Florida Senate - 2014 COMMITTEE AMENDMENT Bill No. SB 910 Ì389346GÎ389346 LEGISLATIVE ACTION Senate . House Comm: RCS . 04/01/2014 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— following: 1 Senate Substitute for Amendment (549218) (with title 2 amendment) 3 4 Delete everything after the enacting clause 5 and insert: 6 Section 1. Utility Cost Containment Bond Act.— 7 (1) SHORT TITLE.—This section may be cited as the “Utility 8 Cost Containment Bond Act.” 9 (2) DEFINITIONS.—As used in this section, the term: 10 (a) “Authority” means an entity created pursuant to s. 11 163.01(7)(g), Florida Statutes, which provides public utility 12 services and whose membership consists of at least three 13 counties. The term includes any successor to the powers and 14 functions of such an entity. 15 (b) “Cost,” as applied to a utility project or a portion of 16 a utility project financed under this act, means any of the 17 following: 18 1. Any part of the expense of constructing, renovating or 19 acquiring lands, structures, real or personal property, rights, 20 rights-of-way, franchises, easements, and interests acquired or 21 used for a utility project. 22 2. The expense of demolishing or removing any buildings or 23 structures on acquired land, including the expense of acquiring 24 any lands to which the buildings or structures may be moved, and 25 the cost of all machinery and equipment used for the demolition 26 or removal. 27 3. Finance charges. 28 4. Interest, as determined by the authority. 29 5. Provisions for working capital and debt service 30 reserves. 31 6. Expenses for extensions, enlargements, additions, 32 replacements, renovations, and improvements. 33 7. Expenses for architectural, engineering, financial, 34 accounting, and legal services, plans, specifications, 35 estimates, and administration. 36 8. Any other expense necessary or incidental to determining 37 the feasibility of constructing any utility project or 38 incidental to the construction, acquisition, or financing of any 39 utility project. 40 (c) “Customer” means a person receiving water, wastewater, 41 or stormwater service from a publicly owned utility. 42 (d) “Financing costs” means any of the following: 43 1. Interest and redemption premiums that are payable on 44 utility cost containment bonds. 45 2. The cost of retiring the principal of utility cost 46 containment bonds, whether at maturity, including acceleration 47 of maturity upon an event of default, or upon redemption, 48 including sinking fund redemption. 49 3. The cost related to issuing or servicing utility cost 50 containment bonds, including any payment under an interest rate 51 swap agreement and any type of fee. 52 4. A payment or expense associated with a bond insurance 53 policy; financial guaranty; a contract, agreement, or other 54 credit or liquidity enhancement for bonds; or a contract, 55 agreement, or other financial agreement entered into in 56 connection with utility cost containment bonds. 57 5. Any coverage charges. 58 6. The funding of one or more reserve accounts relating to 59 utility cost containment bonds. 60 (e) “Finance” or “financing” includes refinancing. 61 (f) “Financing resolution” means a resolution adopted by 62 the governing body of an authority that provides for the 63 financing or refinancing of a utility project with utility cost 64 containment bonds and that imposes a utility project charge in 65 connection with the utility cost containment bonds in accordance 66 with subsection (4). A financing resolution may be separate from 67 a resolution authorizing the issuance of the bonds. 68 (g) “Governing body” means the body that governs a local 69 agency. 70 (h) “Local agency” means a member of the authority, or an 71 agency or subdivision of that member, which is sponsoring or 72 refinancing a utility project, or any municipality, county, 73 authority, special district, public corporation, or other 74 governmental entity of the state that is sponsoring or 75 refinancing a utility project. 76 (i) “Public utility services” means any of the following 77 services provided by a publicly owned utility: 78 1. Water. 79 2. Wastewater. 80 3. Stormwater. 81 82 The term does not include internet or cable services. 83 (j) “Publicly owned utility” means a utility furnishing 84 water, wastewater, or stormwater service that is owned and 85 operated by a local agency. The term includes any successor to 86 the powers and functions of such a utility. 87 (k) “Revenue” means income and receipts of the authority 88 from any of the following: 89 1. A bond purchase agreement. 90 2. Bonds acquired by the authority. 91 3. Installment sales agreements and other revenue-producing 92 agreements entered into by the authority. 93 4. Utility projects financed or refinanced by the 94 authority. 95 5. Grants and other sources of income. 96 6. Moneys paid by a local agency. 97 7. Interlocal agreements with a local agency. 98 8. Interest or other income from any investment of money in 99 any fund or account established for the payment of principal, 100 interest, or premiums on utility cost containment bonds, or the 101 deposit of proceeds of utility cost containment bonds. 