06/03/2013 14-4-6 State of North Carolina Department of State Treasurer JANET COWELL State and Local Government Finance Division T.VANCE HOLLOMAN Treasurer and the Local Government Commission Deputy Treasurer Official Statement of the North Carolina Local Government Commission Concerning County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 INTRODUCTION This Official Statement, including the cover page and the Appendices, is provided to furnish information relating to the issuance of the $ * County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 (the "Series 2013 Bonds"). The Series 2013 Bonds are being issued pursuant to The State and Local Government Revenue Bond Act, as amended (the "Act"), a Bond Order adopted by the Board of Commissioners of the County (the "Board") on October 6, 1993, as amended by a First Supplemental Bond Order adopted by the Board on February 5, 1999, and a Second Supplemental Bond Order adopted by the Board on December 7, 2005 (collectively, the "Bond Order"), and a Series Resolution adopted by the Board pursuant to the Bond Order on June 6, 2013 (the "Series Resolution"). This introduction provides certain limited information to serve as a guide to the Official Statement and is expressly qualified by the Official Statement as a whole. Investors should make a full review of the entire Official Statement and the documents summarized or described herein. For the definition of certain capitalized terms used herein and a summary of certain provisions of the Bond Order and the Series Resolution, see Appendix C hereto. Capitalized terms used herein and not otherwise defined have the same meanings given such terms in the Bond Order and the Series Resolution unless otherwise indicated. The County has heretofore issued under the Bond Order (a) $79,070,000 Variable Rate Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2005A-1, Series 2005A-2, Series 2005B-1 and Series 2005B-2 (collectively, the "Series 2005 Bonds"), $58,560,000 of which are currently outstanding and are being refunded in whole with the proceeds of the Series 2013 Bonds, (e) $120,000,000 Variable Rate Hospital Revenue Bonds (New Hanover Regional Medical Center Project), Series 2006A and Series 2006B (collectively, the "Series 2006 Bonds"), $116,015,000 of which are currently outstanding, (f) $40,000,000 Variable Rate Hospital Revenue Bonds (New Hanover Regional Medical Center Project), Series 2008A and Series 2008B (collectively, the "Series 2008 Bonds"), $37,020,000 of which are currently outstanding, and $93,965,000 Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2011 (the "Series 2011 Bonds"), $90,835,000 of which are currently outstanding. On June 4, 2009, the interest rate determination method for the Series 2006 Bonds was converted to fixed rates to their respective maturities. Securi ty. Under the Bond Order,the County is required to make payments from Net Revenues (as defined herein) sufficient to pay the principal of and interest on the Series 2013 Bonds as they become due and payable. The obligation of the County to make such payments is secured by a pledge of the Net Revenues of the Health Care System (hereinafter defined). The Series 2013 Bonds do not constitute a debt of the County for which the faith and credit and taxing power of the County are pledged, and the issuance of the Series 2013 Bonds will not directly or indirectly or contingently obligate the County to levy any tax or pledge any form of taxation for the payment thereof. * Preliminary; subject to change. Board of Commissioners Meeting 06/03/2013 14-4-7 The Series 2013 Bonds are secured on a parity basis with the Series 2006 Bonds, the Series 2008 Bonds, the Series 2011 Bonds and any other bonds which may be subsequently issued pursuant to the Bond Order. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013 BONDS"herein. The Corporation and the Lease Agreement. New Hanover Regional Medical Center (the "Corporation") is a North Carolina nonprofit corporation established in 1967. Pursuant to a Lease Agreement, dated as of October 1, 1993, as amended (the "Lease Agreement"), between the County and the Corporation, the Corporation has agreed to operate and maintain certain facilities owned by the County, as well as to operate certain health care facilities owned by the Corporation at which health care or medical services are provided(collectively,the "Health Care System"). The portion of the Health Care System that is owned by the County is leased to the Corporation pursuant to the Lease Agreement. Pursuant to the Lease Agreement, the Corporation has agreed to collect on behalf of the County and deliver to the Trustee the Revenues for application in accordance with the Bond Order and any Series Resolution for the payment of all Bonds issued under the Bond Order, subject only to their application to the payment of Operating Expenses. The Corporation has also agreed in the Lease Agreement to pay certain fees and expenses relating to the Bonds. The Lease Agreement expires on October 2, 2038, subject to certain optional renewal rights of the Corporation. See "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2013 BONDS" herein and "SUMMARY OF CERTAIN PROVISIONS OF THE LEASE AGREEMENT"in Appendix C hereto. Purpose. The Series 2013 Bonds are being issued for the purpose of providing funds, together with any other available funds, to (a) currently refund all of the County's outstanding Series 2005 Bonds as described under "PLAN OF FINANCE" herein, (b) finance certain termination payments in connection with the termination in whole or in part of certain interest rate hedging agreements entered into by the Corporation relating to the Series 2005 Bonds as described under"PLAN OF FINANCE"herein and (c) pay the costs incurred in connection with the sale and issuance of the Series 2013 Bonds. Details of Series 2013 Bonds. The Series 2013 Bonds will be dated the date of delivery thereof and will bear interest from their date at the interest rates as set forth on the inside cover page hereof. The Series 2013 Bonds will mature, subject to prior redemption as described herein, as set forth on the inside cover page hereof Interest on the Series 2013 Bonds will be payable semiannually on each April 1 and October 1, beginning October 1, 2013. The Series 2013 Bonds are subject to optional, extraordinary [and mandatory sinking fund] redemption prior to their maturity all as described herein. The Series 2013 Bonds will be issued as fully registered bonds in book-entry-only form,without physical delivery of bond certificates to the beneficial owners of the Series 2013 Bonds and, when delivered, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York ("DTC"). The Paying Agent will make payment of principal of and interest on the Series 2013 Bonds to DTC, which will in turn remit such payment to its participants for subsequent distribution to the beneficial owners of the Series 2013 Bonds. Individual purchases of the Series 2013 Bonds by the beneficial owners will be made in denominations of$5,000 and any integral multiple thereof("Authorized Denominations"). See Appendix F hereto for a more complete description of DTC and the book-entry-only system for the Series 2013 Bonds. Continuing Disclosure. The Corporation will agree in the Eighth Amendment to Lease Agreement, dated as of June 1, 2013 (the "Eighth Amendment"), to provide certain information on an ongoing basis and to satisfy other continuing disclosure obligations as required by Rule 15c2-12 issued under the Securities Exchange Act of 1934, as amended. See "CONTINUING DISCLOSURE"herein. Tax Status. See "TAX TREATMENT"herein. Professionals. RBC Capital Markets, LLC, New York, New York, and Merrill Lynch, Pierce, Fenner & Smith, Incorporated, New York, New York, are underwriting the Series 2013 Bonds. Parker Poe Adams & Bernstein LLP, Raleigh, North Carolina, is serving as Bond Counsel to the County. Wanda M. Copley, Esq., Wilmington, North Carolina, is the County Attorney. Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., Raleigh, North Carolina, is serving as counsel to the Corporation. Womble Carlyle Sandridge & Rice, LLP, Raleigh, North Carolina, is 2 Board of Commissioners Meeting 06/03/2013 14-4-8 serving as counsel to the Underwriters. U.S. Bank National Association, Raleigh, North Carolina is serving as Trustee and Paying Agent for the Series 2013 Bonds. THE SERIES 2013 BONDS Authorization The Series 2013 Bonds will be issued pursuant to the Act, the Bond Order and the Series Resolution. The issuance of the Series 2013 Bonds received the required approval of the North Carolina Local Government Commission (the "LGC") on June 4, 2013. The LGC is a division of the State Treasurer's office charged with general oversight of local government finance in North Carolina. Its approval is required for all local government bond issues and substantially all other local government financing arrangements in North Carolina. In determining whether to allow bonds to be issued under the Act,the LGC has been given wide statutory discretion to consider the need for and feasibility of the projects to be financed,the local government's capability to repay the amount financed from the pledged revenue sources and the local government's general compliance with State budget and finance laws. Under the Act, the LGC is also responsible, with the issuing unit's approval, for selling bonds issued pursuant to the Act. See Appendix D hereto for additional information on the LGC and its powers and duties. General The Series 2013 Bonds will be dated the date of delivery thereof and will bear interest from their date at the interest rates as set forth on the inside cover page hereof, calculated on the basis of a 360-day year consisting of twelve 30-day months. The Series 2013 Bonds will mature, subject to prior redemption as described herein, as set forth on the inside cover page hereof Interest on the Series 2013 Bonds will be payable on October 1, 2013 and semiannually thereafter on each April 1 and October 1. The Series 2013 Bonds are subject to optional, extraordinary [and mandatory sinking fund] redemption prior to their maturity all as described herein. The Series 2013 Bonds will be fully registered bonds in book-entry-only form, without physical delivery of bond certificates to the beneficial owners of the Series 2013 Bonds and will be registered in the name of Cede & Co., as registered owner and nominee for DTC. The Paying Agent will make payment of principal of and interest on the Series 2013 Bonds to DTC, which in turn remits such payment to its participants for subsequent distribution to the beneficial owners of the Series 2013 Bonds. Individual purchases of the Series 2013 Bonds by the beneficial owners will be made in denominations of$5,000 and any whole multiple thereof("Authorized Denominations"). See Appendix F hereto for a more complete description of DTC and the book-entry-only system for the Series 2013 Bonds. The principal of, premium, if any, and interest on and the redemption price of the Series 2013 Bonds will be payable in any currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts. Interest on the Series 2013 Bonds will be paid to the person whose name appears on the bond register as the Holder thereof as of the close of business on the Record Date for each Interest Payment Date. In the event the Series 2013 Bonds are no longer held in the book-entry-only-system, payment of the interest shall be made by check mailed by first class mail to such Holder at its address as it appears on such registration books, or, upon the written request of any Holder of at least $1,000,000 in aggregate principal amount of the Series 2013 Bonds, submitted to the Trustee at least five Business Days prior to the Record Date, by wire transfer in immediately available funds to an account within the United States of America designated by such Holder. Redemption Provisions Optional Redemption. The Series 2013 Bonds maturing on or after October 1, 20 will be subject to redemption at the option of the County, at the direction of the Corporation, in whole or in part on any date on or after October 1, 20 , at a redemption price equal to 100% of the principal amount of the Series 2013 Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption, all in the manner provided in the Bond Order and the Series Resolution. 3 Board of Commissioners Meeting 06/03/2013 14-4-9 Extraordinary Redemption. The Series 2013 Bonds are subject to redemption by the County, at the direction of the Corporation, in whole or in part on any date at a redemption price equal to 100%of the principal amount thereof, plus accrued interest to the redemption date, to the extent available, from Net Proceeds resulting from certain casualty insurance carried or maintained with respect to the Health Care System as required by the Bond Order, and Net Proceeds resulting from Eminent Domain proceedings pursuant to the Bond Order,to the extent such Net Proceeds exceed 10% of Net Book Value. The Series 2013 Bonds are also subject to redemption by the County, at the direction of the Corporation, in whole only on any date to the extent available from money deposited by the Corporation in the Redemption Fund at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date in the event that, by reason of any change in any federal or State law or of any legislative, administrative or judicial action or administrative failure of action, (i) the Lease Agreement becomes unenforceable or impossible to perform without unreasonable delay or(ii) unreasonable burdens or excessive liabilities are imposed on the County or the Corporation, including, without limitation, the imposition of federal, state or other ad valorem property, income or other taxes not being imposed on the date of the Lease Agreement. [Mandatory Sinking Fund Redemption. The Series 2013 Bonds maturing on October 1, 20 will be subject to mandatory sinking fund redemption on October 1 in the years and principal amounts set forth below at a redemption price equal to 100% of the principal amount of the Series 2013 Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, all in the manner provided in the Bond Order and Series Resolution: Year Amount *Maturity] [To be discussed with working group.] [Purchase in Lieu of Optional Redemption. In the event the Series 2013 Bonds have been called for optional redemption,the County, at the direction of the Corporation,will have the right to purchase such Series 2013 Bonds in lieu of redemption thereof, at a price equal to the applicable redemption price of the Series 2013 Bonds so called for redemption, on the date such Series 2013 Bonds have been so called for optional redemption, and the payment of the redemption price of the Series 2013 Bonds so called for redemption will be deemed in such event to be the payment of the purchase price of such Series 2013 Bonds to be purchased in lieu of such optional redemption and such Series 2013 Bonds may, at the option of the County, at the direction of the Corporation, remain outstanding or be cancelled. To exercise such right to purchase the Series 2013 Bonds in lieu of optional redemption,the County, at the direction of the Corporation,will give written notice of its intent to purchase such Series 2013 Bonds to the Trustee not later than 12:00 noon, New York City time, no later than the Business Day immediately preceding the applicable redemption date,which notice will state whether such Series 2013 Bonds are to remain outstanding or be cancelled, and the County shall promptly confirm its purchase thereof in a written notice delivered to the Trustee.] General Redemption Provisions. The Series 2013 Bonds shall be redeemed only in Authorized Denominations. If less than all the Series 2013 Bonds are called for redemption,the Series 2013 Bonds of each maturity to be so redeemed shall be called for redemption in the manner set forth in a certificate of the Corporation filed with the Trustee. If less than all of the Series 2013 Bonds of any one maturity are to be called for redemption, the Trustee shall select the Series 2013 Bonds of each such maturity to be redeemed by lot, each $5,000 portion of principal being counted as one Series 2013 Bond for this purpose; provided, however, that so long as the only Owner of the Series 2013 Bonds is a Securities Depository Nominee, such selection shall be made by the Securities Depository by lot in accordance with its operating rules and procedures. Not less than 30 days but not more than sixty 60 days before the redemption date of any Series 2013 Bonds, whether such redemption be in whole or in part,the Trustee shall cause a notice of any redemption signed by the Trustee to be mailed, postage prepaid, to all Holders owning Series 2013 Bonds to be redeemed in whole or in part provided that notice to DTC shall be sent in accordance with its policies and procedures. Failure to mail any such notice to any Holder 4 Board of Commissioners Meeting 06/03/2013 14-4- 10 or any defect in any notice so mailed shall not affect the validity of the proceedings for the redemption of the Series 2013 Bonds of any other Holders to whom notice was properly given. At least 30 days before the redemption date, such notice shall be also given by first class mail, postage prepaid,to the LGC. Neither failure to give any such notice nor any defect in any such notice so given to the LGC shall affect the sufficiency of the proceedings for the redemption of such Series 2013 Bonds. Any notice of redemption, [except a notice of redemption in respect of a mandatory sinking fund redemption,] at the direction of the Corporation, may state that the redemption to be effected is conditioned upon the receipt by the Trustee on or prior to the redemption date of moneys sufficient to pay the principal of and interest on the Series 2013 Bonds or portions thereof to be redeemed, and if such moneys are not so received, such notice shall be of no force or effect and such Series 2013 Bonds shall not be required to be redeemed. In the event that such notice contains such a condition and moneys sufficient to pay the principal of and interest on such Series 2013 Bonds are not received by the Trustee on or prior to the redemption date,the redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. On or before the date upon which Series 2013 Bonds are to be redeemed,the County shall deposit, or cause to be deposited, with the Trustee money or Defeasance Obligations, or a combination of both, that will be sufficient to pay on the redemption date the redemption price of, and interest accruing on, the Series 2013 Bonds or portions thereof to be redeemed on such redemption date. On the redemption date, notice having been given in the manner and under the conditions hereinabove provided, the Series 2013 Bonds or portions thereof called for redemption shall be due and payable at the redemption price provided therefor,plus accrued interest to such redemption date (except in the case of a conditional redemption if moneys are not so available), and if moneys sufficient to pay the redemption price of the Series 2013 Bonds or portions thereof to be redeemed plus accrued interest thereon to the redemption date are held by the Trustee in trust for the owners of the Series 2013 Bonds or portions thereof to be redeemed, interest on the Series 2013 Bonds or portions thereof called for redemption shall cease to accrue on such redemption date; such Series 2013 Bonds or portions thereof shall cease to be entitled to any benefits or security under the Bond Order or the Series Resolution or to be deemed Outstanding; and the owners of such Series 2013 Bonds or portions thereof shall have no rights in respect thereof except to receive payment of the redemption price thereof,plus accrued interest to the redemption date. SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2013 BONDS General The Series 2013 Bonds will be special obligations of the County, secured by and payable from the Net Revenues of the Health Care System and, under certain circumstances, the proceeds of the Series 2013 Bonds, investment earnings and certain other proceeds. Neither the credit nor the taxing power of the County is pledged for the payment of principal of or interest on the Series 2013 Bonds, and no Holder of the Series 2013 Bonds has the right to compel the exercise of the taxing power by the County or the forfeiture of any of its property other than the forfeiture of its Net Revenues in connection with any default on the Series 2013 Bonds. Pledge of Net Revenues As security for the payment of the Series 2013 Bonds,pursuant to the Bond Order,the County has pledged to the Holders thereof, subject to Permitted Liens and to the application of Revenues to pay Operating Expenses, (a) Revenues and (b) the right to receive the same. As additional security for the payment of the Series 2013 Bonds, pursuant to the Series Resolution,the County has pledged to the Holders thereof,the money and Investment Obligations in any and all of the funds and accounts established thereunder. With respect to the security pledged pursuant to the Bond Order, the Series 2013 Bonds are secured on a parity basis with the Series 2006 Bonds, the Series 2008 Bonds, the Series 2011 Bonds and any other Bonds which may be hereafter issued pursuant to the Bond Order or any other Indebtedness secured pan passu therewith. Payments owed by the Corporation under the Swap Agreements (as defined under "PLAN OF 5 Board of Commissioners Meeting 06/03/2013 14-4- 11 FINANCE" herein) are not secured by a pledge of the Revenues of the Health Care System and are each a general unsecured obligation of the Corporation. The County has covenanted to cause Net Revenues to be delivered periodically to the Trustee sufficient in the aggregate to enable the Trustee to make deposits to the Bond Fund to meet the annual debt service requirements of the Series 2013 Bonds, including the mandatory sinking fund redemption requirements. Funds and Accounts The Bond Order provides for the creation of the Operating Fund. Each Series Resolution for a particular Series of Bonds may provide for the creation of such additional funds and accounts as the County shall determine,which funds and accounts shall provide security, to the extent permitted by law, only for the Series of Bonds issued under such Series Resolution. With the exception of the Operating Fund, all funds and accounts shall be established with and held by the Trustee. The money in each of such funds and accounts (other than the Operating Fund) shall be held in trust and applied as provided in the Bond Order as described below, and pending such application, shall be subject to a lien and charge in favor of the Holders of the Series of Bonds issued under such Series Resolution and held for the further security of such Holders, all as provided in the Bond Order and the applicable Series Resolution. Operating Fund. The Operating Fund is held by a depositary selected and administered by the Corporation and is not a Trustee-held fund. Upon the funding of the Operating Fund as described under "Application of Revenues" below, the Operating Expenses will be paid on behalf of the County from the Operating Fund as the same become due and payable in conformity with applicable law. Bond Fund. The Bond Fund for the Series 2013 Bonds created by the Series Resolution is held by the Trustee and is composed of the Interest Account, the Principal Account and the Sinking Fund Account. Moneys held in the Interest Account,the Principal Account and the Sinking Fund Account are pledged to, and are to be applied solely for,the payment of the principal of(whether at maturity or pursuant to mandatory sinking fund redemption) and interest on the Series 2013 Bonds and do not secure any other Series of Bonds or any other Indebtedness secured on a parity with the Bonds. Redemption Fund. In the event of a deposit with the Trustee by the County of moneys from any other source for redeeming Series 2013 Bonds or the purchase of Series 2013 Bonds for cancellation, except as otherwise provided in the Series Resolution, such moneys shall be deposited in the Redemption Fund. Moneys on deposit in the Redemption Fund shall be used for the redemption or purchase of Series 2013 Bonds in accordance with the provisions of the Series Resolution. Expense Fund. A portion of the proceeds of the Series 2013 Bonds will be deposited in the Expense Fund created by the Series Resolution and held by the Trustee. Amounts deposited in the Expense Fund, including investment earnings thereon,will be used to pay the costs of issuance of the Series 2013 Bonds. Application of Revenues If (a) no Event of Default has occurred and is continuing under the Bond Order and (b) the Long-Term Debt Service Coverage Ratio is not less than 1.10 as required by the Bond Order, at the times specified in the applicable Series Resolution, the County shall deposit or cause to be deposited with the Trustee the amounts required to satisfy the requirements of the applicable Series Resolution (subject to any credits permitted by such Series Resolution). If an Event of Default under the Bond Order has occurred and is continuing, or if the Long-Term Debt Service Coverage Ratio for two consecutive Fiscal Years is less than 1.10 as required by the Bond Order, the County shall cause all Revenues to be deposited with the Trustee as received. The Trustee is required to apply Revenues first to the Operating Fund in such amounts as it shall determine to pay Operating Expenses and thereafter to make deposits pro rata to any funds and accounts created by any Series Resolution and to any payments of principal or interest due with respect to other Indebtedness that is secured by the Net Revenues on a parity with the Bonds. All Revenues shall continue to be deposited with the Trustee as received until all Events of Default have been cured to the satisfaction of the Trustee and the Long-Term Debt Service Coverage Ratio shall be not less than the amount required by the Bond Order. 6 Board of Commissioners Meeting 06/03/2013 14-4- 12 See "SUMMARY OF CERTAIN PROVISIONS OF THE BOND ORDER AND THE SERIES RESOLUTION— Certain Covenants and Representations — Rates and Charges" in Appendix C hereto for a detailed description of the rate covenant established by the Bond Order. Lease Agreement The portion of the Health Care System that is owned by the County is leased to the Corporation pursuant to the Lease Agreement. Pursuant to the Lease Agreement, the Corporation has agreed to collect on behalf of the County and deliver to the Trustee the Revenues for application in accordance with the Bond Order and any Series Resolution for the payment of all Bonds issued under the Bond Order, subject only to their application to the payment of Operating Expenses. The Corporation has also agreed in the Lease Agreement to pay certain fees and expenses relating to the Bonds. The Lease Agreement expires on October 2, 2038, subject to certain optional renewal rights of the Corporation. The County nevertheless has retained the right to terminate the Lease Agreement with the Corporation at any time upon 90 days' written notice after a public hearing. Upon such a termination, the County has agreed, pursuant to the Bond Order, to use its best efforts to enter into a new lease for operation of such portion of the Health Care System owned by the County or to fix rates, fees and charges for such portion of the Health Care System in order to meet the County's obligations under the Bond Order. See "SUMMARY OF CERTAIN PROVISIONS OF THE LEASE AGREEMENT" in Appendix C hereto. Additional Indebtedness Under the conditions and limitations set forth in the Bond Order and without the approval or consent of the Holders of Bonds or the holders of any other Indebtedness, the County may issue or incur Indebtedness secured by a pledge, charge and lien upon the Net Revenues on a parity with the Series 2006 Bonds,the Series 2008 Bonds,the Series 2011 Bonds and the Series 2013 Bonds. See "SUMMARY OF CERTAIN PROVISIONS OF THE BOND ORDER AND THE SERIES RESOLUTION — Certain Covenants and Representations - Limitation on Indebtedness" in Appendix C hereto. REPLACEMENT MASTER AGREEMENT The County, without the consent of, or notice to, the Bondholders, may replace the Bond Order with an existing or new bond indenture or similar document ("Replacement Master Agreement") by which the County, or if the County is not a party or is not the only party thereto, such other party, has agreed to be bound; provided, however, that after such replacement,the then current rating on the Bonds will not be withdrawn or reduced below the then current rating category (without regard to any gradations by numerical qualifier or otherwise within such rating category) by any Rating Agency as a result of such substitution. This and other conditions for such substitution are described in "SUMMARY OF CERTAIN PROVISIONS OF THE BOND ORDER AND THE SERIES RESOLUTION — Certain Covenants and Representations -Replacement of Bond Order"in Appendix C hereto. If a Replacement Master Agreement shall become effective, Bonds Outstanding under the Bond Order thereafter shall be deemed issued and outstanding under, and subject to, the terms and provisions of such Replacement Master Agreement and no longer Outstanding under or subject to the Bond Order. No such replacement can become effective without the prior written consent of the bond insurers for the Series 2006 Bonds while such Series 2006 Bonds are outstanding. Any such replacement of the Bond Order may result in a reduction or material alteration in the covenants and other provisions provided to secure payment of the Series 2013 Bonds. PLAN OF FINANCE The Series 2013 Bonds are being issued to provide funds, together with other available funds, to (a) currently refund all of the outstanding Series 2005 Bonds (the "Refunded Bonds"), (b) finance certain termination payments in connection with the termination in whole or in part of the Swap Agreements (as defined below) and (c) pay the costs incurred in connection with the sale and issuance of the Series 2013 Bonds. 7 Board of Commissioners Meeting 06/03/2013 14-4- 13 A portion of the proceeds of the Series 2013 Bonds, together with other available funds of the Corporation, will be applied to redeem all of the Refunded Bonds on the date of issuance of the Series 2013 Bonds. The Refunded Bonds will be redeemed at a redemption price equal to 100% of the principal amount of such Refunded Bonds, plus accrued interest to the redemption date. A portion of the proceeds of the Series 2013 Bonds will be also be used to make certain termination payments relating to [all or a portion] of the following interest rate swap agreements relating to the Series 2005 Bonds: (a) the ISDA Master Agreement and related Schedule, dated as of October 17, 2005, between the Royal Bank of Canada and the Corporation, together with (i) a transaction confirmation, dated as of October 17, 2005, with a term expiring October 1, 2023 and (ii) a transaction confirmation, dated as of October 17, 2005, with a term expiring on October 1, 2026; and (b) the ISDA Master Agreement and related Schedule, dated as of October 17, 2005,between Merrill Lynch Capital Services Inc. and the Corporation, together with (i) a transaction confirmation, dated as of October 17, 2005, with a term expiring October 1, 2023 and (ii) a transaction confirmation, dated as of October 17, 2005,with a term expiring on October 1, 2026 (collectively,the "Swap Agreements"). 8 Board of Commissioners Meeting 06/03/2013 14-4- 14 ESTIMATED SOURCES AND USE OF FUNDS The proceeds to be received from the sale of the Series 2013 Bonds, together with other available funds, will be applied substantially as shown below: Sources Par amount of Series 2013 Bonds $ Net Original Issue [Premium/Discount] [Corporation Contribution] Total $ Uses Redemption of the Refunded Bonds $ Termination Payments on Swap Agreements Costs of Issuance' Total $ ' Includes underwriters' discount, legal fees, printing costs, rating agency fees, fees and expenses of the Trustee and miscellaneous fees and expenses. 9 Board of Commissioners Meeting 06/03/2013 14-4- 15 ANNUAL DEBT SERVICE REQUIREMENTS The table on the following page sets forth, for each 12-month period ending October 1, the amount required in such period for the payment of debt service on the Series 2006 Bonds,the Series 2008 Bonds,the Series 2011 Bonds and the Series 2013 Bonds and total debt service. Totals may not foot due to rounding. Series 2013 Bonds Twelve Month Period Ending Series 2006, October 1 2008 and 2011 Bonds' 2,3 Principal Interest Total4 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Total Includes principal and interest. For the twelve month period ending October 1,2013,includes only those payments due following the issuance of the Series 2013 Bonds. Excludes debt service on the Refunded Bonds. 2 Assumes that the Series 2008 Bonds bear interest at a rate of[3.50]%per annum. [Note: This assumed rate may,for certain maturities,reflect the fixed interest rate on the unterminated portion of the Swap Agreements transferred to the Series 2008 Bonds.] s The Corporation has also incurred a long-term obligation with respect to a licensing agreement for certain information systems software and related improvements. As of[June 30,20121, such obligation was outstanding in the principal amount of$ with final payment due in September 2015. The Corporation's obligations with respect to the licensing agreement are not secured by a pledge of the Net Revenues and are not included in this table. [To be updated as necessary][Also include any additional debt obligations,if any.] 10 Board of Commissioners Meeting 06/03/2013 14-4- 16 THE COUNTY The County is located in southeastern coastal North Carolina with a land area totaling approximately 220 square miles, of which 21 square miles consist of water and wetlands. The North Carolina Department of Commerce estimated the 2012 population of the County to be 209,234. For further information relating to the County, see "The County" in Appendix A hereto. BONDHOLDERS' RISKS [To be further updated as necessary.] General The Series 2013 Bonds are limited obligations of the County payable solely from, and secured by a pledge of,the Net Revenues. Therefore, payment of the Series 2013 Bonds will ultimately depend upon the County and the Corporation's ability to generate Revenues with respect to the Health Care System sufficient to provide for payment of the Series 2013 Bonds and all other Bonds and other Indebtedness secured on a parity with the Series 2013 Bonds after paying Operating Expenses. No representation or assurance can be made that Net Revenues will be realized by the Corporation in amounts sufficient to pay maturing principal of and interest on the Series 2013 Bonds. The Corporation's ability to generate sufficient Net Revenues is subject, among other things, to the capabilities of management of the Corporation and future economic and other conditions which are unpredictable, and may be adversely affected by a wide variety of future events, including the Corporation's ability to provide services required or expected by patients, competition, changes in the economic conditions of or demand for medical treatment in the Corporation's service area, rising costs, governmental regulation and control by third-party payors, both governmental and private. Currently both the federal and State governments have extensive powers to regulate the operation of the Corporation, control the flow of revenues thereto, limit its expansion, and even control and restrict the services provided by the Corporation. As discussed below,these powers may be expanded in the future. The following are some of many factors that may affect the operations and economic well-being of the Health Care System. Mergers,Acquisitions and Other Affiliations The County and the Corporation may consider certain offers of merger, acquisitions, divestures or other affiliations with other health care providers. The Bond Order contains only limited restrictions on such transactions (although governmental and other third party approvals may also be required in connection therewith). No assurances can be given that any such mergers, acquisitions, divestitures or other affiliations would not have a material financial impact on the County and the Corporation. Substitution of Security The County, without the consent of, or notice to, the Bondholders, may replace the Bond Order with an existing or new bond indenture or similar document ("Replacement Master Agreement") by which the County, or if the County is not a party or is not the only party thereto, such other party, has agreed to be bound; provided, however, that after such replacement,the then current rating on the Bonds will not be withdrawn or reduced below the then current rating category (without regard to any gradations by numerical qualifier or otherwise within such rating category) by any Rating Agency as a result of such substitution. This and other conditions for such substitution are described in "SUMMARY OF CERTAIN PROVISIONS THE BOND ORDER AND THE SERIES RESOLUTION — Certain Covenants and Representations -Replacement of Bond Order"in Appendix C. There are no requirements as to what provisions the Replacement Master Agreement must contain. hl the event that a Replacement Master Agreement is substituted for the Bond Order, there can be no assurance that the security provided under, and the provisions and covenants contained in, the Bond Order would be included in the Replacement 11 Board of Commissioners Meeting 06/03/2013 14-4- 17 Master Agreement. The Replacement Master Agreement could, among other things, eliminate or modify the provisions and covenants in the Bond Order. Health Care Reform In March 2010, the House of Representatives of the United States Congress approved the Patient Protection and Affordable Care Act (the "PPACA"), originally passed by the Senate in December 2009. President Obama signed the PPACA into law on March 23, 2010. The House of Representatives and the Senate also approved the Health Care and Education Reconciliation Act of 2010 (the "Reconciliation Act" and,together with the PPACA,the "Health Care Reform Act"), a bill that modified various provisions of the PPACA. President Obama signed the Reconciliation Act into law on March 30, 2010. The comprehensive health care reform mandated by the Health Care Reform Act aims to expand the availability of health insurance coverage, control the costs of health care and improve the manner in which health care is delivered. The Health Care Reform Act requires all individuals to purchase health insurance or pay a tax penalty, with hardship exceptions (the "individual mandate"); requires certain employers to provide minimum levels of health insurance or pay a tax penalty (the "employer mandate"); substantially expands Medicaid coverage; provides premium subsidies to certain individuals; imposes certain taxes on individuals; creates insurance pooling mechanisms or health insurance exchanges; makes certain changes to insurance industry regulation in order to generally expand