HB 1583CS

CHAMBER ACTION



1The Committee on Natural Resources recommends the following:
2
3     Committee Substitute
4     Remove the entire bill and insert:
5
A bill to be entitled
6An act relating to water and wastewater utilities;
7amending s. 163.01, F.S.; revising provisions for a
8separate legal entity to acquire, own, construct, improve,
9operate, and manage or finance certain public facilities;
10providing for petition to the Public Service Commission of
11the action or binding arbitration for certain changes;
12defining "host government," "separate legal entity,"
13"system," and "utility"; requiring certain notice to the
14commission and host government by the separate legal
15entity that seeks to acquire any utility; providing
16procedures for the host government to accept or reject the
17proposal; requiring the separate legal entity to accept
18the host government as a member upon adoption of a
19membership resolution by the host government; providing
20for the two parties to enter into negotiations to complete
21the utility acquisition agreement; providing for the
22separate legal entity to proceed with the acquisition if
23the host government does not act; providing for petition
24to the commission to consider whether the action is in the
25public interest; providing for review and approval by the
26host government of rates, charges, customer
27classifications, terms of service, and changes to
28financing; providing procedures for changes in rates,
29charges, customer classifications, terms of service, and
30financing; requiring notice of the proposed change;
31providing for negotiations to resolve concerns of the host
32government; providing for binding arbitration by the
33commission; requiring the commission to develop and adopt
34administrative rules governing the arbitration process and
35establishing fees; requiring any transfer or payment by
36the separate legal entity to a member or other local
37government to be solely from user fees or other charges or
38revenues generated from customers that are physically
39located within the jurisdictional or service delivery
40boundaries of the member or local government receiving the
41transfer or payment; authorizing a host government to
42acquire any utility or utility system that it hosts that
43is owned by the separate legal entity; providing for
44limitation of powers and authority of the separate legal
45entity by the terms and conditions of the utility
46acquisition agreement; amending ss. 367.021 and 367.071,
47F.S.; revising the definition of "governmental authority"
48to exclude a separate legal entity for purposes of the
49Water and Wastewater System Regulatory Law; creating s.
50367.0813, F.S.; clarifying state policy that gains or
51losses from a purchase or condemnation of a utility's
52assets that results in the loss of customers served by
53such assets and the associated future revenue streams
54shall be borne by the shareholders of the utility;
55amending s. 367.145, F.S.; revising requirements for
56payment of assessment fees by certain utilities; providing
57for severability; providing for application; providing an
58effective date.
59
60Be It Enacted by the Legislature of the State of Florida:
61
62     Section 1.  Paragraph (g) of subsection (7) of section
63163.01, Florida Statutes, is amended to read:
64     163.01  Florida Interlocal Cooperation Act of 1969.--
65     (7)
66     (g)1.  Notwithstanding any other provisions of this
67section, any separate legal entity created under this section,
68the membership of which is limited to municipalities and
69counties of the state, may acquire, own, construct, improve,
70operate, and manage public facilities, or finance facilities on
71behalf of any person, relating to a governmental function or
72purpose, including, but not limited to, wastewater facilities,
73water or alternative water supply facilities, and water reuse
74facilities, which may serve populations within or outside of the
75members of the entity. Notwithstanding s. 367.171(7), any
76separate legal entity created under this paragraph is not
77subject to Public Service Commission jurisdiction unless the
78host government or at least 10 percent of the customers of the
79utility system being acquired file a petition with the
80commission seeking approval of the acquisition of the utility
81system by the separate legal entity and seeking binding
82arbitration by the commission of proposed changes to the initial
83or subsequent rates and charges of the separate legal entity.
84The separate legal entity and may not provide utility services
85within the service area of an existing utility system unless it
86has received the consent of the utility.
87     2.  For purposes of this paragraph, the term:
88     a.  "Host government" means either the governing body of
89the county, if the largest number of equivalent residential
90connections currently served by a system of the utility is
91located in the unincorporated area, or the governing body of a
92municipality, if the largest number of equivalent residential
93connections currently served by a system of the utility is
94located within that municipality's boundaries.
