SB501: Bill Text

1997 - 1998 LEGISLATURE

1997 Senate BILL 501

March 12, 1998 - Introduced by Senators Cowles, Drzewiecki, A. Lasee and Shibilski, cosponsored by Representatives F. Lasee, Gard, Kelso, Green, Hoven, Ott, Ainsworth, Hutchison, Vander Loop, Ryba, Porter, Owens and Ladwig. Referred to Committee on Utility Regulation.

SB501,1,4 An Act to renumber and amend 196.01 (5); to amend 32.05 (intro.), 32.05 (1) (a), 32.07 (2), 70.11 (2), 71.26 (1) (b) and 196.52 (3) (b) 1.; and to create 66.0735, 77.54 (9a) (em) and 196.01 (5) (b) of the statutes; relating to: permitting the creation of joint local water authorities and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill authorizes the creation of a joint local water authority (an "authority"). The bill specifies how an authority may be organized, what powers the authority has, and how an authority is regulated:

Organization

Under the bill, a local governmental unit in the state may contract with one or more local governmental units in this state, or with state or federally recognized Indian tribes or bands in this state, to establish an authority. Under the bill, local governmental unit is defined to mean a city, village, town, county, town sanitary district, water utility district or certain public inland lake protection and rehabilitation districts. At least 30 days before entering into a contract to establish or join a joint local water authority, a local governmental unit shall hold a public hearing on the proposed agreement. An authority established by this contract is a governmental entity that is separate from the contracting powers and is a separate political subdivision and body public and corporate of this state. The authority is exempt from state sales, property and income taxes.

In order to create an authority, the contracting parties must file a copy of the contract with the secretary of state, who is required to record the contract and issue a certificate of incorporation stating the name of the authority and the date and fact of incorporation. The contract filed with the secretary of state must include certain specified information including the name of the authority; the number of directors, their terms and compensation; voting requirements; the manner of selecting officers; the manner in which other local governmental units or Indian tribes or bands may join the authority; provisions for the disposition of property upon dissolution; the term of the contract; and provisions governing dispute resolution. Each contracting party is required to have an equal number of directors, although the directors may be given different voting power, if the formula for determining voting power is specified in the contract. The term of the contract may be for a definite period or may be until the contract is rescinded or terminated. The contract may not be rescinded or terminated as long as the authority has bonds outstanding, unless provision for the full payment of the bonds is made pursuant to the terms of the bonds or the resolution, trust indenture or security instrument securing the bonds.

Powers

The bill grants an authority a range of powers, but does not give the authority to tax. In general, an authority may do all of the following: 1) construct, operate and manage facilities in this state for the production treatment, storage, transmission and sale of water, either solely or in conjunction with others; 2) act as agent in constructing, operating or managing these facilities; 3) buy or sell interests in or rights in these facilities; 4) produce, treat, store, transmit, purchase and sell water, except that the authority may not sell water to persons other than contracting parties, except pursuant to emergency services agreements; 5) buy and sell property; 6) acquire property using condemnation procedures; 7) install and maintain, without compensation to the state, facilities under river beds and land covered by navigable waters of the state; 8) enter on other public property for the purpose of installing, maintaining and operating the authority's facilities; 9) require contracting parties to purchase water from the authority and to connect its distribution system with the authority's distribution system; 10) employ agents and employes; and 11) exercise any other power that the board of directors considers necessary and convenient to effectuate the purposes of the authority. The authority may invest its funds in the obligations, securities and other investments that authority deems proper, subject to the investment restrictions that are generally applicable to local governmental units.

In addition to these express powers, the bill contains language specifically authorizing the authority to enter into particular types of purchase agreements with the contracting parties. These purchase agreements may include: 1) provisions requiring the purchaser to make payments in amounts that are sufficient to enable the authority to meet expenses, interest and principal payments; 2) provisions requiring the purchaser to pay for water regardless of whether water is delivered to the purchaser or whether any project contemplated by the agreement is completed; and 3) provisions requiring that, if one or more of the purchasers defaults in the payment of its obligations under a purchase agreement, the remaining purchasers are required to accept and pay for, water that was to have been purchased by the defaulting purchaser. In addition, the contracting parties may agree to pay the authority for commodities procured or services rendered by the authority. This agreement may also provide for payments to the authority in the form of contributions.

