HB 1583

1
A bill to be entitled
2An act relating to water and wastewater utilities;
3amending s. 163.01, F.S.; revising provisions for a
4separate legal entity to acquire, own, construct, improve,
5operate, and manage or finance certain public facilities;
6providing for petition to the Public Service Commission of
7the action or binding arbitration for certain changes;
8defining "host government," "separate legal entity,"
9"system," and "utility"; requiring certain notice to the
10commission and host government by the separate legal
11entity that seeks to acquire any utility; providing
12procedures for the host government to accept or reject the
13proposal; requiring the separate legal entity to accept
14the host government as a member upon adoption of a
15membership resolution by the host government; providing
16for the two parties to enter into negotiations to complete
17the utility acquisition agreement; providing for the
18separate legal entity to proceed with the acquisition if
19the host government does not act; providing for petition
20to the commission to consider whether the action is in the
21public interest; providing for review and approval by the
22host government of rates, charges, customer
23classifications, terms of service, and changes to
24financing; providing procedures for changes in rates,
25charges, customer classifications, terms of service, and
26financing; requiring notice of the proposed change;
27providing for negotiations to resolve concerns of the host
28government; providing for binding arbitration by the
29commission; requiring the commission to develop and adopt
30administrative rules governing the arbitration process and
31establishing fees; requiring any transfer or payment by
32the separate legal entity to a member or other local
33government to be solely from user fees or other charges or
34revenues generated from customers that are physically
35located within the jurisdictional or service delivery
36boundaries of the member or local government receiving the
37transfer or payment; authorizing a host government to
38acquire any utility or utility system that it hosts that
39is owned by the separate legal entity; providing for
40limitation of powers and authority of the separate legal
41entity by the terms and conditions of the utility
42acquisition agreement; amending s. 120.52, F.S.; revising
43the definition of "agency" to include a separate legal
44entity for purposes of the Administrative Procedure Act;
45amending ss. 367.021 and 367.071, F.S.; revising the
46definition of "governmental authority" to exclude a
47separate legal entity for purposes of the Water and
48Wastewater System Regulatory Law; creating s. 367.0813,
49F.S.; clarifying state policy that gains or losses from a
50purchase or condemnation of a utility's assets that
51results in the loss of customers served by such assets and
52the associated future revenue streams shall be borne by
53the shareholders of the utility; providing for
54severability; providing for application; providing an
55effective date.
56
57Be It Enacted by the Legislature of the State of Florida:
58
59     Section 1.  Paragraph (g) of subsection (7) of section
60163.01, Florida Statutes, is amended to read:
61     163.01  Florida Interlocal Cooperation Act of 1969.--
62     (7)
63     (g)1.  Notwithstanding any other provisions of this
64section, any separate legal entity created under this section,
65the membership of which is limited to municipalities and
66counties of the state, may acquire, own, construct, improve,
67operate, and manage public facilities, or finance facilities on
68behalf of any person, relating to a governmental function or
69purpose, including, but not limited to, wastewater facilities,
70water or alternative water supply facilities, and water reuse
71facilities, which may serve populations within or outside of the
72members of the entity. Notwithstanding s. 367.171(7), any
73separate legal entity created under this paragraph is not
74subject to Public Service Commission jurisdiction unless the
75host government or at least 10 percent of the customers of the
76utility system being acquired file a petition with the
77commission seeking approval of the acquisition of the utility
78system by the separate legal entity and seeking binding
79arbitration by the commission of proposed changes to the initial
80or subsequent rates and charges of the separate legal entity.
81The separate legal entity and may not provide utility services
82within the service area of an existing utility system unless it
83has received the consent of the utility.
84     2.  For purposes of this paragraph, the term:
85     a.  "Host government" means either the governing body of
86the county, if the largest number of equivalent residential
87connections currently served by a system of the utility is
88located in the unincorporated area, or the governing body of a
89municipality, if the largest number of equivalent residential
90connections currently served by a system of the utility is
91located within that municipality's boundaries.
92     b.  "Separate legal entity" means any entity created by
93interlocal agreement the membership of which is limited to two
94or more municipalities or counties of the state but which entity
95is legally separate and apart from any of its member
96governments.
