Florida Senate - 2014 COMMITTEE AMENDMENT Bill No. SB 910 Ì549218:Î549218 LEGISLATIVE ACTION Senate . House Comm: RS . 04/01/2014 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— following: 1 Senate Amendment (with title amendment) 2 3 Delete everything after the enacting clause 4 and insert: 5 Section 1. Utility Cost Containment Bond Act.— 6 (1) SHORT TITLE.—This section may be cited as the “Utility 7 Cost Containment Bond Act.” 8 (2) DEFINITIONS.—As used in this section, the term: 9 (a) “Authority” means an entity created pursuant to s. 10 163.01(7)(g), Florida Statutes, which provides public utility 11 services and whose membership consists of at least three 12 counties. The term includes any successor to the powers and 13 functions of such an entity. 14 (b) “Cost,” as applied to a utility project or a portion of 15 a utility project financed under this act, means: 16 1. Any part of the expense of constructing, renovating or 17 acquiring lands, structures, real or personal property, rights, 18 rights-of-way, franchises, easements, and interests acquired or 19 used for a utility project. 20 2. The expense of demolishing or removing any buildings or 21 structures on acquired land, including the expense of acquiring 22 any lands to which the buildings or structures may be moved, and 23 the cost of all machinery and equipment used for the demolition 24 or removal. 25 3. Finance charges. 26 4. Interest, as determined by the authority. 27 5. Provisions for working capital and debt service 28 reserves. 29 6. Expenses for extensions, enlargements, additions, 30 replacements, renovations, and improvements. 31 7. Expenses for architectural, engineering, financial, 32 accounting, and legal services, plans, specifications, 33 estimates, and administration. 34 8. Any other expense necessary or incidental to determining 35 the feasibility of constructing any utility project or 36 incidental to the construction, acquisition, or financing of any 37 utility project. 38 (c) “Customer” means a person receiving water, wastewater, 39 electric, or stormwater service from a publicly owned utility. 40 (d) “Financing costs” means any of the following: 41 1. Interest and redemption premiums that are payable on 42 utility cost containment bonds. 43 2. The cost of retiring the principal of utility cost 44 containment bonds, whether at maturity, including acceleration 45 of maturity upon an event of default, or upon redemption, 46 including sinking fund redemption. 47 3. The cost related to issuing or servicing utility cost 48 containment bonds, including any payment under an interest rate 49 swap agreement and any type of fee. 50 4. A payment or expense associated with a bond insurance 51 policy; financial guaranty; a contract, agreement, or other 52 credit or liquidity enhancement for bonds; or a contract, 53 agreement, or other financial agreement entered into in 54 connection with utility cost containment bonds. 55 5. Any coverage charges. 56 6. The funding of one or more reserve accounts relating to 57 utility cost containment bonds. 58 (e) “Finance” or “financing” includes refinancing. 59 (f) “Financing resolution” means a resolution adopted by 60 the governing body of an authority that provides for the 61 financing or refinancing of a utility project with utility cost 62 containment bonds and that imposes a utility project charge in 63 connection with the utility cost containment bonds in accordance 64 with subsection (4). A financing resolution may be separate from 65 a resolution authorizing the issuance of the bonds. 66 (g) “Governing body” means the body that governs a local 67 agency. 68 (h) “Local agency” means a member of the authority, or an 69 agency or subdivision of that member, which is sponsoring or 70 refinancing a utility project, or any municipality, county, 71 authority, special district, public corporation, or other 72 governmental entity of the state that is sponsoring or 73 refinancing a utility project. 74 (i) “Public utility services” means any of the following 75 services provided by a publicly owned utility: 76 1. Water. 77 2. Wastewater. 78 3. Electric. 79 4. Stormwater. 80 (j) “Publicly owned utility” means a utility furnishing 81 water, wastewater, electric, or stormwater service that is owned 82 and operated by a local agency. The term includes any successor 83 to the powers and functions of such a utility. 84 (k) “Revenue” means income and receipts of the authority 85 from any of the following: 86 1. A bond purchase agreement. 87 2. Bonds acquired by the authority. 88 3. Installment sales agreements and other revenue-producing 89 agreements entered into by the authority. 90 4. Utility projects financed or refinanced by the 91 authority. 92 5. Grants and other sources of income. 93 6. Moneys paid by a local agency. 94 7. Interlocal agreements with a local agency. 95 8. Interest or other income from any investment of money in 96 any fund or account established for the payment of principal, 97 interest, or premiums on utility cost containment bonds, or the 98 deposit of proceeds of utility cost containment bonds. 