95     b.  "Separate legal entity" means any entity created by
96interlocal agreement the membership of which is limited to two
97or more municipalities or counties of the state but which entity
98is legally separate and apart from any of its member
99governments.
100     c.  "System" means each separate water or wastewater
101facility providing service.
102     d.  "Utility" means a water or wastewater utility and
103includes every person, separate legal entity, lessee, trustee,
104or receiver owning, operating, managing, or controlling a
105system, or proposing construction of a system, who is providing,
106or proposes to provide, water or wastewater service to the
107public for compensation.
108     3.  A separate legal entity that seeks to acquire any
109utility must notify the Public Service Commission and the host
110government in writing by certified mail about the contemplated
111acquisition not less than 30 days before any proposed transfer
112of ownership, use, or possession of any utility assets by such
113separate legal entity. The potential acquisition notice must be
114provided to the legislative head of the governing body of the
115host government and to its chief administrative officer and must
116provide the name and address of a contact person for the
117separate legal entity and information identified in s.
118367.071(4)(a) concerning the contemplated acquisition.
119     4.a.  Within 30 days following receipt of the notice, the
120host government may adopt a resolution to become a member of the
121separate legal entity, adopt a resolution to approve the utility
122acquisition, adopt a resolution to prohibit the utility
123acquisition by the separate legal entity if the host government
124determines that the proposed acquisition is not in the public
125interest, or request in writing an automatic 45-day extension of
126the 30-day period in order to allow sufficient time for the host
127government to evaluate the proposed acquisition. A resolution
128adopted by the host government that prohibits the acquisition
129may include conditions that would make the proposal acceptable
130to the host government.
131     b.  If a host government adopts a membership resolution,
132the separate legal entity must accept the host government as a
133member on the same basis as its existing members before any
134transfer of ownership, use, or possession of the utility or the
135utility facilities. If a host government adopts a resolution to
136approve the utility acquisition, the two parties shall enter
137into negotiations to complete the utility acquisition agreement.
138If a host government adopts a prohibition resolution, the
139separate legal entity may not acquire the utility within that
140host government's territory without the specific consent of the
141host government by future resolution. If a host government does
142not adopt a prohibition resolution or an approval resolution,
143does not provide a written request for an extension of the 30-
144day notice period, and takes no action to initiate judicial
145proceedings regarding the proposed acquisition, the separate
146legal entity may proceed to acquire the utility after the 30-day
147notice period without further notice.
148     c.  Upon the filing of a petition by at least 10 percent of
149the customers of the system being acquired, the Public Service
150Commission shall consider whether the sale, assignment, or
151transfer of the utility is in the public interest pursuant to
152the provisions of s. 367.071(1).
153     5.  In addition to the host government's right to review as
154fair and reasonable the rates, charges, customer
155classifications, and terms of service that will be in place at
156the time of acquisition, the host government has the right to
157review and approve as fair and reasonable any later changes
158proposed by the separate legal entity to the rates, charges,
159customer classifications, and terms of service before adoption
160by the separate legal entity. In addition, the host government
161has the right to review and approve any changes to the financing
162of such facilities that may result in increased costs to
163customers. Such right of review and approval by the host
164government is subject to the obligation of the separate legal
165entity to establish rates and charges that comply with the
166requirements contained in any resolution or trust agreement
167relating to the issuance of bonds to acquire and improve the
168affected utility and such right does not affect the obligation
169of the separate legal entity to set rates at a level sufficient
170to pay debt service on its obligations issued in relation to the
171host government utility.
172     6.a.  In order to facilitate review of proposed changes by
173the host government, the separate legal entity must notify the
174host government in writing by certified mail about the proposed
175changes not fewer than 90 days before it implements any changes.
176The notice of proposed changes must be provided to the
177legislative head of the governing body of each host government
178and to its chief administrative officer and must provide the
179name and address of a contact person for the separate legal
180entity and information identified in s. 367.081(2)(a)1. as it
181applies to publicly owned utilities about the proposed changes.
