Florida Senate - 2015 SB 1102
By Senator Legg
17-00585A-15 20151102__
1 A bill to be entitled
2 An act relating to utility projects; providing a short
3 title; providing definitions; authorizing certain
4 local government entities to finance the costs of a
5 utility project by issuing utility cost containment
6 bonds upon application by a local agency; specifying
7 application requirements; requiring a successor entity
8 of a local agency to assume and perform the
9 obligations of the local agency with respect to the
10 financing of a utility project; providing procedures
11 for local agencies to use when applying to finance a
12 utility project using utility cost containment bonds;
13 authorizing an authority to issue utility cost
14 containment bonds for specified purposes related to
15 utility projects; authorizing an authority to form
16 alternate entities to finance utility projects;
17 requiring the governing body of the authority to adopt
18 a financing resolution and impose a utility project
19 charge on customers of a publicly owned utility as a
20 condition of utility project financing; specifying
21 required and optional provisions of the financing
22 resolution; specifying powers of the authority;
23 requiring the local agency or its publicly owned
24 utility to assist the authority in the establishment
25 or adjustment of the utility project charge; requiring
26 that customers of the public utility specified in the
27 financing resolution pay the utility project charge;
28 providing for adjustment of the utility project
29 charge; establishing ownership of the revenues of the
30 utility project charge; requiring the local agency or
31 its publicly owned utility to collect the utility
32 project charge; conditioning a customer’s receipt of
33 public utility services on payment of the utility
34 project charge; authorizing a local agency or its
35 publicly owned utility to use available remedies to
36 enforce collection of the utility project charge;
37 providing that the pledge of the utility project
38 charge to secure payment of bonds issued to finance
39 the utility project is irrevocable and cannot be
40 reduced or impaired except under certain conditions;
41 providing that a utility project charge constitutes
42 utility project property; providing that utility
43 project property is subject to a lien to secure
44 payment of costs relating to utility cost containment
45 bonds; establishing payment priorities for the use of
46 revenues of the utility project property; providing
47 for the issuance and validation of utility cost
48 containment bonds; securing the payment of utility
49 cost containment bonds and related costs; providing
50 that utility cost containment bonds do not obligate
51 the state or any political subdivision and are not
52 backed by their full faith and credit and taxing
53 power; requiring that certain disclosures be printed
54 on utility cost containment bonds; providing that
55 financing costs related to utility cost containment
56 bonds are an obligation of the authority only;
57 providing limitations on the state’s ability to alter
58 financing costs or utility project property under
59 certain circumstances; prohibiting an authority with
60 outstanding payment obligations on utility cost
61 containment bonds from becoming a debtor under certain
62 federal or state laws; providing for construction;
63 endowing public entities with certain powers;
64 providing an effective date.
65
66 Be It Enacted by the Legislature of the State of Florida:
67
68 Section 1. Utility Cost Containment Bond Act.—
69 (1) SHORT TITLE.—This section may be cited as the “Utility
70 Cost Containment Bond Act.”
71 (2) DEFINITIONS.—As used in this section, the term:
72 (a) “Authority” means an entity created under s.
73 163.01(7)(g), Florida Statutes, that provides public utility
74 services and whose membership consists of at least three
75 counties. The term includes any successor to the powers and
76 functions of such an entity.
77 (b) “Cost,” as applied to a utility project or a portion of
78 a utility project financed under this section, means:
79 1. Any part of the expense of constructing, renovating, or
80 acquiring lands, structures, real or personal property, rights,
81 rights-of-way, franchises, easements, and interests acquired or
82 used for a utility project;
83 2. The expense of demolishing or removing any buildings or
84 structures on acquired land, including the expense of acquiring
85 any lands to which the buildings or structures may be moved, and
86 the cost of all machinery and equipment used for the demolition
87 or removal;
88 3. Finance charges;
89 4. Interest, as determined by the authority;
90 5. Provisions for working capital and debt service
91 reserves;
92 6. Expenses for extensions, enlargements, additions,
93 replacements, renovations, and improvements;
94 7. Expenses for architectural, engineering, financial,
95 accounting, and legal services, plans, specifications,
96 estimates, and administration; or
97 8. Any other expenses necessary or incidental to
98 determining the feasibility of constructing a utility project or
99 incidental to the construction, acquisition, or financing of a
100 utility project.
