Senate Bill sb0140c2

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    Florida Senate - 2003       CS for CS for SB's 140, 998 & 1060

    By the Committees on Communication and Public Utilities;
    Comprehensive Planning; and Senators Argenziano, Cowin,
    Constantine and Fasano



    319-2131-03

  1                      A bill to be entitled

  2         An act relating to utilities; amending s.

  3         163.01, F.S.; providing applicability of

  4         provisions relating to ownership and operation

  5         of utilities by entities composed of

  6         municipalities and counties; prescribing powers

  7         of counties and specified municipalities with

  8         respect to acquisition of water utilities and

  9         wastewater utilities by separate legal entities

10         composed of municipalities and counties;

11         authorizing the Public Service Commission to

12         review the acquisition of a utility by two or

13         more host governments; providing for a binding

14         arbitration process under the Public Service

15         Commission to resolve certain disputes relating

16         to utility acquisition; authorizing the

17         commission to adopt rules; requiring the Public

18         Service Commission to establish rules that base

19         the acquisition price for a host government to

20         acquire a utility on certain information;

21         amending s. 120.52, F.S.; deleting an exception

22         from the requirements of ch. 120, F.S., for an

23         entity created under s. 163.01(7)(g)1., F.S.;

24         amending s. 367.021, F.S.; excluding an entity

25         created under s. 163.01(7)(g)1., F.S., from the

26         definition of "governmental authority";

27         amending s. 367.071, F.S.; deleting a provision

28         authorizing a utility to be sold or transferred

29         prior to approval of the Public Service

30         Commission with a contingency clause in the

31  

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 1         contract; providing severability; providing

 2         applicability; providing an effective date.

 3  

 4  Be It Enacted by the Legislature of the State of Florida:

 5  

 6         Section 1.  Paragraph (g) of subsection (7) of section

 7  163.01, Florida Statutes, is amended to read:

 8         163.01  Florida Interlocal Cooperation Act of 1969.--

 9         (7)

10         (g)1.  Notwithstanding any other provisions of this

11  section, any separate legal entity created under this section,

12  the membership of which is limited to municipalities and

13  counties of the state, may acquire, own, construct, improve,

14  operate, and manage public facilities, or finance facilities

15  on behalf of any person, relating to a governmental function

16  or purpose, including, but not limited to, wastewater

17  facilities, water or alternative water supply facilities, and

18  water reuse facilities, which may serve populations within or

19  outside of the members of the entity. Notwithstanding s.

20  367.171(7), any separate legal entity created under this

21  paragraph is not subject to Public Service Commission

22  jurisdiction, except when a host government specifically

23  requests binding arbitration services through the commission

24  under subparagraphs 4. and 5. and as is otherwise provided for

25  in general law. The separate legal entity and may not provide

26  utility services within the service area of an existing

27  utility system unless it has received the consent of the

28  utility.

29         2.  For purposes of this paragraph, the term "utility"

30  means a water or wastewater utility and includes every person,

31  separate legal entity, lessee, trustee, or receiver owning,

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 1  operating, managing, or controlling a system, or proposing

 2  construction of a system, who is providing, or proposes to

 3  provide, water or wastewater service to the public for

 4  compensation. For purposes of this paragraph, the term

 5  "system" means each separate water or wastewater facility

 6  providing service. For purposes of this paragraph, the term

 7  "host government" means either the governing body of the

 8  county, if the largest number of equivalent residential

 9  connections currently served by a system of the utility is

10  located in the unincorporated area, or the governing body of a

11  municipality, if the largest number of equivalent residential

12  connections currently served by a system of the utility is

13  located within that municipality's boundaries. For purposes of

14  this paragraph, the term "separate legal entity" may mean any

15  entity created by interlocal agreement the membership of which

16  is limited to two or more municipalities or counties of the

17  state, but which entity is legally separate and apart from any

18  of its member governments. A separate legal entity that seeks

19  to acquire any utility must notify the host government in

20  writing by certified mail about the contemplated acquisition

21  not less than 90 days before any proposed transfer of

22  ownership, use, or possession of any utility assets by such

23  separate legal entity. The potential acquisition notice must

24  be provided to the legislative head of the governing body of

25  the host government and to its chief administrative officer

26  and must provide the name and address of a contact person for

27  the separate legal entity and information identified in s.