Lastly, the authority is given the power to incur debts, liabilities or obligations, including the issuance of secured or unsecured bonds. The authority may issue the types of bonds it determines, subject only to any agreement with bond holders. The principal and interest on the bonds are payable exclusively from all or a portion of the revenues of the authority. The bonds of the authority is not a debt of the contracting parties and the contracting parties are not liable for the payment of the bonds. The bonds of the authority are required to state these restrictions on liability on the face of the bonds. The bonds may be sold at public or private sales and may have the dates, mature at the times, bear interest at the rates, be in the denominations and have the rank or priority specified by the bond resolution, trust indenture or other security instrument. The authority is given broad authority to make covenants in connection with the issuance of bonds. The authority may also issue refunding bonds, subject generally to the provisions governing the issuance of other bonds of the authority. The bonds may be invested in by the state and its political subdivisions, insurance companies, certain financial institutions and trustees and other fiduciaries.

Regulation

The authority may not sell water at retail and is not generally subject to regulation as a public utility. Under the bill, arrangements between public utilities and authorities are not subject to provisions in current law which govern transactions between public utilities and their affiliated interests. The authority may not issue bonds for the construction of a project until the public service commission (PSC) has certified that public convenience and necessity require the project. No such certification is needed if no bonds are issued by the authority for the project. The PSC may refuse to certify a project if the PSC determines that the project will: 1) substantially impair the efficiency of the service of a contracting party's public utility; 2) provide facilities unreasonably in excess of probable future requirements; or 3) add to the cost of service without proportionately increasing the value or available quantity of service.

The bill generally requires the authority to comply with all local ordinances, unless the authority's board of directors determines that the ordinance imposes unreasonable requirements, costs or delays on the authority's ability to carry out its responsibilities. If the board of directors of an authority make this determination, the board is required to pass a resolution specifying the ordinance, indicating why it is unreasonable and how the authority intends to deviate from the ordinance. The bill provides for notice to the county or municipality whose ordinance is identified in the resolution and for a 90-day period in which to challenge the authority's determination. If the determination of the authority either is not challenged or is upheld, the authority may deviate from the local ordinance in the manner specified in the resolution. The bill does not authorize the authority to deviate from floodplain or shoreland zoning ordinances.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB501, s. 1 Section 1. 32.05 (intro.) of the statutes is amended to read:

SB501,5,3 32.05 Condemnation for sewers and transportation facilities. (intro.) In this section, "mass transit facility" includes, without limitation because of enumeration, exclusive or preferential bus lanes if those lanes are limited to abandoned railroad rights-of-way or existing expressways constructed before May 17, 1978, highway control devices, bus passenger loading areas and terminal facilities, including shelters, and fringe and corridor parking facilities to serve bus and other public mass transportation passengers, together with the acquisition, construction, reconstruction and maintenance of lands and facilities for the development, improvement and use of public mass transportation systems for the transportation of passengers. This section does not apply to town highways created or altered under ch. 80 except as to jury trials on appeals under ss. 80.24 and 80.25, nor to proceedings in 1st class cities under subch. II. In any city, condemnation for housing under ss. 66.40 to 66.404, or for urban renewal under s. 66.431, may proceed under this section or under s. 32.06 at the option of the condemning authority. Condemnation by a local exposition district under subch. II of ch. 229 for any exposition center or exposition center facility may proceed under this section or under s. 32.06 at the option of the local exposition district. All other condemnation of property for public alleys, streets, highways, airports, mass transit facilities, or other transportation facilities, gas or leachate extraction systems to remedy environmental pollution from a solid waste disposal facility, or storm sewers and sanitary sewers or, watercourses or water transmission and distribution facilities shall proceed as follows:

SB501, s. 2 Section 2. 32.05 (1) (a) of the statutes is amended to read:

SB501,5,22 32.05 (1) (a) Except as provided under par. (b), the county board of supervisors (or the county highway committee when so authorized by the county board) of supervisors, city council, village board, town board, sewerage commission governing metropolitan sewerage district created by ss. 66.22 or 66.88 to 66.918, secretary of transportation, a commission created by contract under s. 66.30, a joint local water authority created by contract under s. 66.0375, housing authority under ss. 66.40 to 66.404, local exposition district created under subch. II of ch. 229, redevelopment authority under s. 66.431 or community development authority under s. 66.4325 shall make an order providing for the laying out, relocation and improvement of the public highway, street, alley, storm and sanitary sewers, watercourses, water transmission and distribution facilities, mass transit facilities, airport, or other transportation facilities, gas or leachate extraction systems to remedy environmental pollution from a solid waste disposal facility, housing project, redevelopment project, exposition center or exposition center facilities which shall be known as the relocation order. This order shall include a map or plat showing the old and new locations and the lands and interests required. A copy of the order shall, within 20 days after its issue, be filed with the county clerk of the county wherein the lands are located.

SB501, s. 3 Section 3. 32.07 (2) of the statutes is amended to read:

SB501,6,8 32.07 (2) The petitioner shall determine necessity if application is by the state or any commission, department, board or other branch of state government or by a city, village, town, county, school district, board, commission, public officer, commission created by contract under s. 66.30, joint local water authority under s. 66.0735, redevelopment authority created under s. 66.431, local exposition district created under subch. II of ch. 229, housing authority created under ss. 66.40 to 66.404 or for the right-of-way of a railroad up to 100 feet in width, for a telegraph, telephone or other electric line, for the right-of-way for a gas pipeline, main or service or for easements for the construction of any elevated structure or subway for railroad purposes.

SB501, s. 4 Section 4. 66.0735 of the statutes is created to read:

SB501,6,20 66.0735 Joint local water authorities. (1) Finding and declaration of necessity. It is declared that the operation of water utility systems by local governmental units of this state and the improvement of the systems through joint action in the production, treatment, storage, transmission, distribution, purchase, sale and exchange of water is in the public interest and a matter of statewide concern; that there is a need in order to ensure the stability and continued viability of the local systems to provide for a means by which local governmental units which operate the systems may act jointly, including development of coordinated water production, treatment, storage, transmission and distribution; and that, the necessity in the public interest for the provisions of this section is declared as a matter of legislative determination.

SB501,6,22 (2) Definitions. As used in this section, unless the context clearly indicates otherwise:

SB501,6,23 (a) "Authority" means a joint local water authority.

SB501,6,25 (b) "Bonds" means any bonds, interim certificates, notes, debentures or other obligations of an authority issued under this section.

SB501,7,1 (c) "Commission" means the public service commission.

SB501,7,4 (d) "Contracting party" means a local governmental unit in this state, or a federally recognized Indian tribe or band located in this state, that contracts to establish or to join an authority under this section.

SB501,7,7 (e) "Local governmental unit" means any city, village, town, county, town sanitary district, water utility district, or a public inland lake protection and rehabilitation district that has town sanitary district powers under s. 33.22 (3).

SB501,7,9 (f) "Local water authority" means a public corporation created by contract between 2 or more contracting parties.

SB501,7,16 (g) "Project" means any plant, works, system, facilities and real and personal property of any nature, together with all parts and appurtenances, that are used or useful in the production, treatment, storage, transmission, distribution, purchase, sale, or exchange of water. "Project" includes any interest in, or right to the capacity of, the plant, works, system, facilities or property. "Project" also includes the acquisition of water and the acquisition, construction or operation of facilities for producing, treating, storing, transmitting, or distributing water.

SB501,7,23 (3) Creation of an authority. (a) Creation by contract. Any local governmental unit in this state may contract with one or more local governmental units in this state or federally recognized Indian tribes or bands located in the state to establish a separate governmental entity, to be known as a joint local water authority, to jointly produce, treat, store, transmit, distribute, purchase, sell or exchange water, in whole or in part for the benefit of the contracting parties. The parties to the contract may amend the contract as provided in the contract.