99 (l) “Utility cost containment bonds” means bonds, notes, 100 commercial paper, variable rate securities, and any other 101 evidence of indebtedness issued by an authority, the proceeds of 102 which are used directly or indirectly to pay or reimburse a 103 local agency or its publicly owned utility for the costs of a 104 utility project, and which are secured by a pledge of, and are 105 payable from, utility project property. 106 (m) “Utility project” means the acquisition, construction, 107 installation, retrofitting, rebuilding, or other addition to or 108 improvement of any equipment, device, structure, process, 109 facility, technology, rights, or property located within or 110 outside this state which is used in connection with the 111 operations of a publicly owned utility. 112 (n) “Utility project property” means the property right 113 created pursuant to subsection (6) including the right, title, 114 and interest of an authority in any of the following: 115 1. The financing resolution, the utility project charge, 116 and any adjustment to the utility project charge established in 117 accordance with subsection (5). 118 2. The financing costs of the utility cost containment 119 bonds and all revenues, and all collections, claims, payments, 120 moneys, or proceeds for, or arising from, the utility project 121 charge. 122 3. All rights to obtain adjustments to the utility project 123 charge pursuant to subsection (5). 124 (3) UTILITY PROJECTS.— 125 (a) A local agency that owns and operates a publicly owned 126 utility may apply to an authority to finance the costs of a 127 utility project using the proceeds of utility cost containment 128 bonds. In its application to the authority, the local agency 129 shall specify the utility project to be financed by the utility 130 cost containment bonds and the maximum principal amount, the 131 maximum interest rate, and the maximum stated terms of the 132 utility cost containment bonds. 133 (b) A local agency may not apply to an authority for the 134 financing of a utility project under this section unless the 135 governing body has determined, in a duly noticed public meeting, 136 all of the following: 137 1. The project to be financed is a utility project. 138 2. The local agency will finance costs of the utility 139 project and the financing costs associated with the financing 140 will be paid from utility project property, including the 141 utility project charge for the utility cost containment bonds. 142 3. Based on the best information available to the governing 143 body, the rates charged to the local agency’s retail customers 144 by the publicly owned utility, including the utility project 145 charge resulting from the financing of the utility project with 146 utility cost containment bonds, are expected to be lower than 147 the rates that would be charged if the project was financed with 148 bonds payable from revenues of the publicly owned utility. 149 (c) A determination by the governing body that a project to 150 be financed with utility cost containment bonds is a utility 151 project is final and conclusive, and the utility cost 152 containment bonds issued to finance the utility project and the 153 utility project charge shall be valid and enforceable as set 154 forth in the financing resolution and the documents relating to 155 the utility cost containment bonds. 156 (d) The savings resulting from the issuance of utility cost 157 containment bonds for a utility project must be used to directly 158 benefit the customers of the publicly owned utility through rate 159 reductions or other programs. 160 (e) If a local agency that has outstanding utility cost 161 containment bonds ceases to operate a water, wastewater, 162 electric, or stormwater utility, directly or through its 163 publicly owned utility, references in this section to the local 164 agency or to its publicly owned utility shall be to the 165 successor entity. The successor entity shall assume and perform 166 all obligations of the local agency and its publicly owned 167 utility required by this section and shall assume the servicing 168 agreement required under subsection (4) while the utility cost 169 containment bonds remain outstanding. 170 (4) FINANCING UTILITY PROJECTS.— 171 (a) An authority may issue utility cost containment bonds 172 to finance or refinance utility projects; refinance debt of a 173 local agency incurred in financing or refinancing utility 174 projects, provided such refinancing results in present value 175 savings to the local agency; or, with the approval of the local 176 agency, refinance previously issued utility cost containment 177 bonds. 178 1. To finance a utility project, the authority may: 179 a. Form a single-purpose limited liability company and 180 authorize the company to adopt the financing resolution of such 181 utility project; or 182 b. Create a new single-purpose entity by interlocal 183 agreement whose membership shall consist of the authority and 184 two or more of its members or other public agencies. 185 2. A single-purpose limited liability company or a single 186 purpose entity may be created by the authority solely for the 187 purpose of performing the duties and responsibilities of the 188 authority specified in this section and shall constitute an 189 authority for all purposes of this section. Reference to the 190 authority includes a company or entity created under this 191 paragraph. 