97     c.  "System" means each separate water or wastewater
98facility providing service.
99     d.  "Utility" means a water or wastewater utility and
100includes every person, separate legal entity, lessee, trustee,
101or receiver owning, operating, managing, or controlling a
102system, or proposing construction of a system, who is providing,
103or proposes to provide, water or wastewater service to the
104public for compensation.
105     3.  A separate legal entity that seeks to acquire any
106utility must notify the Public Service Commission and the host
107government in writing by certified mail about the contemplated
108acquisition not less than 30 days before any proposed transfer
109of ownership, use, or possession of any utility assets by such
110separate legal entity. The potential acquisition notice must be
111provided to the legislative head of the governing body of the
112host government and to its chief administrative officer and must
113provide the name and address of a contact person for the
114separate legal entity and information identified in s.
115367.071(4)(a) concerning the contemplated acquisition.
116     4.a.  Within 30 days following receipt of the notice, the
117host government may adopt a resolution to become a member of the
118separate legal entity, adopt a resolution to approve the utility
119acquisition, adopt a resolution to prohibit the utility
120acquisition by the separate legal entity if the host government
121determines that the proposed acquisition is not in the public
122interest, or request in writing an automatic 45-day extension of
123the 30-day period in order to allow sufficient time for the host
124government to evaluate the proposed acquisition. A resolution
125adopted by the host government that prohibits the acquisition
126may include conditions that would make the proposal acceptable
127to the host government.
128     b.  If a host government adopts a membership resolution,
129the separate legal entity must accept the host government as a
130member on the same basis as its existing members before any
131transfer of ownership, use, or possession of the utility or the
132utility facilities. If a host government adopts a resolution to
133approve the utility acquisition, the two parties shall enter
134into negotiations to complete the utility acquisition agreement.
135If a host government adopts a prohibition resolution, the
136separate legal entity may not acquire the utility within that
137host government's territory without the specific consent of the
138host government by future resolution. If a host government does
139not adopt a prohibition resolution or an approval resolution,
140does not provide a written request for an extension of the 30-
141day notice period, and takes no action to initiate judicial
142proceedings regarding the proposed acquisition, the separate
143legal entity may proceed to acquire the utility after the 30-day
144notice period without further notice.
145     c.  Upon the filing of a petition by at least 10 percent of
146the customers of the system being acquired, the Public Service
147Commission shall consider whether the sale, assignment, or
148transfer of the utility is in the public interest pursuant to
149the provisions of s. 367.071(1).
150     5.  In addition to the host government's right to review as
151fair and reasonable the rates, charges, customer
152classifications, and terms of service that will be in place at
153the time of acquisition, the host government has the right to
154review and approve as fair and reasonable any later changes
155proposed by the separate legal entity to the rates, charges,
156customer classifications, and terms of service before adoption
157by the separate legal entity. In addition, the host government
158has the right to review and approve any changes to the financing
159of such facilities that may result in increased costs to
160customers. Such right of review and approval by the host
161government is subject to the obligation of the separate legal
162entity to establish rates and charges that comply with the
163requirements contained in any resolution or trust agreement
164relating to the issuance of bonds to acquire and improve the
165affected utility and such right does not affect the obligation
166of the separate legal entity to set rates at a level sufficient
167to pay debt service on its obligations issued in relation to the
168host government utility.
169     6.a.  In order to facilitate review of proposed changes by
170the host government, the separate legal entity must notify the
171host government in writing by certified mail about the proposed
172changes not fewer than 90 days before it implements any changes.
173The notice of proposed changes must be provided to the
174legislative head of the governing body of each host government
175and to its chief administrative officer and must provide the
176name and address of a contact person for the separate legal
177entity and information identified in s. 367.081(2)(a)1. as it
178applies to publicly owned utilities about the proposed changes.
179If, after review, the host government believes that the proposed
180changes are in the public interest, the host government may pass
181a resolution approving the proposed changes. If, after review,
182the host government believes that the proposed changes are not
183in the public interest, the host government may enter into
184negotiation with the separate legal entity to resolve those
185concerns.