182If, after review, the host government believes that the proposed
183changes are in the public interest, the host government may pass
184a resolution approving the proposed changes. If, after review,
185the host government believes that the proposed changes are not
186in the public interest, the host government may enter into
187negotiation with the separate legal entity to resolve those
188concerns.
189     b.  If no agreement is reached within 30 days after the
190host government's determination that the proposed changes are
191not in the public interest, the host government or the separate
192legal entity may request and, if requested, shall receive
193binding arbitration services through the Public Service
194Commission to resolve the dispute with the separate legal
195entity. The commission shall develop and adopt administrative
196rules governing the arbitration process and establishing fees
197for this dispute-resolution service. The arbitration shall be
198conducted by the commission within 90 days after the request by
199the host government or the separate legal entity. The
200commission's arbitration order shall ensure that the new rates
201of the separate legal entity applicable to a specific host
202government recover applicable costs of service, including costs
203of financing, and provide for a reasonable rate of return.
204     7.  After the acquisition or construction of any utility
205systems by a separate legal entity created under this paragraph
206revenues or any other income may not be transferred or paid to a
207member of a separate legal entity, or to any other county or
208municipality, from user fees or other charges or revenues
209generated from customers that are not physically located within
210the jurisdictional or service delivery boundaries of the member,
211county, or municipality receiving the transfer or payment. Any
212transfer or payment to a member or other local government must
213be solely from user fees or other charges or revenues generated
214from customers that are physically located within the
215jurisdictional or service delivery boundaries of the member or
216local government receiving the transfer or payment.
217     8.  A host government may acquire any utility or utility
218system that it hosts that is owned by the separate legal entity.
219If the separate legal entity and the host government cannot
220agree on the terms and conditions of the acquisition, the host
221government may institute eminent domain proceedings under
222chapters 73 and 74, as applicable. This paragraph is an
223alternative provision otherwise provided by law as authorized in
224s. 4, Art. VIII of the State Constitution for any transfer of
225power as a result of an acquisition of a utility by a separate
226legal entity from a municipality, county, or special district.
227     9.  The entity may finance or refinance the acquisition,
228construction, expansion, and improvement of such facilities
229relating to a governmental function or purpose through the
230issuance of its bonds, notes, or other obligations under this
231section or as otherwise authorized by law. Except as limited by
232the terms and conditions of the utility acquisition agreement,
233as approved by the applicable host government and subject to
234approval by the Public Service Commission if a petition is filed
235pursuant to subparagraph 1., the entity has all the powers
236provided by the interlocal agreement under which it is created
237or which are necessary to finance, own, operate, or manage the
238public facility, including, without limitation, the power to
239establish rates, charges, and fees for products or services
240provided by it, the power to levy special assessments, the power
241to sell or finance all or a portion of such facility, and the
242power to contract with a public or private entity to manage and
243operate such facilities or to provide or receive facilities,
244services, or products. Except as may be limited by the
245interlocal agreement under which the entity is created, all of
246the privileges, benefits, powers, and terms of s. 125.01,
247relating to counties, and s. 166.021, relating to
248municipalities, are fully applicable to the entity. However,
249neither the entity nor any of its members on behalf of the
250entity may exercise the power of eminent domain over the
251facilities or property of any existing water or wastewater plant
252utility system, nor may the entity acquire title to any water or
253wastewater plant utility facilities, other facilities, or
254property which was acquired by the use of eminent domain after
255the effective date of this act. Bonds, notes, and other
256obligations issued by the entity are issued on behalf of the
257public agencies that are members of the entity.