102 (l) “Utility cost containment bonds” means bonds, notes, 103 commercial paper, variable rate securities, and any other 104 evidence of indebtedness issued by an authority, the proceeds of 105 which are used directly or indirectly to pay or reimburse a 106 local agency or its publicly owned utility for the costs of a 107 utility project, and which are secured by a pledge of, and are 108 payable from, utility project property. 109 (m) “Utility project” means the acquisition, construction, 110 installation, retrofitting, rebuilding, or other addition to or 111 improvement of any equipment, device, structure, process, 112 facility, technology, rights, or property located within or 113 outside this state which is used in connection with the 114 operations of a publicly owned utility. 115 (n) “Utility project property” means the property right 116 created pursuant to subsection (6) including the right, title, 117 and interest of an authority in any of the following: 118 1. The financing resolution, the utility project charge, 119 and any adjustment to the utility project charge established in 120 accordance with subsection (5). 121 2. The financing costs of the utility cost containment 122 bonds and all revenues, and all collections, claims, payments, 123 moneys, or proceeds for, or arising from, the utility project 124 charge. 125 3. All rights to obtain adjustments to the utility project 126 charge pursuant to subsection (5). 127 (3) UTILITY PROJECTS.— 128 (a) A local agency that owns and operates a publicly owned 129 utility may apply to an authority to finance the costs of a 130 utility project using the proceeds of utility cost containment 131 bonds. In its application to the authority, the local agency 132 shall specify the utility project to be financed by the utility 133 cost containment bonds and the maximum principal amount, the 134 maximum interest rate, and the maximum stated terms of the 135 utility cost containment bonds. 136 (b) A local agency may not apply to an authority for the 137 financing of a utility project under this section unless the 138 governing body has determined, in a duly noticed public meeting, 139 all of the following: 140 1. The project to be financed is a utility project. 141 2. The local agency will finance costs of the utility 142 project and the financing costs associated with the financing 143 will be paid from utility project property, including the 144 utility project charge for the utility cost containment bonds. 145 3. Based on the best information available to the governing 146 body, the rates charged to the local agency’s retail customers 147 by the publicly owned utility, including the utility project 148 charge resulting from the financing of the utility project with 149 utility cost containment bonds, are expected to be lower than 150 the rates that would be charged if the project was financed with 151 bonds payable from revenues of the publicly owned utility. 152 (c) A determination by the governing body that a project to 153 be financed with utility cost containment bonds is a utility 154 project is final and conclusive, and the utility cost 155 containment bonds issued to finance the utility project and the 156 utility project charge shall be valid and enforceable as set 157 forth in the financing resolution and the documents relating to 158 the utility cost containment bonds. 159 (d) The savings resulting from the issuance of utility cost 160 containment bonds for a utility project must be used to directly 161 benefit the customers of the publicly owned utility through rate 162 reductions or other programs. 163 (e) If a local agency that has outstanding utility cost 164 containment bonds ceases to operate a water, wastewater, or 165 stormwater utility, directly or through its publicly owned 166 utility, references in this section to the local agency or to 167 its publicly owned utility shall be to the successor entity. The 168 successor entity shall assume and perform all obligations of the 169 local agency and its publicly owned utility required by this 170 section and shall assume the servicing agreement required under 171 subsection (4) while the utility cost containment bonds remain 172 outstanding. 173 (4) FINANCING UTILITY PROJECTS.— 174 (a) An authority may issue utility cost containment bonds 175 to finance or refinance utility projects; refinance debt of a 176 local agency incurred in financing or refinancing utility 177 projects, provided such refinancing results in present value 178 savings to the local agency; or, with the approval of the local 179 agency, refinance previously issued utility cost containment 180 bonds. 181 1. To finance a utility project, the authority may: 182 a. Form a single-purpose limited liability company and 183 authorize the company to adopt the financing resolution of such 184 utility project; or 185 b. Create a new single-purpose entity by interlocal 186 agreement whose membership shall consist of the authority and 187 two or more of its members or other public agencies. 188 2. A single-purpose limited liability company or a single 189 purpose entity may be created by the authority solely for the 190 purpose of performing the duties and responsibilities of the 191 authority specified in this section and shall constitute an 192 authority for all purposes of this section. Reference to the 193 authority includes a company or entity created under this 194 paragraph. 