28  367.071(4)(a) concerning the contemplated acquisition.

29         3.  Within 90 days following receipt of the notice, the

30  host government may adopt a resolution to become a member of

31  the separate legal entity; adopt a resolution to approve the

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 1  utility acquisition; adopt a resolution to prohibit the

 2  utility acquisition by the separate legal entity if the host

 3  government determines that the proposed acquisition is not in

 4  the public interest; request in writing an automatic 45-day

 5  extension of the 90-day period in order to allow sufficient

 6  time for the host government to evaluate the proposed

 7  acquisition; or take no action to agenda the proposed

 8  acquisition for discussion at a public meeting, which shall be

 9  construed as denial of the proposed acquisition. If a host

10  government adopts a prohibition resolution, the separate legal

11  entity may not acquire the utility within that host

12  government's territory without specific consent of the host

13  government by future resolution. If a host government adopts a

14  membership resolution, the separate legal entity must accept

15  the host government as a member before any transfer of

16  ownership, use, or possession of the utility or the utility

17  facilities on the same basis as its existing members. If a

18  host government does not adopt a prohibition resolution or an

19  approval resolution, does not provide a written request for an

20  extension of the 90-day notice period, and takes no action to

21  initiate judicial proceedings regarding the proposed

22  acquisition, the separate legal entity may proceed to acquire

23  the utility after the 90-day notice period without further

24  notice, except as otherwise agreed upon by the separate legal

25  entity and the host government. In utility acquisitions

26  involving two or more host governments, the Public Service

27  Commission shall consider whether the sale, assignment, or

28  transfer of the utility is in the public interest pursuant to

29  the provisions of s. 367.071(1).

30         4.  In addition to the host government's right to

31  review as fair and reasonable the rates, charges, customer

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 1  classifications, and terms of service that will be in place at

 2  the time of acquisition, the host government has the right to

 3  review and approve as fair and reasonable any later changes

 4  proposed by the separate legal entity to the rates, charges,

 5  customer classifications, and terms of service, before

 6  adoption by the separate legal entity. In addition, the host

 7  government has the right to review and approve any changes to

 8  the financing of such facilities which may result in increased

 9  costs to customers. Such right of review and approval by the

10  host government is subject to the obligation of the separate

11  legal entity to establish rates and charges that comply with

12  the requirements contained in any resolution or trust

13  agreement relating to the issuance of bonds to acquire and

14  improve the affected utility, and such right does not affect

15  the obligation of the separate legal entity to set rates at a

16  level sufficient to pay debt service on its obligations issued

17  in relation to the host government utility. In order to

18  facilitate review of proposed changes by such host government,

19  the separate legal entity must notify the host government in

20  writing by certified mail about the proposed changes not less

21  than 90 days before it implements any changes. The notice of

22  proposed changes must be provided to the legislative head of

23  the governing body of each host government and to its chief

24  administrative officer and must provide the name and address

25  of a contact person for the separate legal entity and

26  information identified in s. 367.081(2)(a)1. as it applies to

27  publicly owned utilities about the proposed changes. If after

28  review the host government believes that the proposed changes

29  are in the public interest, the host government may pass a

30  resolution approving the proposed changes. If, after review,

31  the host government believes that the proposed changes are not

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 1  in the public interest, the host government may enter into

 2  negotiation with the separate legal entity to resolve those

 3  concerns. If no agreement is reached within 30 days after the

 4  host government's determination that the proposed changes are

 5  not in the public interest, the host government may request

 6  and, if requested, shall receive binding arbitration services

 7  through the Public Service Commission to resolve the dispute

 8  with the separate legal entity. The commission shall develop

 9  and adopt administrative rules governing the arbitration

10  process and establishing fees for this dispute-resolution

11  service.

12         5.  After the acquisition or construction of any

13  utility systems by a separate legal entity created under this

14  subsection, revenues or any other income may not be

15  transferred or paid to a member of a separate legal entity, or

16  to any other county or municipality, from user fees or other

17  charges or revenues generated from customers that are not

18  physically located within the jurisdictional or service

19  delivery boundaries of the member, county, or municipality

20  receiving the transfer or payment. Any transfer or payment to

21  a member or other local government must be solely from user

22  fees or other charges or revenues generated from customers

23  that are physically located within the jurisdictional or

24  service delivery boundaries of the member or local government

25  receiving the transfer or payment.