258     10.2.  Except as limited by the terms and conditions of the
259utility acquisition agreement, as approved by the applicable
260host government and subject to approval by the Public Service
261Commission if a petition is filed pursuant to subparagraph 1.,
262any entity created under this section may also issue bond
263anticipation notes in connection with the authorization,
264issuance, and sale of bonds. The bonds may be issued as serial
265bonds or as term bonds or both. Any entity may issue capital
266appreciation bonds or variable rate bonds. Any bonds, notes, or
267other obligations must be authorized by resolution of the
268governing body of the entity and bear the date or dates; mature
269at the time or times, not exceeding 40 years from their
270respective dates; bear interest at the rate or rates; be payable
271at the time or times; be in the denomination; be in the form;
272carry the registration privileges; be executed in the manner; be
273payable from the sources and in the medium or payment and at the
274place; and be subject to the terms of redemption, including
275redemption prior to maturity, as the resolution may provide. If
276any officer whose signature, or a facsimile of whose signature,
277appears on any bonds, notes, or other obligations ceases to be
278an officer before the delivery of the bonds, notes, or other
279obligations, the signature or facsimile is valid and sufficient
280for all purposes as if he or she had remained in office until
281the delivery. The bonds, notes, or other obligations may be sold
282at public or private sale for such price as the governing body
283of the entity shall determine. Pending preparation of the
284definitive bonds, the entity may issue interim certificates,
285which shall be exchanged for the definitive bonds. The bonds may
286be secured by a form of credit enhancement, if any, as the
287entity deems appropriate. The bonds may be secured by an
288indenture of trust or trust agreement. In addition, the
289governing body of the legal entity may delegate, to an officer,
290official, or agent of the legal entity as the governing body of
291the legal entity may select, the power to determine the time;
292manner of sale, public or private; maturities; rate of interest,
293which may be fixed or may vary at the time and in accordance
294with a specified formula or method of determination; and other
295terms and conditions as may be deemed appropriate by the
296officer, official, or agent so designated by the governing body
297of the legal entity. However, the amount and maturity of the
298bonds, notes, or other obligations and the interest rate of the
299bonds, notes, or other obligations must be within the limits
300prescribed by the governing body of the legal entity and its
301resolution delegating to an officer, official, or agent the
302power to authorize the issuance and sale of the bonds, notes, or
303other obligations.
304     11.3.  Bonds, notes, or other obligations issued under this
305paragraph subparagraph 1. may be validated as provided in
306chapter 75. The complaint in any action to validate the bonds,
307notes, or other obligations must be filed only in the Circuit
308Court for Leon County. The notice required to be published by s.
30975.06 must be published in Leon County and in each county that
310is a member of the entity issuing the bonds, notes, or other
311obligations, or in which a member of the entity is located, and
312the complaint and order of the circuit court must be served only
313on the State Attorney of the Second Judicial Circuit and on the
314state attorney of each circuit in each county that is a member
315of the entity issuing the bonds, notes, or other obligations or
316in which a member of the entity is located. Section 75.04(2)
317does not apply to a complaint for validation brought by the
318legal entity.
319     12.4.  The accomplishment of the authorized purposes of a
320legal entity created under this paragraph is in all respects for
321the benefit of the people of the state, for the increase of
322their commerce and prosperity, and for the improvement of their
323health and living conditions. Since the legal entity will
324perform essential governmental functions in accomplishing its
325purposes, the legal entity is not required to pay any taxes or
326assessments of any kind whatsoever upon any property acquired or
327used by it for such purposes or upon any revenues at any time
328received by it. The bonds, notes, and other obligations of an
329entity, their transfer and the income therefrom, including any
330profits made on the sale thereof, are at all times free from
331taxation of any kind by the state or by any political
332subdivision or other agency or instrumentality thereof. The
333exemption granted in this subparagraph is not applicable to any
334tax imposed by chapter 220 on interest, income, or profits on
335debt obligations owned by corporations.
336     Section 2.  Subsection (7) of section 367.021, Florida
337Statutes, is amended to read:
338     367.021  Definitions.--As used in this chapter, the
339following words or terms shall have the meanings indicated:
340     (7)  "Governmental authority" means a political
341subdivision, as defined by s. 1.01(8), a regional water supply
342authority created pursuant to s. 373.1962, or a nonprofit
343corporation formed for the purpose of acting on behalf of a
344political subdivision with respect to a water or wastewater
345facility; however, this definition shall exclude a separate
346legal entity created pursuant to s. 163.01(7)(g)1.