195 (b) The governing body of an authority that is financing 196 the costs of a utility project shall adopt a financing 197 resolution and shall impose a utility project charge as 198 described in subsection (5). All provisions of a financing 199 resolution adopted pursuant to this section are binding on the 200 authority. 201 1. The financing resolution must: 202 a. Provide a brief description of the financial calculation 203 method the authority will use in determining the utility project 204 charge. The calculation method shall include a periodic 205 adjustment methodology to be applied at least annually to the 206 utility project charge. The authority shall establish the 207 allocation of the utility project charge among classes of 208 customers of the publicly owned utility. The decision of the 209 authority shall be final and conclusive, and the method of 210 calculating the utility project charge and the periodic 211 adjustment may not be changed; 212 b. Require each customer in the class or classes of 213 customers specified in the financing resolution who receives 214 water, wastewater, or stormwater service through the publicly 215 owned utility to pay the utility project charge regardless of 216 whether the customer has an agreement to receive water, 217 wastewater, or stormwater service from a person other than the 218 publicly owned utility; 219 c. Require that the utility project charge be charged 220 separately from other charges on the bill of customers of the 221 publicly owned utility in the class or classes of customers 222 specified in the financing resolution; and 223 d. Require that the authority enter into a servicing 224 agreement with the local agency or its publicly owned utility to 225 collect the utility project charge. 226 2. The authority may require in the financing resolution 227 that, in the event of a default by the local agency or its 228 publicly owned utility with respect to revenues from the utility 229 project property, the authority, upon application by the 230 beneficiaries of the statutory lien as set forth in subsection 231 (6), shall order the sequestration and payment to the 232 beneficiaries of revenues arising from utility project property. 233 This provision does not limit any other remedies available to 234 the beneficiaries by reason of default. 235 (c) An authority has all the powers provided in this 236 section and under s. 163.01(7)(g), Florida Statutes. 237 (5) UTILITY PROJECT CHARGE.— 238 (a) The authority shall impose a sufficient utility project 239 charge, based on estimates of water, wastewater, or stormwater 240 service usage, to ensure timely payment of all financing costs 241 with respect to utility cost containment bonds. The local agency 242 or its publicly owned utility shall provide the authority with 243 information concerning the publicly owned utility which may be 244 required by the authority in establishing the utility project 245 charge. 246 (b) The utility project charge is a nonbypassable charge to 247 all present and future customers of the publicly owned utility 248 in the class or classes of customers specified in the financing 249 resolution upon its adoption. If a customer of the publicly 250 owned utility that is subject to a utility project charge enters 251 into an agreement to purchase water, wastewater, or stormwater 252 service from a supplier other than the publicly owned utility, 253 the customer shall remain liable for the payment of the utility 254 project charge if the customer has received any service or 255 benefit from the publicly owned utility subsequent to the date 256 the utility project charged is imposed. 257 (c) The authority shall determine at least annually and at 258 such additional intervals as provided in the financing 259 resolution and documents related to the applicable utility cost 260 containment bonds whether adjustments to the utility project 261 charge are required. The authority shall use the adjustment to 262 correct for any overcollection or undercollection of financing 263 costs from the utility project charge or to make any other 264 adjustment necessary to ensure the timely payment of the 265 financing costs of the utility cost containment bonds, including 266 adjustment of the utility project charge to pay any debt service 267 coverage requirement for the utility cost containment bonds. The 268 local agency or its publicly owned utility shall provide the 269 authority with information concerning the publicly owned utility 270 which may be required by the authority in adjusting the utility 271 project charge. 272 1. If the authority determines that an adjustment to the 273 utility project charge is required, the adjustment shall be made 274 using the methodology specified in the financing resolution. 275 2. The adjustment may not impose the utility project charge 276 on a class of customers that was not subject to the utility 277 project charge pursuant to the financing resolution imposing the 278 utility project charge. 279 (d) Revenues from a utility project charge are special 280 revenues of the authority and do not constitute revenue of the 281 local agency or its publicly owned utility for any purpose, 282 including, but not limited to, any dedication, commitment, or 283 pledge of revenue, receipts, or other income that the local 284 agency or its publicly owned utility has made or will make for 285 the security of any of its obligations. 