101 (c) “Customer” means a person receiving water, wastewater,
102 or stormwater service from a publicly owned utility.
103 (d) “Finance” or “financing” includes refinancing.
104 (e) “Financing cost” means:
105 1. Interest and redemption premiums that are payable on
106 utility cost containment bonds;
107 2. The cost of retiring the principal of utility cost
108 containment bonds, whether at maturity, including acceleration
109 of maturity upon an event of default, or upon redemption,
110 including sinking fund redemption;
111 3. The cost related to issuing or servicing utility cost
112 containment bonds, including any payment under an interest rate
113 swap agreement and any type of fee;
114 4. A payment or expense associated with a bond insurance
115 policy; financial guaranty; contract, agreement, or other credit
116 or liquidity enhancement for bonds; or contract, agreement, or
117 other financial agreement entered into in connection with
118 utility cost containment bonds;
119 5. Any coverage charges; or
120 6. The funding of one or more reserve accounts relating to
121 utility cost containment bonds.
122 (f) “Financing resolution” means a resolution adopted by
123 the governing body of an authority that provides for the
124 financing or refinancing of a utility project with utility cost
125 containment bonds and that imposes a utility project charge in
126 connection with the utility cost containment bonds in accordance
127 with subsection (4). A financing resolution may be separate from
128 a resolution authorizing the issuance of the bonds.
129 (g) “Governing body” means the body that governs a local
130 agency.
131 (h) “Local agency” means a member of the authority, or an
132 agency or subdivision of that member, that is sponsoring or
133 refinancing a utility project, or any municipality, county,
134 authority, special district, public corporation, regional water
135 authority, or other governmental entity of the state that is
136 sponsoring or refinancing a utility project.
137 (i) “Public utility services” means water, wastewater, or
138 stormwater services provided by a publicly owned utility. The
139 term does not include Internet or cable services.
140 (j) “Publicly owned utility” means a utility providing
141 retail or wholesale water, wastewater, or stormwater services
142 that is owned and operated by a local agency. The term includes
143 any successor to the powers and functions of such a utility.
144 (k) “Revenue” means income and receipts of the authority
145 related to the financing of utility projects and issuance of
146 utility cost containment bonds, including any of the following:
147 1. Bond purchase agreements;
148 2. Bonds acquired by the authority;
149 3. Installment sales agreements and other revenue-producing
150 agreements entered into by the authority;
151 4. Utility projects financed or refinanced by the
152 authority;
153 5. Grants and other sources of income;
154 6. Moneys paid by a local agency;
155 7. Interlocal agreements with a local agency, including all
156 service agreements; or
157 8. Interest or other income from any investment of money in
158 any fund or account established for the payment of principal,
159 interest, or premiums on utility cost containment bonds, or the
160 deposit of proceeds of utility cost containment bonds.
161 (l) “Utility cost containment bonds” means bonds, notes,
162 commercial paper, variable rate securities, and any other
163 evidence of indebtedness issued by an authority the proceeds of
164 which are used directly or indirectly to pay or reimburse a
165 local agency or its publicly owned utility for the costs of a
166 utility project and which are secured by a pledge of, and are
167 payable from, utility project property.
168 (m) “Utility project” means the acquisition, construction,
169 installation, retrofitting, rebuilding, or other addition to or
170 improvement of any equipment, device, structure, process,
171 facility, technology, rights, or property located within or
172 outside this state which is used in connection with the
173 operations of a publicly owned utility.
174 (n) “Utility project charge” means a charge levied on
175 customers of a publicly owned utility to pay the financing costs
176 of utility cost containment bonds issued under subsection (4).
177 The term includes any adjustments to the utility project charge
178 under subsection (5).
179 (o) “Utility project property” means the property right
180 created pursuant to subsection (6), including the right, title,
181 and interest of an authority in any of the following:
182 1. The financing resolution, the utility project charge,
183 and any adjustment to the utility project charge established in
184 accordance with subsection (5);
185 2. The financing costs of the utility cost containment
186 bonds and all revenues, and all collections, claims, payments,
187 moneys, or proceeds for, or arising from, the utility project
188 charge; or
189 3. All rights to obtain adjustments to the utility project
190 charge pursuant to subsection (5).