coverage; implements certain cost containment mechanisms; reduces Medicare spending; and implements provisions designed to improve the quality of outcomes and health system performance. Funding cutbacks in Medicare are to be achieved, among other ways,by a reduction in Medicare Disproportionate Share Hospital ("DSH") payments commencing in fiscal year 2014. DSH payments will initially be reduced by 75%, followed by further reductions. Also commencing in fiscal year 2014, Medicaid DSH payments are to be reduced in the aggregate by $14.1 billion over seven years. In addition, annual market basket updates (updates which are used to adjust Medicare payments for inflation) have been reduced for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers. Market basket updates will also be adjusted downward to reflect gains in productivity. For more information on DSH payments, see "Indigent Care and Uninsured and Underinsured Patients"below. In an effort to contain costs, the Health Care Reform Act establishes a Medicare test payment program that will affect Medicare reimbursement by rewarding efficient operation. Additional reimbursement cuts may result from provisions in the Health Care Reform Act that adjust payments based on efficiency and quality of care. For example, beginning in 2012, Medicare payments for preventable hospital readmissions were reduced. Medicare payments to certain hospitals will also be reduced by 1% for hospital acquired medical conditions. Federal payments to states and payments by states to providers for Medicaid services related to health care-acquired conditions were prohibited starting in July 2011, although the federal government has stated that compliance action will not be taken until July 1, 2012 so that states have additional time to develop and adopt their policies. Despite the challenges discussed above, the Health Care Reform Act contains provisions that may provide long- term benefits to hospitals as well. Foremost among these benefits is the creation of a large pool of newly insured individuals. The large number of the newly insured could have a significant impact on the amounts hospitals previously had to write off each year as a result of patients' inability to pay for hospital services. Other provisions contained in the Health Care Reform Act relating to (a) pre-existing conditions, (b) the individual mandate and (c) Medicaid eligibility may help hospitals reduce the losses they incur because of patients' inability to pay. Under the PPACA, people with pre-existing conditions who have been uninsured for at least six months may sign up for insurance through a high-risk insurance pool. This benefit is designed to continue until January 1, 2014, although funding limitations may limit coverage or duration of the pools. For plan years beginning on or after September 23, 2010, insurers are prohibited from (a) denying coverage to children with pre-existing conditions, (b) placing lifetime dollar limits on coverage for hospital stays and other essential health benefits and (c) rescinding coverage when a person becomes sick or disabled, except in cases of fraud. Existing individual and group plans will be "grandfathered" with respect to new benefit standards, but these grandfathered plans will be required to extend dependent coverage to adult children up to age 26, prohibit rescissions of coverage and, effective in 2014, eliminate waiting periods for coverage of greater than 90 days. Grandfathered group plans will be required to eliminate lifetime limits on coverage and, beginning 12 Board of Commissioners Meeting 06/03/2013 14-4- 18 in 2014, will be required to eliminate annual limits on coverage. Prior to 2014, grandfathered group plans may only impose restricted annual limits on essential health benefits as permitted by the government. The implementation of the individual mandate in 2014 will be another benefit afforded to hospitals nationally. The individual mandate provides that an individual who does not maintain a minimum level of health insurance will be required to pay a tax penalty for a number of years, which is intended to increase the number of insured. In 2014, Medicaid coverage will be extended to individuals with incomes less than 133% of the poverty level, or currently about $30,657 for a family of four, resulting in an estimated 16 million additional Medicaid beneficiaries. The extension of coverage, although expected to be economical in the long run, has been estimated to cost approximately $940 billion over ten years. The Health Care Reform Act seeks to generate revenue from the following sources to cover the costs of health care reform: (1) a 40% excise tax imposed on high-cost health plans, (2) a Medicare payroll tax rate increase depending on an individual's or a family's income, (3) annual fees imposed on the health care sector, including significant fees imposed on drug makers (beginning in 2011), insurance companies (beginning in 2014) and medical device manufacturers (beginning in 2013), (4) a reduction in flexible account annual limits from $5,000 to $2,500 (beginning in 2013), (5)various reductions in Medicare payments and(6)a 10%tax on indoor tanning services. The impact of the Health Care Reform Act on the Corporation cannot be predicted at this time, and the uncertainty of that impact is likely to continue for the foreseeable future until implementing regulations are finalized and the provisions of the Health Care Reform Act are fully implemented and until all legal challenges are resolved. Possible effects on the Corporation include, without limitation, an increase in the number of insured patients and a possible reduction in charity care and bad debt write offs; significant regulatory changes that increase the cost of operations; increased activity by government agencies regarding fraud, waste and abuse; decreased reimbursements for hospital services from third-party payors, including Medicare and Medicaid; significant changes to current payment methodologies for hospital services; increased scrutiny and auditing of governmental payments and cost reimbursements; and changes to costs and expenses of providing health insurance coverage to hospital employees. Expansion of Medicaid coverage may result in a significant shift in the Corporation's payor mix. Increased coverage and reduction in the number of uninsured patients could result in increased demand for the services of the Corporation, causing strains on the existing operating capacity of its facilities, or create a likely need to recruit or employ additional physicians and other health services providers to meet increased demand. Third-Party Payors The Corporation strives to be paid appropriately for the services it provides, but third-party payors continue to require or ask it to accept lower rates of payment even as medical costs continue to rise. The Corporation receives a substantial portion of its revenues from the Medicare and Medicaid programs. [For example,_%of the Corporation's fiscal year 2012 net patient service revenue came from Medicare (_%) and Medicaid (_%).] Medicare is a federal program that provides certain hospital and medical insurance benefits primarily to persons age 65 and older. Medicaid is a joint federal-state program administered by the states that provides hospital and medical benefits to qualifying individuals who are unable to afford health care. Because the federal government funds the Medicare program and participates in the Medicaid program, the rapidly rising cost of health care has put pressure on the federal budget. In recent years there have been numerous federal legislative and administrative actions, including the Health Care Reform Act, that have reduced the rate of increase in Medicare payments to hospitals and other health care providers, including physicians. The federal government also has reduced the share of federal matching payments made to the states to subsidize the cost of their Medicaid programs. The Corporation believes the federal government is likely to implement other reductions in Medicare and Medicaid funding. In recent years,the State of North Carolina has cut or failed to increase Medicaid reimbursement to hospitals. For fiscal year 2012, the State of North Carolina has authorized reduced payments for inpatient care of up to 7.3% from the prior fiscal year. As of the date of this Official Statement,the State of North Carolina has not elected to participate in the expansion of Medicaid eligibility under the Health Care Reform Act. The Corporation believes that the State of North Carolina will continue to be under pressure to limit its Medicaid expenditures. No assurances can be provided that the 13 Board of Commissioners Meeting 06/03/2013 14-4- 19 federal government and the State of North Carolina will continue to provide reasonable levels of reimbursement to health systems to cover the costs of providing care to Medicare and Medicaid patients. The revenues of the Corporation may also be impacted by reductions in government reimbursement to other health care providers such as physicians. For example, in response to reductions in reimbursement, physicians who practice at the Corporation's facilities may seek additional compensation and benefits from the Corporation and are now competing for services with hospitals in such areas as imaging and ambulatory surgery. Reductions in physician reimbursement also could make the predicted nationwide shortage of physicians discussed below worse, which could result in decreased use of programs and services at the Corporation's facilities. The Corporation also receives a substantial portion of its revenues from managed care programs. Because government reimbursement does not cover the Corporation's costs of providing medical care, an even greater portion of the net revenue is derived from managed care revenues. [For example,_%of the Corporation's fiscal year 2012 net patient service revenue came from managed care payors.] Managed care companies and employers also are increasing their efforts to control health care costs. For example, purchasers are shifting more costs to patients and limiting what costs are covered. The Corporation believes this trend will continue and that payment increases may not keep up with costs and increased use of the Corporation's facilities. The Corporation's operating income could be significantly reduced if increases in managed care payments do not keep up with costs. Indigent Care and Uninsured and Underinsured Patients hl recent years, the Corporation has increased its provision for uncollectible accounts because of higher volumes of indigent care and uninsured and underinsured patients. The Corporation believes this trend is due to a combination of broad economic factors, including higher unemployment levels, lack of adequate increases in state Medicaid budgets, increasing numbers of individuals and employers who choose not to purchase insurance and insurers requiring patients to pay higher co-payments and deductibles. Additionally, many of these patients are being admitted through the Corporation's emergency departments and often require more costly care, resulting in higher billings, which have lower collection rates. The Corporation receives reimbursement under the Medicaid program for care provided to many,but not all, of its indigent patients. Medicaid is designed to reimburse healthcare providers such as the Corporation at less than actual cost and has not kept pace in recent years with the industry's rapidly rising cost of personnel, supplies and technology. Because the Corporation serves a disproportionate share of low income patients with special needs, it has historically received additional Medicaid reimbursement payments under the State of North Carolina's "Medicaid Reimbursement Initiative." Under this program,the Corporation is eligible for additional reimbursement payments based on the cost deficits and treatment of a disproportionate share of indigent patients. The reimbursement payments are subject to final settlement based upon upper payment limits for Medicaid and uncompensated care. Elimination of, or reductions in the amount of, the Medicaid Reimbursement Initiative payments the Corporation has received historically, as contemplated in the Health Care Reform Act, could adversely affect its results of operations. The Corporation also provides care, without charge or at discounted rates,to uninsured patients who meet certain criteria under the Corporation's charity care policy. Key elements used to determine eligibility include a patient's demonstrated inability to pay based upon family size and household income relative to federal income poverty guidelines. hl addition, the Corporation's policy provides discounts for any patient, relative to such patient's income level, who experiences catastrophic related illnesses or injury. The underinsured population in North Carolina has grown due to the prevalence of agricultural and small employers in the economic base. The underinsured include those at risk for high levels of out-of-pocket expenditures due to catastrophic coverage only and persons insured by plans that contain high co-payments or deductibles. Small companies and lower-wage industries are increasingly offering such plans as a means to control employer health costs. Notwithstanding the substantial amount of charity care provided by the Corporation and many other nonprofit and public hospitals, in past years, more than 70 federal class action lawsuits were filed against hospitals nationally alleging that they provide insufficient charity care, overcharge uninsured patients and use improper debt collection practices 14 Board of Commissioners Meeting 06/03/2013 14-4-20 against uninsured patients. No class was certified, and many of the federal suits have been dismissed. The Corporation cannot predict the effect that success of any of these federal lawsuits would have on its financial condition. Health Care Regulations The healthcare industry is subject to extensive federal, state and local laws and regulations. These laws and regulations require that hospitals meet various requirements, including those relating to the adequacy of medical care, equipment, personnel, physician relationships, operating policies and procedures, billing patients for services, filing of Medicare and Medicaid reports, payments for services and supplies, maintenance of adequate records, privacy, building codes and environmental protection. These laws and regulations are extremely complex and subject to interpretation. The Corporation often finds there is little or no regulatory or judicial interpretation of these laws and regulations to guide it. Moreover, routine modification of the laws and regulations creates additional uncertainty when trying to comply with applicable laws and regulations. If the Corporation fails to comply with applicable laws and regulations, it could be subject to civil or criminal penalties, including the loss of its licenses to operate its hospitals, repayment of amounts received as reimbursement, and its ability to participate in the Medicare and Medicaid programs. A determination that the Corporation has violated these laws, or even a public announcement that it is being investigated for possible violations of these laws, could harm its business reputation and materially adversely affect its business, financial condition, or results of operations. In the future, different interpretations or enforcement of these laws and regulations could result in allegations that some of the Corporation's current practices are improper or illegal or could require it to make changes in its facilities, equipment,personnel, services,policies,physician relationships, capital expenditure programs or operating expenses. Civil and Criminal Enforcement Efforts The hospital industry is subject to regular, ongoing inquiries, audits and investigations relating to issues such as referrals of patients, physician recruiting practices, Medicare and Medicaid cost reporting, coding and billing practices, physician ownership and joint ventures involving hospitals. Federal and state government agencies have engaged in coordinated civil and criminal enforcement efforts. In addition, the Office of Inspector General of the United States Department of Health and Human Services, which is responsible for investigating fraud and abuse, and the United States Department of Justice periodically establish enforcement initiatives focusing on specific patient billing practices or other suspected areas of abuse. To the extent that these enforcement activities are part of the overall effort by federal and state governments to control and reduce health care costs,the Corporation expects these enforcement activities will take on additional importance and may become more intense. The Corporation regularly cooperates with audits, inquiries and investigations and has received requests for information relating to a variety of subjects because of these enforcement activities. As a result of these audits, inquiries and investigations, claims and lawsuits may be brought against it from time to time. The Corporation cannot predict the results of any such claims and lawsuits. The ultimate resolution of these claims and lawsuits, individually or in the aggregate, may have a material adverse effect on its business (both in the near and long term), financial position, results of operations or cash flows. Maintenance of Tax-Exempt Status The Corporation is exempt from federal income taxation because it has been determined to be a charitable nonprofit organization described in Section 501(c)(3) of the Internal Revenue Code, as amended (the "Code"). The Corporation also is exempt from (or entitled to a refund of) North Carolina income, franchise and sales taxation. The property used by the Corporation for charitable hospital purposes is exempt from North Carolina ad valorem property taxation. The federal tax-exempt status of the Corporation is subject to audit by the Internal Revenue Service. If an audit reveals that the Corporation has violated the provisions of federal tax law applicable to tax-exempt organizations,the IRS 15 Board of Commissioners Meeting 06/03/2013 14-4-21 could assess monetary penalties against, or revoke the tax-exempt status of,the Corporation. A loss of federal tax-exempt status could cause interest on the Series 2013 Bonds to become taxable and would be likely to materially adversely affect the financial condition of the Corporation. The Health Care Reform Act also establishes new requirements for any organization that operates at least one hospital facility to qualify as a Section 501(c)(3) organization. In general, new Section 501(r) of the Code imposes the following new requirements: (i) each hospital facility is required to conduct a community needs assessment at least every three taxable years and adopt an implementation strategy to meet the community needs identified through such assessment; (ii) each hospital facility is required to adopt, implement, and publicize a written financial assistance policy; (iii) each hospital facility is permitted to bill for emergency or other medically necessary care provided to individuals who qualify for financial assistance under the facility's financial assistance policy to no more than the amounts generally billed to individuals who have insurance covering such care; and (iv) a hospital facility (or its affiliates) may not undertake extraordinary collection actions (even if otherwise permitted by law) against an individual without first making reasonable efforts to determine whether the individual is eligible for assistance under the hospital's financial assistance policy. These new requirements are generally effective for taxable years beginning after March 2010, except that the requirement for a community needs assessment is effective for taxable years beginning after March 23, 2012. Failure to complete a community health needs assessment in any applicable three-year period can result in a penalty on the organization of up to $50,000, in addition to possible revocation of status as a 501(c)(3) organization. The IRS has developed a revised Schedule H to the Form 990 filed by hospitals to implement the new requirements of Section 501(r). However,the IRS granted those tax-exempt hospital organizations filing for the 2010 tax year before August 15, 2011 an automatic three-month extension of time to file the Form 990 for 2010. In addition, this announcement directed these hospital organizations not to file the 2010 Form 990 before July 1, 2011. The Health Care Reform Act requires the Secretary of the Treasury, in consultation with the Secretary of the Department of Health and Human Services ("HHS"), to submit annually a report to Congress with information regarding the levels of charity care, bad debt expenses, unreimbursed costs of government programs, as well as costs incurred by tax-exempt hospitals for community benefit activities. The Secretary of the Treasury, in consultation with the Secretary of HHS,must conduct a study of the trends in these amounts, and submit a report on such study to Congress not later than five years after the date of enactment. These statutorily mandated requirements for periodic review will increase IRS surveillance over such organizations and may increase the likelihood of IRS examinations challenging their Section 501(c)(3) status. In recent years the federal and state governments have begun to scrutinize the amount of tax benefits received by charitable nonprofit hospitals in light of the amount of community benefits provided by such organizations. Submission of a report to Congress relating to community benefit provided by Section 501(c)(3) hospital organizations may increase the likelihood that Congress will consider additional requirements for Section 501(c)(3) hospital organizations in the future. The passage or adoption of laws or regulations requiring the Corporation to increase the amount of community benefits it provides, revoking its exemptions from income, franchise, sales or property taxation in whole or in part, or placing additional restrictions on tax-exempt bonds issued for its benefit, could materially adversely affect the financial condition of the Corporation. Malpractice Claims and General Liability Insurance In recent years, the value of claims brought and recovered in malpractice and general liability suits has increased nationwide, resulting in substantial increases in malpractice and general liability insurance premiums. Despite these trends, the Corporation has experienced minimal increases in insurance costs with the exception of a specific case or issue. The Corporation's Corporate Risk Management Steering Committee constantly monitors professional liability activity to ensure that potential risk is adequately reserved. The Corporation self-insures portions of professional and general liability coverage and maintains excess loss policies for professional and general liability coverage. The excess professional and general liability insurance the Corporation purchases is subject to self-insured retentions and buffer retentions. The Corporation funds its self-insurance program annually based upon actuarial estimates. These estimates are based on a number of factors, including amount and timing of historical payments, severity of individual cases, anticipated volume of services provided and discount rates 16 Board of Commissioners Meeting 06/03/2013 14-4-22 for future cash flows. Changes in these factors resulting in increases in these estimates could adversely affect the Corporation's business. The excess professional and general liability insurance the Corporation purchases also is subject to certain limitations of liability. If covered losses partially or fully exceed such limitations in the future, or actual payments of claims materially exceed projected estimates of claims, its business, financial position, results of operations or cash flows could be materially adversely affected. Physicians, including those who practice at the Corporation's facilities, face significant and sometimes prohibitive increases in malpractice insurance premiums and limitations on availability, which could cause those physicians to limit their practices. That, in turn, could reduce use of programs and services at the Corporation's facilities. Staffing In recent years,the hospital industry has suffered from an increasing scarcity of nurses and some skilled clinicians to staff its facilities. Factors underlying this industry trend include an increase in the proportion of the population that is elderly, an increase in the tendency to institutionalize senior citizens as opposed to providing nursing care in the home, a decrease in the number of persons entering the nursing profession and an increase in the number of nurses specializing in home health care. These factors may intensify in years to come, aggravating the shortage of skilled personnel. As competition for nurses and skilled technicians intensifies, staffing shortages could have the continued effect of significantly increasing the Corporation's personnel costs and could have a material adverse effect on the financial results of the Corporation and on its ability to sustain minimum staffing levels necessary to maintain licensure, certification and accreditation. Although the Corporation has achieved adequate nurse and skilled technician staffing levels to date through the use of various methods including contract personnel,there is no assurance that qualified candidates will be available to the Corporation in the future or that the hiring of such candidates will not be at a higher cost. Over the next fifteen to twenty years, a nationwide shortage of physicians is expected to emerge as a result of several factors, including increases in the general population, the additional amount of health care needed for an aging population (particularly the so-called "baby boomers"), and more physicians reaching retirement age. Medical schools across the country are being encouraged to increase enrollment to combat this expected shortage. A future shortage of physicians in the Corporation's service area could reduce use of programs and services at the Corporation's facilities and materially adversely affect its financial condition. Certificates of Need,Licenses, Certifications and Accreditations The State of North Carolina has adopted a certificate of need law that regulates various types of activities and expenditures made by or on behalf of health facilities including hospitals. The purpose of the certificate of need law is to prevent unnecessary duplication of expensive health care services and equipment in an effort to contain health care costs. Before undertaking certain types of activities or expenditures, the Corporation is required to obtain a certificate of need. There is no assurance that the Corporation will receive certificates of need for future activities. The failure to receive certificates of need could have an adverse effect on the Corporation's business. Although the certificate of need law limits the Corporation's ability to offer new services, facilities or equipment, it also limits the ability of other healthcare providers to do so. If the certificate of need law were repealed and all healthcare providers were free to offer new services, facilities or equipment without regard to need or cost and without being required to treat all patients regardless of ability to pay,the Corporation's business could be adversely affected. On a regular basis, health facilities are subject to numerous legal, regulatory, professional and private licensing, certification and accreditation requirements. These include, but are not limited to, requirements relating to State licensing agencies, private payors and the Joint Commission. Renewal and continuance of certain of these licenses, certifications and accreditations are based on inspections, surveys, audits, investigations or other reviews, some of which may require or include affirmative action or response by the facility. These activities generally are conducted in the normal course of business of health facilities. The loss of any currently held licenses, certifications or accreditations could result in a 17 Board of Commissioners Meeting 06/03/2013 14-4-23 reduction in third-party payments that would materially adversely affect the operations or financial condition of the Corporation. Union Activity None of the employees of the Corporation are represented by a labor union, and management of the Corporation is not aware of any efforts by any labor union to organize any employees of the Corporation. Health care facilities, however, have been subjected to an increasing amount of union organizational efforts. Unionization of the Corporation's employees could have an adverse effect on the Corporation's financial condition. Other Factors Related to Health Care Facilities In the future, the following factors, among others, may adversely affect the operation of health care facilities, including those of the Corporation,to an extent that cannot be determined at this time: 1. Efforts by insurers and governmental agencies to limit the cost of hospital services and to reduce the utilization of hospital facilities by such means as preventive medicine, improved occupational health and safety and outpatient care or by increased copayments, deductibles and other financial incentives or penalties. 2. Hospitals are major employers, combining a mix of professional, quasi-professional, technical, clerical, housekeeping, maintenance, dietary and other types of workers in a single operation. The Corporation bears a wide variety of risks in connection with their employees. These risks include strikes and other related work actions, contract disputes, exposure to hazardous materials, discrimination claims, personal tort actions, work-related injuries, interpersonal torts (such as between employees, between physicians or management and employees, or between employees and patients), and other risks that may flow from the relationships between employer and employee or between physicians, patients and employees. Many of these risks are not covered by insurance, and certain of them cannot be anticipated or prevented. 3. Scientific and technological advances, new procedures, drugs and appliances, preventive medicine, occupational health and safety and outpatient health care delivery that could reduce utilization and revenues of the Corporation in the future. Technological advances in recent years have accelerated the trend toward the use by hospitals of sophisticated, and costly, equipment and services for diagnosis and treatment. The acquisition and operation of certain equipment or services may continue to be a significant factor in hospital utilization, but the ability of the Corporation to offer such equipment or services may be subject to governmental approval, the availability of equipment or specialists or the ability to finance such acquisitions or operations. 4. Cost and availability of any insurance, such as malpractice, fire, automobile and general comprehensive liability that institutions of similar size and type generally carry. 5. Competition from other hospitals and other competitive facilities now or hereafter located in the service area of the Health Care System. See "Service Area and Competition"in Appendix A hereto. 6. Imposition of wage and price controls for the health care industry. 7. The occurrence of natural disasters that may damage the Health Care System, interrupt utility service to the Health Care System or otherwise impair the operation of the Health Care System and the generation of revenues. 8. The reduced need for hospitalization or other services arising from future medical and scientific advances or from decreases in the respective service areas of the Health Care System. 9. The growth of managed care organizations promoting discounted fee for service and capitated fee payment arrangements for health care services. 10. Increases in utility costs in the near future due to an energy shortage which, to the extent that such costs are not reimbursed, could have an adverse impact on the financial condition of the Corporation. 18 Board of Commissioners Meeting 06/03/2013 14-4-24 11. Increases in pharmaceutical costs. 12. Risks inherent in investments and changes in investment returns. The Corporation expects that it will experience increases in operating costs due to inflation, increased depreciation and other factors. There is no assurance that cost increases will be matched by increased patient and other charges in amounts sufficient to generate an excess of revenues over expenses at the levels experienced by the Corporation in the past. [The following new risk factors are to be discussed.] Variable Rate Indebtedness Following the issuance of the Series 2013 Bonds, a portion of the proceeds of which will be used to refund all of the outstanding Series 2005 Bonds, the Series 2008 Bonds will be the only remaining variable rate bonds outstanding under the Bond Order. Variable rate bonds expose the Corporation to two primary risks: 1. "interest rate risk"—then sk that the interest rate on the variable rate bonds will increase; and 2. "bank renewal risk" — the risk that the existing bank letter of credit support for the Series 2008 Bonds described below will not be able to be renewed or replaced on reasonable terms. The Series 2008 Bonds are variable rate demand bonds that bear interest at a rate that is reset weekly by the applicable remarketing agent at the lowest rate necessary to enable them to be remarketed at par; however, based on market conditions, the interest rate can increase to a maximum of 12%. The Series 2008 Bonds are subject to optional tender by the holders on seven days' notice. To obtain the most favorable interest rates on the Series 2008 Bonds, the Corporation has obtained a direct-pay letter of credit from a bank pursuant to which such bank has agreed, subject to the terms and conditions of such letter of credit, to purchase tendered bonds that are not remarketed. The Corporation must regularly renew or replace the letter of credit. To manage bank renewal risk, the Corporation seeks to renew or replace the letter of credit as far in advance as reasonable of stated expiration dates. The Corporation has been able to renew the letter of credit supporting the Series 2008 Bonds; however, there is no assurance that the Corporation will continue to be able to do so. Because the Series 2008 Bonds are subject to optional tender on seven days' notice and must be supported by a letter of credit,the Series 2008 Bonds expose the Corporation to certain other risks: 1. "remarketing risk"—the risk that the applicable remarketing agent will not be able to remarket the Series 2008 Bonds on the tender date, which could occur as a result of general market conditions or disruptions, a material adverse change in the Corporation's financial condition (e.g., evidenced by a reduction in its long- term debt ratings) or if the bank providing the letter of credit is downgraded; and 2. "bank downgrade risk" — the risk that the credit ratings of the bank providing the letter of credit will be downgraded,which could result in higher interest rates or a failed remarketing. If the Series 2008 Bonds cannot be remarketed and are purchased pursuant to the letter of credit, they will bear interest at higher rates and will be subject to being repaid on an accelerated basis until they can be remarketed. There is no assurance that the Series 2008 Bonds will be able to be remarketed after they are purchased pursuant to the letter of credit. The Corporation has been able to obtain and maintain the letter of credit for the Series 2008 Bonds; however, there is no assurance that the Corporation will continue to be able to do so. Interest Rate Swap Transactions 19 Board of Commissioners Meeting 06/03/2013 14-4-25 [In connection with the issuance of the Series 2013 Bonds,the Corporation is considering terminating all or a portion of the Swap Agreements. The Corporation may determine to leave a portion of the Swap Agreements outstanding and apply such portion of the Swap Agreements to hedge the variable rate interest risk associated with the Series 2008 Bonds. The Swap Agreements are described in more detail in Note _ in Appendix B to this Official Statement.] In the event the Corporation leaves a portion of the Swap Agreements outstanding following the issuance of the Series 2013 Bonds,the Corporation would be exposed to the following swap-related risks: 1. "basis risk"—the risk that floating rate payments received by the Corporation under the Swap Agreements will be less than the interest payments the Corporation will be required to make on the Series 2008 Bonds; 2. "tax risk"—the risk that a decrease in marginal income tax rates will affect the London Interbank Offered Rate,which is a taxable lending rate, and result in reduced cash flows to the Corporation; 3. "termination risk" — the risk that the Swap Agreements will terminate at a point in time when the Corporation would be required to make a termination payment to the applicable swap providers; and 4. "credit risk" —the risk that the Swap Agreements will terminate at a point in time when the Corporation is entitled to receive a termination payment from the applicable swap provider that such swap provider does not pay. The Swap Agreements are subject to certain early termination provisions under which one or more of the transactions may be terminated prior to their respective stated maturity dates. Upon termination, the Corporation or the applicable swap provider may owe a termination payment to the other, depending upon market conditions and the events that cause the termination. The ability of the Corporation to restructure its variable rate bonds may be limited if it will be required to make swap termination payments. Payments owed by the Corporation under the Swap Agreements are not secured by a pledge of the Revenues of the Health Care System and are each a general unsecured obligation of the Corporation. LITIGATION There is no litigation pending or, to the knowledge of the County or the Corporation, threatened seeking to restrain or enjoin the issuance, sale, execution or delivery of the Series 2013 Bonds, or questioning or affecting the validity of the Series 2013 Bonds or any proceedings of the County, the Corporation or the Local Government Commission taken with respect to the initial issuance or sale thereof, or questioning or affecting the validity of the pledge or application of any security pledged for the payment of the Series 2013 Bonds or the existence or powers of the County, the Corporation or the Local Government Commission to issue and approve the Series 2013 Bonds or questioning the right of the County or the Corporation to adopt and comply with the Bond Order and the Series Resolution or to finance or operate its facilities in accordance with the provisions of the Bond Order and the Series Resolution. The County and the Corporation are defendants in a number of malpractice and other suits. Based upon the opinions of the respective counsels representing the County and the Corporation in those cases, the County and the Corporation believe that their exposure for uninsured damages in those suits is unlikely to have a material adverse effect on the financial condition of the County,the Corporation or the Health Care System except as otherwise disclosed in this Official Statement. See "Regulatory Matters" in Appendix A hereto for a description of certain litigation and regulatory matters affecting the Corporation. LEGAL MATTERS Legal matters incident to the validity of the Series 2013 Bonds are subject to the approving opinion of Parker Poe Adams & Bernstein LLP, Bond Counsel. Certain legal matters will be passed on for the County by Wanda M. Copley, 20 Board of Commissioners Meeting 06/03/2013 14-4-26 Esq., County Attorney, for the Corporation by Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., Raleigh, North Carolina, and for the Underwriters of the Series 2013 Bonds by Womble Carlyle Sandridge & Rice, LLP, Raleigh, North Carolina,none of which is passing on the validity of the Series 2013 Bonds. TAX TREATMENT General On the date of issuance of the Series 2013 Bonds, Parker Poe Adams & Bernstein LLP ("Bond Counsel") will render an opinion that, under existing law and assuming compliance by the County and the Corporation with certain provisions of the Internal Revenue Code of 1986, as amended (the "Code"), interest on the Series 2013 Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The interest on the Series 2013 Bonds will be taken into account in determining adjusted current earnings of certain corporations (as defined for federal income tax purposes), and such corporations are required to include in the calculation of federal alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over its federal alternative minimum taxable income. The Code imposes various restrictions, conditions and requirements relating to the exclusion of interest on obligations, such as the Series 2013 Bonds, from gross income for federal income tax purposes, including, but not limited to, the requirement that the County rebate certain excess earnings on proceeds and amounts treated as proceeds of the Series 2013 Bonds to the United States Treasury, restrictions on the investment of such proceeds and other amounts, and restrictions on the ownership and use of the facilities financed or refinanced with proceeds of the Series 2013 Bonds. The foregoing is not intended to be an exhaustive listing of the post-issuance tax compliance requirements of the Code, but is illustrative of the requirements that must be satisfied by the County and the Corporation subsequent to issuance of the Series 2013 Bonds to maintain the excludability of the interest on the Series 2013 Bonds from gross income for federal income tax purposes. Bond Counsel's opinion is given in reliance on certifications by representatives of the County and the Corporation as to certain facts material to the opinion and the requirements of the Code. In addition, Bond Counsel has relied, among other things, on the opinion of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., counsel to the Corporation, regarding the current qualification of the Corporation as an organization described in Section 501(c)(3) of the Code. Such opinion is subject to a number of qualifications and limitations. In addition, Bond Counsel has relied on representations of the Corporation concerning the Corporation's "unrelated trade or business" activities as defined in Section 513(a) of the Code. Neither Bond Counsel nor Counsel to the Corporation has given any opinion or assurance concerning Section 513(a) of the Code, and neither Bond Counsel nor counsel to the Corporation can give or has given any opinion or assurance about the future activities of the Corporation, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the resulting changes in enforcement thereof by the Internal Revenue Service. Failure of the Corporation to be organized and operated in accordance with the Internal Revenue Service's requirements for the maintenance of its status as an organization described in Section 501(c)(3) of the Code, or to operate the facilities financed or refinanced by the Series 2013 Bonds in a manner that is substantially related to the Corporation's charitable purpose under Section 513(a) of the Code,may result in interest payable with respect to the Series 2013 Bonds being included in federal gross income,possibly from the date of the original issuance of the Series 2013 Bonds. The County and the Corporation have covenanted to comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2013 Bonds in order that the interest on the Series 2013 Bonds be, or continue to be, excludable from gross income for federal income tax purposes. The opinion of Bond Counsel assumes compliance by the County and the Corporation with such covenants, and Bond Counsel has not been retained to monitor compliance by the County or the Corporation with such covenants subsequent to the date of issuance of the Series 2013 Bonds. Failure to comply with certain of such requirements may cause the interest on the Series 2013 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2013 Bonds. No other opinion is expressed by Bond Counsel regarding the federal tax consequences of the ownership of or the receipt or accrual of interest with respect to the Series 2013 Bonds. 