186     b.  If no agreement is reached within 30 days after the
187host government's determination that the proposed changes are
188not in the public interest, the host government or the separate
189legal entity may request and, if requested, shall receive
190binding arbitration services through the Public Service
191Commission to resolve the dispute with the separate legal
192entity. The commission shall develop and adopt administrative
193rules governing the arbitration process and establishing fees
194for this dispute-resolution service. The arbitration shall be
195conducted by the commission within 90 days after the request by
196the host government or the separate legal entity. The
197commission's arbitration order shall ensure that the new rates
198of the separate legal entity applicable to a specific host
199government recover applicable costs of service, including costs
200of financing, and provide for a reasonable rate of return.
201     7.  After the acquisition or construction of any utility
202systems by a separate legal entity created under this paragraph
203revenues or any other income may not be transferred or paid to a
204member of a separate legal entity, or to any other county or
205municipality, from user fees or other charges or revenues
206generated from customers that are not physically located within
207the jurisdictional or service delivery boundaries of the member,
208county, or municipality receiving the transfer or payment. Any
209transfer or payment to a member or other local government must
210be solely from user fees or other charges or revenues generated
211from customers that are physically located within the
212jurisdictional or service delivery boundaries of the member or
213local government receiving the transfer or payment.
214     8.  A host government may acquire any utility or utility
215system that it hosts that is owned by the separate legal entity.
216If the separate legal entity and the host government cannot
217agree on the terms and conditions of the acquisition, the host
218government may institute eminent domain proceedings under
219chapters 73 and 74, as applicable. This paragraph is an
220alternative provision otherwise provided by law as authorized in
221s. 4, Art. VIII of the State Constitution for any transfer of
222power as a result of an acquisition of a utility by a separate
223legal entity from a municipality, county, or special district.
224     9.  The entity may finance or refinance the acquisition,
225construction, expansion, and improvement of such facilities
226relating to a governmental function or purpose through the
227issuance of its bonds, notes, or other obligations under this
228section or as otherwise authorized by law. Except as limited by
229the terms and conditions of the utility acquisition agreement,
230as approved by the applicable host government and subject to
231approval by the Public Service Commission if a petition is filed
232pursuant to subparagraph 1., the entity has all the powers
233provided by the interlocal agreement under which it is created
234or which are necessary to finance, own, operate, or manage the
235public facility, including, without limitation, the power to
236establish rates, charges, and fees for products or services
237provided by it, the power to levy special assessments, the power
238to sell or finance all or a portion of such facility, and the
239power to contract with a public or private entity to manage and
240operate such facilities or to provide or receive facilities,
241services, or products. Except as may be limited by the
242interlocal agreement under which the entity is created, all of
243the privileges, benefits, powers, and terms of s. 125.01,
244relating to counties, and s. 166.021, relating to
245municipalities, are fully applicable to the entity. However,
246neither the entity nor any of its members on behalf of the
247entity may exercise the power of eminent domain over the
248facilities or property of any existing water or wastewater plant
249utility system, nor may the entity acquire title to any water or
250wastewater plant utility facilities, other facilities, or
251property which was acquired by the use of eminent domain after
252the effective date of this act. Bonds, notes, and other
253obligations issued by the entity are issued on behalf of the
254public agencies that are members of the entity.