191 (3) UTILITY PROJECTS.—
192 (a) A local agency that owns and operates a publicly owned
193 utility may apply to an authority to finance the costs of a
194 utility project using the proceeds of utility cost containment
195 bonds. In its application to the authority, the local agency
196 shall specify the utility project to be financed by the utility
197 cost containment bonds and the maximum principal amount, the
198 maximum interest rate, and the maximum stated terms of the
199 utility cost containment bonds.
200 (b) A local agency may not apply to an authority for the
201 financing of a utility project under this section unless the
202 governing body has determined, in a duly noticed public meeting,
203 all of the following:
204 1. The project to be financed is a utility project.
205 2. The local agency will finance costs of the utility
206 project, and the costs associated with the financing will be
207 paid from utility project property, including the utility
208 project charge for the utility cost containment bonds.
209 3. Based on the best information available to the governing
210 body, the rates charged to the local agency’s retail customers
211 by the publicly owned utility, including the utility project
212 charge resulting from the financing of the utility project with
213 utility cost containment bonds, are expected to be lower than
214 the rates that would be charged if the project were financed
215 with bonds payable from revenues of the publicly owned utility.
216 (c) A determination by the governing body that a project to
217 be financed with utility cost containment bonds is a utility
218 project is final and conclusive, and the utility cost
219 containment bonds issued to finance the utility project and the
220 utility project charge shall be valid and enforceable as set
221 forth in the financing resolution and the documents relating to
222 the utility cost containment bonds.
223 (d) If a local agency that has outstanding utility cost
224 containment bonds ceases to operate a water, wastewater, or
225 stormwater utility, directly or through its publicly owned
226 utility, references in this section to the local agency or to
227 its publicly owned utility shall be to the successor entity. The
228 successor entity shall assume and perform all obligations of the
229 local agency and its publicly owned utility required by this
230 section and shall assume the servicing agreement required under
231 subsection (4) while the utility cost containment bonds remain
232 outstanding.
233 (4) FINANCING UTILITY PROJECTS.—
234 (a) An authority may issue utility cost containment bonds
235 to finance or refinance utility projects; refinance debt of a
236 local agency incurred in financing or refinancing utility
237 projects, provided such refinancing results in present value
238 savings to the local agency; or, with the approval of the local
239 agency, refinance previously issued utility cost containment
240 bonds.
241 1. To finance a utility project, the authority may:
242 a. Form a single-purpose limited liability company and
243 authorize the company to adopt the financing resolution of such
244 utility project; or
245 b. Create a new single-purpose entity by interlocal
246 agreement under s. 163.01, Florida Statutes, the membership of
247 which shall consist of the authority and two or more of its
248 members or other public agencies.
249 2. A single-purpose limited liability company or a single
250 purpose entity may be created by the authority solely for the
251 purpose of performing the duties and responsibilities of the
252 authority specified in this section and shall constitute an
253 authority for all purposes of this section. Reference to the
254 authority includes a company or entity created under this
255 paragraph.
256 (b) The governing body of an authority that is financing
257 the costs of a utility project shall adopt a financing
258 resolution and shall impose a utility project charge as
259 described in subsection (5). All provisions of a financing
260 resolution adopted pursuant to this section are binding on the
261 authority.
262 1. The financing resolution must:
263 a. Provide a brief description of the financial calculation
264 method the authority will use in determining the utility project
265 charge. The calculation method shall include a periodic
266 adjustment methodology to be applied at least annually to the
267 utility project charge. The authority shall establish the
268 allocation of the utility project charge among classes of
269 customers of the publicly owned utility. The decision of the
270 authority shall be final and conclusive, and the method of
271 calculating the utility project charge and the periodic
272 adjustment may not be changed;
273 b. Require each customer in the class or classes of
274 customers specified in the financing resolution who receives
275 water, wastewater, or stormwater service through the publicly
276 owned utility to pay the utility project charge regardless of
277 whether the customer has an agreement to receive water,
278 wastewater, or stormwater service from a person other than the
279 publicly owned utility;
280 c. Require that the utility project charge be charged
281 separately from other charges on the bill of customers of the
282 publicly owned utility in the class or classes of customers
283 specified in the financing resolution; and
284 d. Require that the authority enter into a servicing
285 agreement with the local agency or its publicly owned utility to
286 collect the utility project charge.