21 Board of Commissioners Meeting 06/03/2013 14-4-27 If the interest on the Series 2013 Bonds subsequently becomes included in gross income for federal income tax purposes due to a failure by the County or the Corporation to comply with any requirements described above, neither the County nor the Corporation is required to redeem the Series 2013 Bonds or to pay any additional interest or penalty. The Internal Revenue Service has established an ongoing program to audit tax-exempt obligations to determine whether interest on such obligations is includible in gross income for federal income tax purposes. Bond Counsel cannot predict whether the Internal Revenue Service will commence an audit of the Series 2013 Bonds. Prospective purchasers and owners of the Series 2013 Bonds are advised that, if the Internal Revenue Service does audit the Series 2013 Bonds, under current Internal Revenue Service procedures, at least during the early stages of an audit, the Internal Revenue Service will treat the County as the taxpayer, and the owners of the Series 2013 Bonds may have limited rights, if any,to participate in such audit. The commencement of an audit could adversely affect the market value and liquidity of the Series 2013 Bonds until the audit is concluded, regardless of the ultimate outcome. Prospective purchasers of the Series 2013 Bonds should be aware that ownership of the Series 2013 Bonds and the accrual or receipt of interest on the Series 2013 Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property or casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain Subchapter S Corporations with "excess net passive income," foreign corporations subject to the branch profits tax, life insurance companies and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the Series 2013 Bonds. Bond Counsel does not express any opinion as to any such collateral tax consequences. Prospective purchasers of the Series 2013 Bonds should consult their own tax advisors as to the collateral tax consequences. Proposed legislation is considered from time to time by the United States Congress that, if enacted, would affect the tax consequences of owning the Series 2013 Bonds. No assurance can be given that any future legislation, or clarifications or amendments to the Code, if enacted into law, will not contain provisions which could cause the interest on the Series 2013 Bonds to be subject directly or indirectly to federal or State of North Carolina income taxation, adversely affect the market price or marketability of the Series 2013 Bonds or otherwise prevent the owners of the Series 2013 Bonds from realizing the full current benefit of the status of the interest on the Series 2013 Bonds. Bond Counsel is further of the opinion that, under existing law, the interest on the Series 2013 Bonds is exempt from State of North Carolina income taxation. Bond Counsel's opinion is based on existing law, which is subject to change. Such opinion is further based on factual representations made to Bond Counsel as of the date thereof. Bond Counsel assumes no duty to update or supplement its opinion to reflect any facts or circumstances that may thereafter come to Bond Counsel's attention, or to reflect any changes in law that may thereafter occur or become effective. Moreover, Bond Counsel's opinion is not a guarantee of a particular result, and is not binding on the Internal Revenue Service or the courts; rather, such opinion represents Bond Counsel's professional judgment based on its review of existing law, and in reliance on the representations and covenants that Bond Counsel deems relevant to such opinion. Bond Counsel's opinion expresses the professional judgment of the attorneys rendering the opinion regarding the legal issues expressly addressed therein. By rendering its opinion, Bond Counsel does not become an insurer or guarantor of the result indicated by that expression of professional judgment, of the transaction on which the opinion is rendered, or of the future performance of the County or the Corporation, nor does the rendering of such opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Original Issue Discount As indicated on the inside cover page, the Series 2013 Bonds maturing on October 1, (the "OID Bonds") are being sold at initial offering prices which are less than the principal amount payable at maturity. Under the Code, the difference between (a) the initial offering prices to the public (excluding bond houses and brokers) at which a substantial amount of each maturity of the OID Bonds is sold and (b) the principal amount payable at maturity of such OID Bonds, constitutes original issue discount treated as interest which will be excluded from the gross income of the owners of such OID Bonds for federal income tax purposes. 22 Board of Commissioners Meeting 06/03/2013 14-4-28 In the case of an owner of the OID Bond, the amount of original issue discount on such OID Bond is treated as having accrued daily over the term of such OID Bond on the basis of a constant yield compounded at the end of each accrual period and is added to the owner's cost basis of such OID Bond in determining, for federal income tax purposes, the gain or loss upon the sale, redemption or other disposition of such OID Bond (including its sale, redemption or payment at maturity). Amounts received upon the sale, redemption or other disposition of an OID Bond which are attributable to accrued original issue discount on such OID Bonds will be treated as interest exempt from gross income, rather than as a taxable gain, for federal income tax purposes, and will not be a specific item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and individuals. However, it should be noted that with respect to certain corporations (as defined for federal income tax purposes), a portion of the original issue discount that accrues to such corporate owners of an OID Bonds in each year will be taken into account in determining the adjusted current earnings for the purpose of computing the federal alternative minimum tax imposed on such corporations and may result in other collateral federal income tax consequences for certain taxpayers in the year of accrual. Consequently, corporate owners of an OID Bond should be aware that the accrual of original issue discount on any OID Bond in each year may result in a federal alternative minimum tax liability or other collateral federal income tax consequences, even though such corporate owners may not have received any cash payments attributable to such original issue discount in such year. Original issue discount is treated as compounding semiannually(which yield is based on the initial public offering price of such OID Bond) at a rate determined by reference to the yield to maturity of each individual OID Bond. The amount treated as original issue discount on an OID Bond for a particular semiannual accrual period is equal to (a) the product of(i) the yield to maturity for such OID Bond (determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such OID Bond at the beginning of the particular accrual period if held by the original purchaser, less (b) the amount of interest payable on such OID Bond during the particular accrual period. The tax basis is determined by adding to the initial public offering price on such OID Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior accrual periods. If an OID Bond is sold between semiannual compounding dates, original issue discount which would have accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. The Code contains additional provisions relating to the accrual of original issue discount in the case of owners of the OID Bonds who subsequently purchase any OID Bonds after the initial offering or at a price different from the initial offering price during the initial offering of the Series 2013 Bonds. Owners of OID Bonds should consult their own tax advisors with respect to the precise determination for federal and state income tax purposes of the amount of original issue discount accrued upon the sale, redemption or other disposition of an OID Bond as of any date and with respect to other federal, state and local tax consequences of owning and disposing of an OID Bond. It is possible that under the applicable provisions governing the determination of state or local taxes, accrued original issue discount on an OID Bond may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment attributable to such original issue discount until a later year. Original Issue Premium As indicated on the inside cover page, the Series 2013 Bonds maturing on October 1, (the "Premium Bonds") are being sold at initial offering prices which are in excess of the principal amount payable at maturity. The difference between(a)the initial offering prices to the public(excluding bond houses and brokers) at which a substantial amount of the Premium Bonds is sold and (b) the principal amount payable at maturity of such Premium Bonds constitutes original issue premium,which original issue premium is not deductible for federal income tax purposes. In the case of an owner of a Premium Bond,however,the amount of the original issue premium which is treated as having accrued over the term of such Premium Bond is reduced from the owner's cost basis of such Premium Bond in determining, for federal income tax purposes, the taxable gain or loss upon the sale, redemption or other disposition of such Premium Bond (whether upon its sale, redemption or payment at maturity). Owners of Premium Bonds should consult their tax advisors with respect to the determination, for federal income tax purposes, of the "adjusted basis" of such Premium Bonds upon any sale or disposition and with respect to any state or local tax consequences of owning a Premium Bond. 23 Board of Commissioners Meeting 06/03/2013 14-4-29 CONTINUING DISCLOSURE hl the Eighth Amendment, the Corporation will agree, for the benefit of the beneficial owners of the Series 2013 Bonds,to provide to the Municipal Rulemaking Securities Board (the "MSRB"): (a) by not later than seven months after the end of each fiscal year of the Corporation, beginning with the fiscal year ending September 30, 2013, the audited financial statements of the Corporation for such fiscal year, if available, prepared in accordance with Section 159-39 of the General Statutes of North Carolina, as amended from time to time or with any successor statute, or, if such audited financial statements are not available by seven months after the end of such fiscal year, the unaudited financial statements of the Corporation for such fiscal year to be replaced subsequently by the audited financial statements of the Corporation to be delivered within 15 days after such audited financial statements become available for distribution; (b) by not later than seven months after the end of each fiscal year of the Corporation, beginning with the fiscal year ending September 30, 2013, the financial and statistical data as of a date not earlier than the end of the preceding fiscal year for the type of information included under the following headings in Appendix A hereto, to the extent such items are not included in the financial statements referred to in (a) above: [Section list to be confirmed upon completion of Appendix A.] [(1) "Facilities and Services" (tables relating to the Medical Center therein); (2) "Medical Staff'; (3) "Utilization Statistics"; (4) "Historical Long-Term Debt Service Coverage Ratios"; (5) "Liquidity"; (6) "Debt-to-Capitalization"; and (7) "Third-Party Reimbursement and Sources of Payment";] (c) in a timely manner not in excess of ten business days after the occurrence of the event, notice of any of the following events with respect to the Series 2013 Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults,if material; (3) unscheduled draws on any debt service reserves reflecting financial difficulties; (4) unscheduled draws on any credit enhancements reflecting financial difficulties; (5) substitution of any credit or liquidity providers,or their failure to perform; (6) adverse tax opinions,the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series 2013 Bonds, or other material events affecting the tax status of the Series 2013 Bonds; (7) modification to the rights of the beneficial owners of the Series 2013 Bonds,if material; (8) call of any of the Series 2013 Bonds for redemption, [other than mandatory sinking fund redemption,] if material, and tender offers; 24 Board of Commissioners Meeting 06/03/2013 14-4-30 (9) defeasances; (10) release, substitution or sale of any property securing repayment of the Series 2013 Bonds, if material; (11) ratings changes; (12) bankruptcy, insolvency, receivership or similar event of the Corporation; (13) the consummation of a merger, consolidation, or acquisition involving the Corporation or the sale of all or substantially all of the assets of the Corporation, other than in the ordinary course of business, the entry into a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional Trustee or the change of name of a Trustee, if material; and (d) in a timely manner, notice of a failure of the Corporation to provide required annual financial information described in (a) or(b) above on or before the date specified. The Corporation shall provide the documents referred to above to the MSRB in an electronic format as prescribed by the MSRB and accompanied by identifying information as prescribed by the MSRB. The Corporation may discharge its undertaking described above by transmitting the documents referred to above to any entity and by any method authorized or required by the U.S. Securities and Exchange Commission. The Lease Agreement also provides that if the Corporation fails to comply with the undertakings described above, the Trustee or any beneficial owner of the Series 2013 Bonds then outstanding may take action to protect and enforce the rights of all beneficial owners with respect to such undertakings, including an action for specific performance; provided, however, that failure to comply with such undertakings shall not be an event of default under the Lease Agreement, the Bond Order or the Series Resolution and shall not result in any acceleration of payment of the Series 2013 Bonds. All actions shall be instituted, had and maintained in the manner provided in this paragraph for the benefit of all beneficial owners of the Series 2013 Bonds. The Corporation reserves the right to modify from time to time the information to be provided to the extent necessary or appropriate in the judgment of the Corporation,provided that: (a) any such modification may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, composition,nature or status of the Corporation; (b) the information to be provided, as modified, would have complied with the requirements of Rule 15c2-12 issued under the Securities Exchange Act of 1934 ("Rule 15c2-12") as of the date of this Official Statement, after taking into account any amendments or interpretations of Rule 15c2-12, as well as any changes in circumstances; and (c) any such modification does not materially impair the interests of the beneficial owners of the Series 2013 Bonds, as determined either by parties unaffiliated with the Corporation (such as bond counsel), or by the approving vote of the registered owners of a majority in principal amount of the Series 2013 Bonds then Outstanding pursuant to the terms of the Bond Order and the Series Resolution as they may be amended from time to time. Any annual financial information containing the modified operating data or financial information is required to explain, in narrative form, the reasons for the amendments and the impact of the change in the type of operating data or financial information being provided. The undertaking described in this section will terminate upon payment, or provision having been made for payment in a manner consistent with Rule 15c2-12, in full of the principal of and interest on all of the Series 2013 Bonds. The County has covenanted and agreed under the Series Resolution that in the event of termination of the Lease Agreement the County will impose upon any successor lessee of the Existing Facilities and Health Care System the same obligations, or if the County shall operate the Existing Facilities or the Health Care System the County will assume and 25 Board of Commissioners Meeting 06/03/2013 14-4-31 perform the same obligations, imposed upon the Corporation as described above. The Series Resolution also provides that if the County fails to comply with the undertaking described above, any beneficial owner of the Series 2013 Bonds then outstanding may take action to protect and enforce the rights of all beneficial owners with respect to such undertaking, including an action for specific performance; provided,however,that failure to comply with such undertaking shall not be an event of default under the Series Resolution and shall not result in any acceleration of payment of the Series 2013 Bonds. The Corporation has complied in all material respects with all of its prior continuing disclosure undertakings under SEC. LEGALITY FOR INVESTMENT The Series 2013 Bonds are legal investments for all public officers and bodies of the State of North Carolina and its political subdivisions and all insurance companies, trust companies, banking associations, investment companies, executors, administrators,trustees and other fiduciaries in the State of North Carolina. UNDERWRITING The Underwriters have agreed under the terms of a Bond Purchase Agreement to purchase all of the Series 2013 Bonds, if any of the Series 2013 Bonds are to be purchased, at a purchase price equal to the principal amount of the Series 2013 Bonds, [plus] [less] a net original issue [premium] [discount] of$ and less an underwriters' discount of $ . The Underwriters' obligation to purchase the Series 2013 Bonds will be subject to certain terms and conditions set forth in the Bond Purchase Agreement. The Underwriters may offer and sell the Series 2013 Bonds to certain dealers (including dealers depositing the Series 2013 Bonds into investment trusts) and others at prices lower than the initial public offering prices stated on the inside front cover. The public offering prices may be changed from time to time by the Underwriters. RATINGS Moody's Investors Service, Inc. ("Moody's") and Standard and Poor's Rating Services, a Standard & Poor's Financial Services LLC business ("S&P"), have assigned the ratings of" " and " ", respectively,to the Series 2013 Bonds. The County and the Corporation have provided certain information to Moody's and S&P that is not included in this Official Statement. The ratings reflect only the view of the respective rating agency. An explanation of the ratings given by Moody's may be obtained from Moody's at 7 World Trade Center, New York, New York 10007, (212) 553- 0300, and an explanation of the ratings given by S&P may be obtained from S&P at 55 Water Street, New York, New York 10041, (212) 208-8000. There is no assurance that any such ratings will continue for any given period of time or that any such ratings will not be revised downward or withdrawn entirely if, in the judgment of each rating agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 2013 Bonds. INDEPENDENT AUDITORS The financial statements of the Corporation and its blended component units for the fiscal years ended September 30, 2012 and 2011, included in Appendix B to this Official Statement, have been audited by McGladrey & Pullen LLP, independent certified public accountants, as stated in their report appearing therein. New Hanover Regional Medical Center Foundation, Inc. (the "Foundation") and Carolina Healthcare Associates, Inc. ("CHA") are included in the Corporation's financial statements as blended component units. The revenues of CHA are pledged to secure the payment of the Series 2013 Bonds. No portion of the revenues of the Foundation, however, are pledged to secure the payment of the Series 2013 Bonds. For the fiscal year ended September 30, 2012, the Foundation represented less than % of 26 Board of Commissioners Meeting 06/03/2013 14-4-32 total operating revenue, less than %of total operating expenses, less than %of total assets and less than % of excess of revenues over expenses before capital contributions and special items. MISCELLANEOUS The Corporation has reviewed the information contained herein relating to the Health Care System and the Corporation, and the operations of the Corporation, and the County and the Corporation have reviewed the summaries of all documents relating to the Series 2013 Bonds to which the County or the Corporation is a party, and have approved this Official Statement. Members of the LGC staff have participated in the preparation of this Official Statement and other documents related to the issuance of the Series 2013 Bonds, but the LGC and its staff assume no responsibility for the accuracy or completeness of any representation or statement in this Official Statement other than those made in Appendix D hereto. 27 Board of Commissioners Meeting 06/03/2013 14-4-33 The LGC and the County have each duly authorized the execution and delivery of this Official Statement. LOCAL GOVERNMENT COMMISSION OF NORTH CAROLINA By: Secretary COUNTY OF NEW HANOVER-NORTH CAROLINA By: Chairman Approved: NEW HANOVER REGIONAL MEDICAL CENTER By: Executive Vice President and Chief Financial Officer 28 Board of Commissioners Meeting 06/03/2013 14-4-34 APPENDIX A CERTAIN INFORMATION CONCERNING THE CORPORATION AND THE HEALTH CARE SYSTEM Board of Commissioners Meeting 06/03/2013 14-4-35 APPENDIX B AUDITED FINANCIAL STATEMENTS OF NEW HANOVER REGIONAL MEDICAL CENTER Board of Commissioners Meeting 06/03/2013 14-4-36 APPENDIX C DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE BOND ORDER, THE SERIES RESOLUTION AND THE LEASE AGREEMENT Board of Commissioners Meeting 06/03/2013 14-4-37 APPENDIX D THE NORTH CAROLINA LOCAL GOVERNMENT COMMISSION Board of Commissioners Meeting 06/03/2013 14-4-38 THE NORTH CAROLINA LOCAL GOVERNMENT COMMISSION The Local Government Commission (the "Commission") is composed of nine members: the State Treasurer, the Secretary of State,the State Auditor,the Secretary of Revenue and five others by appointment(three by the Governor, one by the General Assembly upon recommendation of the President Pro Tempore of the Senate and one by the General Assembly upon recommendation of the Speaker of the House of Representatives). The State Treasurer serves as Chairman and selects the Secretary of the Commission,who heads the administrative staff serving the Commission. A major function of the Commission is the approval, sale and delivery of substantially all North Carolina local government bonds and notes. A second key function is monitoring certain fiscal and accounting standards prescribed for units of local government by The Local Government Budget and Fiscal Control Act. In addition, the Commission furnishes, upon request, on-site assistance to units of local government concerning existing financial and accounting systems as well as aid in establishing new systems. Further, educational programs and materials are provided for local officials concerning finance and cash management. Before any unit of local government can incur bonded indebtedness, the proposed bond issue must be approved by the Commission. In determining whether to give such approval the Commission may consider, among other things,the unit's debt management procedures and policies, its compliance with The Local Government Budget and Fiscal Control Act and its ability to service the proposed debt. All general obligation issues are customarily sold on the basis of formal sealed bids submitted at the Commission's offices in Raleigh and are subsequently delivered to the successful bidder by the Commission. The Commission maintains records for all units of local government of principal and interest payments coming due on bonded indebtedness in the current and future years and monitors the payment by the units of local government of debt service through a system of monthly reports. As a part of its role in assisting and monitoring the fiscal programs of units of local government,the Commission attempts to ensure that the units of local government follow generally accepted accounting principles, systems and practices. The Commission's staff also counsels the units of local government in treasury and cash management, budget preparation and investment policies and procedures. Educational programs, in the form of seminars or classes, are also provided by the Commission in order to accomplish these tasks. The monitoring of the financial systems of units of local government is accomplished through the examination and analysis of the annual audited financial statements and other required reports. The Local Government Budget and Fiscal Control Act requires each unit of local government to have its accounts audited annually by a certified public accountant or by an accountant certified by the Commission as qualified to audit local government accounts. A written contract must be submitted to the Secretary of the Commission for his approval prior to the commencement of the audit. The Commission has the statutory authority to impound the books and records of any unit of local government and assume full control of all its financial affairs (a) when the unit defaults on any debt service payment or, in the opinion of the Commission, will default on a future debt service payment if the financial policies and practices of the unit are not improved or (b) when the unit persists, after notice and warning from the Commission, in willfully or negligently failing or refusing to comply with the provisions of The Local Government Finance Act. When the Commission takes action under this authority, the Commission is vested with all of the powers of the governing board of the unit of local government as to the levy of taxes, expenditure of money, adoption of budgets and all other financial powers conferred upon such governing board by law. In addition, if a unit of local government fails to pay any installment of principal or interest on its outstanding debt on or before its due date and remains in default for 90 days, the Commission may take such action as it deems advisable to investigate the unit's fiscal affairs, consult with its governing board and negotiate with its creditors in order to assist the unit in working out a plan for refinancing, adjusting or compromising such debt. When a plan is developed that the Commission finds to be fair and equitable and reasonably within the ability of the unit of local government to meet, the Commission will enter an order finding that the plan is fair, equitable and within the ability of the unit to meet and will advise the unit to take the necessary steps to implement such plan. If the governing board of the unit declines or refuses to do so within 90 days after receiving the Commission's advice, the Commission may enter an order directing the unit to implement such plan and may apply for a court order to enforce such order. When a refinancing plan has been put into effect,the Commission has the authority (a)to require any periodic financial reports on the unit's financial affairs that the Secretary deems necessary and (b) to approve reject the unit's annual budget ordinance. The governing board of the unit D-1 Board of Commissioners Meeting 06/03/2013 14-4-39 of local government must also obtain the approval of the Secretary of the Commission before adopting any annual budget ordinance. The power and authority granted to the Commission as described in this paragraph will continue with respect to a defaulting unit of local government until the Commission is satisfied that the unit has performed or will perform the duties required of it in the refinancing plan and until agreements made with the unit's creditors have been performed in accordance with such plan. D-2 Board of Commissioners Meeting 06/03/2013 14-4-40 APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL Board of Commissioners Meeting 06/03/2013 14-4-41 APPENDIX F DTC'S BOOK-ENTRY-ONLY SYSTEM Board of Commissioners Meeting 06/03/2013 14-4-42 DTC'S BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company ("DTC"),New York,New York, acts as securities depository for the Series 2013 Bonds. The Series 2013 Bonds will be delivered as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered bond certificate for each maturity will be issued for the Series 2013 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. SO LONG AS CEDE &CO. IS THE REGISTERED OWNER OF THE SERIES 2013 BONDS, AS DTC'S PARTNERSHIP NOMINEE, REFERENCE HEREIN TO THE REGISTERED OWNERS OR OWNERS OF THE SERIES 2013 BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE SERIES 2013 BONDS. DTC,the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Series 2013 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2013 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2013 Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2013 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2013 Bonds, except in the event that use of the book-entry system for the Series 2013 Bonds is discontinued. To facilitate subsequent transfers, all Series 2013 Bonds deposited by Direct Participants with DTC will be registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2013 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2013 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2013 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners of the Series 2013 Bonds will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2013 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Series 2013 Bonds, such as redemptions, tenders, defaults and proposed amendments to the security documents. For example, Beneficial Owners of Series 2013 Bonds may wish to F-1 Board of Commissioners Meeting 06/03/2013 14-4-43 ascertain that the nominee holding the Series 2013 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2013 Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such Series 2013 Bonds to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2013 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2013 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments and redemption premium, if any, on the Series 2013 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the County, the Trustee or the Paying Agent on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the County,the Trustee or the Paying Agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest and redemption premium, if any, to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County, the Trustee and the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2013 Bonds at any time by giving reasonable notice to the County and the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2013 Bond certificates are required to be printed and delivered. The County may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2013 Bond certificates will be printed and delivered to DTC. The information in this Appendix concerning DTC and DTC's book-entry system has been obtained from DTC, and the County and the Corporation take no responsibility for the accuracy thereof. The County, the Trustee and the Paying Agent cannot and do not give any assurances that DTC, Direct Participants or Indirect Participants will distribute to the Beneficial Owners of the Series 2013 Bonds (a) payments of principal of, premium, if any, and interest on the Series 2013 Bonds, (b) confirmations of their ownership interests in the Series 2013 Bonds or (c) redemption or other notices sent to DTC or Cede & Co., its partnership nominee, as the registered owner of the Series 2013 Bonds, or that they will do so on a timely basis, or that DTC, Direct Participants or Indirect Participants will serve and act in the manner described in this Official Statement. NEITHER THE COUNTY, THE TRUSTEE, NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (2) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2013 BONDS; (3) THE DELIVERY BY DTC OR ANY DIRECT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO OWNERS OF THE SERIES 2013 BONDS UNDER THE TERMS OF THE F-2 WCSR 7750578v1 Board of Commissioners Meeting 06/03/2013 14-4-44 BOND ORDER OR THE SERIES RESOLUTION; AND (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC. F-3 Board of Commissioners Meeting 06/03/2013 14-4-45 May 9, 2013 TABLE OF CONTENTS Page General......................................................................................................................................................A-2 Governance...............................................................................................................................................A-3 Management..............................................................................................................................................A-4 Facilitiesand Services ..............................................................................................................................A-7 MedicalStaff..........................................................................................................................................A-12 Employees...............................................................................................................................................A-13 PatientSatisfaction.................................................................................................................................A-14 UtilizationStatistics................................................................................................................................A-14 Summary of Historical Revenues and Expenses ....................................................................................A-15 Management's Discussion and Analysis ................................................................................................A-17 Historical Long-Term Debt Service Coverage Ratios............................................................................A-18 Liquidity..................................................................................................................................................A-19 Debt-to-Capitalization ............................................................................................................................A-19 Third-Party Reimbursement and Sources of Payment............................................................................A-20 ServiceArea and Competition................................................................................................................A-20 TheCounty .............................................................................................................................................A-24 Planned Capital Improvements...............................................................................................................A-25 Insurance.................................................................................................................................................A-25 Pension and Supplemental Retirement Plan Obligations .......................................................................A-25 Licensureand Accreditation...................................................................................................................A-26 Litigation and Regulatory Matters..........................................................................................................A-26 Board of Commi Q ob ers Meeting 06/03/2013 14-5- 1 APPENDIX A CERTAIN INFORMATION CONCERNING THE CORPORATION AND THE HEALTH CARE SYSTEM General New Hanover Regional Medical Center, (the "Corporation"), is a North Carolina nonprofit corporation established in 1967. The Corporation is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as an organization described in Section 501(c)(3) of the Code. The Corporation operates a network of hospital and health care related facilities and services located in Wilmington,North Carolina(hereinafter collectively referred to as the "Health Care System"). The Health Care System includes a tertiary referral health care center with 694 licensed beds located on the Corporation's main campus (the "Main Campus") and an acute care hospital with 75 licensed beds located on the Corporation's Cape Fear campus (the "Cape Fear Campus"). The Main Campus facilities include a general acute care hospital known as New Hanover Regional Medical Center with 572 licensed beds, the Surgical Pavilion, which provides advanced surgical services, the Betty H. Cameron Women's and Children's Hospital (the "Women's and Children's Hospital"), which is a dedicated facility for pregnancy, delivery, gynecological, neonatal, and pediatric care, a 60-bed inpatient and outpatient rehabilitation facility (the "Rehabilitation Hospital"), Oaks Behavioral Health Hospital, a 62-bed psychiatric hospital (the "Behavioral Health Hospital") and New Hanover Regional Emergency Medical Services, a regional integrated health transport network. The Main Campus also includes the Medical Mall (the "Medical Mall"), an outpatient facility located adjacent to other facilities on the Main Campus, and various other outpatient facilities and programs described below. The Main Campus, which was originally known as New Hanover Memorial Hospital, opened in June 1967 as a 320-bed facility. In 1974, it added 186 licensed beds in conjunction with its first expansion project. An additional 40 beds were licensed in 1987 with the opening of the Behavioral Health Hospital. In 2009, 8 licensed beds were shifted from the Cape Fear Campus to the Main Campus. As part of the renovations of the patient tower(the "Patient Tower") 10 licensed beds from the Cape Fear Campus were shifted to the Main Campus in 2011 and another 48 licensed beds were transferred in 2012 from the Cape Fear Campus to the Main Campus. The Behavioral Health Hospital reached its present bed complement in 1992 when 22 more psychiatric beds were licensed. The Rehabilitation Hospital opened in 1995 with its present complement of 60 licensed beds. The Cape Fear Campus facilities include an acute care hospital with 75 licensed beds, an outpatient rehabilitation center(the "Oleander Rehabilitation Center") and a medical office building. The Main Campus is owned by the County of New Hanover, North Carolina (the "County"). Pursuant to a Lease Agreement, dated as of October 1, 1993 (as amended, the "Lease Agreement"), between the County and the Corporation, the County leases the existing Main Campus facilities to the Corporation for operation by the Corporation. The lease terminates on October 2, 2038. On November 1, 1998, the Corporation acquired the Cape Fear Campus in an asset purchase from Columbia HCA Healthcare Corporation and thereafter conveyed it to the County. The Lease Agreement was amended to include the lease of Cape Fear Campus to the Corporation for operation. See "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2013 BONDS — Lease Agreement" in the front part of this Official Statement. A-2 Board of Commissioners Meeting 06/03/2013 14-5-2 Carolina Healthcare Associates, Inc. ("CHA") is a North Carolina nonprofit corporation established in 1997. CHA is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as an organization described in Section 501(c)(3) of the Code. CHA is governed by the Corporation. The Corporation's Executive Committee of the Board of Trustees,which includes 8 of the 17 voting members of the Corporation's Board of Trustees, serves as the CHA Board, thereby appointing 100% of CHA's Board members. Doing business as NHRMC Physician Group, CHA provides an integrated primary and specialty care physician practice network to the Corporation in the form of physician and nurse practitioner services within the Corporation's Main and Cape Fear Campuses and independent office locations in the Corporation's service area. The revenues and assets of CHA are pledged to the payment of the Series 2013 Bonds. Governance The Corporation is governed by the Board of Trustees, consisting of twelve members appointed by the Board of Commissioners of the County (the "County Board") and one member appointed by the Board of Trustees of PMH. In addition, there are four ex-officio members of the Board of Trustees, consisting of the current and former chiefs of the medical staff of the Health Care System, the current chief of the medical staff of Pender Memorial Hospital and one member appointed by the County Board from among its members. In addition, the chief-of-staff elect at the Health Care System is a non-voting guest of the Board of Trustees. The officers of the Board of Trustees consist of a Chairman, Vice- Chairman, Secretary, and Treasurer. Officers are elected by the Board of Trustees for one-year terms. The following table sets forth the name, occupation and expiration of term of each of the members of the Board of Trustees: Term Trustee Occupation Expires John(Jack) D. Fuller, Chairman President and Chief Executive Officer of GE—Hitachi 2014 Nuclear Energy, Inc. John S. Pace, M.D., Anesthesiologist 2014 Vice-Chairman Ronald J. Isyk, Treasurer Retired,National Director of Deloitte &Touche's Internal 2013 Audit Services Practice Richard McGraw,Secretary Former Special Assistant to the Secretary of Defense; 2015 Retired, Communications Satellite Corporation (COMSAT) Virginia W. Adams Retired, Dean and Professor of UNC-Wilmington School of 2013 Nursing John(Rod)Andrew Consulting Engineer,Andrew Consulting Engineers, P.C. 2015 Carl D. Brown Retired,Vice President of Cape Fear Community College 2013 Robert (Bobby) G. Greer Retired,President of Sellers and Greer, Inc. 2015 Patricia L. Leonard Vice Chancellor, UNC Wilmington 2013 John S. Monroe Retired,Vice President of Progress Energy 2015 Horace (David) Swain Owner, David Swain and Associates 2014 Michael (Mike) O.Wilkinson Chief Information Officer, Pharmaceutical Product 2014 Development A-3 Board of Commissioners Meeting 06/03/2013 14-5-3 David Williams Member of the Board of Commissioners of Pender County(Member of the Board of Trustees of PMH) Jonathan Barfield, Jr.' Owner of Barfield&Associates Realty, LLC (Member of the County Board) Joseph L. Cooper, M.D.' Physician(Chief of the Medical Staff of Pender Memorial 2015 Hospital; Member of the Board of Trustees of Pender Memorial Hospital) Robert E. Lubanski, Jr., M.D.' Anesthesiologist(Immediate Past Chief of the Medical Staff 2013 of the Health Care System) Hemantkumar(Henry) M. Patel, Neurological Surgeon(Chief of the Medical Staff of the 2014 M.D.' Health Care System) Clyde Harris, M.D. Internal Medicine and Hospitalist(Chief of the Medical 2015 Staff(Elect) of the Health Care System) ' Ex-officio Member. 2 Non-voting guest of the Board of Trustees. * Serves at pleasure of the Board of Trustees of Pender Memorial Hospital. ** Serves at pleasure of the County Board. Fiscal control of the Corporation is the responsibility of the Finance Committee of the Board of Trustees and the Corporation's Chief Financial Officer. The Corporation is required by the North Carolina Local Government Budget and Fiscal Control Act to operate under a balanced budget and uses a comprehensive budgeting process to ensure that result. Service rates are recommended by the Finance Committee to the Board of Trustees. Capital improvement planning for the Corporation's facilities and major equipment is done on a five-year basis in collaboration with department directors and medical staff leadership. A contingency fund is also established for unanticipated capital expenditures. Management The general charge and supervision of the Corporation is delegated to a management staff headed by the President and Chief Executive Officer, who is appointed by, and reports to,the Board of Trustees. Biographical information of the key executive personnel of the Corporation is as follows: JACK BARTO (59) — President and Chief Executive Officer. Mr. Barto joined the Corporation as its President and Chief Executive Officer in February 2004. He received his Bachelor of Arts degree from Notre Dame University in American Studies and Communication (1976) and a Master's degree from George Washington University in Health Administration (1979). Prior to joining the Corporation, Mr. Barto served as President and Chief Executive Officer at Provena Mercy Center in Aurora, Illinois, which is part of a seven hospital system (1996-2004). He also served as Regional Vice President of Memorial Sisters of Charity Health Network in Houston, Texas (1995-1996) and Chief Executive Officer of Sisters of Charity Health System in Houston, Texas (1988-1995). Prior to serving in these positions, Mr. Barto served as an Executive Director at hospitals in Oklahoma and Florida(1985-1988). Mr. Barto is a Fellow of the American College of Healthcare Executives. Since moving to Wilmington, North Carolina, Mr. Barto has served on various boards and committees throughout the community and State, including the Greater Wilmington Area Chamber of Commerce Board of Directors, Wilmington Industrial Development Board, the American College of Healthcare Executives, University of North Carolina-Wilmington Cameron School of Business Executive Development Board, and the North Carolina Hospital Association Board. A-4 Board of Commissioners Meeting 06/03/2013 14-5-4 EDWIN J. OLLIE (62) — Executive Vice President and Chief Financial Officer. Mr. 011ie joined the Corporation in August 2004. He received a Master's degree in Business Administration from Northwestern University's Kellogg School of Management (1995) and a Bachelor's degree in Accounting from the University of North Florida (1977). Prior to joining the Corporation, he served as Executive Vice President of Operations and Chief Financial Officer for Wellmont Health System, a five- hospital system in Northeast Tennessee (1999-2004), as Senior Vice President and Chief Financial Officer for Phoebe Putney Health Systems, Inc. in Albany, Georgia (1988-1999), as Assistant Administrator and Chief Financial Officer for Bay Medical Center(1985-1988) and as Vice President of Finance for Tallahassee Memorial Medical Center (1981-1985). He also worked with the national accounting firm of Coopers & Lybrand in Jacksonville, Florida. Mr. 011ie is a certified public accountant (Florida 1981), a Fellow in the American College of Healthcare Executives, a Fellow in the Healthcare Financial Management Association and a Vietnam Veteran having served in the United States Navy(1969-1973). MATTHEW F. HEYWOOD (46) — Chief Operating Officer. Mr. Heywood joined the Corporation as its Chief Operating Officer in January 2008. He received his Bachelor of Arts degree from Dartmouth College in Government(1989) and a Master's degree from the University of Michigan— School of Business in Business Administration in General Management (1994). Prior to joining the Corporation Mr. Heywood served as Chief Operating Officer at Delray Regional Medical Center in Delray Beach, Florida (2004-2008). He also served in Senior Management roles with Riverview Regional Medical Center in Gadsden, Alabama (2002-2003) and with Deloitte Consulting in Detroit, Michigan (1994-2002). Mr. Heywood is a member of the American College of Healthcare Executives. He has served on the boards of the United Way of the Cape Fear Area and the Cape Fear Museum as well as other boards and committees throughout the community. MARY ELLEN BONCZEK (57) — Senior Vice President and Chief Nurse Executive. Ms. Bonczek joined the Corporation on February 28, 2001. She received her Bachelor of Science degree in Nursing from Wagner College, Staten Island, New York (1976) and her Master's degree in Public Administration from Fairleigh Dickinson University, Rutherford,New Jersey(1992). Priorto joining the Corporation, she served as Vice President of Patient Care Services and Chief Nurse Executive of the Medical Center of Ocean County, Meridian Health Systems (1993-2001) and as Director of Nursing/Chief Nurse Executive for Monmouth Medical Center in Long Branch, New Jersey (1991- 1993). Her clinical background is in critical care nursing. Ms. Bonczek is board-certified in Advanced Nursing Administration (1997) by the American Nurses Credentialing Center. She serves as a board member, as well as Secretary/Treasurer, of the New Hanover County Blue Ribbon Commission on the Prevention of Youth Violence, the Nurse Advocacy Board for the University of North Carolina at Wilmington and the Cape Fear Community College Surgical Technician Advisory Board, and is a board member for the North Carolina Foundation For Nursing Excellence. Ms. Bonczek is a published author in the Lippincott's Review Series on Pathophysiology and Pharmacology, RN Magazine and the Inside Ambulatory Care Journal along with numerous other publications. She has extensive management experience overseeing and coordinating nursing and patient care operations in comprehensive health care systems. DONNA DAVIS BOST (59) —Vice President of Support Services and Site Administrator, Cape Fear Campus. Ms. Bost received a Bachelor of Science in Nursing degree from the University of North Carolina at Chapel Hill (1976) and a Master of Science in Nursing degree from East Carolina University (1986). Ms. Bost joined the Corporation in 1981 and was appointed to her current position in February 1999. Prior to serving in her current position, she served as Vice President Sub-Acute Services (1996- 1999), Administrator Coastal Heart Center (1990-1996), Administrator—Medical/Surgical Services (1983-1991) and Administrator—Mother/Child Services (1981-1983). Prior to joining the Corporation, Ms. Bost served as a staff nurse for the Forsyth County Health Department (1978-1979) and a patient A-5 Board of Commissioners Meeting 06/03/2013 14-5-5 educator at North Carolina Baptist Hospital (1979-1981). Ms. Bost has served on the Boards of Lower Cape Fear Hospice, Wilmington Health Access for Teens, Girls Inc., Mariner Health LLC, North Carolina Center for Nursing and North Carolina Hospital Association Policy Development Committee. Presently, she serves on Atlantic Surgery Center LLC and is a volunteer at the Tileston Clinic. She was certified as an Advanced Nursing Administrator by the American Nurses Association and is a Fellow in the American College of Health Care Executives. JOHN H. GIZDIC (43) — Executive Vice President of Strategic Planning, Business Development, and Medical Affairs. Mr. Gizdic received a Bachelor of Science degree in Health Policy and Administration from Penn State University (1992) and a Master of Business Administration degree and a Master of Health Administration degree from Pfeiffer University (1996). Mr. Gizdic joined the Corporation in April 2005. Prior to joining the Corporation, Mr. Gizdic served as Vice President of Administration and Strategic Services for Blue Ridge HealthCare System, a two-hospital system in western North Carolina affiliated with Carolinas Healthcare System (2001-2005), as Director of the Carolina Healthcare System Management Company (1996-2001) and as Senior Financial Analyst and a Management Engineer with Mercy Hospitals (1992-1996). Mr. Gizdic is a member of the American College of Healthcare Executives. He has served on various boards and committees throughout the community and State, including the Greater Wilmington Area Chamber of Commerce Board of Directors; the Greater Wilmington Chamber Foundation Board, the Cape Fear Future Board; the North Carolina Hospital Association Policy Development Committee, and the North Carolina Center for Affordable Care Board. SAMUEL S. SPICER, MD, MMM, FACEP (63) — Vice President of Medical Affairs. Dr. Spicer received his Medical Degree from the Medical University of South Carolina (1976) and his Master's degree from Tulane University (2005) in Medical Management. Dr. Spicer joined the Corporation in 2003 and was appointed to his current position in January 2005. Prior to serving in his current position, he served as the Medical Director of Outcomes and Informatics (2003-2005). Prior to joining the Corporation, Dr. Spicer worked as an emergency physician with East Carolina Emergency Physicians (1987-2003), Pitt County Memorial Hospital in Greenville, North Carolina (1981-1987), Broward General Hospital in Ft. Lauderdale, Florida (1979-1981), Fort Eustis Hospital in Fort Eustis, Virginia(1978-1979) and Walter Reed Hospital in Gloucester, Virginia(1978-1979). Dr. Spicer is board certified in both Emergency Medicine and Family Practice. He is a member of the American College of Healthcare Executives. In 2009, he co-founded Coastal Connect, a Regional Health Information Exchange for seven counties in Southeastern North Carolina. He has severed as Chair of the Coastal Connect Board of Trustees since 2009. AVERY CLOUD (59) — Vice President and Chief Information Officer. Mr. Cloud joined the Corporation as Vice President and Chief Information Officer in July 2004. He received an Applied Science degree in Business Data Processing from Rutledge College in 1973 and a Master's Degree in Business Administration at Wake Forest University in 1988. Mr. Cloud has extensive knowledge of information management with experience using IT to support global manufacturing as well as hospital systems. He came to the Corporation from Integris Heath in Oklahoma City, a fifteen hospital statewide system, where he served as Chief Information Officer. Prior to Integris Health, he was Chief information Officer at Novant Health System in Charlotte North Carolina. Since moving to Wilmington, North Carolina, he has served on the IT Advisory Board at University of North Carolina-Wilmington, been an active member of the North Carolina Health Information and Communications Alliance, Health Information Management Systems Society, and the College of Healthcare Information Management Executives. LORELLE "LORI" FEEZOR (49) — Vice President of Legal Affairs and General Counsel. Ms. Feezor joined NHRMC in 2006. Immediately prior to joining NHRMC, she served as Associate A-6 Board of Commissioners Meeting 06/03/2013 14-5-6 Vice President and Chief Compliance Officer at Duke University Health System. She also directed the risk management program at the University of California-Davis Medical Center where she was responsible for the litigation, insurance and risk management functions of both the hospital and medical school. In other previous roles as both outside and in-house counsel, she provided legal and risk management advice to a variety of health enterprises including academic medical centers, hospitals, physicians groups,HMOs, PHOs. MSOs,wellness centers and surgery centers. In addition, she served as adjunct faculty at East Carolina University for several years where she taught health law. Ms. Freezor writes and edits the NC Patient and Provider Rights Guide, a resource manual produced by the NC Hospital Association with funding from the Duke Endowment. In addition, she has published several articles in professional journals and is a frequent national and statewide lecturer on various health-related topics. In 2011, she was the recipient of the NC Bar Association-Health Law Section's Distinguished Service Award, an honor that has only been presented six other times. Facilities and Services The Corporation is currently licensed to operate 647 general acute care beds, 60 rehabilitation beds and 62 psychiatric beds for a total of 769 beds as part of the Health Care System. As of March 31, 2013, the allocation of the licensed and staffed beds among medical services for both the Main Campus and Cape Fear Campus is as follows: Main Campus Service Licensed Beds Staffed Beds Medical/Surgical 382 326 Psychiatric 62 42 Rehabilitation 60 57 Obstetrical/Gynecological 68 68 Pediatric 17 17 Pediatric Intensive Care 6 6 Neonatal Intensive Care (level IV) 23 23 Neonatal (level III) 22 22 Medical/Surgical Intensive Care 24 24 Cardiac Intensive Care 16 16 Cardiovascular Surgical Intensive Care 14 14 Total 694 615 Cape Fear Campus Service Licensed Beds Staffed Beds Medical/Surgical 37 25 Orthopedics 31 31 Medical/Surgical Intensive Care 7 7 Total 75 63 Main Campus As a teaching hospital and regional referral center,the Main Campus facilities offer a wide array of inpatient and outpatient services, as well as trauma, surgical care and specialty centers. Inpatient services provided at the Main Campus include medical, cardiology and cardiac surgery, cardiac catheterization,medical/surgical and gynecological oncology,nephrology, orthopedics,geriatrics, A-7 Board of Commissioners Meeting 06/03/2013 14-5-7 neurology, surgical services, maternity, rehabilitation, psychiatric services, pediatric services and general acute care. Inpatient care offers four adult intensive care units, a surgical step down unit and a rapid admit unit to expedite the admissions process. The Main Campus's outpatient clinics specialize in a variety of areas, including general medicine, surgery, cardiology, gastroenterology, endocrinology and infectious disease, and also provide prenatal, neonatal, postpartum and postoperative services. Outpatient care at the Main Campus includes a wide array of services, such as cardiac catheterization, radiologic procedures, IV therapy or blood administration, internal medicine and pediatric clinics, ambulatory surgery and rehabilitation services, including cardiac and pulmonary rehabilitation. The Medical Mall, which opened in 1992 and is located adjacent to the Main Campus, houses a comprehensive diagnostic imaging center, including PET/CT, magnetic resonance imaging, computerized tomography, mammography and other outpatient radiology services, as well as facilities for pre-admission testing and counseling. The Main Campus is one of nine Level I or II designated trauma centers in North Carolina. As the trauma center for the Health Care System's seven-county Service Area, it is responsible for providing a full spectrum of trauma care. The Main Campus is one of twelve hospitals in North Carolina with a Level IV neonatal intensive care unit. Other intensive care services include cardiac and cardiovascular surgical intensive care units, as well as medical/surgical and trauma-neuro intensive care units. The Main Campus operates a 24-hour, physician-staffed emergency room. In 1998,the Corporation acquired from the County a pre-hospital service known as New Hanover Regional EMS and Rescue (the "Transport Network"). The Transport Network operates ten ambulances and seven VitaLink mobile intensive care units. The ambulances, staffed by paramedics, are responsible for 911 emergency responses in all of New Hanover County. Each VitaLink mobile intensive care unit is staffed by a paramedic, a registered nurse and an emergency medical technician. The Transport Network established AirLink, a medical helicopter providing air ambulance service to the region, in 2001. An additional helicopter serving Onslow and Columbus Counties was put into service in February 2013. The VitaLink and AirLink units transport seriously ill or injured patients throughout the region to the Main Campus, as needed. The Main Campus's VitaLine is a free health information telephone service that operates 24 hours a day. Through VitaLine, registered nurses are available to answer questions from residents throughout the region and provide physician referrals and community health information. The Surgical Pavilion, which opened on June 30, 2008, provides advanced surgical services, including minimally invasive surgery, in a spacious 186,500 square foot setting. The 26 operating rooms can accommodate advanced laparoscopic procedures and other surgical technology, such as the da Vinci Surgical System, which includes the only da Vinci surgical robot in the Wilmington area. Other features include 76 private surgical prep and recovery rooms, 24 post anesthesia care rooms, and a dedicated entrance and parking. The Main Campus offers a number of specialty care units, including the Coastal Heart Center (the "Heart Center"), the Zimmer Cancer Center (the "Cancer Center"), the Women's and Children's Hospital,the Rehabilitation Hospital and the Behavioral Health Hospital. The Heart Center provides a range of cardiac care services, including the area's only open-heart surgery program, cardiac catheterization, angioplasty, atherectomy, electrophysiology, cardiopulmonary rehabilitation and coronary intensive care. The Heart Center includes four cardiac catheterization laboratories, two electrophysiology labs, a cardiovascular laboratory suite providing stress testing, echocardiograms and other cardiovascular testing services and a cardiac rehabilitation facility. The Cancer Center provides advanced cancer treatment on an inpatient and outpatient basis. It also houses the area's only accredited teaching cancer program. Chemotherapy, radiation therapy, A-8 Board of Commissioners Meeting 06/03/2013 14-5-8 oncology clinics, educational seminars and national clinical trials are all located in one setting. The Cancer Center's programs are designated as Teaching Hospital Cancer Programs by the Commission on Cancer of the American College of Surgeons. Among its specialties is gynecological oncology. The Cancer Center participates in national clinical trials for specific cancers and maintains a cancer registry providing information on the incidence, cure and mortality rates for cancer in Southeastern North Carolina. In September 2009, the Corporation was awarded a $1.9 million grant from the National Cancer Institute to increase the numbers of African-American and other underserved populations of cancer patients who participate in federally funded radiation oncology clinical trials. This study will continue through July 2014. The Women's and Children's Hospital is a 136-bed hospital that provides comprehensive tertiary care for women in specially designed units for high-risk pregnancy, labor and delivery, motheribaby, and gynecological conditions including urogynecology and gynecological oncology. Three C-section operating rooms and a 4-bed recovery room provide care for women requiring cesarean delivery, and labor assessment and fetal testing are also provided. Annually, approximately 3,800 babies are delivered at the Health Care System. The children's units include pediatrics, pediatric intensive care and neonatal intensive care. The 6-bed pediatric intensive care unit and 17-bed pediatrics unit are the only units designed specifically for children in southeastern North Carolina. Every child's room includes a sleep sofa for parents. A family living room, kitchen and washer/dryer unit provide basic amenities for parents staying with children. The 45-bed all private room neonatal intensive care unit is available for infants born prematurely or requiring specialty care. Pediatric care is supported by pediatric hospitalists, pediatric intensivists and pediatric surgeons available 24 hours a day. Transport service is available to provide tertiary level neonatal services to community hospitals in a seven county region. The Rehabilitation Hospital provides inpatient services to patients requiring rehabilitation services for treatment of conditions such as arthritis, multiple sclerosis, stroke, amputation and traumatic brain and spinal cord injuries. The Rehabilitation Hospital also offers day hospital services for those patients undergoing therapies of four to six hours per day. The Behavioral Health Hospital is a 62-bed psychiatric crisis inpatient stabilization hospital that provides inpatient psychiatric programs, including for patients with co-occurring mental health and substance abuse disorders. It is staffed by a comprehensive team of mental healthcare professionals, including board-certified psychiatrists and psychiatric nurse practitioners, counselors, clinical social workers and recreation therapists. Cape Fear Campus The Cape Fear Campus, which is located approximately five miles from the Main Campus, provides a range of medical, surgical and ambulatory care services, including 24-hour emergency care, outpatient surgery, radiology, ultrasound, magnetic resonance imaging, and outpatient rehabilitation services. Inpatient services include orthopedics, general medical and surgical services, and general acute and intensive care. Housed at the Cape Fear Campus, the Cape Fear Orthopedic Specialty Center (the "Orthopedic Center") offers both inpatient and outpatient surgical services for patients with problems with their muscles, joints, bones, ligaments, tendons and nerves. The Orthopedic Center consolidates orthopedic surgery, an experienced orthopedic staff, specialized equipment and rehabilitation services in one location. Free educational seminars are regularly offered to the community on a wide range of orthopedic topics. Joint Camp, an athletic-style treatment program, encourages and pushes patients to regain mobility and function after joint replacement surgery, allowing better satisfaction and outcomes. The predominant surgical service at the Cape Fear Campus is orthopedics, but other surgical specialties include neurosurgery, plastic surgery, urology, ophthalmology, and ear, nose and throat. Approximately 60%of the Cape Fear Campus's surgical procedures are performed on an outpatient basis. A-9 Board of Commissioners Meeting 06/03/2013 14-5-9 Located less than one-half mile from the Cape Fear Campus, the Oleander Rehabilitation Center offers an array of outpatient services in the following specialized disciplines: physical therapy, occupational therapy, industrial rehabilitation, sports rehabilitation, hand therapy, aquatics and wound care. The Rehabilitation Center's occupational health services include treatment of work-related illness and injury, screenings and examinations and a variety of preventive programs. Carolina Healthcare Associates, Inc. The Corporation governs Carolina Healthcare Associates, Inc. ("CHA"). Also known as NHRMC Physician Group, CHA is a nonprofit corporation that provides professional patient care throughout the Health Care System service area in the form of physician and nurse practitioner services. CHA has six locations providing family and internal medicine services; two urgent care facilities; specialist practices in cardiology, neurology, oncology, urology; and hospitalists and other specialists located throughout the Health Care System facilities. As of March 2013, CHA had a staff consisting of 100 physicians and 41 mid-level providers. Pender Memorial Hospital The Corporation operates Pender Memorial Hospital, an 86 licensed beds acute care and skilled nursing facility owned by Pender County, North Carolina ("Pender Memorial Hospital"), pursuant to an operating agreement among the Corporation, Pender Memorial Hospital, Incorporated ("PMH") and Pender County which runs through July 17, 2019. The Corporation is the sole member of PMH, and the Corporation appoints three members to the Board of Trustees of PMH. PMH leases the facility from Pender County pursuant to a lease agreement between Pender County and PMH which also runs through July 17, 2019. PMH is responsible for Pender Memorial Hospital's licensure and accreditation, medical staff and lease payments to Pender County. The decisions of PMH's Board of Trustees are subject to various levels of oversight from the Corporation's Board of Trustees (the `Board of Trustees"). The Corporation funds any annual operating deficits of Pender Memorial Hospital, and all revenues derived from the operation of Pender Memorial Hospital are returned to the Corporation on an annual basis. Although the Corporation operates Pender Memorial Hospital pursuant to such operating agreement, Pender Memorial Hospital does not constitute a part of the Health Care System, and the revenues derived from the operation of Pender Memorial Hospital do not constitute "Revenues" under the Bond Order and are not pledged as security for any series of bonds issued under the Bond Order, including the Series 2013 Bonds. Furthermore, the operating expenses incurred by the Corporation in connection with its operation of Pender Memorial Hospital do not constitute "Operating Expenses"under the Bond Order. New Hanover Regional Medical Center Home Care (formerly known as Pender Home Health) is a wholly owned subsidiary of Pender Memorial Hospital offering home health services to patients who do not require 24-hour care. New Hanover Regional Medical Center Home Care can provide or arrange for the provision of a full array of home care services to meet the patient's individual needs, including physical therapy, occupational therapy, speech therapy, wound care, home infusion therapy, skilled nursing, medical social services, home health aides, a diabetes home program, home medical equipment, and a palliative care bridge program with Lower Cape Fear Hospice, Inc. (the "Hospice"). New Hanover Regional Medical Center Home Care is licensed by the North Carolina Division of Health Service Regulation, is accredited by the Joint Commission, and is a Medicare/Medicaid certified agency. No portion of the revenues, or assets, of New Hanover Regional Medical Center Home Care is pledged to the payment of and are not pledged as security for any series of bonds issued under the Bond Order, including the Series 2013 Bonds. A-10 Board of Commissioners Meeting 06/03/2013 14-5- 10 Other Related Entities New Hanover Regional Medical Center Foundation, Inc. (the "Foundation") was formed in 1991 to receive gifts and donations, as well as to organize and to conduct fundraising activities on behalf of the Corporation. The Foundation is a North Carolina nonprofit corporation exempt from federal income taxes under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code. No portion of the revenues or assets of the Foundation is pledged to the payment of any series of bonds issued under the Bond Order, including the Series 2013 Bonds. In August 2008,the Board of Trustees approved a partnership with Carolinas HealthCare System ("CHS"), through which area physicians may join North Carolina's largest physician network. Physicians are employed by Carolinas Physician Network,the physician practice arm of CHS,while their practice staffs are employed by, and their practices are owned or operated by, CHA. Carolinas Physicians Network employs physicians in the following specialties: hospitalists, family medicine, cardiology, gastroenterology, internal medicine, medical oncology, oral and maxillofacial surgery, neurology, urology, urgent care, gynecology/oncology, pediatric surgery and psychiatry. No portion of the revenues or assets of CHS or Carolinas Physician Network is pledged to the payment of any series of bonds issued under the Bond Order, including the Series 2013 Bonds. The Corporation is also affiliated with the Hospice by virtue of its authority to appoint 80% of the Board of Directors of the Hospice. The Hospice is a nonprofit corporation that provides healthcare and social services to terminally ill patients and their families. No portion of the revenues or assets of the Hospice is pledged to the payment of any series of bonds issued under the Bond Order, including the Series 2013 Bonds. The Corporation has formed four alliances with various medical groups through equity method investments. The Corporation acquired a 40% interest in Atlantic Surgicenter, an ambulatory surgery facility that opened in 2008 and, in June 2012, increased its ownership percentage to 46%. The Corporation holds a 50% ownership interest in South Atlantic Radiation Oncology, LLC. This company provides radiation oncology services to residents of Brunswick County. The Corporation holds a 50% ownership interest in Porter's Neck Imaging, a joint venture providing mobile MRI services in Northern New Hanover County and surrounding areas. In April 2007, the Corporation entered into a joint venture to form, and committed to a 50% ownership interest in, Dosher/NHRMC, LLC, which operates healthcare related facilities and provides healthcare services in Brunswick County in a manner that furthers the charitable and tax-exempt purpose of the members. No portion of the revenues or assets of any of these entities is pledged to the payment of any series of bonds issued under the Bond Order, including the Series 2013 Bonds. In 2007, the Corporation entered into a joint venture agreement to form Coastal Carolina Heart, LLC (CCH), acquiring an 82%ownership interest. In 2011,the Corporation acquired the remaining 18% of the minority interest in CCH and consolidated all operations of the joint venture into the Hospital. The Corporation, like all other hospitals in the Health Care System's service area,is a member of Coastal Carolinas Health Alliance, a 501(c)(3) organization ("CCHA"). CCHA provides education and assistance to its member hospitals for the purpose of reducing operational costs and improving the delivery of health care in the service area. The Corporation, along with nine other healthcare providers, is a