255     10.2.  Except as limited by the terms and conditions of the
256utility acquisition agreement, as approved by the applicable
257host government and subject to approval by the Public Service
258Commission if a petition is filed pursuant to subparagraph 1.,
259any entity created under this section may also issue bond
260anticipation notes in connection with the authorization,
261issuance, and sale of bonds. The bonds may be issued as serial
262bonds or as term bonds or both. Any entity may issue capital
263appreciation bonds or variable rate bonds. Any bonds, notes, or
264other obligations must be authorized by resolution of the
265governing body of the entity and bear the date or dates; mature
266at the time or times, not exceeding 40 years from their
267respective dates; bear interest at the rate or rates; be payable
268at the time or times; be in the denomination; be in the form;
269carry the registration privileges; be executed in the manner; be
270payable from the sources and in the medium or payment and at the
271place; and be subject to the terms of redemption, including
272redemption prior to maturity, as the resolution may provide. If
273any officer whose signature, or a facsimile of whose signature,
274appears on any bonds, notes, or other obligations ceases to be
275an officer before the delivery of the bonds, notes, or other
276obligations, the signature or facsimile is valid and sufficient
277for all purposes as if he or she had remained in office until
278the delivery. The bonds, notes, or other obligations may be sold
279at public or private sale for such price as the governing body
280of the entity shall determine. Pending preparation of the
281definitive bonds, the entity may issue interim certificates,
282which shall be exchanged for the definitive bonds. The bonds may
283be secured by a form of credit enhancement, if any, as the
284entity deems appropriate. The bonds may be secured by an
285indenture of trust or trust agreement. In addition, the
286governing body of the legal entity may delegate, to an officer,
287official, or agent of the legal entity as the governing body of
288the legal entity may select, the power to determine the time;
289manner of sale, public or private; maturities; rate of interest,
290which may be fixed or may vary at the time and in accordance
291with a specified formula or method of determination; and other
292terms and conditions as may be deemed appropriate by the
293officer, official, or agent so designated by the governing body
294of the legal entity. However, the amount and maturity of the
295bonds, notes, or other obligations and the interest rate of the
296bonds, notes, or other obligations must be within the limits
297prescribed by the governing body of the legal entity and its
298resolution delegating to an officer, official, or agent the
299power to authorize the issuance and sale of the bonds, notes, or
300other obligations.
301     11.3.  Bonds, notes, or other obligations issued under this
302paragraph subparagraph 1. may be validated as provided in
303chapter 75. The complaint in any action to validate the bonds,
304notes, or other obligations must be filed only in the Circuit
305Court for Leon County. The notice required to be published by s.
30675.06 must be published in Leon County and in each county that
307is a member of the entity issuing the bonds, notes, or other
308obligations, or in which a member of the entity is located, and
309the complaint and order of the circuit court must be served only
310on the State Attorney of the Second Judicial Circuit and on the
311state attorney of each circuit in each county that is a member
312of the entity issuing the bonds, notes, or other obligations or
313in which a member of the entity is located. Section 75.04(2)
314does not apply to a complaint for validation brought by the
315legal entity.
316     12.4.  The accomplishment of the authorized purposes of a
317legal entity created under this paragraph is in all respects for
318the benefit of the people of the state, for the increase of
319their commerce and prosperity, and for the improvement of their
320health and living conditions. Since the legal entity will
321perform essential governmental functions in accomplishing its
322purposes, the legal entity is not required to pay any taxes or
323assessments of any kind whatsoever upon any property acquired or
324used by it for such purposes or upon any revenues at any time
325received by it. The bonds, notes, and other obligations of an
326entity, their transfer and the income therefrom, including any
327profits made on the sale thereof, are at all times free from
328taxation of any kind by the state or by any political
329subdivision or other agency or instrumentality thereof. The
330exemption granted in this subparagraph is not applicable to any
331tax imposed by chapter 220 on interest, income, or profits on
332debt obligations owned by corporations.
333     Section 2.  Subsection (1) of section 120.52, Florida
334Statutes, is amended to read:
335     120.52  Definitions.--As used in this act:
336     (1)  "Agency" means:
337     (a)  The Governor in the exercise of all executive powers
338other than those derived from the constitution.
339     (b)  Each:
340     1.  State officer and state department, and each
341departmental unit described in s. 20.04.
342     2.  Authority, including a regional water supply authority.
343     3.  Board.
344     4.  Commission, including the Commission on Ethics and the
345Fish and Wildlife Conservation Commission when acting pursuant
346to statutory authority derived from the Legislature.
347     5.  Regional planning agency.
348     6.  Multicounty special district with a majority of its
349governing board comprised of nonelected persons.
350     7.  Educational units.
351     8.  Entity described in chapters 163, 373, 380, and 582 and
352s. 186.504.
353     (c)  Each other unit of government in the state, including
354counties and municipalities, to the extent they are expressly
355made subject to this act by general or special law or existing
356judicial decisions.