26         6.  The host government is guaranteed the right to

27  acquire any utility or utility system that it hosts owned by

28  the separate legal entity. In those instances when the

29  separate legal entity and the host government cannot agree on

30  the terms and conditions of the acquisition, the host

31  government may request and, if requested, shall receive

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 1  binding arbitration services through the Public Service

 2  Commission to resolve the disputed acquisition terms. The

 3  commission shall develop and adopt administrative rules

 4  governing the arbitration process and establishing the fees

 5  for these services. In developing and adopting its rules

 6  governing the acquisition price for a given host government to

 7  acquire the utility or utility system located within its

 8  jurisdiction, the Public Service Commission shall, to the

 9  greatest extent possible, base the acquisition price on the

10  same percentage to the total bonded indebtedness of the

11  separate legal entity upon acquiring the utility as the

12  acquired system's rate base was to the utility's total rate

13  base at the time transferred from a regulated utility to the

14  separate legal entity. This paragraph is an alternative

15  provision otherwise provided by law as authorized in s. 4,

16  Art. VIII of the State Constitution for any transfer of power

17  as a result of an acquisition of a utility by a separate legal

18  entity from a municipality, county, or special district.

19         7.  The entity may finance or refinance the

20  acquisition, construction, expansion, and improvement of such

21  facilities relating to a governmental function or purpose

22  through the issuance of its bonds, notes, or other obligations

23  under this section or as otherwise authorized by law. Except

24  as limited by the terms and conditions of the utility

25  acquisition agreement, as approved by the applicable host

26  government, the entity has all the powers provided by the

27  interlocal agreement under which it is created or which are

28  necessary to finance, own, operate, or manage the public

29  facility, including, without limitation, the power to

30  establish rates, charges, and fees for products or services

31  provided by it, the power to levy special assessments, the

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 1  power to sell or finance all or a portion of such facility,

 2  and the power to contract with a public or private entity to

 3  manage and operate such facilities or to provide or receive

 4  facilities, services, or products. Except as may be limited by

 5  the interlocal agreement under which the entity is created,

 6  all of the privileges, benefits, powers, and terms of s.

 7  125.01, relating to counties, and s. 166.021, relating to

 8  municipalities, are fully applicable to the entity. However,

 9  neither the entity nor any of its members on behalf of the

10  entity may exercise the power of eminent domain over the

11  facilities or property of any existing water or wastewater

12  plant utility system, nor may the entity acquire title to any

13  water or wastewater plant utility facilities, other

14  facilities, or property which was acquired by the use of

15  eminent domain after the effective date of this act. Bonds,

16  notes, and other obligations issued by the entity are issued

17  on behalf of the public agencies that are members of the

18  entity.

19         8.2.  Except as limited by the terms and conditions of

20  the utility acquisition agreement, as approved by the

21  applicable host government, any entity created under this

22  section may also issue bond anticipation notes in connection

23  with the authorization, issuance, and sale of bonds. The bonds

24  may be issued as serial bonds or as term bonds or both. Any

25  entity may issue capital appreciation bonds or variable rate

26  bonds. Any bonds, notes, or other obligations must be

27  authorized by resolution of the governing body of the entity

28  and bear the date or dates; mature at the time or times, not

29  exceeding 40 years from their respective dates; bear interest

30  at the rate or rates; be payable at the time or times; be in

31  the denomination; be in the form; carry the registration

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    Florida Senate - 2003       CS for CS for SB's 140, 998 & 1060
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 1  privileges; be executed in the manner; be payable from the