192 (b) The governing body of an authority that is financing 193 the costs of a utility project shall adopt a financing 194 resolution and shall impose a utility project charge as 195 described in subsection (5). All provisions of a financing 196 resolution adopted pursuant to this section are binding on the 197 authority. 198 1. The financing resolution must: 199 a. Provide a brief description of the financial calculation 200 method the authority will use in determining the utility project 201 charge. The calculation method shall include a periodic 202 adjustment methodology to be applied at least annually to the 203 utility project charge. The authority shall establish the 204 allocation of the utility project charge among classes of 205 customers of the publicly owned utility. The decision of the 206 authority shall be final and conclusive, and the method of 207 calculating the utility project charge and the periodic 208 adjustment may not be changed. 209 b. Require each customer in the class or classes of 210 customers specified in the financing resolution who receives 211 water, wastewater, electric, or stormwater service through the 212 publicly owned utility to pay the utility project charge 213 regardless of whether the customer has an agreement to receive 214 water, wastewater, electric, or stormwater service from a person 215 other than the publicly owned utility. 216 c. Require that the utility project charge be charged 217 separately from other charges on the bill of customers of the 218 publicly owned utility in the class or classes of customers 219 specified in the financing resolution. 220 d. Require that the authority enter into a servicing 221 agreement with the local agency or its publicly owned utility to 222 collect the utility project charge. 223 2. The authority may require in the financing resolution 224 that, in the event of a default by the local agency or its 225 publicly owned utility with respect to revenues from the utility 226 project property, the authority, upon application by the 227 beneficiaries of the statutory lien as set forth in subsection 228 (6), shall order the sequestration and payment to the 229 beneficiaries of revenues arising from utility project property. 230 This provision does not limit any other remedies available to 231 the beneficiaries by reason of default. 232 (c) An authority has all the powers provided in this 233 section and under s. 163.01(7)(g), Florida Statutes. 234 (5) UTILITY PROJECT CHARGE.— 235 (a) The authority shall impose a sufficient utility project 236 charge, based on estimates of water, wastewater, electric, or 237 stormwater service usage, to ensure timely payment of all 238 financing costs with respect to utility cost containment bonds. 239 The local agency or its publicly owned utility shall provide the 240 authority with information concerning the publicly owned utility 241 which may be required by the authority in establishing the 242 utility project charge. 243 (b) The utility project charge is a nonbypassable charge to 244 all present and future customers of the publicly owned utility 245 in the class or classes of customers specified in the financing 246 resolution upon its adoption. If a customer of the publicly 247 owned utility that is subject to a utility project charge enters 248 into an agreement to purchase water, wastewater, electric, or 249 stormwater service from a supplier other than the publicly owned 250 utility, the customer shall remain liable for the payment of the 251 utility project charge if the customer has received any service 252 or benefit from the publicly owned utility subsequent to the 253 date the utility project charged is imposed. 254 (c) The authority shall determine at least annually and at 255 such additional intervals as provided in the financing 256 resolution and documents related to the applicable utility cost 257 containment bonds whether adjustments to the utility project 258 charge are required. The authority shall use the adjustment to 259 correct for any overcollection or undercollection of financing 260 costs from the utility project charge or to make any other 261 adjustment necessary to ensure the timely payment of the 262 financing costs of the utility cost containment bonds, including 263 adjustment of the utility project charge to pay any debt service 264 coverage requirement for the utility cost containment bonds. The 265 local agency or its publicly owned utility shall provide the 266 authority with information concerning the publicly owned utility 267 which may be required by the authority in adjusting the utility 268 project charge. 269 1. If the authority determines that an adjustment to the 270 utility project charge is required, the adjustment shall be made 271 using the methodology specified in the financing resolution. 272 2. The adjustment may not impose the utility project charge 273 on a class of customers that was not subject to the utility 274 project charge pursuant to the financing resolution imposing the 275 utility project charge. 276 (d) Revenues from a utility project charge are special 277 revenues of the authority and do not constitute revenue of the 278 local agency or its publicly owned utility for any purpose, 279 including, but not limited to, any dedication, commitment, or 280 pledge of revenue, receipts, or other income that the local 281 agency or its publicly owned utility has made or will make for 282 the security of any of its obligations. 