287 2. The authority may require in the financing resolution
288 that, in the event of a default by the local agency or its
289 publicly owned utility with respect to revenues from the utility
290 project property, the authority, upon application by the
291 beneficiaries of the statutory lien as set forth in subsection
292 (6), shall order the sequestration and payment to the
293 beneficiaries of revenues arising from utility project property.
294 This subparagraph does not limit any other remedies available to
295 the beneficiaries by reason of default.
296 (c) An authority has all the powers provided in this
297 section and s. 163.01(7)(g), Florida Statutes.
298 (d) Each authority shall work with local agencies that
299 request assistance to determine the most cost-effective manner
300 of financing regional water projects. If the entities determine
301 that the issuance of utility cost containment bonds will result
302 in lower financing costs for a project, the authority shall
303 cooperate with such local agencies and, if requested by the
304 local agencies, issue utility cost containment bonds as provided
305 in this section.
306 (5) UTILITY PROJECT CHARGE.—
307 (a) The authority shall impose a sufficient utility project
308 charge, based on estimates of water, wastewater, or stormwater
309 service usage, to ensure timely payment of all financing costs
310 with respect to utility cost containment bonds. The local agency
311 or its publicly owned utility shall provide the authority with
312 information concerning the publicly owned utility which may be
313 required by the authority in establishing the utility project
314 charge.
315 (b) The utility project charge is a nonbypassable charge to
316 all present and future customers of the publicly owned utility
317 in the class or classes of customers specified in the financing
318 resolution upon its adoption. If a customer of a publicly owned
319 utility that is subject to a utility project charge enters into
320 an agreement to purchase water, wastewater, or stormwater
321 service from a supplier other than the publicly owned utility,
322 the customer remains liable for the payment of the utility
323 project charge if the customer has received any service or
324 benefit from the publicly owned utility after the date the
325 utility project charge was imposed.
326 (c) The authority shall determine at least annually and at
327 such additional intervals as provided in the financing
328 resolution and documents related to the applicable utility cost
329 containment bonds whether adjustments to the utility project
330 charge are required. The authority shall use the adjustment to
331 correct for any overcollection or undercollection of financing
332 costs from the utility project charge or to make any other
333 adjustment necessary to ensure the timely payment of the
334 financing costs of the utility cost containment bonds, including
335 adjustment of the utility project charge to pay any debt service
336 coverage requirement for the utility cost containment bonds. The
337 local agency or its publicly owned utility shall provide the
338 authority with information concerning the publicly owned utility
339 which may be required by the authority in adjusting the utility
340 project charge.
341 1. If the authority determines that an adjustment to the
342 utility project charge is required, the adjustment shall be made
343 using the methodology specified in the financing resolution.
344 2. The adjustment may not impose the utility project charge
345 on a class of customers that was not subject to the utility
346 project charge pursuant to the financing resolution imposing the
347 utility project charge.
348 (d) Revenues from a utility project charge are special
349 revenues of the authority and do not constitute revenue of the
350 local agency or its publicly owned utility for any purpose,
351 including any dedication, commitment, or pledge of revenue,
352 receipts, or other income that the local agency or its publicly
353 owned utility has made or will make for the security of any of
354 its obligations.
355 (e) The local agency or its publicly owned utility shall
356 act as a servicing agent for collecting the utility project
357 charge throughout the duration of the servicing agreement
358 required by the financing resolution. The local agency or its
359 publicly owned utility shall hold the money collected in trust
360 for the exclusive benefit of the persons entitled to have the
361 financing costs paid from the utility project charge, and the
362 money does not lose its designation as revenues of the authority
363 by virtue of possession by the local agency or its publicly
364 owned utility.
365 (f) The customer must make timely and complete payment of
366 all utility project charges as a condition of receiving water,
367 wastewater, or stormwater service from the publicly owned
368 utility. The local agency or its publicly owned utility may use
369 its established collection policies and remedies provided under
370 law to enforce collection of the utility project charge. A
371 customer liable for a utility project charge may not withhold
372 payment, in whole or in part, thereof.
