HB 207 — Acquisition of Water and Wastewater Systems

Reasonable367.071(4)(a) transactionconcerning and closing costs incurred by the acquiringcontemplated utility.acquisition.

(d)4.a. The rate base value of the acquired utility system, which must be reflected in the acquiring utility's next general rate case for ratemaking purposes, is equal to the lesser of the purchase price negotiated between the parties to the sale or the fair market value, and the fees and costs authorized in paragraph (c).

(3)Within An30 applicationdays tofollowing receipt of the commissionnotice, forthe approvalhost government may adopt a resolution to become a member of the rateseparate baselegal valueentity, ofadopt a resolution to approve the utility systemacquisition, or adopt a resolution to beprohibit acquiredthe mustutility containacquisition by the following:separate legal entity if the host government determines that the proposed acquisition is not in the public interest.

(a)A Copiesresolution ofadopted by the appraisalshost performedgovernment bywhich prohibits the appraisersacquisition pursuantmay include conditions that would make the proposal acceptable to paragraph(2)(a).the host government.

(b)b. Each deficiency identified by the engineering assessment conducted pursuant to paragraph (2)(b) and a 3-year plan for prudent and necessary infrastructure improvements.

(c)If Thea projectedhost rategovernment impactadopts fora membership resolution, the sellingseparate utility'slegal customersentity forshall accept the nexthost 5government years.as a member on the same basis as its existing members before any transfer of ownership, use, or possession of the utility or the utility facilities.

(d)If Thea averagehost ofgovernment theadopts appraisals,a whichresolution shallto constituteapprove the fairutility marketacquisition, valuethe ofseparate legal entity may complete the system.acquisition.

(e)If Thea assessmenthost government adopts a prohibition resolution, the separate legal entity may not acquire the utility within that host government's territory without the specific consent of tangiblethe assetshost pursuantgovernment toby (2)(b).future resolution.

If a host government does not adopt a prohibition resolution or an approval resolution, the separate legal entity may proceed to acquire the utility after the 30-day notice Page 4 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 period without further notice.

5.

After the acquisition or construction of any utility systems by a separate legal entity created under this paragraph, revenues or any other income may not be transferred or paid to a member of a separate legal entity, or to any other special district, county, or municipality, from user fees or other charges or revenues generated from customers that are not physically located within the jurisdictional or service delivery boundaries of the member, special district, county, or municipality receiving the transfer or payment.

Any transfer or payment to a member, special district, or other local government must be solely from user fees or other charges or revenues generated from customers that are physically located within the jurisdictional or service delivery boundaries of the member, special district, or local government receiving the transfer of payment.

6.

This section is an alternative provision otherwise provided by law as authorized in s.

4, Art.

VIII of the State Constitution for any transfer of power as a result of an acquisition of a utility by a separate legal entity from a municipality, county, or special district.

7.

The entity may finance or refinance the acquisition, construction, expansion, and improvement of such facilities relating to a governmental function or purpose through the issuance of its bonds, notes, or other obligations under this Page 5 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 section or as otherwise authorized by law.

The entity has all the powers provided by the interlocal agreement under which it is created or which are necessary to finance, own, operate, or manage the public facility, including, without limitation, the power to establish rates, charges, and fees for products or services provided by it, the power to levy special assessments, the power to sell or finance all or a portion of such facility, and the power to contract with a public or private entity to manage and operate such facilities or to provide or receive facilities, services, or products.

Except as may be limited by the interlocal agreement under which the entity is created, all of the privileges, benefits, powers, and terms of s.

125.01, relating to counties, and s.

166.021, relating to municipalities, are fully applicable to the entity.

However, neither the entity nor any of its members on behalf of the entity may exercise the power of eminent domain over the facilities or property of any existing water or wastewater plant utility system, nor may the entity acquire title to any water or wastewater plant utility facilities, other facilities, or property which was acquired by the use of eminent domain after the effective date of this act unless 10 or more years have elapsed since the date of the acquisition by eminent domain.