283 (e) The local agency or its publicly owned utility shall 284 act as a servicing agent for collecting the utility project 285 charge throughout the duration of the servicing agreement 286 required by the financing resolution. The local agency or its 287 publicly owned utility shall hold the money collected in trust 288 for the exclusive benefit of the persons entitled to have the 289 financing costs paid from the utility project charge and the 290 money does not lose its character as revenues of the authority 291 by virtue of possession by the local agency or its publicly 292 owned utility. 293 (f) The timely and complete payment of all utility project 294 charges by the customer shall be a condition of receiving water, 295 wastewater, electric, or stormwater service from the publicly 296 owned utility. The local agency or its publicly owned utility 297 may use its established collection policies and remedies 298 provided under law to enforce collection of the utility project 299 charge. A customer liable for a utility project charge may not 300 withhold payment, in whole or in part, thereof. 301 (g) The pledge of a utility project charge to secure 302 payment of utility cost containment bonds is irrevocable, and 303 the state, or any other entity, may not reduce, impair, or 304 otherwise adjust the utility project charge, except that the 305 authority shall implement the periodic adjustments to the 306 utility project charge as provided under this subsection. 307 (6) UTILITY PROJECT PROPERTY.— 308 (a) A utility project charge constitutes utility project 309 property on the effective date of the financing resolution 310 authorizing such utility project charge. Utility project 311 property constitutes property, including for contracts securing 312 utility cost containment bonds, regardless of whether the 313 revenues and proceeds arising with respect to the utility 314 project property have accrued. Utility project property shall 315 continuously exist as property for all purposes with all of the 316 rights and privileges of this section for the period provided in 317 the financing resolution or until all financing costs with 318 respect to the related utility cost containment bonds are paid 319 in full, whichever occurs first. 320 (b) Upon the effective date of the financing resolution, 321 the utility project property is subject to a first priority 322 statutory lien to secure the payment of the utility cost 323 containment bonds. 324 1. The lien secures the payment of all financing costs then 325 existing or subsequently arising to the holders of the utility 326 cost containment bonds, the trustee or representative for the 327 holders of the utility cost containment bonds, and any other 328 entity specified in the financing resolution or the documents 329 relating to the utility cost containment bonds. 330 2. The lien attaches to the utility project property 331 regardless of the current ownership of the utility project 332 property, including any local agency or its publicly owned 333 utility, the authority, or other person. 334 3. Upon the effective date of the financing resolution, the 335 lien is valid and enforceable against the owner of the utility 336 project property and all third parties, and additional public 337 notice is not required. 338 4. The lien is a continuously perfected lien on all 339 revenues and proceeds generated from the utility project 340 property, regardless of whether the revenues or proceeds have 341 accrued. 342 (c) All revenues with respect to utility project property 343 related to utility cost containment bonds, including payments of 344 the utility project charge, shall be applied first to the 345 payment of the financing costs of the utility cost containment 346 bonds then due, including the funding of reserves for the 347 utility cost containment bonds. Any excess revenues shall be 348 applied as determined by the authority for the benefit of the 349 utility for which the utility cost containment bonds were 350 issued. 351 (7) UTILITY COST CONTAINMENT BONDS.— 352 (a) Utility cost containment bonds shall be issued within 353 the parameters of the financing provided by the authority 354 pursuant to this section. The proceeds of the utility cost 355 containment bonds made available to the local agency or its 356 publicly owned utility shall be used for the utility project 357 identified in the application for financing of the utility 358 project or used to refinance indebtedness of the local agency 359 which financed or refinanced utility projects. 360 (b) Utility cost containment bonds shall be issued in 361 accordance with this section and s. 163.01(7)(g)8., Florida 362 Statutes, and may be validated pursuant to s. 163.01(7)(g)9., 363 Florida Statutes. 364 (c) The authority shall pledge the utility project property 365 as security for the payment of the utility cost containment 366 bonds. All rights of an authority with respect to utility 367 project property pledged as security for the payment of utility 368 cost containment bonds shall be for the benefit of, and 369 enforceable by, the beneficiaries of the pledge to the extent 370 provided in the financing documents relating to the utility cost 371 containment bonds. 