373 (g) The pledge of a utility project charge to secure
374 payment of utility cost containment bonds is irrevocable, and
375 the state, or any other entity, may not reduce, impair, or
376 otherwise adjust the utility project charge, except that the
377 authority shall implement the periodic adjustments to the
378 utility project charge as provided under this subsection.
379 (6) UTILITY PROJECT PROPERTY.—
380 (a) A utility project charge constitutes utility project
381 property on the effective date of the financing resolution
382 authorizing such utility project charge. Utility project
383 property constitutes property, including for contracts securing
384 utility cost containment bonds, regardless of whether the
385 revenues and proceeds arising with respect to the utility
386 project property have accrued. Utility project property shall
387 continuously exist as property for all purposes with all of the
388 rights and privileges of this section through the end of the
389 period provided in the financing resolution or until all
390 financing costs with respect to the related utility cost
391 containment bonds are paid in full, whichever occurs first.
392 (b) Upon the effective date of the financing resolution,
393 the utility project property is subject to a first-priority
394 statutory lien to secure the payment of the utility cost
395 containment bonds.
396 1. The lien secures the payment of all financing costs then
397 existing or subsequently arising to the holders of the utility
398 cost containment bonds, the trustees or representatives of the
399 holders of the utility cost containment bonds, and any other
400 entity specified in the financing resolution or the documents
401 relating to the utility cost containment bonds.
402 2. The lien attaches to the utility project property
403 regardless of the current ownership of the utility project
404 property, including any local agency or its publicly owned
405 utility, the authority, or any other person.
406 3. Upon the effective date of the financing resolution, the
407 lien is valid and enforceable against the owner of the utility
408 project property and all third parties, and additional public
409 notice is not required.
410 4. The lien is a continuously perfected lien on all
411 revenues and proceeds generated from the utility project
412 property regardless of whether the revenues or proceeds have
413 accrued.
414 (c) All revenues with respect to utility project property
415 related to utility cost containment bonds, including payments of
416 the utility project charge, shall be applied first to the
417 payment of the financing costs of the utility cost containment
418 bonds then due, including the funding of reserves for the
419 utility cost containment bonds. Any excess revenues shall be
420 applied as determined by the authority for the benefit of the
421 utility for which the utility cost containment bonds were
422 issued.
423 (7) UTILITY COST CONTAINMENT BONDS.—
424 (a) Utility cost containment bonds shall be issued within
425 the parameters of the financing provided by the authority
426 pursuant to this section. The proceeds of the utility cost
427 containment bonds made available to the local agency or its
428 publicly owned utility shall be used for the utility project
429 identified in the application for financing of the utility
430 project or used to refinance indebtedness of the local agency
431 which financed or refinanced utility projects.
432 (b) Utility cost containment bonds shall be issued as set
433 forth in this section and s. 163.01(7)(g)8., Florida Statutes,
434 and may be validated pursuant to s. 163.01(7)(g)9., Florida
435 Statutes.
436 (c) The authority shall pledge the utility project property
437 as security for the payment of the utility cost containment
438 bonds. All rights of an authority with respect to utility
439 project property pledged as security for the payment of utility
440 cost containment bonds shall be for the benefit of, and
441 enforceable by, the beneficiaries of the pledge to the extent
442 provided in the financing documents relating to the utility cost
443 containment bonds.
444 1. If utility project property is pledged as security for
445 the payment of utility cost containment bonds, the local agency
446 or its publicly owned utility shall enter into a contract with
447 the authority which requires, at a minimum, that the publicly
448 owned utility:
449 a. Continue to operate its publicly owned utility,
450 including the utility project that is being financed or
451 refinanced;
452 b. Collect the utility project charge from customers for
453 the benefit and account of the authority and the beneficiaries
454 of the pledge of the utility project charge; and
455 c. Separately account for and remit revenue from the
456 utility project charge to, or for the account of, the authority.
457 2. The pledge of a utility project charge to secure payment
458 of utility cost containment bonds is irrevocable, and the state
459 or any other entity may not reduce, impair, or otherwise adjust
460 the utility project charge, except that the authority shall
461 implement periodic adjustments to the utility project charge as
462 provided under subsection (5).