 2  sources and in the medium or payment and at the place; and be

 3  subject to the terms of redemption, including redemption prior

 4  to maturity, as the resolution may provide. If any officer

 5  whose signature, or a facsimile of whose signature, appears on

 6  any bonds, notes, or other obligations ceases to be an officer

 7  before the delivery of the bonds, notes, or other obligations,

 8  the signature or facsimile is valid and sufficient for all

 9  purposes as if he or she had remained in office until the

10  delivery. The bonds, notes, or other obligations may be sold

11  at public or private sale for such price as the governing body

12  of the entity shall determine. Pending preparation of the

13  definitive bonds, the entity may issue interim certificates,

14  which shall be exchanged for the definitive bonds. The bonds

15  may be secured by a form of credit enhancement, if any, as the

16  entity deems appropriate. The bonds may be secured by an

17  indenture of trust or trust agreement. In addition, the

18  governing body of the legal entity may delegate, to an

19  officer, official, or agent of the legal entity as the

20  governing body of the legal entity may select, the power to

21  determine the time; manner of sale, public or private;

22  maturities; rate of interest, which may be fixed or may vary

23  at the time and in accordance with a specified formula or

24  method of determination; and other terms and conditions as may

25  be deemed appropriate by the officer, official, or agent so

26  designated by the governing body of the legal entity. However,

27  the amount and maturity of the bonds, notes, or other

28  obligations and the interest rate of the bonds, notes, or

29  other obligations must be within the limits prescribed by the

30  governing body of the legal entity and its resolution

31  delegating to an officer, official, or agent the power to

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 1  authorize the issuance and sale of the bonds, notes, or other

 2  obligations.

 3         9.3.  Bonds, notes, or other obligations issued under

 4  this paragraph subparagraph 1. may be validated as provided in

 5  chapter 75. The complaint in any action to validate the bonds,

 6  notes, or other obligations must be filed only in the Circuit

 7  Court for Leon County. The notice required to be published by

 8  s. 75.06 must be published in Leon County and in each county

 9  that is a member of the entity issuing the bonds, notes, or

10  other obligations, or in which a member of the entity is

11  located, and the complaint and order of the circuit court must

12  be served only on the State Attorney of the Second Judicial

13  Circuit and on the state attorney of each circuit in each

14  county that is a member of the entity issuing the bonds,

15  notes, or other obligations or in which a member of the entity

16  is located. Section 75.04(2) does not apply to a complaint for

17  validation brought by the legal entity.

18         10.4.  The accomplishment of the authorized purposes of

19  a legal entity created under this paragraph is in all respects

20  for the benefit of the people of the state, for the increase

21  of their commerce and prosperity, and for the improvement of

22  their health and living conditions. Since the legal entity

23  will perform essential governmental functions in accomplishing

24  its purposes, the legal entity is not required to pay any

25  taxes or assessments of any kind whatsoever upon any property

26  acquired or used by it for such purposes or upon any revenues

27  at any time received by it. The bonds, notes, and other

28  obligations of an entity, their transfer and the income

29  therefrom, including any profits made on the sale thereof, are

30  at all times free from taxation of any kind by the state or by

31  any political subdivision or other agency or instrumentality

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 1  thereof. The exemption granted in this subparagraph is not

 2  applicable to any tax imposed by chapter 220 on interest,

 3  income, or profits on debt obligations owned by corporations.

 4         Section 2.  Subsection (1) of section 120.52, Florida

 5  Statutes, is amended to read:

 6         120.52  Definitions.--As used in this act:

 7         (1)  "Agency" means:

 8         (a)  The Governor in the exercise of all executive

 9  powers other than those derived from the constitution.

10         (b)  Each:

11         1.  State officer and state department, and each

12  departmental unit described in s. 20.04.

13         2.  Authority, including a regional water supply

14  authority.

15         3.  Board.

16         4.  Commission, including the Commission on Ethics and

17  the Fish and Wildlife Conservation Commission when acting

18  pursuant to statutory authority derived from the Legislature.

19         5.  Regional planning agency.

20         6.  Multicounty special district with a majority of its

21  governing board comprised of nonelected persons.

22         7.  Educational units.

23         8.  Entity described in chapters 163, 373, 380, and 582

24  and s. 186.504.

25         (c)  Each other unit of government in the state,

26  including counties and municipalities, to the extent they are

27  expressly made subject to this act by general or special law

28  or existing judicial decisions.

29  

30  This definition does not include any legal entity or agency

31  created in whole or in part pursuant to chapter 361, part II,

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 1  an expressway authority pursuant to chapter 348, any legal or

 2  administrative entity created by an interlocal agreement

 3  pursuant to s. 163.01(7), except those created pursuant to s.