member of Assuring Affordable Quality Healthcare in NC, LLC ("AAQHNC"), an organization formed in 2012 to advocate for access to safe, affordable, quality healthcare in North Carolina. No portion of the revenues or assets of CCHA or AAQHNC is pledged to the payment of any series of bonds issued under the Bond Order, including the Series 2013 Bonds. A-11 Board of Commissioners Meeting 06/03/2013 14-5- 11 The Main Campus's Cameron Education Center(the "Cameron Center") serves as a headquarters for continuing education of health professionals in a five-county region. The Cameron Center also houses the Southeastern Area Health Education Center ("Southeastern AHEC"). Through the Southeastern AHEC, the Main Campus and the University of North Carolina at Chapel Hill provide graduate medical education in internal medicine, general surgery, obstetrics and gynecology and family practice. The Southeastern AHEC is administered by the Health Science Foundation, Inc., an educational nonprofit organization. It is part of the state-wide system of area health education centers which links university health science centers, community hospitals and health agencies in North Carolina. Through affiliations with various other educational institutions,the Main Campus also provides clinical training in nursing,pharmacy,public health, dentistry and allied health and pastoral care services. Medical Staff As of March 31, 2013, there were 677 members of the medical staff of the Health Care System, of which 610 members maintain active privileges, representing a broad range of medical and surgical specialties. Approximately 93% of the active medical staff is board certified. The Corporation's policy on appointment, reappointment and clinical privileges requires that all medical staff of the Health Care System be board eligible and become certified within five years of initial appointment unless the Board of Trustees of the Corporation waives the certification requirement. The average age of the Health Care System's medical staff is 49 years. The following table profiles the medical staff of the Health Care System according to specialty as of March 31, 2013: Percentage of Active Active Medical Staff Special tX Medical Staff Board Certified Average g_e Medical Specialties Cardiology 30 100% 51 Family Practice 52 87 48 General Dentistry 9 67 43 Internal Medicine 191 92 48 Pediatrics 68 88 45 Psychiatry 9 100 54 Subtotal 359 89% 48 Surgical pecialties Cardio-Thoracic 3 100% 56 General Surgery 24 92 50 Obstetrics/Gynecology 36 78 46 Oral/Maxillofacial 7 100 47 Orthopedic 35 97 48 Otolaryngology 9 89 51 Surgery 48 92 51 Subtotal 162 93% 50 Hospital-Based Anesthesiology 26 100% 51 Emergency Medicine 30 93 44 Pathology 6 100 55 Radiology 27 100 51 Subtotal 89 98% 50 TOTAL 610 93% 49 A-12 Board of Commissioners Meeting 06/03/2013 14-5- 12 In its role as a primary teaching facility, the Health Care System is actively engaged in instruction of medical students and physicians. The following table sets forth the total number of residents by specialty at the Health Care System for the four preceding academic years ended June 30: As of June 30, Specialty 2009 2010 2011 2012 Family Practice 11 13 14 16 General Surgery 12 11 11 22 Internal Medicine 23 23 23 16 Obstetrics/Gynecology 16 16 17 11 Total 62 63 65 65 From March 31, 2009 through March 31, 2013, the active medical staff of the Health Care System had a net increase of 85 physicians as shown in the following table: Medical Staff As of March 31, 2009 2010 2011 2012 2013 525 545 533 539 610 The following table sets forth certain information regarding the 10 most active physicians by discharges at the Health Care System: Percentage of Total Discharges in the Fiscal Age as of Year to Date Specialty March 31, 2013 March 31, 2013 Internal Medicine 33 1.53% Internal Medicine 40 1.49 Internal Medicine 61 1.47 Physical Medicine &Rehab 57 1.43 Psychiatry 58 1.34 Orthopedic Surgery 40 1.31 Geriatric Medicine 61 1.30 Internal Medicine 37 1.25 Obstetrics/Gynecology 30 1.24 Internal Medicine 40 1.19 Total 13.55% Employees As of April 30, 2013, the Corporation had approximately 5,481employees or 4,633 full-time equivalents. Management believes that employee relations at all of the Corporation's facilities are positive. None of the employees of the Corporation is represented by a union. A-13 Board of Commissioners Meeting 06/03/2013 14-5- 13 Patient Satisfaction The Corporation is a member of the Studer Group, an organization that provides tools and resources to help healthcare organizations sustain improvements in patient satisfaction and quality of care. By utilizing these tools and resources,the Corporation achieved a score of 81%, significantly better than the national average of 71%, in 2011 on the Consumer Assessment of Healthcare Providers and Systems, a national survey conducted by the Centers for Medicare and Medicaid Services ("CMS"). In the past few years, The Corporation has been recognized as a top-ranked Community Value Provider by Cleverley & Associates, and Corporation's Main Campus, its Cape Fear Campus and Pender Memorial Hospital were part of the 29%of hospitals nationwide that did not receive penalties from CMS during the most recent review period. Utilization Statistics The following table sets forth data regarding historical inpatient and outpatient utilization for the Health Care System for the fiscal years ended September 30, 2010, 2011 and 2012 and for the six months ended March 31, 2013: Six-Month Fiscal Years Ended Period Ended September 30, March 31, 2010 2011 2012 2013 Licensed Beds 769 769 769 769 Staffed Beds' 705 709 678 694 Discharges 35,282 36,044 36,613 19,190 Patient Days 166,185 176,832 183,037 94,502 Average Length of Stay 4.71 4.91 5.00 4.92 Average Daily Census 455 484 500 519 Percent Occupancy(Staffed Beds) 65% 68% 74% 75% Emergency Department Visits 116,233 118,720 120,765 61,343 Outpatient Clinic Volume2 261,680 272,009 265,673 134,548 Ambulatory Surgical Visits 18,916 18,686 18,444 11,048 Laboratory Tests (Outpatient, including 674,870 558,698 533,400 294,597 Emergency Department) Note: All data excludes newborns. ' Average for last month of period indicated. 2 Includes cardiac and radiology procedures, in addition to clinic visits. The following tables summarize discharges and patient days by specialty category as a percentage of the Health Care System's total discharges and patient days, respectively, for the fiscal years ended September 30, 2011 and 2012 and for the six months ended March 31, 2013. Percentage of Percentage of Total Discharges Total Patient Days Fiscal Year Ended As of Fiscal Year Ended As of September 30, March 31, September 30, March 31, Service 2011 2012 2013 2011 2012 2013 Cancer Care (medical) 1% 1% 1% 1% 2% 1% Cancer Care (surgical) 1 0 1 0 1 1 Cardiac Care (medical) 9 9 9 7 7 7 A-14 Board of Commissioners Meeting 06/03/2013 14-5- 14 Cardiac Care (surgical) 5 6 5 6 6 5 General Surgery 5 5 5 7 7 7 Medicine 16 16 16 16 16 16 Neurological(medical) 4 5 4 4 4 4 Neurological(surgical) 3 3 3 3 2 2 Newborn 10 10 10 10 10 10 Obstetrics 11 11 11 7 7 7 Orthopedics (medical) 1 1 1 0 1 1 Orthopedics (surgical) 8 7 7 6 6 6 Other Surgery 2 2 2 5 4 5 Psychiatry 4 5 5 7 7 7 Rehabilitation 2 2 1 6 5 5 Renal/Urology(medical) 3 3 3 3 3 3 Renal/Urology(surgical) 1 1 1 0 1 1 Respiratory 6 6 7 7 6 7 Trauma(medical) 1 1 1 1 1 1 Trauma(surgical) 1 0 1 1 1 1 Women's Health 1 1 1 0 0 0 Pediatrics 5 5 5 3 3 3 Total: 100% 100% 100% 100% 100% 100% Note: Totals modified so when presented whole numbers total to 100%. Summary of Historical Revenues and Expenses Set forth below is a summary statement of historical revenues, expenses and changes in net assets of the Corporation and CHA (the obligated unit)for the fiscal years ended September 30, 2010, 2011 and 2012 and the six-month periods ended March 31, 2012 and 2013. The financial information for the fiscal years ended September 30, 2010, 2011 and 2012 has been derived from the audited financial statements of the Corporation and CHA as restated to reflect change in accounting principles as required for adoption of GASB Statement No. 61, "The Financial Reporting Entity: Omnibus — An Amendment of GASB Statements No 14 &No. 34. The financial information for the fiscal years ended September 30, 2011 and 2012 should be read in conjunction with the audited financial statements and notes related thereto included in Appendix B to this Official Statement, which include a supplementary schedule separating out the financial information of the Corporation and CHA. The financial information for the six-month periods ended March 31, 2012 and 2013 is unaudited,but in the opinion of management of the Corporation, includes all adjustments necessary for fair presentation of the results of operations of the Corporation and CHA for such fiscal periods. A-15 Board of Commissioners Meeting 06/03/2013 14-5- 15 A-16 Board of Commissioners Meeting 06/03/2013 14-5- 16 Management's Discussion and Analysis Six Months Ended March 31, 2013 Compared to Six Months Ended March 31, 2012. For the six months ended March 31, 2013, revenues in excess of expenses totaled $29.2 million, an increase of approximately $3.9 million over the same period in 2012, while operating income totaled $27.6 million, an increase of 90.0% from the same period in 2012. Total operating revenue increased by $48.6 million, or 13.5%, over the same period from the prior year. The increase in total operating revenue consisted primarily of an increase of approximately$44.8 million, or 12.8%, in net patient service revenue over the same period from the prior year. The increase in net patient revenue reflects an increase in utilization of both inpatient and outpatient services, improved reimbursement as a sole community hospital and from the State's Medicaid Reimbursement Initiative, CHA practice acquisitions and a rate increase of 5.8%. Operating expenses increased $35.5 million, or 10.3%, over the same period from the prior year. Of this increase, approximately $20 million is related to CHA practice acquisitions as described under "Facilities and Services — Carolina Healthcare Associates, Inc." above. Costs for professional fees and purchased services rose above the rate of increase in operating revenues while salaries, wages and benefits (the largest single expense), medical supply costs and depreciation expense rose at levels below revenue growth. The increase in professional fees was due to increased physician and consulting costs. The increase in purchased services was due to practice start-up, billing services and management fees associated with the CHA practice acquisitions. Salary, wages and benefit costs reflect a continued effort on managing productivity costs and benefits offered to employees, as well as a significant decrease in contracted labor. The increase in medical supply costs is directly attributable to the increased services provided in connection with the CHA practice acquisitions. The increase in insurance was due to an increase in hospital professional liability costs. Depreciation expense increased due to the implementation of a new clinical information system as described under"Planned Capital Improvement" below. For the six months ended March 31, 2013, operating income was $27.6 million, resulting in an operating margin of 6.8%. Non-operating revenues decreased over the same period from the prior year as the result of 59.0%decrease in unrealized gains on investments. Fiscal Year Ended September 30, 2012 Compared to Fiscal Year Ended September 30, 2011. For the fiscal year ended September 30, 2012, revenue in excess of expenses totaled $39.2 million, an increase of$12.2 million, or 45.2%, over the prior fiscal year. Total operating revenue increased $59.5 million, or 8.8%, over the prior fiscal year. Increases in inpatient and outpatient services improved reimbursement as a sole community hospital and from the State's Medicaid Reimbursement Initiative, and a rate increase of 4.0%contributed to the increase in revenue from the prior fiscal year. Operating expenses increased approximately $63.1 million, or 9.8%. Costs for salaries, wages and benefits (the largest single expense), professional fees, and medical supplies rose above the rate of increase in revenues. The increase in salaries and professional fees is directly attributable to additional staffing brought on to implement the new clinical information system as noted above. Medical supply costs and purchased service costs reflect a focused effort on supply chain cost reduction initiatives. Costs for purchased services and depreciation rose at a rate below the revenue growth. Purchased service costs reflect a focused effort on supply chain cost reduction initiatives. Depreciation costs reflect increased costs associated with completion of the Patient Tower along with a new clinic information system and data center. Insurance costs decreased by 26.7% from the prior fiscal year. The decrease in insurance expense is due to a decrease in hospital professional liability costs. Non-operating revenues increased from the prior fiscal year as the result of unrealized gains on investments of$17.5 million. A-17 Board of Commissioners Meeting 06/03/2013 14-5- 17 Fiscal Year Ended September 30, 2011 Compared to Fiscal Year Ended September 30, 2010. For the fiscal year ended September 30, 2011, revenue in excess of expenses totaled $26.9 million, a decrease of$8.7 million, or 24.4%, over the prior fiscal year. Total operating revenue increased $58.2 million, or 9.5%, over the prior fiscal year. Increases in inpatient and outpatient services along with a rate increase of 4.1%contributed to the increase in revenue from the prior year. Operating expenses increased approximately $60.5 million, or 10.4%. Costs for professional fees, insurance and purchased services rose above the rate of increase in revenues while costs for salaries, wages and benefits (the largest single expense), medical supplies and depreciation rose at rates below the revenue growth. The increase in salaries, professional fees and purchased service costs is directly attributable to the growth of CHA through practice acquisitions. Physician fees contributed to the increase in professional fees. The increase in insurance expense is due to an increase in hospital professional liability costs. Medical supply costs reflect a focused effort on supply chain cost reduction initiatives. Non-operating revenues decreased from the prior fiscal year as the result of 73.7% decrease in unrealized gains on investments. Historical Long-Term Debt Service Coverage Ratios The following table sets forth on a historical basis the maximum annual long-term debt service coverage ratio and the actual annual long-term debt service coverage ratio of the Corporation for each of the fiscal years ended September 30, 2010, 2011 and 2012. CHA has no long-term debt. The table reflects debt service requirements with respect to the Series 2005 Bonds, the Series 2006 Bonds, the Series 2008 Bonds, the Series 2011 Bonds and a long-term note payable relating to the acquisition and installation of information systems software. For purposes of calculating the maximum annual long-term debt service coverage ratio, the table assumes that the Series 2005 Bonds, the Series 2006 Bonds, the Series 2008 Bonds,the Series 2011 Bonds and the above-referenced long-term note were outstanding for each fiscal year represented in the table, that the Series 2005A Bonds and the Series 2005B Bonds bore interest at rates of 3.593% and 3.618% per annum, respectively (which rates are the fixed interest rates payable by the Corporation under the Swap Agreements, as further described in Note 7 in Appendix B to the Official Statement), and that the Series 2008 Bonds bore interest at a rate of 3.50%per annum. (In Thousands) Fiscal Year Ended September 30, 2010 2011 2012 Excess of Revenues over Expenses $35,677 $26,970 $39,150 Plus: Depreciation and Amortization 42,651 43,457 44,708 Interest 13,039 13,590 12,440 Income Available for Debt Service (A) $91,367 $84,017 $96,298 Maximum Annual Debt Service (B) $26,366 $26,366 $26,366 Maximum Annual Debt Service Coverage Ratio (A/B) 3.47 3.19 3.65 Actual Annual Debt Service (C)' $18,612 $19,982 $21,449 Actual Annual Debt Service Coverage Ratio (A/C) 4.91 4.20 4.49 ' Actual Annual Debt Service includes interest and principal payments only. Liquidity and remarketing fees are excluded. A-18 Board of Commissioners Meeting 06/03/2013 14-5- 18 For additional information on the Long-Term Debt Service Coverage Ratio, see "DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE BOND ORDER AND THE SERIES RESOLUTION-Rate Covenant"in Appendix C hereto. Liquidity The following table sets forth the Corporation's unrestricted cash and investment balances and days of cash on hand ratio as of September 30, 2010, 2011 and 2012 and March 31, 2013. (In Thousands) As of September 30, As of March 31, 2010 2011 2012 2013 Cash and Cash Equivalents $22,491 $22,326 $15,281 $22,965 Assets Limited as to Use -by Board for Capital 259,608 269,790 285,240 293,583 Improvements Total Unrestricted Cash and Investments $282,099 $292,116 $300,521 $316,548 Daily Operating Expenses' $1,509 $1,674 $1,835 $1,932 Days of Cash on Hand 187 174 164 164 ' Represents total operating expenses plus interest expense, less depreciation and amortization, divided by 365 or 366 (leap year). For the period as of March 31, 2013, total operating expenses is annualized based on past twelve months operating expenses less depreciation, amortization and bad debt expense divided by 365. The following table sets forth the Corporation's cushion ratio as of September 30, 2010, 2011 and 2012 and as of March 31, 2013. (In Thousands) As of September 30, As of March 31, 2010 2011 2012 2013 Total Unrestricted Cash and Investments (A) $282,099 $292,116 $300,521 $316,548 Maximum Annual Debt Service (B) $26,366 $26,366 $26,366 $26,366 Cushion Ratio (A/B) 10.7 11.1 11.4 12.0 Debt-to-Capitalization The following table sets forth the Corporation's outstanding indebtedness and debt-to- capitalization ratio as of September 30, 2010, 2011 and 2012 and March 31, 2013. (In Thousands) As of September 30 As of March 31 2010 2011 2012 2013 Interest Rate Swaps $11,840 $12,452 $11,768 $10,249 Long Term Note Payable 0 6,843 5,117 5,263 Series 1999 Bonds 100,775 2,785 0 0 Series 2005 Bonds 68,395 65,240 61,965 58,560 Series 2006 Bonds 120,000 120,000 120,000 116,015 Series 2008 Bonds 39,330 38,590 37,820 37,020 Series 2011 0 93,965 93,965 90,835 Unamortized Discounts,Net of Premiums (306) 2,778 2,521 2,396 A-19 Board of Commissioners Meeting 06/03/2013 14-5- 19 Deferred Loss Amounts on Refundings (6,718) (7,949) (7,302) (6,984) Total Debt $333,316 $334,704 $325,854 $313,354 Unrestricted Net Assets $472,436 $498,885 $537,348 $568,694 Total Debt 333,316 334,704 325,854 313,354 Total Capitalization $805,752 $833,589 $863,202 $882,048 Debt-to-Capitalization 41.4% 40.2% 37.7% 35.5% The Bond Order, the Series Resolution and the Lease Agreement do not include a Debt-to-Capitalization ratio covenant. The preceding table is presented for informational purposes only. Third-Party Reimbursement and Sources of Payment The following table sets forth the sources of the Corporation's gross patient service revenue by type of payor, expressed as a percentage of total gross patient service revenue for the three fiscal years ended September 30, 2010, 2011, and 2012 and the nine months ended March 31, 2013 (percentages are approximate): Six Month Fiscal Year Ended September 30, Period Ended March 31, 2010 2011 2012 2013 Medicare 46.0% 47.7% 48.4% 49.5% Medicaid 14.4 14.2 13.7 14.1 Commercial 1.0 1.0 8.2 4.1 Managed 25.7 24.4 16.8 20.0 Self-Pay 6.6 6.6 6.8 6.4 Other 6_3 6_1 6_1 5_9 Total 100.0% 100.0% 100.0% 100.0% Service Area and Competition The Health Care System's service area (the "Service Area") consists of a primary service area comprised of New Hanover, Brunswick and Pender Counties (the "Primary Service Area") and a secondary service area comprised of Bladen, Duplin, Columbus and Onslow Counties (the "Secondary Service Area"). The map below shows the Primary and Secondary service Areas and the locations of the Health Care System and other hospital facilities in the Service Area. A-20 Board of Commissioners Meeting 06/03/2013 14-5-20 New Hanover Regional Med C Center { Service Area 0 Primary �I 0 Secondary `— ,, ` I=CU/Pitt r„ CFVMC G 1NHRM�, . CHC Hospital Hospital NHRMC Duplin Cape Pear Onslcw N v nt Dosh er CFVMC NHRMC Bru n swick Gran d Stran d C Columbus Southeastern Bladed Sampson Pen der Conway Loris The table below lists the facilities and corresponding licensed beds in the service area. Licensed Beds as of September 30,2012 Acute Other Service Area Facilities Beds Beds' Total 1 NHRMC(Main Campus) 572 122 694 2 NHRMC(Cape Fear Campus) 75 -- 75 3 J.Arthur Dosher Memorial Hospital 36 64 100 4 Novant Health Brunswick Medical Center 74 -- 74 5 Columbus Regional Healthcare System 154 -- 154 6 Bladen County Memorial Hospital 48 10 58 7 Vidant Duplin Hospital 56 45 101 8 Onslow Memorial Hospital 162 -- 162 9 Pender Memorial Hospital 43 43 86 Consists of skilled nursing, psychiatric, rehabilitation and adult care beds. The following table contains a summary of the Corporation's inpatient origin data indicating discharges by county of residence for the fiscal years ended September 30, 2010, 2011, and 2012. A-21 Board of Commissioners Meeting 06/03/2013 14-5-21 Percentage of Discharges by County of Residence Fiscal Year Ended September 30, County of Origin 2010 2011 2012 Primary Service Area: New Hanover 50.3% 50.2% 49.7% Brunswick 17.2 16.8 16.3 Pender 11.4 11.6 12.1 Subtotal 78.9% 78.6% 78.1% Secondary Service Area Bladen 1.8% 1.6% 1.6% Columbus 5.8 5.6 5.1 Duplin 3.1 3.4 3.4 Onslow 5_8 5_9 6_0 Subtotal 16.5% 16.5% 16.1% Total Primary and Secondary Service Area 95.4% 95.1% 94.2% All Other 4.6% 4.9% 5.8% Total 100.0% 100.0% 100.0% Source: NHRMC Decision Support Software (ADS). Note: Totals modified so when presented whole numbers total to 100%. The following table reflects the historical market share of the Corporation in the Primary and Secondary Service Areas for the fiscal years ended September 30, 2010, 2011 and 2012: Fiscal Year Ended September 30, County 2010 2011 2012 Primary Service Area: New Hanover 93.1% 93.3% 93.2% Brunswick 55.2 54.6 52.9 Pender 78.4 80.0 79.9 Total Primary Service Area 79.1% 79.4% 78.6% Secondary Service Area Bladen 16.0% 14.6% 15.3% Columbus 27.0 27.7 26.2 Duplin 17.7 19.2 21.4 Onslow 14.0 14.1 15.9 Total Secondary Service Area 18.0% 18.1% 19.3% Total Primary and Secondary Service Area 49.9% 50.1% 51.3% Source: Truven Health (formerly Thomson-Reuters) Inpatient Market Share Data. A-22 Board of Commissioners Meeting 06/03/2013 14-5-22 The following table sets forth certain operating statistics for the twelve-month periods ended September 30, 2010, 2011 and 2012 for other hospital facilities located in the Primary and Secondary Service Areas: Period Ended September 30, Primary Service Area 2010 2011 2012 Novant Health Brunswick Medical Center' Licensed Acute Care Beds 60 74 74 Other Licensed Beds2 0 0 0 Acute Care Discharges 3,332 3,253 3,656 Acute Care Patient Days 11,308 11,643 12,787 Acute Care Average Length of Stay 3.4 3.6 3.5 Acute Care Average Daily Census 31.0 32.2 34.9 Percent Occupancy of Licensed Acute Care Beds 51.6% 43.1% 47.3% Dosher Memorial Hospital Licensed Acute Care Beds 36 36 36 Other Licensed Beds2 64 64 64 Acute Care Discharges 1,159 1,214 1,176 Acute Care Patient Days 3,723 4,224 3,984 Acute Care Average Length of Stay 3.2 3.5 3.4 Acute Care Average Daily Census 10.2 11.6 10.9 Percent Occupancy of Licensed Acute Care Beds 28.3% 32.2% 30.3% Secondary Service Area Onslow Memorial Hospital Licensed Acute Care Beds 162 162 162 Other Licensed Beds2 0 0 0 Acute Care Discharges 7,999 9,715 8,018 Acute Care Patient Days 36,370 35,951 29,994 Acute Care Average Length of Stay 4.5 3.7 3.7 Acute Care Average Daily Census 99.6 98.5 81.9 Percent Occupancy of Licensed Acute Care Beds 61.5% 60.8% 50.7% Bladen County Memorial Hospital(CFVB)3 Licensed Acute Care Beds 48 48 48 Other Licensed Beds2 10 10 10 Acute Care Discharges 972 1,026 954 Acute Care Patient Days 3,243 3,840 3,211 Acute Care Average Length of Stay 3.3 3.7 3.4 Acute Care Average Daily Census 8.9 10.5 8.8 Percent Occupancy of Licensed Acute Care Beds 18.5% 21.9% 18.3% Columbus Regional Healthcare System4 Licensed Acute Care Beds 154 154 154 Other Licensed Beds2 0 0 0 Acute Care Discharges 5,443 5,359 5,639 Acute Care Patient Days 22,750 22,944 21,660 Acute Care Average Length of Stay 4.2 4.3 3.8 Acute Care Average Daily Census 62.3 62.9 59.0 Percent Occupancy of Licensed Acute Care Beds 40.5% 40.8% 38.5% Vidant Duplin Hospitals Licensed Acute Care Beds 56 56 56 Other Licensed Beds2 45 45 45 Acute Care Discharges 2,249 2,281 2,324 Acute Care Patient Days 6,891 6,693 6,730 Acute Care Average Length of Stay 3.1 2.9 2.9 A-23 Board of Commissioners Meeting 06/03/2013 14-5-23 Acute Care Average Daily Census 18.9 18.3 45.0 Percent Occupancy of Licensed Acute Care Beds 33.7% 32.7% 32.9% 'Affiliated with Novant Health,Inc. Skilled nursing,psychiatric,rehabilitation and adult care beds. 3Bladen County Memorial Hospital doing business as Cape Fear Valley-Bladen(CFVB). 4Managed by Carolinas Healthcare System AAffiated with University Health Systems of Eastern Carolina,Inc. d/b/a Vidant Health Source: 2013 Hospital License Renewal Applications. The United States Department of Commerce, Bureau of the Census has recorded or estimated, as applicable, the population of the three counties in the Primary Service Area for the years indicated as follows: 1990 2000 2010 2011 2012 New Hanover 120,284 160,327 202,667 206,189 209,234 Brunswick 50,985 73,141 107,431 110,097 112,257 Pender 28,855 41,141 52,217 53,399 54,195 Source: United States Department of Commerce, Bureau of the Census. The County The County's land area totals approximately 220 square miles, of which 21 square miles consists of water and wetlands. The North Carolina Department of Commerce estimated the 2012 population of the County to be 209,234. Based on the 2000 and 2010 Census,the New Hanover County population grew 26.4%(from 160,307 people to 202,667 people). The County has a diversified economy and is a center for southeastern North Carolina for retail sales, regional offices of various State and federal agencies and legal, financial, medical, communication and transportation services. The area's industrial base is diversified with a mix of local, regional and national companies. Local industries are involved in a range of operations from simple assembly to manufacturing processes producing synthetic fibers, fiber optics, nuclear fuel and jet engine components. National industries such as Corning, Inc., Pharmaceutical Product Development, Inc., Verizon Wireless and General Electric have a strong presence in the County. The County's location affords industries equal accessibility to major markets to the north and south. The North Carolina State Port, located on the east bank of the Cape Fear River, is one of two deep-water harbors in the State. In fiscal year 2012,the State-owned port terminal in the County handled approximately 4.38 million tons of cargo. Tourism is a vital part of the area's economy in terms of employment and revenues. Nearby beaches, the historic riverfront area, and the USS North Carolina Battleship Memorial are significant tourist attractions. A variety of special events held throughout the year, such as the Azalea Festival and Riverfest, add to the area's appeal to tourists. The Cape Fear Coast Convention and Visitors Bureau was established to promote tourism and to expand the local economy. Funded in large part by a room occupancy tax,the Convention and Visitors Bureau serves as an umbrella organization representing all of the services available to visitors. According to the North Carolina Division of Tourism, Film and Sports Development,the economic impact of tourism to New Hanover County was over$426 million in 2011, a 6.2%increase over the prior year. The following table illustrates building activity in the County for the five indicated years by reference to issued permits: A-24 Board of Commissioners Meeting 06/03/2013 14-5-24 Non- Number Residential Residential Total Year Ended of Value Value Value June 30, Permits (in 000's) (in 000's) (in 000's) 2008 20,058 $216,808 $450,007 $666,815 2009 15,954 107,376 165,982 273,358 2010 19,096 124,150 156,307 280,457 2011 20,168 82,475 165,405 247,880 2012 21,221 141,343 202,587 343,930 Source: Inspection Department,New Hanover County. Planned Capital Improvements In fiscal year 2012,the Corporation implemented an information systems product suite to replace most of its core clinical and revenue systems. This product provides the Corporation and the local healthcare community with a fully integrated system, including easily accessible electronic medical records. The information system improvements will enable the Corporation to meet criteria necessary to qualify for Meaningful Use Stimulus Incentives from the federal government, which are anticipated to exceed $11 million. The Corporation has budgeted approximately $54 million for capital improvements in fiscal year 2013, primarily for information technology, operations equipment, strategic initiatives, and facility improvements. In subsequent fiscal years, the Corporation expects to incur approximately $40-50 million in capital expenditures annually for routine capital improvements and equipment purchases. Insurance The facilities of the Corporation are insured on a replacement value basis for fire and extended coverage perils in the blanket amount of $500 million. Directors' and officers' liability insurance is provided for the members of the Board of Trustees and management personnel of the Corporation in the amount of$15 million per claim and in the aggregate. Various other policies cover other risks, including automobile liability, collision and comprehensive; comprehensive employee dishonesty; forgery, robbery and other crime perils; general liability; kidnap and ransom; worker's compensation; and fiduciary liability. Non-emergency automobile liability coverage is maintained with a $1 million combined single limit for bodily injury and property damage. The Corporation self-insures hospital professional/general liability for the first $5 million per claim/no annual aggregate. The Corporation has umbrella coverage limits of $25 million per occurrence/$25 million annual aggregate for medical professional liability, general liability, auto liability, employer's liability and non-owned aviation/helipad liability. The Corporation has excess coverage limits of $15 million per claim/$15 million annual aggregate for medical professional liability and other liability policies as stated above. Pension and Supplemental Retirement Plan Obligations The Corporation provides a defined benefit pension plan. Each participant with 5 or more years of service is entitled to monthly pension benefits beginning at age 65 based on the participant's average compensation and years of service. The Plan provides for early retirement at ages 55-64 for participants with 5 or more years of services. Plan provisions also include death and disability retirement benefits. Contribution requirements are established by the Plan document and determined annually based on actuarial recommendations. The Corporation also offers a defined contribution plan under IRS code section 403(b) and a retirement plan created in accordance with RS Code Section 457(b). For A-25 Board of Commissioners Meeting 06/03/2013 14-5-25 information concerning the Corporation's Pension and Supplemental Retirement Plan Obligations, see the Notes to the Corporations Audited Financial Statements in Appendix C. Licensure and Accreditation The Health Care System is licensed by the Division of Health Service Regulation of the North Carolina Department of Health and Human Services. In 2012, the Joint Commission accredited the Health Care System for three years through May 2015. The Health Care System has been approved by the United States Department of Health and Human Services for participation in the Medicare and Medicaid Programs and is a member of the American Hospital Association and the North Carolina Hospital Association. Litigation and Regulatory Matters The County and the Corporation are not aware of any material litigation or regulatory matters. A-26 Board of Commissioners Meeting 06/03/2013 14-5-26 Draft No. 1 April 12, 2013 BOND PURCHASE AGREEMENT Among Local Government Commission of North Carolina, County of New Hanover, North Carolina, New Hanover Regional Medical Center and RBC Capital Markets, LLC, as Representative of the Underwriters Relating to County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 Board of Commissioners Meeting 06/03/2013 14-6- 1 TABLE OF CONTENTS Page Purchase and Sale of the Bonds......................................................................................................... PublicOffering................................................................................................................................... Representations of the Underwriters.................................................................................................. Representations and Warranties of the LGC ..................................................................................... Representations and Warranties of the County.................................................................................. Representations and Warranties of the Corporation.......................................................................... Paymentand Delivery........................................................................................................................ Conditionsof Closing........................................................................................................................ Paymentof Expenses......................................................................................................................... Partiesin Interest................................................................................................................................ Absenceof Liability........................................................................................................................... Indemnification.................................................................................................................................. Deliveryof Official Statement........................................................................................................... Counterparts....................................................................................................................................... Notices ............................................................................................................................................... GoverningLaw.................................................................................................................................. NoAdvisory or Fiduciary Role.......................................................................................................... Auditor's Agreed Upon Procedures Letter........................................................................Exhibit A Supplemental Opinion of Bond Counsel ...........................................................................Exhibit B Opinion of County Attorney..............................................................................................Exhibit C Opinion of Counsel to the Corporation..............................................................................Exhibit D Opinions of Underwriters' Counsel...................................................................................Exhibit E Pricing Information ............................................................................................................Exhibit F i Board of Commissioners Meeting 06/03/2013 14-6-2 BOND PURCHASE AGREEMENT Relating to County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 June 21, 2013 Local Government Commission of North Carolina Raleigh, North Carolina County of New Hanover, North Carolina Wilmington, North Carolina New Hanover Regional Medical Center Wilmington, North Carolina Ladies and Gentlemen: The Underwriters named below (the "Underwriters"), acting on their own behalf and not as a fiduciary or agent for you, hereby offer to enter into this Bond Purchase Agreement (the "Bond Purchase Agreement") with the Local Government Commission of North Carolina, a division of the Department of State Treasurer of the State of North Carolina (the "LGC"), the County of New Hanover, North Carolina (the "County") and New Hanover Regional Medical Center (the "Corporation") which, upon acceptance of this offer by the LGC and approval of this offer and of the LGC's acceptance thereof by the County and the Corporation, will be binding upon the LGC, the County, the Corporation and the Underwriters. This offer is made subject to acceptance by the LGC and approval and agreement by the County and the Corporation on or before 5:00 p.m., Raleigh, North Carolina time, on the date hereof, and, if not so accepted and approved, will be subject to withdrawal by the Underwriters upon notice delivered to the LGC, the County and the Corporation at any time prior to such acceptance and approval. Section 1. Purchase and Sale of the Bonds. Upon the terms and conditions hereof and upon the basis of the representations set forth herein, the Underwriters hereby agree to purchase from the LGC $ Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 (the "Bonds"), and the LGC, the County and the Corporation hereby agree to sell to the Underwriters all, but not less than all, of the Bonds at a purchase price equal to $ (representing the aggregate principal amount of the Bonds, [plus] [less] a net original issue [premium] [discount] of$ , and less an underwriters' discount of$ ) (the delivery and payment and other actions contemplated hereby to take place at the time thereof being herein sometimes referred to as the "Closing"). Board of Commissioners Meeting 06/03/2013 14-6-3 The proceeds of the Bonds are to be used to provide funds, together with other available funds, to (a) currently refund [all] [$ ] of the County's outstanding Variable Rate Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center Project), Series 2005A-1, Series 2005A-2, Series 2005B-1 and Series 2005B-2 (collectively, the "Series 2005 Bonds"), (b) finance certain termination payments in connection with interest rate hedging agreements entered into by the Corporation relating to the Series 2005 Bonds and (c) pay the costs incurred in connection with the issuance and sale of the Bonds. The Bonds shall be issued pursuant to The State and Local Government Revenue Bond Act, Article 5, as amended, of Chapter 159 of the General Statutes of North Carolina (the "Act"), a Bond Order adopted by the Board of Commissioners for the County (the "Board") on October 6, 1993, as supplemented and amended (the "Bond Order"), and a Series Resolution adopted by the Board on June 6, 2013 (the "Series Resolution"). Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Bond Order and the Series Resolution. The Bonds are payable solely from, and secured solely by a pledge of, the Net Revenues derived from the operation by the Corporation of the Health Care System, subject to the payment of the Operating Expenses. Pursuant to a Lease Agreement, dated as of October 1, 1993, as amended, including the Eighth Amendment to Lease Agreement, dated as of June 1, 2013 (the "Eighth Lease Amendment" and, collectively, the "Lease Agreement"), between the County and the Corporation, the Corporation has agreed to operate and maintain the Health Care System and to pay, or cause to be paid, to U.S. Bank National Association (successor to First-Citizens Bank & Trust Company), as trustee (the "Trustee"), amounts sufficient to pay the principal of, premium, if any, and interest on the Bonds, all as provided in the Lease Agreement, the Bond Order and the Series Resolution. The Bonds shall mature in such years and amounts, shall bear interest from the date of delivery thereof at such rates as described in Exhibit F hereto. You shall deliver or cause to be delivered to us prior to your acceptance hereof: (a) one copy of the Official Statement, dated the date hereof, substantially in the form of the Preliminary Official Statement, dated June 6, 2013 (the "Preliminary Official Statement"), relating to the offering and sale of the Bonds, with only such changes therein as shall have been approved by us (such Preliminary Official Statement, with such changes being herein called the "Official Statement," except that, if the Official Statement has been amended between the date hereof and the date of Closing referred to in Section 7, the term "Official Statement" shall refer to the Official Statement as so amended), signed on behalf of the LGC by its Secretary, on behalf of the County by the Chairman of the Board, the County Manager or any other authorized representative of the County, and signed on behalf of the Corporation by its Executive Vice President and Chief Financial Officer or other authorized representative of the Corporation; and (b) a letter, dated on or before the date hereof and addressed to the LGC, the County, the Corporation and the Underwriters from McGladrey & Pullen LLP in 2 Board of Commissioners Meeting 06/03/2013 14-6-4 substantially the form of Exhibit A as to the performance by such firm of certain procedures in connection with the preparation of the Preliminary Official Statement, together with a letter dated on or before the date hereof and addressed to the Corporation from McGladrey & Pullen LLP consenting to the inclusion of their report, and of references to them, in the Preliminary Official Statement and the Official Statement. Section 2. Public Offering. The Underwriters agree to make a bona fide public offering of the Bonds maturing in the years and principal amounts and bearing interest at the interest rates and initial offering prices or yields set forth on the inside cover page of the Official Statement and set forth in Exhibit F hereto. The Underwriters, however, reserve the right to change such initial offering prices or yields as the Underwriters shall deem necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering prices or yields set forth on the cover page of the Official Statement. The Underwriters shall inform the LGC, the County and the Corporation of any such changes in offering prices or yields and the amount of any such changes. The Underwriters also reserve the right to over-allot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. At Closing, the Underwriters shall deliver to the County and the Corporation a certificate, in a form satisfactory to Parker Poe Adams & Bernstein LLP, Raleigh, North Carolina ("Bond Counsel"), executed by an appropriate representative of the Underwriters, verifying the initial offering prices to the public at which the Underwriters sold or reasonably expected to sell a substantial amount of each stated maturity of the Bonds to the public. The Underwriters represent and warrant that they will offer the Bonds only pursuant to the Official Statement and only in states where the offer and sale of the Bonds are legal, either as exempt securities, as exempt transactions or as a result of due registration of the Bonds for sale in any such state. The Underwriters acknowledge that the LGC, the County and the Corporation have not authorized or consented to: (a) the sale of Bonds to any purchaser in connection with the initial public offering of the Bonds unless a copy of the Official Statement is delivered to such purchaser not later than the settlement of such transaction; (b) making any representations or providing any information to prospective purchasers of the Bonds in connection with the public offering and sale of Bonds other than the information set forth in the Preliminary Official Statement, the Official Statement and any amendment thereto approved in writing by the LGC, the County, the Corporation and the Underwriters; or (c) any actions in connection with the public offering and sale of the Bonds in violation of applicable requirements of federal and state securities laws and any 3 Board of Commissioners Meeting 06/03/2013 14-6-5 applicable requirements of the Municipal Securities Rule Making Board and the National Association of Securities Dealers, Inc. Section 3. Representations of the Underwriters. RBC Capital Markets, LLC, as representative of the Underwriters, represents that it is authorized to execute and deliver this Bond Purchase Agreement on behalf of the Underwriters and to act under the provisions of this Bond Purchase Agreement. The payment for, acceptance of and execution and delivery of any receipt for the Bonds and any other instruments in connection with the Closing shall be valid and sufficient for all purposes and binding upon the Underwriters, provided that any such action by the Underwriters shall not impose any obligation or liability upon it other than as may arise as expressly set forth in this Bond Purchase Agreement. Section 4. Representations and Warranties of the LGC. The LGC makes the following representations and warranties to the Underwriters, all of which shall survive the delivery of the Bonds: (a) The LGC is duly organized and validly existing as a division of the Department of the State Treasurer of the State of North Carolina, vested with the rights and powers conferred upon it by the Act. (b) The LGC has full power and authority to approve the issuance and provide for the sale of the Bonds as provided in this Bond Purchase Agreement, and the LGC has taken or will take all action required by the Act or other applicable laws in connection therewith. (c) The LGC has duly authorized the execution and delivery of this Bond Purchase Agreement and has taken or will take all action necessary or appropriate to carry out the sale and delivery of the Bonds to the Underwriters. (d) The execution and delivery of this Bond Purchase Agreement and the performance by the LGC of its obligations hereunder are within the powers of the LGC and, to the best of the LGC's knowledge, will not conflict with or constitute a breach or result in a violation of(i) any federal or North Carolina constitutional or statutory provision, (ii) any agreement or other instrument to which the LGC is a party or by which it is bound, or (iii) any order, rule, regulation, decree or ordinance of any court, government or governmental authority having jurisdiction over the LGC. (e) The LGC has duly approved and authorized the distribution of the Preliminary Official Statement and the execution, delivery and distribution of the Official Statement in connection with the public offering and sale of the Bonds. (f) No consent, approval, authorization or order of any governmental or regulatory authority, other than the approvals of the County and the Corporation as herein required, is required to be obtained by the LGC as a condition precedent to the issuance or sale of the Bonds or the execution and delivery of the Official Statement or this Bond Purchase Agreement or the performance by the LGC of its obligations hereunder; provided, however, that no representation or warranty is expressed as to any action required under federal or North Carolina or other state 4 Board of Commissioners Meeting 06/03/2013 14-6-6 securities or blue sky laws in connection with the offering or sale of the Bonds by the Underwriters. (g) There is no litigation or any other proceeding before any court or governmental body or agency pending or, to the knowledge of the LGC, threatened against or involving the LGC to restrain or enjoin the issuance or delivery of the Bonds or the execution or delivery by the LGC of this Bond Purchase Agreement and the performance of its obligations hereunder. Section 5. Representations and Warranties of the County. The County makes the following representations and warranties to the Underwriters, all of which shall survive the delivery of the Bonds: (a) The County is validly existing as a body corporate and politic and a political subdivision of the State of North Carolina. (b) The County has full power and authority to issue the Bonds for the purposes provided in the Act, the Bond Order, and the Series Resolution, and the County has taken or will take all action required by the Act and other applicable laws in connection therewith. (c) The Bond Order and Series Resolution have been duly adopted and constitute legal, valid and binding obligations of the County enforceable against the County in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. (d) By official action of the County prior to or concurrently with the date hereof, the County has duly authorized (i) the execution and delivery by the County of this Bond Purchase Agreement and the Eighth Lease Amendment, (ii) the issuance and delivery of the Bonds, (iii) the distribution of the Preliminary Official Statement, (iv) the execution, delivery and distribution of the Official Statement and (v) the taking of any and all such action as may be required on the part of the County to carry out, give effect to and consummate the transactions contemplated by such documents. (e) This Bond Purchase Agreement (assuming due authorization, execution and delivery of such documents by the other parties thereto) constitutes a legal, valid and binding agreement of the County enforceable against the County in accordance with its terms, except as enforcement of the foregoing may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. The Lease Agreement, upon execution and delivery of the Eighth Lease Amendment at or prior to Closing, will constitute a legal, valid and binding agreement of the County enforceable against the County in accordance with its terms, except as enforcement of the foregoing may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. (f) When authenticated by the Trustee and delivered to The Depository Trust Company, New York, New York("DTC") and paid for by the Underwriters in accordance with the terms of 5 Board of Commissioners Meeting 06/03/2013 14-6-7 this Bond Purchase Agreement, the Bond Order and the Series Resolution, the Bonds (i) will have been duly authorized, executed and issued, (ii) will constitute legal, valid and binding limited obligations of the County enforceable in accordance with their terms except to the extent that enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights from time to time in effect or by equitable principles and (iii) will be secured by and as provided in the Bond Order and the Series Resolution, it being recognized that the Bonds are not secured by a pledge of the faith and credit of the State of North Carolina or of any political subdivision thereof (including the County) and do not create an indebtedness of such State or of any political subdivision thereof, but are payable solely from the revenues and other funds provided therefor in the Bond Order and the Series Resolution. (g) The Bonds will be in substantially the form set forth in the Series Resolution. (h) The adoption of the Bond Order and the Series Resolution, the execution and delivery of the Lease Agreement and the Bond Purchase Agreement and the issuance and delivery of the Bonds and compliance with the provisions of each do not and will not conflict with or constitute on the part of the County a violation of, breach of or default under any law, indenture, mortgage, deed of trust, note, loan agreement or other agreement or instrument to which the County is a party or by which the County or any of its property is bound, or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the County or any of its activities or properties, and such action will not result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or other assets of the County under the terms of any such law, agreement, instrument, order, rule or regulation, except as provided or permitted by the Bonds, the Bond Order, and the Series Resolution. (i) All consents, approvals, authorizations and orders of any governmental or regulatory authority which is required for the issuance and delivery of the Bonds as contemplated by the Official Statement, the Bond Order, the Series Resolution, the Lease Agreement or the Bond Purchase Agreement have been or will be obtained at or prior to Closing. 0) Subject to the provisions of the Bond Order and the Series Resolution, the County will apply the proceeds derived from the sale of the Bonds to the purposes specified in the Series Resolution. (k) The County is not in violation or breach of or default under any applicable law or administrative regulation of the State of North Carolina or the United States of America or any applicable judgment or decree or administrative ruling, or any agreement, resolution, certificate or other instrument to which the County is a party or is otherwise subject, which violation, breach or default would in any way materially adversely affect the transactions contemplated by this Bond Purchase Agreement or the Bond Order and Series Resolution, or the issuance of the Bonds, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a violation, breach or default. (1) As of the date hereof and as of the date of Closing, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state any material fact 6 Board of Commissioners Meeting 06/03/2013 14-6-8 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the County makes no representation or warranty as to the information with respect to the offering of the Bonds set forth on the cover page and inside cover page of the Official Statement, or the information under the heading "UNDERWRITING' in, and Appendices A, B, D and F to, the Official Statement. (m) The County will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request to qualify the Bonds for offer and sale under the securities laws or regulations of such states and other jurisdictions of the United States of America as the Underwriters may designate; provided, however, that in no event shall the County be obligated to take any action that would subject it to general service of process in any jurisdiction where it is not now so subject, or qualify it to do business in any such jurisdiction, it being understood that the County is not responsible for compliance with or the consequences of failure to comply with applicable state securities laws and regulations. (n) No consent, approval, authorization or order of any governmental or regulatory authority is required to be obtained by the County as a condition precedent to the issuance of the Bonds or the execution and delivery of this Bond Purchase Agreement or the Lease Agreement or the performance by the County of its obligations hereunder or thereunder that has not already been obtained (provided no representation or warranty is expressed as to any action required under federal or North Carolina or other state securities or blue sky laws in connection with the purchase or distribution of the Bonds by the Underwriters). (o) Any certificate signed by an authorized officer of the County and delivered to the Underwriters shall be deemed a representation and warranty of the County to the Underwriters as to the statements made therein. (p) The Preliminary Official Statement is deemed to be a final official statement within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended ("Rule 15c2- 12"), except for the omission of certain pricing and other information authorized to be omitted by Rule 15c2-12. (q) The Official Statement is deemed to be a final official statement within the meaning of Rule 15c2-12. (r)Except as may be disclosed in the Official Statement, there is no litigation or any other proceeding before any court or governmental body or agency, pending or, to the knowledge of the County, threatened against or involving the County or any of the members of the Board in their respective capacities as such (nor, to the knowledge of the County, is there any basis therefor), restraining or enjoining the sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the County taken with respect to the sale thereof, or wherein an unfavorable decision, ruling or finding would, in any way, adversely affect (i) the transactions contemplated by this Bond Purchase Agreement or the Official Statement, (ii) the organization, existence, or powers of the County or the title to the office of any of the members of the Board, (iii)the business, properties or assets or the condition, 7 Board of Commissioners Meeting 06/03/2013 14-6-9 financial or otherwise, of the County, (iv) the validity or enforceability of this Bond Purchase Agreement, the Bond Order, the Series Resolution, the Lease Agreement or the Bonds (or any other agreement or instrument of which the County is a party or used or contemplated for use in the consummation of the transactions contemplated hereby) or (v) the exemption of the interest on the Bonds from taxation as described in the Official Statement. (s) The officers of the County executing this Bond Purchase Agreement and the Eighth Lease Amendment are duly and properly in office and fully authorized to execute the same, and all proceedings of the County authorizing the execution and delivery of the County Documents and the issuance and sale of the Bonds were conducted at duly convened meetings of the Board, with respect to which all notices were duly given to the public and at which meetings quorums were at all material times present. Section 6. Representations and Warranties of the Corporation. The Corporation makes the following representations and warranties to the Underwriters, all of which shall survive the delivery of the Bonds: (a) The statements and information contained in the Preliminary Official Statement and the Official Statement, including the appendices thereto, but excluding the information with respect to the offering of the Bonds set forth on the cover page and inside cover page of the Preliminary Official Statement and the Official Statement, and the information under the headings "THE COUNTY," "LITIGATION" (with respect to litigation affecting the County) and "UNDERWRITING' in, and Appendices D and F to, the Preliminary Official Statement and the Official Statement, are true, correct and complete in all material respects, and the Preliminary Official Statement and the Official Statement do not contain any untrue statement of a material fact or omit to state a material fact that is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading. (b) The Corporation is a nonprofit corporation duly organized and validly existing under the laws of the State of North Carolina and has full power and authority to own and/or lease and operate the Health Care System and to operate its business as presently being operated. (c) The Corporation (i) is exempt from taxation under Section 501(a) of the Code as an organization described in Section 501(c)(3) of the Code and is organized and operated for one or more of the exempt purposes listed in Section 501(c)(3) of the Code and not for pecuniary profit, and no part of its net earnings inures to the benefit of any person, private stockholder or individual, and (ii) is not a "private foundation" as defined in Section 509(a) of the Code, and (iii) has conducted its operations and filed all required reports or documents with the Internal Revenue Service so as to maintain such status, and has not received any notice or other communication from the Internal Revenue Service challenging such status directly or indirectly. (d) The Corporation (i) has duly authorized the distribution by the Underwriters of the Preliminary Official Statement and the approval, execution and distribution by the Underwriters of the Official Statement, (ii) has duly authorized the execution and delivery of this Bond Purchase Agreement and the Lease Agreement, including the Eighth Lease Amendment (collectively, the "Corporation Documents"), (iii) has approved the terms of the Bond Order and 8 Board of Commissioners Meeting 06/03/2013 14-6- 10 the Series Resolution and (iv) has taken or will take all action reasonably necessary or appropriate to cooperate in the issuance, sale and delivery of the Bonds to the Underwriters. (e) The execution and delivery of the Corporation Documents, the performance by the Corporation of its obligations hereunder and thereunder and the approval of the Preliminary Official Statement and the Official Statement are within the corporate powers of the Corporation and will not conflict with or constitute a breach or result in a violation of (i) the articles of incorporation or bylaws of the Corporation, (ii) any federal or North Carolina constitutional or statutory provision, (iii) any agreement or other instrument to which the Corporation is a party or by which it is bound or (iv) any current order, rule, regulation, decree or ordinance of any court, government or governmental authority having jurisdiction over the Corporation or its property; provided, however, the Corporation makes no representation or warranty with respect to compliance with applicable state securities or blue sky laws or the registration of the Bonds under the Securities Act of 1933, as amended, or the qualification of the Bond Order or the Series Resolution under the Trust Indenture Act of 1939, as amended. (f) This Bond Purchase Agreement has been, and, at the Closing, the other Corporation Documents will have been, duly and validly executed and delivered by the Corporation and, assuming due authorization, execution and delivery by the other parties hereto, constitute and will constitute legal, valid and binding obligations of the Corporation enforceable in accordance with their terms, other than with respect to public policy or constitutional limitations on the enforceability of the indemnity and contribution provisions of this Bond Purchase Agreement and except to the extent that enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights from time to time in effect or by equitable principles or, in the case of this Bond Purchase Agreement, applicable securities laws. (g) The Corporation (i) has obtained all consents, approvals, authorizations and orders of governmental or regulatory authorities (collectively, "Consents") that are required to be obtained by the Corporation as a condition precedent to the execution and delivery of the Corporation Documents, (ii) has obtained all Consents obtainable to date that are required to be obtained to date by the Corporation for the performance of its obligations under the Corporation Documents or for the operation of the Health Care System, and all such Consents are in full force and effect, and (iii) will use its best efforts to obtain when needed all Consents that are required for the performance of its obligations under the Corporation Documents or for the operation of the Health Care System, including all operating licenses and certificates of occupancy, and has no reason to believe that all such Consents cannot be obtained when needed. (h) There is no litigation at law or in equity or any proceeding before any governmental agency pending (as to which the Corporation has received notice), or, to the knowledge of the Corporation, threatened, in which any liability of the Corporation is not adequately covered by insurance or any self insurance reserves reasonably established by the Corporation, or in which (taking into account any such insurance or self insurance reserve) any judgment or order would have a material adverse effect on the condition (financial or otherwise) or operations of the Corporation or affect its existence or authority to do business, the validity of any of the Corporation Documents or the performance by the Corporation of its obligations hereunder or thereunder. 9 Board of Commissioners Meeting 06/03/2013 14-6- 11 (i) The Corporation is not a party to any contract or agreement or subject to any charter or other restriction not disclosed in the Official Statement, including the Financial Statements (as hereinafter defined), the performance of or compliance with which may have a material adverse effect on the financial condition or operations of the Corporation. 0) The Corporation is not in default in the payment of the principal of or interest on any of its indebtedness for borrowed money or under any instrument under or subject to which any indebtedness has been incurred, and no event has occurred and is continuing that, with the lapse of time or the giving of notice or both, would constitute an event of default under any such instrument in such instance which such default or event of default would have a material adverse effect on the condition (financial or otherwise) or operations of the Corporation. (k) The audited financial statements of the Corporation as set forth in Appendix B to Preliminary Official Statement and the Official Statement (the "Financial Statements") present fairly the Corporation's financial condition as of the respective dates and the results of its operations for the respective periods set forth therein and have been prepared in accordance with generally accepted accounting principles consistently applied, except as may be otherwise noted therein. (1) Subsequent to the date of the Financial Statements, the Corporation has not incurred any material liabilities, direct or contingent, nor has there been any material adverse change in the financial position, results of operations or condition, financial or otherwise, of the Corporation, in each case that is not described in the Preliminary Official Statement and the Official Statement, whether or not arising from transactions in the ordinary course of business. (m) To the best knowledge of the Corporation's management after due inquiry (but without having undertaken an environmental audit), (i) the Corporation is in compliance in all material respects with all Environmental Laws (as hereinafter defined) in connection with its ownership, use, maintenance and operation of its current business and properties, (ii) the Corporation has obtained all material permits and approvals known by the Corporation to be required under Environmental Laws, including all environmental permits, health and safety permits, licenses, approvals, authorizations, variances, agreements and waivers of federal, state or local government authorities necessary for the conduct of its business operations as currently conducted, and (iii) the Corporation is not subject to any outstanding written order from or agreement with, any government authority, or any judicial or administrative proceeding relating to, any cost, claim or remedial action under any Environmental Laws. For purposes of this paragraph, "Environmental Laws" shall be deemed to include any federal, state or local statute, regulation, rule, order, approval, license, permit, authorization, certification or ordinance that regulates, controls or manages (A) the generation, use, storage, treatment or disposal of hazardous materials, hazardous substances, hazardous wastes, toxic substances, oils and solid wastes (however such terms may be defined under any Environmental Laws), (B) the discharge of pollutants into the waters of the State of North Carolina or of the United States of America, (C) the discharge of any air emissions, (D) the release or discharge of any substance into land, and (5) the use of any water, air or land resources. It is understood that for purposes of this paragraph "due inquiry" shall mean such investigation and inquiry as the Corporation has deemed appropriate. 10 Board of Commissioners Meeting 06/03/2013 14-6- 12 (n) Pursuant to the Lease Agreement, the Corporation will undertake to provide certain annual financial information, operating data and notices of the occurrence of certain material events as specified in the Eighth Lease Amendment. Section 7. Payment and Delivery. At 10:00 a.m., Raleigh, North Carolina time, on June 27, 2013, or at such other time or on such earlier or later date as we mutually agree upon, the LGC, the County, and the Corporation shall deliver or cause to be delivered to The Depository Trust Company ("DTC") in New York, New York, or at such other place specified by the Underwriters, the Bonds in printed form duly executed and authenticated, and at the offices of Parker Poe Adams & Bernstein LLP, the other documents hereinafter mentioned. It is anticipated that CUSIP identification numbers will be placed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriters to accept delivery of and payment for the Bonds in accordance with the terms of this Bond Purchase Agreement. Upon such delivery of the Bonds, the Underwriters shall pay the full purchase price thereof in immediately available funds payable to the order of the State Treasurer. One fully registered Bond for each maturity of the Bonds in the aggregate principal amount of such maturity shall be registered in the name of Cede & Co., as nominee for DTC, as securities depository, and the beneficial interests in the Bonds so registered will be credited to such accounts with DTC as the Underwriters shall designate. The Bonds so registered to and held by DTC or its nominee, and the beneficial interests therein, shall be transferrable only in accordance with DTC's book-entry-only system. Section 8. Conditions of Closing. The Underwriters have entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the LGC, the County and the Corporation contained herein and to be contained in the documents and instruments to be delivered at Closing, and upon the performance by the LGC, the County and the Corporation of their respective obligations hereunder, both as of the date hereof and as of the date of Closing. Accordingly, the Underwriters' obligation under this Bond Purchase Agreement to purchase and pay for the Bonds shall be subject to the performance by the LGC, the County and the Corporation of their respective obligations to be performed hereunder at or prior to Closing, and shall also be subject to the following conditions: (a) At the time of Closing (i) the representations and warranties of the LGC, the County and the Corporation contained herein shall be true, complete and correct with the same effect as if made on the date of Closing, (ii) the Bond Order, the Series Resolution, this Bond Purchase Agreement and the Lease Agreement, including the Eighth Lease Agreement, shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to by the Underwriters, (iii) the proceeds of the sale of the Bonds shall be applied as described in the Official Statement, (iv) the Corporation shall have entered into the Undertaking as described in the Official Statement and (v) the LGC, the County and the Corporation shall have duly adopted and there shall be in full force and effect the Bond Order, the Series Resolution and such other orders or resolutions as in the opinion of Bond Counsel shall be necessary in connection with the transactions contemplated hereby, and the Bond Order, the Series Resolution and such other orders or resolutions shall not have been amended, modified or 11 Board of Commissioners Meeting 06/03/2013 14-6- 13 supplemented and the Official Statement shall not have been amended, modified or supplemented, except as may have been agreed to by the Underwriters. (b) The Underwriters shall have the right to terminate its obligations under this Bond Purchase Agreement to purchase and pay for the Bonds by notifying the LGC, the County and the Corporation of its election to do so if, after the execution hereof and on or prior to the date of Closing: (1) legislation shall have been introduced in or enacted by the Congress of the United States of America or the North Carolina General Assembly, or legislation pending in the Congress of the United States of America or the North Carolina General Assembly shall have been amended, or a decision shall have been rendered by a court of the United States of America or the State of North Carolina, including the Tax Court of the United States of America, or a ruling shall have been made or a regulation shall have been proposed or made or a press release or other form of notice shall have been issued by the Treasury Department of the United States of America or the Internal Revenue Service or other federal or North Carolina authority, with respect to interest on obligations of the general character of the Bonds, which may have the purpose or effect, directly or indirectly, of affecting the tax status of the County or the Corporation, their property or income, their securities (including the Bonds) or the interest thereon, or any tax exemption granted or authorized by relevant North Carolina statutes or, in the opinion of the Underwriters, affects materially and adversely the market for the Bonds, or the market price generally of obligations of the general character of the Bonds; or (2) the United States of America shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or other unforeseen national or international calamity, financial or otherwise, shall have occurred or accelerated to such an extent as, in the opinion of the Underwriters, affects materially and adversely the market for the Bonds, or the market price generally of obligations of the general character of the Bonds; or (3) there shall have occurred and be in force a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by United States of America, State of North Carolina or New York State authorities; or (4) there shall have occurred any material adverse change in the affairs of the County or the Corporation that, in the reasonable judgment of the Underwriters, materially or adversely affects the market price or marketability of the Bonds or the ability of the Underwriters to enforce contracts for the sale of the Bonds; or (5) there shall be established any new restrictions on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or the charge to the net capital requirements of underwriters established by the New York Stock Exchange, the Securities and Exchange Commission, any other federal or state agency or the Congress of the United States of America or by executive order; or 12 Board of Commissioners Meeting 06/03/2013 14-6- 14 (6) a decision of any federal or state court or a ruling or regulation (final, temporary or proposed) of the Securities and Exchange Commission or other governmental agency shall have been made or issued that would make the Bonds or any securities of the County or any similar body of the type contemplated herein subject to the registration requirements of the Securities Act of 1933, as amended, or require the qualification of the Bond Order or the Series Resolution under the Trust Indenture Act of 1939, as amended; or (7) the ratings on the Bonds by any national rating agency shall have been withdrawn or downgraded or any such rating shall have been placed under review or on "credit watch" with negative implications or a similar credit alert by any such national rating agency that, in the reasonable judgment of the Underwriters, materially or adversely affects the market price or marketability of the Bonds or the ability of the Underwriters to enforce contracts for the sale of the Bonds; or (8) an event occurs which in the opinion of the Underwriters requires the preparation and distribution of a supplement or amendment to the Official Statement. (c) On or prior to the date of the Closing, the Underwriters shall have received the following documents in form and substance satisfactory to the Underwriters and Womble Carlyle Sandridge & Rice, LLP, Raleigh, North Carolina, counsel to the Underwriters ("Underwriters' Counsel"): (1) an approving opinion of Bond Counsel, dated as of the date of Closing, relating to the Bonds substantially in the form attached as Appendix E to the Official Statement; (2) a supplemental opinion of Bond Counsel, dated as of the date of Closing and addressed to the Underwriters, in substantially the form attached hereto as Exhibit B; (3) a certificate of the LGC signed by the Secretary or a Deputy Secretary of the LGC, certifying that (i) all of the representations and warranties of the LGC set forth in this Bond Purchase Agreement are true and correct as of the date of such certificate; (ii) to the best of such officer's knowledge after due inquiry, the adoption of the necessary LGC resolutions, the approval of the issuance, sale, execution and delivery of the Bonds and the execution and delivery of this Bond Purchase Agreement and compliance with the provisions thereof under the circumstances contemplated thereby do not and will not conflict with any court decree or any public administrative regulation to which the LGC is subject; and (iii) to the best of such officer's knowledge after due inquiry, there is no litigation at law or in equity or any proceeding before any governmental agency pending or threatened to restrain or enjoin the issuance or delivery of the Bonds or the execution or delivery by the LGC of this Bond Purchase Agreement or the performance by the LGC of its obligations thereunder; 13 Board of Commissioners Meeting 06/03/2013 14-6- 15 (4) an opinion of Wanda M. Copley, Esq., County Attorney, dated as of the date of Closing and addressed to the Underwriters in substantially the form attached hereto as Exhibit C; (5) an opinion of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., counsel to the Corporation, dated as of the date of Closing and addressed to the Underwriters in substantially the form attached hereto as Exhibit D; (6) opinions of Underwriters' Counsel addressed to the Underwriters and dated the date of Closing, substantially in the forms attached as Exhibit E; (7) (i) a copy of the Preliminary Official Statement and (ii) a copy of the Official Statement executed on behalf of the LGC, the County and the Corporation by duly authorized representatives thereof, (8) a certificate, dated as of the date of Closing, signed by a duly authorized representative of the County to the effect that: (A) the representations and warranties of the County set forth in this Bond Purchase Agreement are true, accurate and complete in all material respects as of the date of