286 (e) The local agency or its publicly owned utility shall 287 act as a servicing agent for collecting the utility project 288 charge throughout the duration of the servicing agreement 289 required by the financing resolution. The local agency or its 290 publicly owned utility shall hold the money collected in trust 291 for the exclusive benefit of the persons entitled to have the 292 financing costs paid from the utility project charge and the 293 money does not lose its character as revenues of the authority 294 by virtue of possession by the local agency or its publicly 295 owned utility. 296 (f) The timely and complete payment of all utility project 297 charges by the customer shall be a condition of receiving water, 298 wastewater, or stormwater service from the publicly owned 299 utility. The local agency or its publicly owned utility may use 300 its established collection policies and remedies provided under 301 law to enforce collection of the utility project charge. A 302 customer liable for a utility project charge may not withhold 303 payment, in whole or in part, thereof. 304 (g) The pledge of a utility project charge to secure 305 payment of utility cost containment bonds is irrevocable, and 306 the state, or any other entity, may not reduce, impair, or 307 otherwise adjust the utility project charge, except that the 308 authority shall implement the periodic adjustments to the 309 utility project charge as provided under this subsection. 310 (6) UTILITY PROJECT PROPERTY.— 311 (a) A utility project charge constitutes utility project 312 property on the effective date of the financing resolution 313 authorizing such utility project charge. Utility project 314 property constitutes property, including for contracts securing 315 utility cost containment bonds, regardless of whether the 316 revenues and proceeds arising with respect to the utility 317 project property have accrued. Utility project property shall 318 continuously exist as property for all purposes with all of the 319 rights and privileges of this section for the period provided in 320 the financing resolution or until all financing costs with 321 respect to the related utility cost containment bonds are paid 322 in full, whichever occurs first. 323 (b) Upon the effective date of the financing resolution, 324 the utility project property is subject to a first priority 325 statutory lien to secure the payment of the utility cost 326 containment bonds. 327 1. The lien secures the payment of all financing costs then 328 existing or subsequently arising to the holders of the utility 329 cost containment bonds, the trustee or representative for the 330 holders of the utility cost containment bonds, and any other 331 entity specified in the financing resolution or the documents 332 relating to the utility cost containment bonds. 333 2. The lien attaches to the utility project property 334 regardless of the current ownership of the utility project 335 property, including any local agency or its publicly owned 336 utility, the authority, or other person. 337 3. Upon the effective date of the financing resolution, the 338 lien is valid and enforceable against the owner of the utility 339 project property and all third parties, and additional public 340 notice is not required. 341 4. The lien is a continuously perfected lien on all 342 revenues and proceeds generated from the utility project 343 property, regardless of whether the revenues or proceeds have 344 accrued. 345 (c) All revenues with respect to utility project property 346 related to utility cost containment bonds, including payments of 347 the utility project charge, shall be applied first to the 348 payment of the financing costs of the utility cost containment 349 bonds then due, including the funding of reserves for the 350 utility cost containment bonds. Any excess revenues shall be 351 applied as determined by the authority for the benefit of the 352 utility for which the utility cost containment bonds were 353 issued. 354 (7) UTILITY COST CONTAINMENT BONDS.— 355 (a) Utility cost containment bonds shall be issued within 356 the parameters of the financing provided by the authority 357 pursuant to this section. The proceeds of the utility cost 358 containment bonds made available to the local agency or its 359 publicly owned utility shall be used for the utility project 360 identified in the application for financing of the utility 361 project or used to refinance indebtedness of the local agency 362 which financed or refinanced utility projects. 363 (b) Utility cost containment bonds shall be issued in 364 accordance with this section and s. 163.01(7)(g)8., Florida 365 Statutes, and may be validated pursuant to s. 163.01(7)(g)9., 366 Florida Statutes. 367 (c) The authority shall pledge the utility project property 368 as security for the payment of the utility cost containment 369 bonds. All rights of an authority with respect to utility 370 project property pledged as security for the payment of utility 371 cost containment bonds shall be for the benefit of, and 372 enforceable by, the beneficiaries of the pledge to the extent 373 provided in the financing documents relating to the utility cost 374 containment bonds. 