Bonds, notes, and other obligations issued by the entity are issued on behalf of the public agencies that are members of the entity.

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 8.

Any entity created under this section may also issue bond anticipation notes in connection with the authorization, issuance, and sale of bonds.

The bonds may be issued as serial bonds or as term bonds or both.

Any entity may issue capital appreciation bonds or variable rate bonds.

Any bonds, notes, or other obligations must be authorized by resolution of the governing body of the entity and bear the date or dates;

mature at the time or times, not exceeding 40 years from their respective dates;

bear interest at the rate or rates;

be payable at the time or times;

be in the denomination;

be in the form;

carry the registration privileges;

be executed in the manner;

be payable from the sources and in the medium or payment and at the place;

and be subject to the terms of redemption, including redemption prior to maturity, as the resolution may provide.

If any officer whose signature, or a facsimile of whose signature, appears on any bonds, notes, or other obligations ceases to be an officer before the delivery of the bonds, notes, or other obligations, the signature or facsimile is valid and sufficient for all purposes as if he or she had remained in office until the delivery.

The bonds, notes, or other obligations may be sold at public or private sale for such price as the governing body of the entity shall determine.

Pending preparation of the definitive bonds, the entity may issue interim certificates, which shall be exchanged for the definitive bonds.

The bonds may be secured by a form of credit enhancement, if any, as the Page 7 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 entity deems appropriate.

The bonds may be secured by an indenture of trust or trust agreement.

In addition, the governing body of the legal entity may delegate, to an officer, official, or agent of the legal entity as the governing body of the legal entity may select, the power to determine the time;

manner of sale, public or private;

maturities;

rate of interest, which may be fixed or may vary at the time and in accordance with a specified formula or method of determination;

and other terms and conditions as may be deemed appropriate by the officer, official, or agent so designated by the governing body of the legal entity.

However, the amount and maturity of the bonds, notes, or other obligations and the interest rate of the bonds, notes, or other obligations must be within the limits prescribed by the governing body of the legal entity and its resolution delegating to an officer, official, or agent the power to authorize the issuance and sale of the bonds, notes, or other obligations.

9.

Bonds, notes, or other obligations issued under this paragraph may be validated as provided in chapter 75.

The complaint in any action to validate the bonds, notes, or other obligations must be filed only in the Circuit Court for Leon County.

The notice required to be published by s.

75.06 must be published in Leon County and in each county that is a member of the entity issuing the bonds, notes, or other obligations, or in which a member of the entity is located, and the complaint and Page 8 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 order of the circuit court must be served only on the State Attorney of the Second Judicial Circuit and on the state attorney of each circuit in each county that is a member of the entity issuing the bonds, notes, or other obligations or in which a member of the entity is located.

Section 75.04(2) does not apply to a complaint for validation brought by the legal entity.

10.

The accomplishment of the authorized purposes of a legal entity created under this paragraph is in all respects for the benefit of the people of the state, for the increase of their commerce and prosperity, and for the improvement of their health and living conditions.

Since the legal entity will perform essential governmental functions for the public health, safety, and welfare in accomplishing its purposes, the legal entity is not required to pay any taxes or assessments of any kind whatsoever upon any property acquired or used by it for such purposes or upon any revenues at any time received by it, whether the property is within or outside the jurisdiction of members of the entity.

The exemption provided in this paragraph applies regardless of whether the separate legal entity enters into agreements with private firms or entities to manage, operate, or improve the utilities owned by the separate legal entity.

The bonds, notes, and other obligations of an entity, their transfer, and the income therefrom, including any profits made on the sale thereof, are at all times free from taxation of Page 9 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 any kind by the state or by any political subdivision or other agency or instrumentality thereof.

The exemption granted in this subparagraph is not applicable to any tax imposed by chapter 220 on interest, income, or profits on debt obligations owned by corporations.