Closing and the conditions to be complied with and obligations to be performed by the County hereunder on or prior to the date of Closing have been complied with and performed; (B) except as may be disclosed in the Official Statement, there is no litigation or any other proceeding before any court or governmental body or agency pending or, to the best of such official's knowledge, threatened against or affecting the County or any members of the Board (nor, to the best of such official's knowledge, is there any basis therefor), restraining or enjoining the sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the County taken with respect to the sale thereof, or wherein an unfavorable decision, ruling or finding would materially and adversely affect (1) the transactions contemplated by this Bond Purchase Agreement or the Official Statement, (2) the organization, existence or powers of the County or the title to the office of any of the members of the Board, (3) the business, properties or assets or the condition, financial or otherwise, of the County, (4) the validity or enforceability of the Bond Order, the Series Resolution, this Bond Purchase Agreement, the Lease Agreement or the Bonds (or any other agreement or instrument of which the County is a party, used or contemplated for use in the consummation of the transactions contemplated hereby) or (5) the exemption of the interest on the Bonds from taxation as described in the Official Statement; (C) the Official Statement did not as of its date and does not as of the date of Closing contain any untrue statement of a material fact or omit to state a material fact required to be stated therein for the purpose for which the Official 14 Board of Commissioners Meeting 06/03/2013 14-6- 16 Statement is to be used or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that no representation or warranty is made with respect to the information with respect to the offering of the Bonds set forth on the cover page and inside cover page of the Official Statement, or the information under the heading "UNDERWRITING' in, and Appendices A, B, D and F to, the Official Statement; and (9) a certificate, dated as of the date of Closing, signed by a duly authorized officer of the Corporation to the effect that: (A) the representations and warranties of the Corporation set forth in this Bond Purchase Agreement are true, accurate and complete in all material respects as of the date of Closing and the conditions to be complied with and obligations to be performed by the Corporation hereunder on or prior to the date of Closing have been complied with and performed; (B) subsequent to the date of the Financial Statements, the Corporation has not incurred any material liabilities, direct or contingent, nor has there been any material adverse change in the financial position or condition of the Corporation, in each case that is not described in the Official Statement, whether or not arising from transactions in the ordinary course of business; (C) no litigation is pending of which the Corporation has received notice or, to such officer's knowledge, threatened (i) to restrain or enjoin the collection or application of revenues pledged under the Bond Order, the Series Resolution or the Lease Agreement, (ii) in any way contesting or affecting the execution, delivery or compliance by the Corporation with the provisions of the Bond Order, the Series Resolution or the Corporation Documents or (iii) in any way contesting the corporate existence, tax exempt status or powers of the Corporation; (D) the Official Statement did not as of its date and does not as of the date of Closing contain any untrue statement of a material fact or omit to state a material fact required to be stated therein for the purpose for which the Official Statement is to be used or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that no representation or warranty is made with respect to the information with respect to the offering of the Bonds set forth on the cover page and inside cover page of the Official Statement, and the information under the headings "THE COUNTY," "LITIGATION" (with respect to litigation affecting the County) and "UNDERWRITING' in, and Appendices D and F to, the Official Statement; (E) no event affecting the Corporation has occurred since the date of the Official Statement that makes untrue or incorrect in any material respect, as of the date of Closing, any statement or information relating to the Corporation or the Health Care System contained in the Official Statement or is not reflected in the 15 Board of Commissioners Meeting 06/03/2013 14-6- 17 Official Statement but is necessary to make the statements and information contained therein not misleading; (F) no event has occurred that would constitute a material default (including, but not limited to, any event that would permit acceleration) on the part of the Corporation in any agreement relating to indebtedness of the Corporation or that would cause the Corporation to believe it will default in any material way with respect to its obligations under any such agreement; (10) a copy of the necessary resolutions of the LGC, certified by the Secretary, Deputy Secretary or any other duly authorized representative of the LGC, authorizing the LGC to sell the Bonds and to execute and deliver this Bond Purchase Agreement and the Official Statement; (11) copies, certified by appropriate officials of the County satisfactory to the Underwriters, of all proceedings of the County relating to approvals or authorizations for the Bonds, the adoption of the Series Resolution, the execution and delivery of this Bond Purchase Agreement, the Eighth Lease Amendment and the Official Statement and authorizing the distribution and use of the Preliminary Official Statement and the Official Statement by the Underwriters in connection with the offering and sale of the Bonds; (12) (A) copies of the Articles of Incorporation of the Corporation, as amended, as certified by the Secretary of State of North Carolina, (B) Certificate of Existence, dated as of a date no more than ten days prior to the date of Closing, issued by the Secretary of State of North Carolina and (C) copies, certified by the Secretary or any Assistant Secretary of the Corporation, of the Bylaws of the Corporation; (13) resolutions of the Board of Trustees of the Corporation authorizing the execution and delivery of the Corporation Documents and the approval of the Bond Order, the Series Resolution, the Preliminary Official Statement and the Official Statement, certified by the Secretary or any Assistant Secretary of the Corporation; (14) copies of the current licenses to operate the Health Care System, certified by the Secretary or any Assistant Secretary of the Corporation; (15) a certificate of a duly authorized officer of the Trustee and the Paying Agent as to the authorization of the Trustee and the Paying Agent to perform their respective obligations under the Bond Order and the Series Resolution; (16) evidence satisfactory to Bond Counsel to the effect that the Corporation is an organization described in Section 501(c)(3) of the Code; (17) evidence to the effect that the requirements of Section 149(e) of the Code have been satisfied by the filing of Internal Revenue Service Form 8038 entitled "Information Return for Private Activity Bond Issues"; 16 Board of Commissioners Meeting 06/03/2013 14-6- 18 (18) certified copies of the Bond Order and the Series Resolution and executed copies or counterparts of this Bond Purchase Agreement, the Lease Agreement, including the Eighth Lease Amendment; (19) a specimen Bond; (20) evidence, satisfactory in form and substance to the Underwriters, of receipt of "[AI]" rating assigned to the Bonds by Moody's Investors Service, "[A+]" rating assigned to the Bonds by Standard & Poor's Ratings Services; (21) a Tax Compliance Certificate of the County and the Corporation satisfactory to the Underwriters; (22) a certificate of a duly authorized officer of the Corporation to the effect that all fees and other costs due from the County or the Corporation to the LGC in connection with the transactions contemplated herein have been paid; (23) evidence that all items required to be delivered to the Trustee as a condition precedent to the issuance of the Bonds under the Bond Order and the Series Resolution have been so delivered; (24) a letter, the date of Closing and addressed to the LGC, the County, the Corporation and the Underwriters from McGladrey & Pullen LLP to the effect that such firm reaffirms with respect to the Official Statement, as of the date of Closing and as though made at the date of Closing, the statements made in the letter furnished in Section 1 hereof regarding the performance by such firm of certain procedures in connection with the preparation of the Preliminary Official Statement, except that the date referred to in such letter as the most recent date through which such firm has performed its work will be a date not more than five business days prior to the date of Closing; (25) such additional certificates (including appropriate no-litigation certificates), opinions, proceedings, instruments or other documents as the Underwriters may reasonably request. All representations, warranties and agreements of the LGC, the County and the Corporation set forth in this Bond Purchase Agreement shall remain operative and in full force and effect regardless of (a) any investigation made by or on behalf of the Underwriters or any person controlling the Underwriters and (b) acceptance of and payment for the Bonds by the Underwriters. Section 9. Payment of Expenses. The County and the Corporation shall pay from the proceeds of the Bonds or other available funds all expenses incident to the obligations hereunder and in connection with the authorization, execution, delivery and sale of the Bonds to the Underwriters, including, but not limited to, the cost of printing and distributing the Bonds, the Preliminary Official Statement, the Official Statement, rating agency fees, the fees and expenses of Bond Counsel and Underwriters' Counsel, any fees of the North Carolina Municipal Council and the fees and expenses of consultants, the LGC and the Trustee. The County and the 17 Board of Commissioners Meeting 06/03/2013 14-6- 19 Corporation shall also pay for any expenses (included in the expense component of the Underwriters' discount) incurred by the Underwriters which are incidental to implementing this Bond Purchase Agreement and the issuance of the Bonds, including, but not limited to, meals, transportation and lodging, if any, and any other miscellaneous closing costs. Each of the County and the Corporation acknowledge that it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred as part of the issuance of the Bonds. The Underwriters shall pay its out-of-pocket expenses, the cost of any blue sky or legal investment surveys, any advertising expenses in connection with a public offering of the Bonds, fees of the CUSIP Service Bureau and any fees of the Municipal Securities Rulemaking Board or the Public Securities Association. In order to ensure compliance with applicable state and/or local ethics statutes that may apply to representatives of the County or the Corporation, as well as federal and state securities regulations that may apply to the Underwriters, the Corporation hereby agrees that it shall be solely responsible for and shall pay for any expenses incurred by the Underwriters on behalf of the employees and representatives of the County and the Corporation in connection with the transactions contemplated by this Bond Purchase Agreement, including, but not limited to, meals, transportation, lodging, and entertainment of those employees and representatives. Such payment may be in the form of inclusion of such expenses in the expense component of the underwriters' discount. Section 10. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Underwriters and persons controlling the Underwriters, the LGC, the County and the Corporation, and their respective successors and assigns, and no other person, partnership or corporation shall acquire or have any right under or by virtue of this Bond Purchase Agreement. The terms "successors" and "assigns" shall not include any purchaser of Bonds from the Underwriters merely because of such purchase. Section 11. Absence of Liability. No recourse shall be had by the Underwriters for any claims based on this Bond Purchase Agreement or otherwise against any member, officer, employee or agent of the LGC, the County or the Corporation in his or her individual capacity, all claims, if any, being waived and released by the Underwriters. Section 12. Indemnification. The Corporation hereby agrees to indemnify and hold harmless the Underwriters and each person, if any, who controls (as such term is defined in Section 15 of the Securities Act of 1933, as amended) the Underwriters against any and all losses, claims, damages and liabilities arising out of any statement or information relating to the Corporation, its operations and facilities and the description of all documents and agreements to which the Corporation is a party contained in the Preliminary Official Statement and the Official Statement that is untrue or incorrect in any material respect or the omission therefrom with respect thereto of any statement or information, relating to the Corporation, its operations and facilities and the description of all documents and agreements to which the Corporation is a party, which should be contained therein for the purpose for which the Preliminary Official Statement and the Official Statement are to be used or which is necessary to make the statements 18 Board of Commissioners Meeting 06/03/2013 14-6-20 therein not misleading in any material respect, including the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission if such settlement is effected with the written consent of the Corporation. In case any claim shall be made or action brought against the Underwriters or any controlling person (as aforesaid) based upon the Preliminary Official Statement or the Official Statement, in respect of which indemnity may be sought against the Corporation, the Underwriters shall promptly notify the Corporation in writing setting forth the particulars of such claim or action, and the Corporation shall assume the defense thereof, including, where the Underwriters deem appropriate, the retaining of counsel of their selection and the payment of all expenses. The Underwriters or any such controlling person shall have the right to retain separate counsel in any such action and to participate in the defense thereof at the Underwriters' or such controlling person's own expense. The Corporation shall not be required to indemnify the Underwriters with respect to any claim settled without their consent, which consent shall not be unreasonably withheld. The Corporation agrees to indemnify and hold harmless the County and the LGC and any officer, employee, or agent of the County and the LGC, against any and all losses, claims, damages and liabilities arising out of any statement or information, relating to the Corporation, its operations and facilities and the description of all documents and agreements to which the Corporation is a party contained in the Preliminary Official Statement or the Official Statement that is untrue or incorrect in any material respect or the omission therefrom with respect thereto of any statement or information, relating to the Corporation, its operations and facilities and the description of all documents and agreements to which the Corporation is a party, which should be contained therein for the purpose for which the Preliminary Official Statement and the Official Statement are to be used or which is necessary to make the statements therein not misleading in any material respect, including the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission if such settlement is effected with the written consent of the Corporation. In case any claim shall be made or action brought against the County or the LGC or any member, officer, employee or agent of either of the County or the LGC, based upon the Preliminary Official Statement or the Official Statement, in respect of which indemnity may be sought against the Corporation, the County and the LGC, as the case may be, shall promptly notify the Corporation in writing setting forth the particulars of such claim or action and the Corporation shall assume the defense thereof, including, where the County or the LGC deems appropriate, the retaining of counsel of its selection and the payment of all expenses. The County or the LGC or any member, officer, employee or agent of either, shall have the right to retain separate counsel in any such action and to participate in the defense thereof at the Corporation's expense. The Corporation shall not be required to indemnify either the County or the LGC with respect to any claim settled without their consent, which consent shall not be unreasonably withheld. The indemnity and contribution provided by this Section will be in addition to any other liability that the County or the Corporation may otherwise have hereunder, at common law or otherwise, and is provided solely for the benefit of the indemnified party, and its respective successors, assigns and legal representatives, and no other person will acquire or have any right under or by virtue of such provisions of this Bond Purchase Agreement. 19 Board of Commissioners Meeting 06/03/2013 14-6-21 Section 13. Delivery of Official Statement, Underwriting Period. Within seven days after the execution of this Bond Purchase Agreement, the LGC, the County and the Corporation shall deliver to the Underwriters copies of the Official Statement(with only such changes therein as shall have been approved by the Underwriters), in such quantities as the Underwriters may reasonably request in order for the Underwriters to comply with the rules of the Municipal Securities Rulemaking Board and Rule 15c2-12, executed by authorized officers of the LGC, the County and the Corporation. Delivery of such copies of the Official Statement shall constitute the LGC's, the County's and the Corporation's authorization for the Official Statement, the information contained therein and the documents referred to therein to be used in connection with the public offering of the Bonds by the Underwriters. If on or prior to the 25th day following the "end of the underwriting period" (as such expression is used in Rule 15c2-12), an event occurs affecting the LGC, the County or the Corporation that materially affects the purpose for which the Official Statement is to be used and is not disclosed in the Official Statement, the LGC, the County and the Corporation agree to notify the Underwriters thereof, and if in the opinion of the LGC, the County, the Corporation or the Underwriters such event requires a supplement or amendment to the Official Statement, the LGC, the County and the Corporation will, at the Corporation's expense, supplement or amend the Official Statement in a manner approved by the LGC, the County, the Corporation and the Underwriters (such approval not to be unreasonably delayed or withheld) and will thereafter until the end of such stated period provide the Underwriters with copies of the Official Statement, as so supplemented or amended, in sufficient quantities to allow the Underwriters to comply with the requirements referred to in this Section 13. If the Official Statement is supplemented or amended, at the time of each supplement or amendment thereto and at all times subsequent thereto during the period up to and including the date of Closing the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which made, not misleading. The Underwriters agree to notify the LGC, the County and the Corporation of the end of the underwriting period. In the event the Underwriters fail to notify the LGC, the County and the Corporation of the end of the underwriting period, the end of the underwriting period shall be deemed to be the date of Closing. The Underwriters agree to cause a copy of the Official Statement to be deposited before the end of the underwriting period with each of the parties required by the applicable rules of the Municipal Securities Rulemaking Board. Section 14. Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 15. Notices. Any notice or other communication to be given under this Bond Purchase Agreement may be given by delivering the same in writing by registered or certified mail to the following addresses: 20 Board of Commissioners Meeting 06/03/2013 14-6-22 The LGC: Local Government Commission of North Carolina Blue Ridge Plaza 4505 Fair Meadows Lane, Suite 102 Raleigh, North Carolina 27607-6449 Attention: Secretary The County: County of New Hanover, North Carolina 230 Government Center Drive, Suite 165 Wilmington, North Carolina 28403 Attention: Finance Director The Corporation: New Hanover Regional Medical Center 2131 South 17th Street Wilmington, North Carolina 28401 Attention: Chief Financial Officer The Underwriters: RBC Capital Markets, LLC Three World Financial Center 200 Vesey Street, 12th Floor New York, New York 10281 Attention: Peter W. Bruton Section 16. Governing Law. This Bond Purchase Agreement shall be governed by, and construed in accordance with, the laws of the State of North Carolina. Section 17. No Advisory or Fiduciary Role. Inasmuch as this purchase and sale represents a negotiated transaction, the LGC, the County, and the Corporation, acknowledge and agree that: (i) the transaction contemplated hereby is an arm's length, commercial transaction between the LGC, the County and the Corporation, and the Underwriters in which the Underwriters are acting solely as principals and are not acting as municipal advisors, financial advisors or fiduciaries to the LGC, the County or the Corporation; (ii) the Underwriters have not assumed any advisory or fiduciary responsibility to the LGC, the County or the Corporation with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or are currently providing other services to the LGC, the County or the Corporation on other matters); (iii) each of the Underwriters is acting solely in its capacity as an underwriter for its own account, (iv) the only obligations each of the Underwriters has to the LGC, the County, or the Corporation with respect to the transaction contemplated hereby expressly are set forth in this Bond Purchase Agreement; and (v) the LGC, the County or the Corporation have consulted their 21 Board of Commissioners Meeting 06/03/2013 14-6-23 own legal, accounting, tax, financial and other advisors, as applicable, to the extent they have deemed appropriate. (signatures to follow) 22 Board of Commissioners Meeting 06/03/2013 14-6-24 This Bond Purchase Agreement shall become effective upon the execution of the acceptance and approval hereof by duly authorized representatives of the LGC, the County and the Corporation and shall be valid and enforceable as of the time of such acceptance. RBC CAPITAL MARKETS, LLC MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: RBC Capital Markets, LLC, as Representative By: Managing Director (signatures continued) 23 Board of Commissioners Meeting 06/03/2013 14-6-25 Bond Purchase Agreement County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Accepted: LOCAL GOVERNMENT COMMISSION By: Secretary (signatures continued) 24 Board of Commissioners Meeting 06/03/2013 14-6-26 Bond Purchase Agreement County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Approved: COUNTY OF NEW HANOVER, NORTH CAROLINA By: County Manager (signatures continued) 25 Board of Commissioners Meeting 06/03/2013 14-6-27 Bond Purchase Agreement County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Approved: NEW HANOVER REGIONAL MEDICAL CENTER By: Executive Vice President and Chief Financial Officer 26 Board of Commissioners Meeting 06/03/2013 14-6-28 EXHIBIT A [AUDITOR'S LETTER OF CERTAIN AGREED UPON PROCEDURES] Board of Trustees New Hanover Regional Medical Center P.O. Box 9000 Wilmington, North Carolina 28406 Board of Commissioners County of New Hanover 230 Government Center Drive, Suite 165 Wilmington, North Carolina 28403 Department of the State Treasurer Local Government Commission 325 N. Salisbury Street Raleigh, North Carolina 27603-1385 RBC Capital Markets, LLC Three World Financial Center 200 Vesey Street, 12th Floor New York, New York 10281 Merrill Lynch, Pierce, Fenner& Smith, Incorporated One Bryant Park, 12th Floor New York, New York 10036 Re: $ County of New Hanover,North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Dear Ladies and Gentlemen: We have audited the financial statements of the business-type activities and fiduciary fund information of New Hanover Regional Medical Center, a component unit of New Hanover County, North Carolina (the "Medical Center"), as of and for the fiscal year ended September 30, 2012, included in Appendix B to the Preliminary Official Statement, dated June 6, 2013 (the "Preliminary Official Statement), relating to the above-referenced bonds (the "Bonds"). Our report with respect thereto is included in Appendix B to the Preliminary Official Statement. We are independent accountants with respect to the Medical Center under Rule 101 of the AICPA's Code of Professional Conduct, and its interpretations and rulings. We have not audited any financial statements of the Medical Center as of any date or for any period after September 30, 2012. The purpose (and therefore the scope) or our audit for the A-1 Board of Commissioners Meeting 06/03/2013 14-6-29 year ended September 30, 2012 was to enable us to express our opinion on the financial statements of the Medical Center as of September 30, 2012, and for the fiscal year then ended, but not on any specified elements of the financial statements or for any interim period within that year. Therefore, we are unable to and do not express any opinion on the unaudited summary statement of revenues, expenses and changes in net assets for the six-month periods ended March 31, 2013 and March 31, 2012, included in Appendix A to the Preliminary Official Statement, or on the financial position, changes in financial position, cash flows or other financial information as of any date or for any period after September 30, 2012. 1. At your request, we have read the minutes of meetings of the Board of Trustees of the Medical Center as set forth in the minute books for the period from October 1, 2012 to June 14, 2013, officials of the Medical Center having advised us that the minutes of all such meetings through that date were set forth therein. We also carried out other procedures to June 14, 2013, as follows: a. We have read the Preliminary Official Statement. b. With respect to the six-month period ended March 31, 2013 and March 31, 2012, we have: (i) Read the unaudited balance sheet as of March 31, 2013, and the unaudited statement of revenues, expenses and changes in net assets and cash flows for the six-month periods ended March 31, 2013 and March 31, 2012, including the unaudited statement of revenues, expenses and changes in net assets of the Medical Center for the eight-month periods ended March 31, 2013 and March 31, 2012 included in Appendix A to the Preliminary Official Statement, and agreed the amounts contained therein with the Medical Center's accounting records. (ii) Inquired of certain officials of the Medical Center who have responsibility for financial and accounting matters whether the unaudited financial statements referred to in b(i) above are in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in Appendix B to the Preliminary Official Statement. Those officials stated that such unaudited financial statements are in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in Appendix B to the Preliminary Official Statement, except that the financial statements are incomplete in that they omit certain required disclosures. c. With respect to the period from April 1, 2013 to April 30, 2013, we have: (i) Read the unaudited balance sheets as of April 30, 2013 and 2012, and the related statements of operations for the one month and seven months then ended, furnished to us by the Medical Center, and agreed the amounts A-2 Board of Commissioners Meeting 06/03/2013 14-6-30 contained therein with the Medical Center's accounting records. Officials of the Medical Center have advised us that, as of June 14, 2013, no financial statements as of any date or for any period subsequent to April 30, 2013 were available. (ii) Inquired of certain officials of the Medical Center who have responsibility for financial and accounting matters whether (1) the unaudited financial statements referred to in c(i) are stated on a basis substantially consistent with that of the audited financial statements included in Appendix B to the Preliminary Official Statement, and (2) for the period from April 1, 2013 to April 30, 2013 as compared with the corresponding period in the preceding year, there were any decreases in total operating revenue, operating income or excess of revenues over expenses before capital contributions. Those officials stated that (1) the unaudited basic financial statements referred to in c(i) are stated on a basis substantially consistent with that of the audited financial statements included in Appendix B to the Preliminary Official Statement, except that the unaudited financial statements referred to in c(i) are incomplete in that they omit the statement of cash flows and other disclosures, and (2) for the period from April 1, 2013 to April 30, 2013, as compared with the corresponding period in the preceding year, there were no decreases in total operating revenue, [operating income decreased/increased by approximately $ and excess of revenues over expenses before capital contributions decreased/increased by approximately $ .] d. As mentioned in 1(c), as of June 14, 2013, Medical Center officials have advised us that no financial statements as of any date or for any period subsequent to April 30, 2013, are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after April 30, 2013, have, of necessity, been even more limited than those with respect to the periods referred to in l(b) and 1(c). We have inquired of certain officials of the Medical Center who have responsibility for financial and accounting matters whether (i) at June 14, 2013, there was any increase in total long-term liabilities or any decrease in total current assets or unrestricted net assets as compared with amounts shown in the March 30, 2013 unaudited balance sheet referred to in l(b) above or (ii) for the period from April 1, 2013 to June 14, 2013, as compared to the corresponding period from April 1, 2012 to June 14, 2012, there were any decreases in total operating revenue, operating income or excess of revenues over expenses before capital contribution. Those officials stated that (i) at June 14, 2013, there was no increase in total long- term liabilities or any significant decrease in total current assets or unrestricted net assets as compared with amounts shown in the March 30, 2013 unaudited balance sheet referred to in l(b) above and (ii) for the period from April 1, 2013 to June 14, 2013, as compared to the corresponding period from April 1, 2012 to June 14, 2012, A-3 Board of Commissioners Meeting 06/03/2013 14-6-31 there were no decreases in total operating revenue, operating income, or excess of revenues over expenses before capital contributions. 2. At your request, we have read the following items in the Preliminary Official Statement: Item Location Description a. Appendix A "Summary of Historical Revenues and Expenses" b. Appendix A "Management's Discussion and Analysis" C. Appendix A "Historical Pro-Form Long-Term Debt Service Coverage Ratio" d. Forepart "Independent Auditors" 3. Our audits of the financial statements for the period referred to in the introductory paragraph of this letter comprised audit tests and procedures deemed necessary for the purpose of expressing an opinion on such financial statements taken as a whole. For none of the periods referred to therein, nor for any other period, did we perform audit tests for the purpose of expressing an opinion on individual balances of accounts or summaries of selected transactions such as those enumerated above, and, accordingly, we express no opinion thereon. 4. However, at your request, we have performed the following additional procedures, which were applied as indicated with respect to the items enumerated in 2. above and are included in Attachment A to this letter. Procedures and Findings A Compared to the amounts related to the fiscal years ended 2010, 2011 and 2012 to amounts included in or derived from the audited financial statements of the Medical Center, noting agreement. B Compared the amounts related to the six-month periods ended March 30, 2013 and March 30, 2012 to the underlying accounting records of the Medical Center, noting agreement. C Based on information included in the audited financial statements and the unaudited financial statements referred to in l(b) above, computed the percentage of the Foundation's total operating revenues, total operating expenses and excess of revenues over expenses before capital contributions and special item, as compared to the Medical Center's aggregate total operating revenues, total operating expenses and excess of revenues over expenses before capital contributions and special item for each of the fiscal years ended September 30, 2010, 2011 and 2012, the six- month periods ended March 30, 2013 and March 30, 2012 and verified they were less than the amounts included in the second paragraph under A-4 Board of Commissioners Meeting 06/03/2013 14-6-32 "Summary of Historical Revenues and Expenses" and in "Independent Auditors." D Compared financial statement amounts included in items noted in 2.b, 2.c and 2.d, to the table under "Summary of Historical Revenues and Expenses" on page A- of the Preliminary Official Statement, noting agreement. E Recomputed the mathematical accuracy of each of the dollar changes and percentages contained using items noted in 2.b, 2.c and 2.d, using information provided under "Summary of Historical Revenues and Expenses" on page A- of the Preliminary Official Statement. F Compared the amounts or percentages, as applicable, to a schedule prepared by the Medical Center, using information derived from the Medical Center's financial accounting system, and found such amounts and percentages to be in agreement. G Recomputed the mathematical accuracy of the amounts and percentages using applicable information found in the body of the Preliminary Official Statement. H Compared the amounts to a schedule prepared by the Medical Center, using information derived from the Medical Center's financial accounting system, and found such amounts to be in agreement and recalculated the pro forma maximum annual debt service coverage ratio and found it to be arithmetically accurate. Since the pro forma maximum annual debt service ratio is based on certain events that have not yet taken place, we make no representations as to the reasonableness of the assumptions used by the Medical Center in performing the pro forma calculation. 5. It should be understood that we have no responsibility for establishing (and did not establish) the scope and nature of the procedures enumerated in items 1 through 4 above; rather, the procedures enumerated therein are those the requesting parties asked us to perform. Accordingly, we make no representations regarding questions of legal interpretation or regarding the sufficiency for your purposes of the procedures enumerated in the preceding paragraphs; also, such procedures would not necessarily reveal any material misstatement of the amounts or percentages listed above as set forth in the Preliminary Official Statement. Further, we have addressed ourselves solely to the foregoing data and make no representations regarding the adequacy of disclosures or whether any material facts have been omitted. This letter relates only to the financial statement items specified above and does not extend to any financial statement of the Medical Center taken as a whole. 6. The foregoing procedures do not constitute an audit conducted in accordance with auditing standards generally accepted in the United States of America. Had we A-5 Board of Commissioners Meeting 06/03/2013 14-6-33 performed additional procedures or had we conducted an audit or a review of the Medical Center's March 30, 2012 and March 30, 2013, and April 30, 2013 financial statements in accordance with standards established by the American Institute of Certified Public Accountants, other matters might have come to our attention that would have been reported to you. 7. These procedures should not be taken to supplant any additional inquiries or procedures that you would undertake in your consideration of the proposed offering. 8. This letter is solely for your information and to assist you in your inquiries in connection with the offering of the securities covered by the Preliminary Official Statement, and is not to be used, circulated, quoted, or otherwise referred to for any other purpose, including but not limited to the registration, purchase, or sale of securities, nor is it to be filed with or referred to in whole or in part in the Preliminary Official Statement or any other document, except that reference may be made to it in any list of closing documents pertaining to the offering of the securities covered by the Preliminary Official Statement. 9. We have no responsibility to update this letter for events and circumstances occurring after June 14, 2013. Wilmington, North Carolina June 21, 2013 A-6 Board of Commissioners Meeting 06/03/2013 14-6-34 EXHIBIT B [SUPPLEMENTAL OPINION OF BOND COUNSEL] [To be reviewed by Bond Counsel.] [Closing Date] RBC Capital Markets, LLC New York, New York Merrill Lynch, Pierce, Fenner& Smith Incorporated New York, New York Re: $ County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 We have served as bond counsel to the County of New Hanover, North Carolina (the "County") in connection with the issuance of the above-referenced bonds (the "Bonds"). The Bonds are being purchased today by RBC Capital Markets, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriters") pursuant to a Bond Purchase Agreement, dated June 21, 2013 (the "Bond Purchase Agreement'), between the Local Government Commission (the "LGC") and the Underwriters, and approved by the County and New Hanover Regional Medical Center (the "Corporation"). Capitalized terms used herein and not otherwise defined shall have the meaning given such terms in the Bond Purchase Agreement. Based upon such examination as we have deemed necessary for the purpose of expressing the opinions set forth below, we are of the opinion, as of the date hereof and under existing law, that: 1. The LGC is duly organized and validly existing as a division of the Department of the State Treasurer of the State of North Carolina. 2. The LGC has full power and authority to approve the issuance of the Bonds and to sell the same as provided in the Bond Purchase Agreement, and the LGC has taken all action required in connection therewith. 