 4  163.01(7)(g)1., unless any party to such agreement is

 5  otherwise an agency as defined in this subsection, or any

 6  multicounty special district with a majority of its governing

 7  board comprised of elected persons; however, this definition

 8  shall include a regional water supply authority.

 9         Section 3.  Subsection (7) of section 367.021, Florida

10  Statutes, is amended to read:

11         367.021  Definitions.--As used in this chapter, the

12  following words or terms shall have the meanings indicated:

13         (7)  "Governmental authority" means a political

14  subdivision, as defined by s. 1.01(8), a regional water supply

15  authority created pursuant to s. 373.1962, or a nonprofit

16  corporation formed for the purpose of acting on behalf of a

17  political subdivision with respect to a water or wastewater

18  facility; however, this definition shall exclude a separate

19  legal entity created pursuant to s. 163.01(7)(g)1.

20         Section 4.  Subsections (1) and (4) of section 367.071,

21  Florida Statutes, are amended to read:

22         367.071  Sale, assignment, or transfer of certificate

23  of authorization, facilities, or control.--

24         (1)  A No utility may not shall sell, assign, or

25  transfer its certificate of authorization, facilities or any

26  portion thereof, or majority organizational control without

27  determination and approval of the commission that the proposed

28  sale, assignment, or transfer is in the public interest and

29  that the buyer, assignee, or transferee will fulfill the

30  commitments, obligations, and representations of the utility.

31  However, a sale, assignment, or transfer of its certificate of

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 1  authorization, facilities or any portion thereof, or majority

 2  organizational control may occur prior to commission approval

 3  if the contract for sale, assignment, or transfer is made

 4  contingent upon commission approval.

 5         (4)  An application shall be disposed of as provided in

 6  s. 367.045, except that:

 7         (a)  The sale of facilities, in whole or part, to a

 8  governmental authority, as defined in s. 367.021(7), shall be

 9  approved as a matter of right; however, the governmental

10  authority shall, prior to taking any official action, obtain

11  from the utility or commission with respect to the facilities

12  to be sold the most recent available income and expense

13  statement, balance sheet, and statement of rate base for

14  regulatory purposes and contributions-in-aid-of-construction.

15  Any request for rate relief pending before the commission at

16  the time of sale is deemed to have been withdrawn.  Interim

17  rates, if previously approved by the commission, must be

18  discontinued, and any money collected pursuant to interim rate

19  relief must be refunded to the customers of the utility with

20  interest.

21         (b)  When paragraph (a) does not apply, the commission

22  shall amend the certificate of authorization as necessary to

23  reflect the change resulting from the sale, assignment, or

24  transfer.

25         Section 5.  If any provision of this act or the

26  application thereof to any person or circumstance is held

27  invalid, the invalidity does not affect other provisions or

28  applications of this act which can be given effect without the

29  invalid provision or application, and to this end the

30  provisions of this act are declared severable.

31  

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 1         Section 6.  This act shall take effect upon becoming a

 2  law and shall apply to all contracts pending on that date.

 3  

 4          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 5                      CS/SBs 140, 998 & 1060

 6                                 

 7  The committee substitute for committee substitute for Senate
    Bills 140, 998, & 1060:
 8  
    -Defines the term "separate legal entity;"
 9  
    -Allows a host government to adopt a resolution to become a
10  member of a separate legal entity and requires the separate
    legal entity to accept the host on the same basis as existing
11  members;

12  -Provides that if the host government takes no action to
    agenda the proposed acquisition, this constitutes a denial of
13  the acquisition;

14  -Deletes the provision allowing a county that regulates water
    and wastewater to review the acquisition to determine whether
15  it is in the public interest;

16  -Gives the host government, not the county, the right to
    review proposed changes in rates and services;
17  
    -Requires that any payments or transfers to a member or a
18  county or municipality from a utility owned by a separate
    legal entity come from user fees or other charges or revenues
19  from customers physically located within the jurisdictional or
    service boundaries of the member or county or municipality;
20  
    -Makes only entities created by interlocal agreement pursuant
21  to s. 163.01(7)(g) subject to the definition of "agency" in
    chapter 120;
22  
    -Adds a severability clause;
23  
    -Provides for applicability.
24  

25  

26  

27  

28  

29  

30  

31  

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