Section 2.

Section 367.0712, Florida Statutes, is created to read:

367.0712 Alternative process to establish rate base value of acquired system.— (1)(a) When a utility acquires an existing utility system, including a system described in s.

367.022(2), the utility may petition the commission to establish a rate base value for the utility system being acquired using the valuation process described in this section instead of the system's original cost.

If the petition meets the filing requirements of subsection (3), the commission, no later than 8 months after the date the complete petition is filed, shall issue a final order on the petition.

The commission may grant the petition, in whole or in part, or with modifications in the public interest, or may deny the petition if in the public interest.

The commission may not approve a rate base value higher than that requested in the petition.

(b) The rate base value established by the commission under this section shall be used for ratemaking purposes in the acquiring utility's next general rate case.

The rate base value Page 10 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 may not exceed the lesser of the purchase price negotiated between the parties to the acquisition transaction or the average of the two appraisals conducted under subsection (2), except that it may also include reasonable transaction and closing costs incurred by the acquiring utility and reasonable fees paid to the appraisers.

(2)(a) For purposes of this section, the utility system being acquired must be appraised by two licensed appraisers chosen from a list established by the commission.

One appraiser shall be chosen and paid by the acquiring utility and one appraiser shall be chosen and paid by the utility system being acquired.

Each appraiser shall provide an appraisal of the value of the utility system being acquired consistent with the Uniform Standards of Professional Appraisal Practice.

(b) The acquiring utility and the utility system being acquired shall jointly retain a licensed engineer to conduct an assessment of the tangible assets of the utility system being acquired and the assessment shall be provided to the two appraisers for use in determining the value of the system.

(3) A petition filed under this section to establish the rate base value for a utility system being acquired must contain the following:

(a) The requested rate base value for the utility system being acquired.

(b) Copies of the appraisals required by this section, Page 11 of 13 CODING:

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hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 207 2020 including the average of the valuations produced by each appraisal.

(c) A copy of the assessment of tangible assets required by this section.

(d) A 3-year plan to address each deficiency identified by the assessment of tangible assets required under this section.

The plan must address impact on quality of service and address any planned improvements to water quality.

(e) The 5-year projected rate impact on the customers of the utility system being acquired, including, but not limited to, the rate impact of the following:

1.

Any cost efficiencies expected to result from the transaction.

2.

Use of this section, in lieu of the original cost method, to establish rate base.

(h) A tariff, including rates equal to the rates of the Pageutility 3system ofbeing 4acquired. CODING:

(4) Notwithstanding any provision in this section, the commission retains its authority under this chapter to set rates for the acquired utility system in future rate cases and may classify the acquired utility system as a separate entity for ratemaking purposes, if it deems it to be in the public Page 12 of 13 CODING:

hb0207-00hb0207-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S HBCS/HB 207 2020 sellinginterest. utility.

(4)(5) IfThis thesection applicationapplies compliesto withacquiring theutilities requirementsthat ofprovide subsectionwater (3),service, thewastewater commissionservice, shallor issueboth ato finalmore orderthan approving10,000 orcustomers denyingand theare applicationengaged withinin 6an monthsarms-length afteracquisition theof datea onwater whichsystem, thewastewater applicationsystem, wasor filed.both types of systems.

An(6) orderThe approvingcommission an application shall determineadopt therules rateto baseimplement value of the acquired utility system for ratemaking purposes in a manner consistent with this section.

(5)Section Notwithstanding3. any provision in this section, the commission retains its authority under this chapter to set rates for the acquired utility system in future rate cases and may classify the acquired utility system as a separate entity for ratemaking purposes, consistent with the public interest.

(6) This section applies to acquiring utilities that provide water and wastewater services to more than 10,000 customers and are engaged in a voluntary and mutually agreeable acquisition of a water and wastewater system.

(7) The commission shall adopt rules to implement this section.

Section 2.

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