3. The adoption by the LGC of the resolution authorizing the issuance and sale of the Bonds and the execution and delivery of the Bond Purchase Agreement (the "LGC Resolution"), the approval of the issuance and sale of the Bonds and the execution and delivery of the Bond Purchase Agreement and compliance with the provisions thereof, under the circumstances contemplated thereby, (a) to the best of our knowledge after due inquiry, do not and will not in any material respect conflict with or constitute on the part of the LGC a breach or violation of or B-1 Board of Commissioners Meeting 06/03/2013 14-6-35 default under any agreement or other instrument to which the LGC is a party or by which it is bound in any way which would affect the validity or delivery of the Bonds and (b) do not and will not conflict with, violate or result in a breach of any federal or North Carolina constitutional or statutory provision. 4. No further consent, authorization or order of any governmental or regulatory authority is required to be obtained as a condition precedent to the sale of the Bonds or the execution and delivery of the Bond Purchase Agreement, except that we express no opinion as to any regulatory requirement applicable to the Underwriters or any action required under state securities or blue sky laws in connection with the offering and sale of the Bonds by the Underwriters. 5. The Bond Purchase Agreement has been duly authorized, executed and delivered by the LGC and the County and, assuming due authorization, execution and delivery thereof by the Underwriters, is a legal, valid and binding agreement of the LGC, the County and the Corporation and enforceable against the LGC, the County and the Corporation in accordance with its terms, except that the enforceability thereof may be subject to bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights generally from time to time in effect and by general equitable principles. 6. The Lease Agreement, including the Eighth Lease Amendment, has been duly authorized, executed and delivered by the County and, assuming due authorization execution and delivery thereof by the other parties thereto, is a legal, valid and binding agreement of the County enforceable against the County in accordance with its terms, except that the enforceability thereof may be subject to bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights generally from time to time in effect and by general equitable principles. 7. The LGC and the County have duly authorized, executed and delivered the Official Statement and have consented to the distribution of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds. 8. The statements contained under the headings "INTRODUCTION," "THE SERIES 2013 BONDS," "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2013 BONDS," "REPLACEMENT MASTER AGREEMENT" and "CONTINUING DISCLOSURE" in, and Appendix C to, the Official Statement, but only insofar as such statements purport to summarize certain provisions of the Bonds, the Bond Order, the Series Resolution and the Lease Agreement, accurately and fairly summarize such provisions, and the statements contained in the Official Statement under the heading "TAX TREATMENT" and statements related thereto on the cover page of the Official Statement are true and accurate. 9. The Bonds conform as to form and tenor with the terms and provisions thereof as described in the Official Statement. 10. All conditions precedent to the delivery of the Bonds contained in the Bond Order and the Series Resolution have been fulfilled. B-2 Board of Commissioners Meeting 06/03/2013 14-6-36 11. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Bond Order and Series Resolution are not required to be qualified as an indenture under the Trust Indenture Act of 1939, as amended. You may rely on our approving opinion as bond counsel, addressed to the Board of the County and delivered the date hereof, as though such opinion were addressed to you. B-3 Board of Commissioners Meeting 06/03/2013 14-6-37 EXHIBIT C [OPINION OF COUNTY ATTORNEY] [To be reviewed by County Attorney.] [Closing Date] RBC Capital Markets, LLC New York, New York Merrill Lynch, Pierce, Fenner& Smith Incorporated New York, New York Re: $ County of New Hanover,North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2013 I am the County Attorney for the County of New Hanover, North Carolina (the "County") and have served in such capacity in connection with the execution and delivery on the date hereof of the above-referenced bonds (the "Bonds"). The Bonds are being issued under and pursuant to the terms a Bond Order adopted by the Board of Commissioners for the County (the "Board") on October 6, 1993, as amended (the "Bond Order"), and a Series Resolution adopted by the Board on June 6, 2013 (the"Series Resolution"). The Bonds are being purchased today by RBC Capital Markets, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriters") pursuant to a Bond Purchase Agreement, dated June 21, 2013 (the "Bond Purchase Agreement"), between the Local Government Commission (the "LGC") and the Underwriters, and approved by the County and the New Hanover Regional Medical Center (the "Corporation"). Capitalized terms used herein and not otherwise defined shall have the meaning given such terms in the Bond Purchase Agreement. Based upon such examination as I have deemed necessary for the purpose of expressing the opinions set forth below, I am of the opinion, as of the date hereof and under existing law, that: 1. The County is duly created and existing as a body corporate and politic and a political subdivision of the State of North Carolina under the Constitution and laws of the State of North Carolina. 2. The County has duly adopted a Bond Order and the Series Resolution authorizing the issuance of the Bonds, and the Bond Order and the Series Resolution are in full force and effect. C-1 Board of Commissioners Meeting 06/03/2013 14-6-38 3. The County has duly authorized, executed and delivered the Bond Purchase Agreement and the Lease Agreement, including the Eighth Lease Amendment (collectively, the "County Documents"), and, assuming due authorization, execution and delivery by the other parties thereto, are legal, valid and binding agreements of the County enforceable against the County in accordance with their respective terms, except that the enforceability thereof may be subject to bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights generally from time to time in effect and by general equitable principles. 4. All authorizations, approvals, consents or orders of any governmental entity or any other person, association or corporation required for the valid issuance of the Bonds, the adoption of the Bond Order and the Series Resolution, the execution or delivery by the County of the County Documents and any transactions effected or contemplated thereby have been obtained, except that I express no opinion as to any action required under federal or state securities or blue sky in connection with the offering and sale of the Bonds by the Underwriters. 5. The County is not in breach of or default under any applicable law or administrative regulation of the State of North Carolina or the United States of America or any applicable judgment or decree or administrative ruling or any agreement, resolution, certificate or other instrument to which the County is a party or is otherwise subject, which breach or default would in any way materially adversely affect the transactions contemplated by the Bond Purchase Agreement, the Bond Order, the Series Resolution or the County Documents, and no event has occurred and is continuing which with the passage of time or giving of notice, or both, would constitute such a breach of or default thereunder. 6. To the best of my knowledge, the issuance of the Bonds, the adoption of the Bond Order and the Series Resolution, the execution and delivery of the County Documents and compliance with the provisions of each will not conflict with or constitute a violation or breach of or default under any applicable law, rule or regulation of the United States of America or of the State of North Carolina or of any department, division, agency or instrumentality thereof, or any applicable order, judgment or decree of any court or other governmental agency or body or any bond, note, loan agreement, resolution, certificate, agreement or other instrument to which the County is a party or by which the County or its property is bound. 7. To the best of my knowledge, there is no action, suit, proceeding, inquiry or investigation at law or in equity before any court, public board or body pending or threatened wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by the Bond Purchase Agreement or which, in any way, would adversely affect the validity of the Bonds, the Bond Order, the Series Resolution, the County Documents or the exemption of interest on the Bonds from taxation as described in the Official Statement. 8. The County has duly authorized, executed and delivered the Official Statement and has approved the distribution and use of the Preliminary Official Statement and the Official Statement by the Underwriters in connection with the offering and sale of the Bonds. C-2 Board of Commissioners Meeting 06/03/2013 14-6-39 9. Based upon information made available to me in the course of my representation of the County, and without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, nothing has come to my attention that would lead me to believe that the information contained in the Official Statement under the headings "THE PLAN OF FINANCE," "ESTIMATED SOURCES AND USE OF FUNDS," "ANNUAL DEBT SERVICE REQUIREMENTS," "THE COUNTY" and "LITIGATION" (as it relates to the County) (excluding in all cases financial and statistical data included or mentioned therein, as to which I express no opinion) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. C-3 Board of Commissioners Meeting 06/03/2013 14-6-40 EXHIBIT D [OPINION OF COUNSEL TO THE CORPORATION] [To be reviewed by Corporation Counsel.] [Closing Date] RBC Capital Markets, LLC New York, New York Merrill Lynch, Pierce, Fenner& Smith, Incorporated New York, New York Parker Poe Adams & Bernstein LLP Raleigh, North Carolina Re: $ County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Ladies and Gentlemen: We have acted as special counsel to New Hanover Regional Medical Center (the "Corporation") in connection with the authorization, issuance and sale by the County of New Hanover, North Carolina (the "County") of the above-referenced bonds (the "Bonds"), pursuant to the provisions of a Series Resolution adopted by the Board of Commissioners for the County on June 6, 2013 (the "Series Resolution"). This opinion letter is being delivered pursuant to (i) Section 2.1 l(d) of the Series Resolution and (ii) Section 8(c)(5) of the Bond Purchase Agreement dated June 21, 2013 (the "Bond Purchase Agreement"), among the Local Government Commission, a division of the Department of State Treasurer of the State of North Carolina (the "LGC") and RBC Capital Markets, LLC and Merrill Lynch, Pierce, Fenner & Smith, Incorporated (collectively, the "Underwriters"), and approved by the County and the Corporation. Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Bond Purchase Agreement. In rendering the opinions set forth herein, we have reviewed: (i) the Bond Order; (ii) the Series Resolution; (iii) the Preliminary Official Statement and the Official Statement; (iv) the Bond Purchase Agreement; D-1 Board of Commissioners Meeting 06/03/2013 14-6-41 (vii) the Lease Agreement between the County and the Corporation dated as of October 1, 1993, as amended by the First, Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth Amendments to the Lease Agreement (as so amended, the "Lease Agreement"); (viii) the Articles of Incorporation of the Corporation (the "Articles"), certified by the Secretary of State of the State of North Carolina as of June _, 2013, and certified by an officer of the Corporation as of the date hereof as being true, correct and in full force and effect; (ix) the bylaws of the Corporation (the "Bylaws"), certified by an officer of the Corporation as of the date hereof as being true, correct and in full force and effect; (x) the records of certain proceedings and actions taken by the Finance Committee of the Board of Trustees of the Corporation on , 2013, and by the Board of Trustees of the Corporation on , 2013, relating to the Bonds and related documentation, which have been certified to us by an officer of the Corporation as being true, correct and in full force and effect; and (xi) a Certificate of Existence regarding the Corporation from the North Carolina Secretary of State dated June_, 2013. The Bond Order, the Series Resolution, the Preliminary Official Statement, the Official Statement, the Bond Purchase Agreement and the Lease Agreement are hereinafter collectively referred to as the "Documents." The Bond Purchase Agreement and the Lease Agreement are hereinafter collectively referred to as the "Corporation Documents." We have made such examinations of law and fact as we have deemed necessary to render the opinions set forth below. We have relied, without independent verification, on certificates of public officials and, as to matters of fact material to our opinions, on representations made in the Documents and certificates and other inquiries of internal legal counsel for and officers of the Corporation. In rendering the opinions expressed in paragraphs 7(b) and 10 below, we have relied, with your permission and without independent investigation, on the opinion letter of Lori Feezor, Vice President, Legal Affairs and Chief Compliance Officer of the Corporation, dated the date hereof and addressed to us, a copy of which is attached hereto as Exhibit A. The phrases "to our knowledge" and "known to us" mean the conscious awareness of lawyers in the primary lawyer group of factual matters such lawyers recognize as being relevant to the opinion or confirmation so qualified. Where any opinion or confirmation is qualified by the phrase "to our knowledge" or "known to us," the lawyers in the primary lawyer group are without knowledge, or conscious awareness, that the opinion or confirmation is untrue. "Primary lawyer group" means any lawyer in this firm (i) who signs this opinion letter, (ii) who is actively involved in negotiating or documenting the issuance of the Bonds or the Documents, or (iii) solely as to information relevant to a particular opinion or factual confirmation issue, who is primarily responsible for providing the response concerning the particular opinion or issue. We did not undertake any search of the dockets of federal, state, county or other courts as the basis of our opinions expressed in paragraphs 7(c) or 9. In connection with our opinion expressed in D-2 Board of Commissioners Meeting 06/03/2013 14-6-42 paragraph 7(b), we note that our representation of the Corporation has been limited to (a) the transactions contemplated by the Bond Purchase Agreement, (b) the delivery by the Corporation of a substitute liquidity facility in respect of the $79,070,000 County of New Hanover, North Carolina Variable Rate Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center Project) Series 2005A-1, Series 2005A-2, Series 2005B 1 and Series 200513-2, (c) the transactions contemplated by the Bond Purchase Agreement dated as of September 12, 2006, among the LGC, the County, the Corporation and the Underwriters, relating to the issuance of the $120,000,000 County of New Hanover North Carolina Variable Rate Hospital Revenue Bonds (New Hanover Regional Medical Center Project) Series 2006A and Series 2006B (the "2006 Bonds"), (d) the Corporation's purchase at auction of portions of the 2006 Bonds on or after December 15, 2008, (e) the transactions contemplated by the Bond Purchase Agreement dated May 21, 2009, among the LGC, the County, the Corporation, and the Underwriters, relating to the fixed rate conversion and remarketing of the 2006 Bonds, (f) the transactions contemplated by the Bond Purchase Agreement dated November 5, 2008, among the LGC, the County, the Corporation and the Underwriters, relating to the $40,000,000 County of New Hanover, North Carolina Variable Rate Hospital Revenue Bonds (New Hanover Regional Medical Center Project) Series 2008A and Series 2008B and (g) the transactions contemplated by the Bond Purchase Agreement dated August 31, 2011, among the LGC, the County, the Corporation and the Underwriters, relating to the $93,965,000 County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center) Series 2011. The opinions set forth herein are limited to matters governed by the laws of the State of North Carolina and the federal laws of the United States, and no opinion is expressed herein as to the laws of any other jurisdiction. This opinion letter has been prepared in accordance with the customary practice of lawyers who regularly give and lawyers who regularly advise recipients regarding opinion letters of this kind. Based upon and subject to the foregoing and the further limitations and qualifications hereinafter expressed, it is our opinion that: 1. The Corporation is a nonprofit corporation in existence under the laws of the State of North Carolina. In rendering this opinion, we have relied solely on the Certificate of Existence. 2. The Corporation has the corporate power and authority (a) to conduct its business as described in the Official Statement and to operate a "hospital" as defined in N.C. Gen. Stat. § 131E-76(3), (b) to approve the Preliminary Official Statement, (c) to approve, execute and deliver the Official Statement, (d) to execute and deliver the Corporation Documents, and (e) to consummate the transactions contemplated by the Corporation Documents. 3. No consent, approval, authorization or other action by, or filing with, any governmental authority or agency of the United States or the State of North Carolina is required for (a) the Corporation's execution and delivery of the Official Statement and the Corporation Documents or (b) the consummation of the transactions contemplated by the Corporation Documents. We express no opinion as to whether the offer and sale of the Bonds in certain jurisdictions may be subject to the securities or blue sky laws of such jurisdictions. D-3 Board of Commissioners Meeting 06/03/2013 14-6-43 4. The Corporation has authorized (a) the execution and delivery of the Corporation Documents and (b) the performance of the Corporation Documents by all necessary corporate action. The Corporation has duly executed and delivered the Corporation Documents. 5. Each of the Corporation Documents constitutes the legal, valid and binding obligation of the Corporation, enforceable in accordance with its terms, subject to the following: (i) This opinion is subject to the effect of applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, and similar laws affecting the enforcement of creditors' rights generally. (ii) This opinion is subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), which may, among other things, deny rights of specific performance. (iii) We express no opinion as to the enforceability of any provisions that (a) purport to excuse a party for liability for its own acts, (b) purport to make void any act done in contravention thereof, (c) purport to authorize a party to act in its sole discretion, or (d) require waivers, amendments, changes, or modifications to be made only in writing. (iv) We express no opinion as to the enforceability of provisions purporting to require a party thereto to pay or reimburse attorneys' fees incurred by another party, or to indemnify another party therefor, which provisions may be limited by applicable statutes and decisions relating to the collection and award of attorneys' fees. (v) We note that indemnification provisions in the Corporation Documents may be held invalid as contrary to public policy and limited under applicable laws. (vi) We express no opinion as to the enforceability of provisions to the effect that enumerated remedies are not exclusive or that a party has the right to pursue multiple remedies without regard to other remedies elected or that all remedies are cumulative. (vii) We express no opinion as to the enforceability of severability provisions. (viii) We express no opinion as to the enforceability of provisions permitting the exercise, under certain circumstances, of rights without notice or without providing opportunity to cure failures to perform. 6. The Official Statement has been duly approved and executed, and the distribution and use of the Preliminary Official Statement and the Official Statement have been duly approved, by the Corporation. 7. The execution and delivery by the Corporation of the Corporation Documents, and the performance by the Corporation of its obligations thereunder, will not (a) conflict with the Articles or Bylaws, (b) constitute on the part of the Corporation a breach of or default under any other material written agreement to which the Corporation is party that is known to us, or (c) violate the terms of any judicial or administrative judgment, order, decree or arbitral decision D-4 Board of Commissioners Meeting 06/03/2013 14-6-44 that names the Corporation and is specifically directed to it or its properties and that is known to us. 8. The execution and delivery by the Corporation of the Corporation Documents and the performance by the Corporation of its obligations thereunder do not violate applicable provisions of statutory laws or regulations. 9. To our knowledge, except as described in the Official Statement, there is no action, suit or proceeding at law or in equity before or by any court, governmental instrumentality or agency or arbitral body, now pending or overtly threatened in writing against the Corporation by a potential claimant that (a) challenges the validity of the Bonds, the Bond Order, the Series Resolution, the Corporation Documents or the transactions described therein, (b) challenges the collection or application of revenues pledged under the Bond Order, the Series Resolution and the Lease Agreement, (c) challenges the accuracy or completeness of the Official Statement or the validity of the transactions described therein or (d) challenges the corporate existence of the Corporation or the title of any officer of the Corporation to his or her office. 10. The Corporation has obtained all material licenses, approvals and permits that are now required under federal, state and local laws to operate the Health Care System (as defined in the Bond Order). 11. The Corporation is an organization that is exempt from federal income taxation under Section 501(a) of the Code, by virtue of being an organization described in Section 501(c)(3) of the Code, and is not a"private foundation" as defined in Section 509(a) of the Code. To our knowledge, the Corporation has neither engaged in conduct inconsistent with its status as an exempt organization nor failed to file any report with the Internal Revenue Service, the filing of which was necessary to maintain its status as an exempt organization. In the course of our representation of the Corporation and without having undertaken to determine independently the accuracy and completeness of the statements contained in the Official Statement, nothing has come to our attention which would lead us to believe that the Official Statement(except for financial and statistical data included therein, information included therein or omitted therefrom with respect to the validity and the tax exempt nature of the Bonds, the information contained under the captions " "THE COUNTY," "TAX TREATMENT," "UNDERWRITING," and "INDEPENDENT AUDITORS," and the information relating to the Underwriters or The Depository Trust Company included in, and Appendices B, D, E and F to, the Official Statement, as to which no view is expressed) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. To ensure compliance with Treasury Department Circular 230, you are hereby notified that: (a) any discussion of federal tax issues in this letter is not intended or written to be relied upon, and cannot be relied upon, by any taxpayer for the purpose of avoiding penalties that may be imposed on taxpayers under the Internal Revenue Code; (b) such discussion was written in connection with the promotion or marketing (within the meaning of Treasury Department D-5 Board of Commissioners Meeting 06/03/2013 14-6-45 Circular 230) of the transactions or matters addressed in this letter; and (c) each taxpayer should seek advice based on its particular circumstances from an independent tax advisor. Our opinions are rendered as of the date hereof and we assume no obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein. Our opinions are furnished only to the addressees of this letter and are given solely for their benefit. This letter may not be used, circulated, quoted, relied upon, or otherwise referred to for any purpose without our prior written consent. D-6 Board of Commissioners Meeting 06/03/2013 14-6-46 EXHIBIT E [OPINION OF UNDERWRITERS' COUNSEL] [Closing Date] RBC Capital Markets, LLC New York, New York Merrill Lynch, Pierce, Fenner& Smith Incorporated New York, New York Re: $ County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 We have acted as counsel to you, the underwriters (the "Underwriters) named in the Bond Purchase Agreement, dated June 21, 2013 (the "Bond Purchase Agreement), between the Local Government Commission of North Carolina (the "LGC") and the Underwriters, and approved by the County of New Hanover, North Carolina (the "County") and New Hanover Regional Medical Center (the "Corporation"). Capitalized terms used herein and not otherwise defined shall have the meaning given such terms in the Bond Purchase Agreement. We have examined such documents and reviewed such questions of law and made such other inquiries as we have considered appropriate for the purpose of this opinion. On the basis of the foregoing, as of the date hereof and under existing law, we are of the opinion that the Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Bond Order and the Series Resolution are exempt from qualification as an indenture under the Trust Indenture Act of 1939, as amended. We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of any of the statements made in the Official Statement and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. However, to assist you in your investigation concerning the Official Statement, we have reviewed certain documents and have participated in conferences in which the contents of the Official Statement and related matters were discussed. During the course of our work on this matter, nothing has come to our attention that would cause us to believe that the Official Statement (except for any financial and statistical data, forecasts, numbers, estimates, assumptions, expressions of opinion, information concerning The Depository Trust Company and the book-entry system contained or incorporated by reference in the Official Statement and its appendices, which we expressly exclude from the scope of this sentence) contains, as of the date hereof, any untrue statement of a material fact or omits to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. In rendering the advice set forth in this paragraph, we are not rendering any opinion with respect to the validity or tax status of the Bonds. On the date hereof Parker Poe Adams & Bernstein LLP has rendered its approving legal opinion with respect to such matters E-1 Board of Commissioners Meeting 06/03/2013 14-6-47 and has consented to your reliance thereon. The advice set forth in this paragraph is given assuming the accuracy of Parker Poe Adams & Bernstein LLP's opinion. This opinion is furnished by us for your sole benefit in connection with your offering and sale of the Bonds, and no other person or entity may rely upon this opinion without our prior written consent. E-2 Board of Commissioners Meeting 06/03/2013 14-6-48 [OPINION OF UNDERWRITERS' COUNSEL] [Closing Date] RBC Capital Markets, LLC New York, New York Merrill Lynch, Pierce, Fenner& Smith Incorporated New York, New York Re: $ County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Pursuant to a Bond Purchase Agreement, dated June 21, 2013 (the "Bond Purchase Agreement), among the Local Government Commission, the County of New Hanover, North Carolina, New Hanover Regional Medical Center (the "Corporation"), and yourselves, as underwriters, you are purchasing on the date hereof the above-referenced bonds (the "Bonds"). Capitalized terms used herein and not otherwise defined shall have the meaning given such terms in the Bond Purchase Agreement. Pursuant to Section 4.36 of the Lease Agreement, the Corporation has undertaken to provide certain annual financial information and operating data relating to the Corporation and notices of the occurrence of certain material events as specified in the Series Resolution and the Official Statement(the "Undertaking"). The United States Securities and Exchange Commission (the "SEC") has promulgated Rule 15c2-12, as amended ("Rule 15c2-12") under the Securities Exchange Act of 1934, as amended. Rule 15c2-12 requires, among other things, that underwriters of municipal securities determine that the issuer of the municipal securities or an obligated person (as such terms are defined in Rule 15c2-12) have undertaken to provide certain continuing disclosure information specified by Rule 15c2-12 to the Municipal Securities Rulemaking Board at the times and in the manner specified by Rule 15c2-12. The SEC has issued a number of releases (the "SEC Releases")that discuss Rule 15c2-12 and various amendments and proposed amendments thereto and various comments received by the SEC regarding the same. Rule 15c2-12 has also been the subject of commentary and interpretation by various SEC letters to industry participants responding to questions posed to the SEC (the"SEC Interpretation Letters"). Based upon our review of the Undertaking, the Rule 15c2-12, the SEC Releases and the SEC Interpretation Letters, we are of the opinion that the Undertaking will permit you to comply with clause (b)(5) of Rule 15c2-12 in connection with the primary offering of the Bonds. In rendering the foregoing opinion, we do not express any opinion as to the validity or enforceability of the Undertaking and, with your consent, are assuming such validity and enforceability. E-3 Board of Commissioners Meeting 06/03/2013 14-6-49 This opinion is furnished by us for your sole benefit in connection with your offering and sale of the Bonds, and no other person or entity may rely upon this opinion without our prior written consent. E-4 Board of Commissioners Meeting 06/03/2013 14-6-50 EXHIBIT F MATURITY SCHEDULE County of New Hanover, North Carolina Hospital Revenue Refunding Bonds (New Hanover Regional Medical Center), Series 2013 Due Principal Interest Due Principal Interest October 1 Amount Rate Yield October 1 Amount Rate Yield * Yield to call date of October 1,20 at par. F-1 WCSR 7728904v1 Board of Commissioners Meeting 06/03/2013 14-6-51 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 15 DEPARTMENT: PRESENTER(S): Tara Duckworth,Parks& Gardens Director CONTACT(S): Tara Duckworth,Parks& Gardens Director SUBJECT: Presentation of Parks Development Plan- This item is continued to July 1,2013. BRIEF SUMMARY: As a follow up to the March 11, 2013 presentation, staff is bringing back recommendations for the remaining Parks Bond funds. The proposed plan looks at ways to maximize funds by expanding existing facilities in order to provide regional park opportunities to the underserved areas of the northern region. STRATEGIC PLAN ALIGNMENT: Superior Public Health, Safety and Education • Market and promote New Hanover County assets • Deliver value for taxpayer money Intelligent Growth and Economic Development • Enhance and add recreational, cultural and enrichment amenities • Deliver value for taxpayer money RECOMMENDED MOTION AND REQUESTED ACTIONS: Approve plan to reallocate $500,000 from Battle Park project; $420,000 from Wrightsboro Park project; $350,000 from Library bonds funds; and approve BA 2013-69 transferring $41,619 from bond projects, Smith Creek Parks Project, and additional revenue to the Northern Regional Park. COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Recommend approval. COMMISSIONERS'ACTIONS: Continued to July 1, 2013 at agenda review on May 30, 2013. Board of Commissioners Meeting 06/03/2013 15-0 NEW HANOVER COUNTY BOARD OF COMMISSIONERS REQUEST FOR BOARD ACTION MEETING DATE: June 3, 2013 REGULAR ITEM. 16 DEPARTMENT: PRESENTER(S): Tara Duckworth,Parks& Gardens Director CONTACT(S): Tara Duckworth,Parks& Gardens Director SUBJECT: Adoption of Addendum to By-Laws and Appointment of Initial Terms to Parks Conservancy Board BRIEF SUMMARY: An addendum to Parks Conservancy by-laws allowing for staggered terms for initial board appointments is submitted for adoption. Those appointed with the one or two year initial terms may serve out two full terms (6 yrs.)following their initial appointment if they wish to do so. STRATEGIC PLAN ALIGNMENT: Effective County Management • Understand and act on citizen needs • Deliver value for taxpayer money RECOMMENDED MOTION AND REQUESTED ACTIONS: Adopt addendum to by-laws. Recommended initial terms: 2 members: 1 year initial term with two additional 3 year terms allowable 3 members: 2 year initial term with two additional 3 year terms allowable 3 members: 3 year initial term with one additional 3 year term allowable 1 County Commissioner ATTACHMENTS: Addendum to By-Laws Parks Conservancy Information COUNTY MANAGER'S COMMENTS AND RECOMMENDATIONS: (only Manager) Adopt addendum to by-laws and assign terms for initial appointments. COMMISSIONERS'ACTIONS: Adopted addendum to by-laws 4-0. Appointed Eric Lasing. Assigned the following terms. Board of Commissioners Meeting 06/03/2013 16-0 2 members: 1 year initial term with two additional 3 year terms allowable: Tom Conway and Theron Marshall 3 members: 2 year initial term with two additional 3 year terms allowable: Faye D. Brock, Oliver Carter, III and John Dismukes 3 members: 3 year initial term with one additional 3 year term allowable: Melissa Ivey, Eric Lasing and Jeremy M. Wilson Board of Commissioners Meeting 06/03/2013 16-0 Addendum to the By-laws of the Parks Conservancy of New Hanover County, Inc. Whereas, the adopted Bylaws do not address staggered terms for initial appointment of directors, Now, Therefore, the following addendum is adopted and enacted: Initial Board. For initial appointments, two persons shall serve one year terms, three persons shall serve two year terms, and three persons shall serve three years terms. For purpose of Section 3 Elections, Terms and Vacancies any initial term less than three years duration shall not constitute a term when determining re- appointment eligibility. ADOPTED this the day of , 2013. NEW HANOVER COUNTY Woody White, Chairman ATTEST: Sheila L. Schult, Clerk to the Board Board of Commissioners Meeting 06/03/2013 16- 1 - 1 Parks Conservancy of New Hanover County, Inc. Board of Directors Members: 9 8 Board members appointed by the County Commissioners 1 County Commissioner Representative Term of Office: 3-year terms Qualifications: County resident 18 years of age or more who has a sincere interest and commitment to the importance of park and recreation services; a willingness to give freely of time and energy to learn about and to carry out responsibilities; the ability to work well with all other Board members; complete open-mindedness and respect for varied points of view and consideration of all Board business; good judgment, intelligence and courage of conviction; a dedicated interest in the Park and Recreation welfare of all citizens of the county; the capability of speaking out and articulating parks and recreation needs; the ability to accept and weather criticism gracefully; the strength to refuse to be intimidated by pressure groups and issues which are not in the best interest of the whole county; a strong feeling for team work between the Director, Board of County Commissioners, and other Advisory Board members and a desire to truly know the community and the recreational needs of all citizens. Regular Meetings: To be determined Statute or cause creating Board: The New Hanover County Board of Commissioners approved the establishment of the Parks Conservancy on April 16, 2012; first appointments were made May 20, 2013. Purpose: The general purposes of the Parks Conservancy are as follows: 1. To establish an endowment and receive and distribute monies for prospective funding of capital improvements at County parks and to encourage the accumulation and dissemination of knowledge of the history and natural heritage of Southeastern North Carolina. 2. To arrange for such meetings of Conservancy officers or other interested individuals, as may be legally necessary or considered desirable in the furtherance of the aims and purposes of County parks. 3. To encourage and arrange for gifts, grants, bequests, and devises to the Conservancy for its work in the furtherance of the objectives for which it is organized, and to provide for the proper expenditure, use, and conservation of all gifts, grants, bequests, and devises so received. 4. To provide oversight to all internal groups including but not limited to: Volunteers and special event committees. 5. To foster relationships with other related organizations. 6. To serve as ambassadors for the Parks to the community. 7. To participate in and support Parks events and programs. TERM OF OFFICE CURRENT MEMBERS APPOINTMENT EXPIRATION Faye D. Brock First 5/20/13 TBD 4725 Wedgefield Drive Wilmington, NC 28409 431-2501 (H) 395-8266 (W) Board of Commissioners Meeting 06/03/2013 16-2- 1 PARKS CONSERVANCY OF NEW HANOVER COUNTY (CONT.) TERM OF OFFICE CURRENT MEMBERS APPOINTMENT EXPIRATION Oliver Carter, III First 5/20/13 TBD 516 S. Third Street Wilmington, NC 28401 297-7896 (H) 763-3626 (W) Tom Conway First 5/20/13 TBD P.O. Box 1343 1601 Quail Roost Circle Wrightsville Beach, NC 28480 509-0705 (H) 685-5084 (C) 509-0818 (W) John Dismukes First 5/20/13 TBD 802 Summer Tree Lane Wilmington, NC 28412 919-648-3162 (H) 520-6786 (W) Melissa Ivey First 5/20/13 TBD 511 North Channel Drive Wrightsville Beach, NC 28480 919-601-9252 (H) 313-3336 (W) Theron Marshall First 5/20/13 TBD 5707 Sentinel Court Wilmington, NC 28409 431-7425 (H) Antonio Saviano First 5/20/13 TBD P.O. Box 15669 225 Mohican Trail (28409) Wilmington, NC 28408 231-1070 (H) Jeremy M. Wilson First 5/20/13 TBD 6112 Nettle Circle Wilmington, NC 28405 399-5627 (H) 794-4870 (W) County Commissioner Representative Appt. 5/20/13 Undesignated Beth Dawson 230 Government Center Drive, Suite 175 Wilmington, NC 28403 798-7260 (NHC Office) Tara Duckworth, Director Parks and Gardens Department 230 Government Center Drive, Suite 120 Wilmington, NC 28403 File: /Parks Conservancy 798-7198 Revised: 5/23/2013 Board of Commissioners Meeting 06/03/2013 16-2-2