SB501,8,2 (am) Hearing requirements. At least 30 days before becoming a contracting party by entering into a contract under this subsection, a local governmental unit shall hold a public hearing on the proposed contract. Notice of the hearing shall be published as a class 3 notice under ch. 985.

SB501,8,7 (b) Filing requirements. The parties entering into a contract under this subsection shall file a copy of the contract with the secretary of state. Upon receipt, the secretary of state shall record the contract and issue a certificate of incorporation stating the name of the authority and the date and fact of incorporation. The corporate existence of the authority begins upon issuance of the certificate.

SB501,8,9 (4) Contract. A contract establishing an authority under sub. (3) shall specify all of the following:

SB501,8,12 (a) The name and purpose of the authority and the functions or services to be provided by the authority. The name shall refer to the authority as an agency, authority or district.

SB501,8,16 (b) The establishment and organization of a board of directors, in which all powers of the authority shall be vested. The contract may permit the board of directors to create an executive committee of the board of directors to which the board of directors may delegate any of its powers and duties, as specified by the board.

SB501,8,21 (c) The number of directors, the manner of their appointment, the terms of their office, their compensation, if any, and the procedure for filling vacancies on the board of directors. The contracting parties shall appoint the members of the board of directors. Each contracting party shall be entitled to appoint an equal number of directors to the board of directors and may remove those directors at will.

SB501,8,25 (d) The weight given to each director's vote. Unless specifically provided otherwise, each director's vote shall be given equal weight. If the contract provides for differing weights to be given to each director's vote, the contract shall specify the manner of calculating the weight to be given to each director's vote.

SB501,9,1 (e) The manner of selection of the officers of the authority and their duties.

SB501,9,6 (f) The voting requirements for action by the board of directors. Unless specifically provided otherwise, a majority of the authorized directors constitutes a quorum of the board of directors. Unless specifically provided otherwise, a majority of the voting power present is necessary for any action to be taken by the board of directors.

SB501,9,9 (g) The duties of the board of directors, including the obligation to comply with this section and the laws of this state and with the terms of the contract under this subsection.

SB501,9,11 (h) The manner in which additional local governmental units and Indian tribes or bands located in the state may become parties to the contract by amendment.

SB501,9,13 (i) Provisions for the disposition, division or distribution of any property or assets of the authority on dissolution.

SB501,9,19 (j) The term of the contract and the method, if any, of terminating or rescinding the contract. The term of the contract may be a definite period or it may be until rescinded or terminated. The contract may not be rescinded or terminated so long as the authority has bonds outstanding, unless provision for full payment of such bonds, by escrow or otherwise, has been made pursuant to the terms of the bonds or the resolution, trust indenture or security instrument securing the bonds.

SB501,9,20 (k) The manner in which the contracting parties shall resolve any disputes.

SB501,9,21 (5) Powers. The authority may do all of the following:

SB501,9,24 (a) Plan, develop, acquire, construct, reconstruct, operate, manage, dispose of, participate in, maintain, repair, extend or improve one or more projects within the state, either solely or in conjunction with any other person.

SB501,9,25 (b) Act as agent in conducting an activity under par. (a).

SB501,10,1 (c) Buy or sell interest in, or rights to the capacity of, projects.

SB501,10,9 (d) Produce, treat, store, transmit, distribute, purchase, sell or exchange water in such amounts as the board of directors determines to be necessary and appropriate, subject to the limitations in this paragraph. An authority may not sell water at retail. An authority may not sell any water to a person other than a contracting party, except pursuant to an emergency services contract. An authority may enter into an emergency services contract to sell water at wholesale to a person other than a contracting party in emergency situations, to be specified in the contract.

SB501,10,12 (e) Acquire, own, hold, use, lease as lessor or lessee, sell or otherwise dispose of, mortgage, pledge, or grant a security interest in any real or personal property, commodity or service.

SB501,10,14 (f) Acquire property by condemnation using the procedure under s. 32.05 or 32.06 for the purposes set forth in this section.