372 1. If utility project property is pledged as security for 373 the payment of utility cost containment bonds, the local agency 374 or its publicly owned utility shall enter into a contract with 375 the authority which requires, at a minimum, that the publicly 376 owned utility: 377 a. Continue to operate its publicly owned utility, 378 including the utility project that is being financed or 379 refinanced. 380 b. Collect the utility project charge from customers for 381 the benefit and account of the authority and the beneficiaries 382 of the pledge of the utility project charge. 383 c. Separately account for and remit revenue from the 384 utility project charge to, or for the account of, the authority. 385 2. The pledge of a utility project charge to secure payment 386 of utility cost containment bonds is irrevocable, and the state 387 or any other entity may not reduce, impair, or otherwise adjust 388 the utility project charge, except that the authority shall 389 implement periodic adjustments to the utility project charge as 390 provided under subsection (5). 391 (d) Utility cost containment bonds shall be nonrecourse to 392 the credit or any assets of the local agency or the publicly 393 owned utility but shall be payable from, and secured by a pledge 394 of, the utility project property relating to the utility cost 395 containment bonds and any additional security or credit 396 enhancement specified in the documents relating to the utility 397 cost containment bonds. If, pursuant to subsection (4), the 398 authority is financing the project through a single-purpose 399 limited liability company, the utility cost containment bonds 400 shall be payable from, and secured by, a pledge of amounts paid 401 by the company to the authority from the applicable utility 402 project property. This provision shall be the exclusive method 403 of perfecting a pledge of utility project property by the 404 company securing the payment of financing costs under any 405 agreement of the company in connection with the issuance of 406 utility cost containment bonds. 407 (e) The issuance of utility cost containment bonds does not 408 obligate the state or any political subdivision thereof to levy 409 or to pledge any form of taxation to pay the utility cost 410 containment bonds or to make any appropriation for their 411 payment. All utility cost containment bonds must contain on 412 their face a statement in substantially the following form: 413 414 “Neither the full faith and credit nor the taxing power of the 415 State of Florida or any political subdivision thereof is pledged 416 to the payment of the principal of, or interest on, this bond.” 417 418 (f) Notwithstanding any other law or this section, a 419 financing resolution or other resolution of the authority, or 420 documents relating to utility cost containment bonds, the 421 authority may not rescind, alter, or amend any resolution or 422 document that pledges utility cost charges for payment of 423 utility cost containment bonds. 424 (g) Subject to the terms of the pledge document created 425 under this part, the validity and relative priority of a pledge 426 is not defeated or adversely affected by the commingling of 427 revenues generated by the utility project property with other 428 funds of the local agency or the publicly owned utility 429 collecting a utility project charge on behalf of an authority. 430 (h) Financing costs in connection with utility cost 431 containment bonds are a special obligation of the authority and 432 do not constitute a liability of the state or any political 433 subdivision thereof. Financing costs are not a pledge of the 434 full faith and credit of the state or any political subdivision 435 thereof, including the authority, but are payable solely from 436 the funds in the documents relating to the utility cost 437 containment bonds. This provision does not preclude guarantees 438 or credit enhancements in connection with utility cost 439 containment bonds. 440 (i) Except as otherwise provided in this section with 441 respect to adjustments to a utility project charge, the recovery 442 of the financing costs for the utility cost containment bonds 443 from the utility project charge shall be irrevocable and the 444 authority does not have the power, either by rescinding, 445 altering, or amending the applicable financing resolution, to 446 revalue or revise for ratemaking purposes the financing costs of 447 utility cost containment bonds; to determine that the financing 448 costs for the related utility cost containment bonds or the 449 utility project charge is unjust or unreasonable; or to in any 450 way reduce or impair the value of utility project property that 451 includes the utility project charge, either directly or 452 indirectly. The amount of revenues arising with respect to the 453 financing costs for the related utility cost containment bonds 454 or the utility project charge are not subject to reduction, 455 impairment, postponement, or termination for any reason until 456 all financing costs to be paid from the utility project charge 457 are fully met and discharged. 