375 1. If utility project property is pledged as security for 376 the payment of utility cost containment bonds, the local agency 377 or its publicly owned utility shall enter into a contract with 378 the authority which requires, at a minimum, that the publicly 379 owned utility: 380 a. Continue to operate its publicly owned utility, 381 including the utility project that is being financed or 382 refinanced; 383 b. Collect the utility project charge from customers for 384 the benefit and account of the authority and the beneficiaries 385 of the pledge of the utility project charge; and 386 c. Separately account for and remit revenue from the 387 utility project charge to, or for the account of, the authority. 388 2. The pledge of a utility project charge to secure payment 389 of utility cost containment bonds is irrevocable, and the state 390 or any other entity may not reduce, impair, or otherwise adjust 391 the utility project charge, except that the authority shall 392 implement periodic adjustments to the utility project charge as 393 provided under subsection (5). 394 (d) Utility cost containment bonds shall be nonrecourse to 395 the credit or any assets of the local agency or the publicly 396 owned utility but shall be payable from, and secured by a pledge 397 of, the utility project property relating to the utility cost 398 containment bonds and any additional security or credit 399 enhancement specified in the documents relating to the utility 400 cost containment bonds. If, pursuant to subsection (4), the 401 authority is financing the project through a single-purpose 402 limited liability company, the utility cost containment bonds 403 shall be payable from, and secured by, a pledge of amounts paid 404 by the company to the authority from the applicable utility 405 project property. This provision shall be the exclusive method 406 of perfecting a pledge of utility project property by the 407 company securing the payment of financing costs under any 408 agreement of the company in connection with the issuance of 409 utility cost containment bonds. 410 (e) The issuance of utility cost containment bonds does not 411 obligate the state or any political subdivision thereof to levy 412 or to pledge any form of taxation to pay the utility cost 413 containment bonds or to make any appropriation for their 414 payment. All utility cost containment bonds must contain on 415 their face a statement in substantially the following form: 416 417 “Neither the full faith and credit nor the taxing power of the 418 State of Florida or any political subdivision thereof is pledged 419 to the payment of the principal of, or interest on, this bond.” 420 421 (f) Notwithstanding any other law or this section, a 422 financing resolution or other resolution of the authority, or 423 documents relating to utility cost containment bonds, the 424 authority may not rescind, alter, or amend any resolution or 425 document that pledges utility cost charges for payment of 426 utility cost containment bonds. 427 (g) Subject to the terms of the pledge document created 428 under this part, the validity and relative priority of a pledge 429 is not defeated or adversely affected by the commingling of 430 revenues generated by the utility project property with other 431 funds of the local agency or the publicly owned utility 432 collecting a utility project charge on behalf of an authority. 433 (h) Financing costs in connection with utility cost 434 containment bonds are a special obligation of the authority and 435 do not constitute a liability of the state or any political 436 subdivision thereof. Financing costs are not a pledge of the 437 full faith and credit of the state or any political subdivision 438 thereof, including the authority, but are payable solely from 439 the funds in the documents relating to the utility cost 440 containment bonds. This provision does not preclude guarantees 441 or credit enhancements in connection with utility cost 442 containment bonds. 443 (i) Except as otherwise provided in this section with 444 respect to adjustments to a utility project charge, the recovery 445 of the financing costs for the utility cost containment bonds 446 from the utility project charge shall be irrevocable and the 447 authority does not have the power, either by rescinding, 448 altering, or amending the applicable financing resolution, to 449 revalue or revise for ratemaking purposes the financing costs of 450 utility cost containment bonds; to determine that the financing 451 costs for the related utility cost containment bonds or the 452 utility project charge is unjust or unreasonable; or to in any 453 way reduce or impair the value of utility project property that 454 includes the utility project charge, either directly or 455 indirectly. The amount of revenues arising with respect to the 456 financing costs for the related utility cost containment bonds 457 or the utility project charge are not subject to reduction, 458 impairment, postponement, or termination for any reason until 459 all financing costs to be paid from the utility project charge 460 are fully met and discharged. 