SB501,10,22 (g) Enter upon any state, county or municipal street, road or alley, or any public highway for the purpose of installing, maintaining and operating the authority's facilities. The authority may construct in the street, road or alley or public highway necessary facilities without a permit or a payment of a charge. Whenever the work is to be done in a state, county or municipal highway, the public authority having control thereof shall be duly notified, and the highway shall be restored to as good a condition as existed before the commencement of the work with all costs incident to the work to be borne by the authority.

SB501,11,3 (h) Install and maintain, without compensation to the state, any part of the authority's facilities over, upon or under any part of the bed of any river or of any land covered by any of the navigable waters of the state, the title to which is held by the state, and over, upon or under canals or through waterways. This paragraph does not relieve the authority of its obligation to obtain any permits or approvals otherwise required by law.

SB501,11,6 (i) Require contracting parties to purchase water from the authority and to connect any contracting party's distribution system with the authority's distribution system.

SB501,11,8 (j) Fix, maintain and revise fees, rates, rents and charges for functions, services, facilities or commodities provided by the authority.

SB501,11,10 (k) Make, and from time to time amend and repeal, bylaws, rules and regulations to carry into effect the powers and purposes of the authority.

SB501,11,12 (L) Join an organization, if the board of directors determines that membership is beneficial to accomplishment of the authority's purposes.

SB501,11,13 (m) Sue and be sued in its own name.

SB501,11,14 (n) Have and use a corporate seal.

SB501,11,15 (o) Employ agents and employes.

SB501,11,17 (p) Incur debts, liabilities or obligations including the borrowing of money and the issuance of bonds, secured or unsecured, under sub. (9) (b).

SB501,11,21 (q) Invest any funds held in reserve or sinking funds, or any funds not required for immediate disbursement, including the proceeds from the sale of any bonds, in such obligations, securities and other investments as the authority deems proper in accordance with s. 66.04 (2).

SB501,11,23 (r) Do and perform any acts and things authorized by this section under, through or by means of an agent or by contracts with any person.

SB501,11,25 (s) Exercise any other powers that the board of directors considers necessary and convenient to effectuate the purposes of the authority.

SB501,12,4 (6) Public character. An authority is a political subdivision and body public and corporate of the state, exercising public powers, separate from the contracting parties. It has the duties, privileges, immunities, rights, liabilities and disabilities of a public body but does not have taxing power.

SB501,12,6 (7) Payments. (a) Definition. In this subsection, "purchase of water" includes any right to capacity or interest in any project.

SB501,12,12 (b) Payments for commodities and services. The contracting parties may agree to pay the authority funds for commodities to be procured or services to be rendered by the authority. The agreement may also provide for payments in the form of contributions to defray the cost of any purpose set forth in the contract under sub. (4) or the agreement and, subject to repayment by the authority, for advances for any purpose set forth in the contract under sub. (4) or the agreement.

SB501,12,15 (c) Purchase agreements. The contracting parties may enter into purchase agreements with the authority for the purchase of water. Purchase agreements may include the following provisions:

SB501,12,21 1. A provision requiring the purchaser to make payments in amounts that are sufficient to enable the authority to meet its expenses, interest and principal payments, whether at maturity or upon debt service fund redemption, for its bonds, reasonable reserves for debt service, operation and maintenance and renewals and replacements and the requirements of any rate covenant with respect to debt service coverage contained in any resolution, trust indenture or other security instrument.

SB501,12,25 2. A provision requiring the purchaser to pay for water regardless of whether water is delivered to the purchaser or whether any project contemplated by any such agreement is completed, operable or operating, and notwithstanding suspension, interruption, interference, reduction or curtailment of the output of the project.

SB501,13,4 3. A provision requiring that, if one or more of the purchasers defaults in the payment of its obligations under a purchase agreement, the remaining purchasers shall accept and pay for, and shall be entitled proportionately to use or otherwise dispose of, the water that was to have been purchased by the defaulting purchaser.

SB501,13,6 4. A provision providing for a term for the purchase agreement. The term may be for the life of a project, for an indefinite period or for any other term.

SB501,13,8 5. Other terms and conditions that the authority and the purchasers determine.