458 (j) Except as provided in subsection (5) with respect to 459 adjustments to a utility project charge, the state does hereby 460 pledge and agree with the owners of utility cost containment 461 bonds that the state shall neither limit nor alter the financing 462 costs or the utility project property, including the utility 463 project charge, relating to the utility cost containment bonds, 464 or any rights in, to, or under the utility project property 465 until all financing costs with respect to the utility cost 466 containment bonds are fully met and discharged. This paragraph 467 does not preclude limitation or alteration if adequate provision 468 is made by law for the protection of the owners. The authority 469 may include this pledge by the state in the governing documents 470 for utility cost containment bonds. 471 (8) LIMITATION ON DEBT RELIEF.—Notwithstanding any other 472 law, an authority that issued utility cost containment bonds may 473 not, and no governmental officer or organization shall so 474 authorize the authority to, become a debtor under the United 475 States Bankruptcy Code or become the subject of any similar case 476 or proceeding under any other state or federal law if any 477 payment obligation from utility project property remains with 478 respect to the utility cost containment bonds. 479 (9) CONSTRUCTION.—This section and all grants of power and 480 authority in this section shall be liberally construed to 481 effectuate their purposes. All incidental powers necessary to 482 carry into effect the provisions of this section are expressly 483 granted to, and conferred upon, public entities. 484 Section 2. This act shall take effect July 1, 2014. 485 486 ================= T I T L E A M E N D M E N T ================ 487 And the title is amended as follows: 488 Delete everything before the enacting clause 489 and insert: 490 A bill to be entitled 491 An act relating to utility projects; providing a short 492 title; providing definitions; authorizing certain 493 local government entities to finance the costs of a 494 utility project by issuing utility cost containment 495 bonds upon application by a local agency; specifying 496 application requirements; requiring that savings 497 resulting from the issuance of utility cost 498 containment bonds be used for the benefit of the 499 customers of a public utility; requiring any successor 500 entity of a local agency to assume and perform the 501 obligations of the local agency with respect to the 502 financing of a utility project; authorizing an 503 authority to issue utility cost containment bonds for 504 specified purposes related to utility projects; 505 authorizing an authority to form alternate entities to 506 finance utility projects; requiring the governing body 507 of the authority to adopt a financing resolution and 508 impose a utility project charge on customers of a 509 publicly owned utility as a condition of utility 510 project financing; specifying required and optional 511 provisions of the financing resolution; specifying 512 powers of the authority; requiring the local agency or 513 its publicly owned utility to assist the authority in 514 the establishment or adjustment of the utility project 515 charge; requiring that customers of the public utility 516 specified in the financing resolution pay the utility 517 project charge; providing for adjustment of the 518 utility project charge; establishing ownership of the 519 revenues of the utility project charge; requiring the 520 local agency or its publicly owned utility to collect 521 the utility project charge; conditioning a customer’s 522 receipt of public utility services on payment of the 523 utility project charge; authorizing a local agency or 524 its publicly owned utility to use available remedies 525 to enforce collection of the utility project charge; 526 providing that the pledge of the utility project 527 charge or the utility project property to secure 528 payment of bonds issued to finance the utility project 529 is irrevocable and cannot be reduced or impaired 530 except under certain conditions; providing that a 531 utility project charge constitutes utility project 532 property; providing that utility project property is 533 subject to a lien to secure payment of costs relating 534 to utility cost containment bonds; establishing 535 payment priorities for the use of revenues of the 536 utility project property; providing for the issuance 537 and validation of utility cost containment bonds; 538 securing the payment of utility cost containment bonds 539 and related costs; providing that utility cost 540 containment bonds do not obligate the state or any 541 political subdivision thereof and are not backed by 542 their full faith and credit and taxing power; 543 requiring that certain disclosures be printed on 544 utility cost containment bonds; providing that 545 financing costs related to utility cost containment 546 bonds are an obligation of the authority only; 547 securing the payment of the financing costs of utility 548 cost containment bonds; prohibiting an authority with 549 outstanding payment obligations on utility cost 550 containment bonds from becoming a debtor under certain 551 federal or state laws; providing for construction; 552 endowing public entities with certain powers; 553 providing an effective date.