347     Section 3.  Subsections (1) and (4) of section 367.071,
348Florida Statutes, are amended to read:
349     367.071  Sale, assignment, or transfer of certificate of
350authorization, facilities, or control.--
351     (1)  A No utility may not shall sell, assign, or transfer
352its certificate of authorization, facilities or any portion
353thereof, or majority organizational control without
354determination and approval of the commission that the proposed
355sale, assignment, or transfer is in the public interest and that
356the buyer, assignee, or transferee will fulfill the commitments,
357obligations, and representations of the utility. However, a
358sale, assignment, or transfer of its certificate of
359authorization, facilities or any portion thereof, or majority
360organizational control may occur prior to commission approval if
361the contract for sale, assignment, or transfer is made
362contingent upon commission approval.
363     (4)  An application shall be disposed of as provided in s.
364367.045, except that:
365     (a)  The sale of facilities, in whole or part, to a
366governmental authority, as defined in s. 367.021(7), shall be
367approved as a matter of right; however, the governmental
368authority shall, prior to taking any official action, obtain
369from the utility or commission with respect to the facilities to
370be sold the most recent available income and expense statement,
371balance sheet, and statement of rate base for regulatory
372purposes and contributions-in-aid-of-construction. Any request
373for rate relief pending before the commission at the time of
374sale is deemed to have been withdrawn. Interim rates, if
375previously approved by the commission, must be discontinued, and
376any money collected pursuant to interim rate relief must be
377refunded to the customers of the utility with interest.
378     (b)  When paragraph (a) does not apply, the commission
379shall amend the certificate of authorization as necessary to
380reflect the change resulting from the sale, assignment, or
381transfer.
382     Section 4.  Section 367.0813, Florida Statutes, is created
383to read:
384     367.0813  Gain or loss on purchase or condemnation by
385governmental authority.--In order to provide appropriate
386incentives to encourage the private sector to participate in the
387investment in water and wastewater infrastructure, to protect
388private-sector property rights of a utility's shareholders, and
389to avoid additional burden of costs placed on ratepayers by
390relitigating this issue, the Legislature affirms and clarifies
391the clear policy of this state that gains or losses from a
392purchase or condemnation of a utility's assets that results in
393the loss of customers served by such assets and the associated
394future revenue streams shall be borne by the shareholders of the
395utility. This section shall apply to all transactions prior to
396and after the effective date of this section.
397     Section 5.  Subsection (1) of section 367.145, Florida
398Statutes, is amended to read:
399     367.145  Regulatory assessment and application fees.--
400     (1)  The commission shall set by rule a regulatory
401assessment fee that each utility must pay in accordance with s.
402350.113(3); however, small utilities with annual revenues less
403than $200,000 shall pay once a year in conjunction with filing
404its annual financial report required by commission rule.
405Notwithstanding any provision of law to the contrary, the amount
406of the regulatory assessment fee shall not exceed 4.5 percent of
407the gross revenues of the utility derived from intrastate
408business, excluding sales for resale made to a regulated
409company.
410     (a)  A governmental authority to which ownership or control
411of a utility is transferred is not liable for any fees owed the
412commission by the utility as of the date of transfer. However,
413whenever a purchase at wholesale is made of any water or
414wastewater service and a fee is paid or payable thereon by the
415selling utility and the utility purchasing such water or
416wastewater service resells the same directly to customers, the
417purchasing utility is entitled to, and must receive, credit on
418such fees as may be due by it under this section to the extent
419of the fee paid or payable upon such water or wastewater service
420by the utility from which such purchase was made. All such fee
421payments and penalties must be deposited in accordance with s.
422350.113.
423     (b)  In addition to the penalties and interest otherwise
424provided, the commission may impose a penalty upon a utility for
425failure to pay regulatory assessment fees in a timely manner in
426accordance with s. 367.161.
427     Section 6.  If any provision of this act or its application
428to any person or circumstance is held invalid, the invalidity
429does not affect other provisions or applications of this act
430which can be given effect without the invalid provision or
431application, and to this end the provisions of this act are
432declared severable.
433     Section 7.  This act shall take effect upon becoming a law
434and shall apply to all contracts pending on that date.


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