461 (j) Except as provided in subsection (5) with respect to 462 adjustments to a utility project charge, the state does hereby 463 pledge and agree with the owners of utility cost containment 464 bonds that the state shall neither limit nor alter the financing 465 costs or the utility project property, including the utility 466 project charge, relating to the utility cost containment bonds, 467 or any rights in, to, or under the utility project property 468 until all financing costs with respect to the utility cost 469 containment bonds are fully met and discharged. This paragraph 470 does not preclude limitation or alteration if adequate provision 471 is made by law for the protection of the owners. The authority 472 may include this pledge by the state in the governing documents 473 for utility cost containment bonds. 474 (8) LIMITATION ON DEBT RELIEF.—Notwithstanding any other 475 law, an authority that issued utility cost containment bonds may 476 not, and no governmental officer or organization shall so 477 authorize the authority to, become a debtor under the United 478 States Bankruptcy Code or become the subject of any similar case 479 or proceeding under any other state or federal law if any 480 payment obligation from utility project property remains with 481 respect to the utility cost containment bonds. 482 (9) CONSTRUCTION.—This section and all grants of power and 483 authority in this section shall be liberally construed to 484 effectuate their purposes. All incidental powers necessary to 485 carry into effect the provisions of this section are expressly 486 granted to, and conferred upon, public entities. 487 Section 2. This act shall take effect July 1, 2014. 488 489 ================= T I T L E A M E N D M E N T ================ 490 And the title is amended as follows: 491 Delete everything before the enacting clause 492 and insert: 493 A bill to be entitled 494 An act relating to utility projects; providing a short 495 title; providing definitions; authorizing certain 496 local government entities to finance the costs of a 497 utility project by issuing utility cost containment 498 bonds upon application by a local agency; specifying 499 application requirements; requiring that savings 500 resulting from the issuance of utility cost 501 containment bonds be used for the benefit of the 502 customers of a public utility; requiring any successor 503 entity of a local agency to assume and perform the 504 obligations of the local agency with respect to the 505 financing of a utility project; authorizing an 506 authority to issue utility cost containment bonds for 507 specified purposes related to utility projects; 508 authorizing an authority to form alternate entities to 509 finance utility projects; requiring the governing body 510 of the authority to adopt a financing resolution and 511 impose a utility project charge on customers of a 512 publicly owned utility as a condition of utility 513 project financing; specifying required and optional 514 provisions of the financing resolution; specifying 515 powers of the authority; requiring the local agency or 516 its publicly owned utility to assist the authority in 517 the establishment or adjustment of the utility project 518 charge; requiring that customers of the public utility 519 specified in the financing resolution pay the utility 520 project charge; providing for adjustment of the 521 utility project charge; establishing ownership of the 522 revenues of the utility project charge; requiring the 523 local agency or its publicly owned utility to collect 524 the utility project charge; conditioning a customer’s 525 receipt of public utility services on payment of the 526 utility project charge; authorizing a local agency or 527 its publicly owned utility to use available remedies 528 to enforce collection of the utility project charge; 529 providing that the pledge of the utility project 530 charge or the utility project property to secure 531 payment of bonds issued to finance the utility project 532 is irrevocable and cannot be reduced or impaired 533 except under certain conditions; providing that a 534 utility project charge constitutes utility project 535 property; providing that utility project property is 536 subject to a lien to secure payment of costs relating 537 to utility cost containment bonds; establishing 538 payment priorities for the use of revenues of the 539 utility project property; providing for the issuance 540 and validation of utility cost containment bonds; 541 securing the payment of utility cost containment bonds 542 and related costs; providing that utility cost 543 containment bonds do not obligate the state or any 544 political subdivision thereof and are not backed by 545 their full faith and credit and taxing power; 546 requiring that certain disclosures be printed on 547 utility cost containment bonds; providing that 548 financing costs related to utility cost containment 549 bonds are an obligation of the authority only; 550 securing the payment of the financing costs of utility 551 cost containment bonds; prohibiting an authority with 552 outstanding payment obligations on utility cost 553 containment bonds from becoming a debtor under certain 554 federal or state laws; providing for construction; 555 endowing public entities with certain powers; 556 providing an effective date.