463 (d) Utility cost containment bonds shall be nonrecourse to
464 the credit or any assets of the local agency or the publicly
465 owned utility but shall be payable from, and secured by a pledge
466 of the utility project property relating to the utility cost
467 containment bonds and any additional security or credit
468 enhancement specified in the documents relating to the utility
469 cost containment bonds. If, pursuant to subsection (4), the
470 authority is financing the project through a single-purpose
471 limited liability company, the utility cost containment bonds
472 shall be payable from, and secured by, a pledge of amounts paid
473 by the company to the authority from the applicable utility
474 project property. This paragraph shall be the exclusive method
475 of perfecting a pledge of utility project property by the
476 company securing the payment of financing costs under any
477 agreement of the company in connection with the issuance of
478 utility cost containment bonds.
479 (e) The issuance of utility cost containment bonds does not
480 obligate the state or any political subdivision thereof to levy
481 or to pledge any form of taxation to pay the utility cost
482 containment bonds or to make any appropriation for their
483 payment. Each utility cost containment bond must contain on its
484 face a statement in substantially the following form:
485
486 “Neither the full faith and credit nor the taxing power of the
487 State of Florida or any political subdivision thereof is pledged
488 to the payment of the principal of, or interest on, this bond.”
489
490 (f) Notwithstanding any other law or this section, a
491 financing resolution or other resolution of the authority, or
492 documents relating to utility cost containment bonds, the
493 authority may not rescind, alter, or amend any resolution or
494 document that pledges utility cost charges for payment of
495 utility cost containment bonds.
496 (g) Subject to the terms of any pledge document created
497 under this section, the validity and relative priority of a
498 pledge is not defeated or adversely affected by the commingling
499 of revenues generated by the utility project property with other
500 funds of the local agency or the publicly owned utility
501 collecting a utility project charge on behalf of an authority.
502 (h) Financing costs in connection with utility cost
503 containment bonds are a special obligation of the authority and
504 do not constitute a liability of the state or any political
505 subdivision thereof. Financing costs are not a pledge of the
506 full faith and credit of the state or any political subdivision
507 thereof, including the authority, but are payable solely from
508 the funds identified in the documents relating to the utility
509 cost containment bonds. This paragraph does not preclude
510 guarantees or credit enhancements in connection with utility
511 cost containment bonds.
512 (i) Except as otherwise provided in this section with
513 respect to adjustments to a utility project charge, the recovery
514 of the financing costs for the utility cost containment bonds
515 from the utility project charge shall be irrevocable, and the
516 authority does not have the power, by rescinding, altering, or
517 amending the applicable financing resolution, to revalue or
518 revise for ratemaking purposes the financing costs of utility
519 cost containment bonds; to determine that the financing costs
520 for the related utility cost containment bonds or the utility
521 project charge is unjust or unreasonable; or to in any way
522 reduce or impair the value of utility project property that
523 includes the utility project charge, either directly or
524 indirectly. The amount of revenues arising with respect to the
525 financing costs for the related utility cost containment bonds
526 or the utility project charge are not subject to reduction,
527 impairment, postponement, or termination for any reason until
528 all financing costs to be paid from the utility project charge
529 are fully met and discharged.
530 (j) Except as provided in subsection (5) with respect to
531 adjustments to a utility project charge, the state pledges and
532 agrees with the owners of utility cost containment bonds that
533 the state may not limit or alter the financing costs or the
534 utility project property, including the utility project charge,
535 relating to the utility cost containment bonds, or any rights
536 related to the utility project property, until all financing
537 costs with respect to the utility cost containment bonds are
538 fully met and discharged. This paragraph does not preclude
539 limitation or alteration if adequate provision is made by law to
540 protect the owners. The authority may include the state’s pledge
541 in the governing documents for utility cost containment bonds.
542 (8) LIMITATION ON DEBT RELIEF.—Notwithstanding any other
543 law, an authority that issued utility cost containment bonds may
544 not, and a governmental officer or organization may not
545 authorize the authority to, become a debtor under the United
546 States Bankruptcy Code or become the subject of any similar case
547 or proceeding under any other state or federal law if any
548 payment obligation from utility project property remains with
549 respect to the utility cost containment bonds.
550 (9) CONSTRUCTION.—This section and all grants of power and
551 authority in this section shall be liberally construed to
552 effectuate their purposes. All incidental powers necessary to
553 carry this section into effect are expressly granted to, and
554 conferred upon, public entities.
555 Section 2. This act shall take effect July 1, 2015.