357
358This definition does not include any legal entity or agency
359created in whole or in part pursuant to chapter 361, part II,
360any metropolitan planning organization created pursuant to s.
361339.175, any separate legal or administrative entity created
362pursuant to s. 339.175 of which a metropolitan planning
363organization is a member, an expressway authority pursuant to
364chapter 348, any legal or administrative entity created by an
365interlocal agreement pursuant to s. 163.01(7), except those
366created pursuant to s. 163.01(7)(g)1., unless any party to such
367agreement is otherwise an agency as defined in this subsection,
368or any multicounty special district with a majority of its
369governing board comprised of elected persons; however, this
370definition shall include a regional water supply authority.
371     Section 3.  Subsection (7) of section 367.021, Florida
372Statutes, is amended to read:
373     367.021  Definitions.--As used in this chapter, the
374following words or terms shall have the meanings indicated:
375     (7)  "Governmental authority" means a political
376subdivision, as defined by s. 1.01(8), a regional water supply
377authority created pursuant to s. 373.1962, or a nonprofit
378corporation formed for the purpose of acting on behalf of a
379political subdivision with respect to a water or wastewater
380facility; however, this definition shall exclude a separate
381legal entity created pursuant to s. 163.01(7)(g)1.
382     Section 4.  Subsections (1) and (4) of section 367.071,
383Florida Statutes, are amended to read:
384     367.071  Sale, assignment, or transfer of certificate of
385authorization, facilities, or control.--
386     (1)  A No utility may not shall sell, assign, or transfer
387its certificate of authorization, facilities or any portion
388thereof, or majority organizational control without
389determination and approval of the commission that the proposed
390sale, assignment, or transfer is in the public interest and that
391the buyer, assignee, or transferee will fulfill the commitments,
392obligations, and representations of the utility. However, a
393sale, assignment, or transfer of its certificate of
394authorization, facilities or any portion thereof, or majority
395organizational control may occur prior to commission approval if
396the contract for sale, assignment, or transfer is made
397contingent upon commission approval.
398     (4)  An application shall be disposed of as provided in s.
399367.045, except that:
400     (a)  The sale of facilities, in whole or part, to a
401governmental authority, as defined in s. 367.021(7), shall be
402approved as a matter of right; however, the governmental
403authority shall, prior to taking any official action, obtain
404from the utility or commission with respect to the facilities to
405be sold the most recent available income and expense statement,
406balance sheet, and statement of rate base for regulatory
407purposes and contributions-in-aid-of-construction. Any request
408for rate relief pending before the commission at the time of
409sale is deemed to have been withdrawn. Interim rates, if
410previously approved by the commission, must be discontinued, and
411any money collected pursuant to interim rate relief must be
412refunded to the customers of the utility with interest.
413     (b)  When paragraph (a) does not apply, the commission
414shall amend the certificate of authorization as necessary to
415reflect the change resulting from the sale, assignment, or
416transfer.
417     Section 5.  Section 367.0813, Florida Statutes, is created
418to read:
419     367.0813  Gain or loss on purchase or condemnation by
420governmental authority.--In order to provide appropriate
421incentives to encourage the private sector to participate in the
422investment in water and wastewater infrastructure, to protect
423private-sector property rights of a utility's shareholders, and
424to avoid additional burden of costs placed on ratepayers by
425relitigating this issue, the Legislature affirms and clarifies
426the clear policy of this state that gains or losses from a
427purchase or condemnation of a utility's assets that results in
428the loss of customers served by such assets and the associated
429future revenue streams shall be borne by the shareholders of the
430utility. This section shall apply to all transactions prior to
431and after the effective date of this section.
432     Section 6.  If any provision of this act or its application
433to any person or circumstance is held invalid, the invalidity
434does not affect other provisions or applications of this act
435which can be given effect without the invalid provision or
436application, and to this end the provisions of this act are
437declared severable.
438     Section 7.  This act shall take effect upon becoming a law
439and shall apply to all contracts pending on that date.


CODING: Words stricken are deletions; words underlined are additions.