Senate Bill No. 501

(By Senators Love, Schoonover and Helmick)


[Introduced February 20, 1995; referred to the Committee
on Government Organization; and then to the Committee on Finance.]

A BILL to amend chapter sixteen of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article thirteen-c, relating to the establishment of the regional water authority act; setting forth the purpose of the Legislature to enable public agencies to join together to secure and provide water for resale; providing definitions; setting forth requirements for agreements between public agencies; authorizing public agencies to provide funds, personnel and services to regional water authorities and authorizing agreements between public agencies and such authorities; establishment of the authority as a quasi-public corporation; establishing requirements for the governing board of such authority; requiring meetings and an audit of the authority; establishing powers of the authority; authorizing the sale of bonds for constructing or acquiring water supply systems; authorizing items to be included as costs of properties; providing that the bonds may be secured by trust indenture; requiring the establishment of a sinking fund; establishing enforcement provisions for bondholders; establishing a statutory mortgage lien in favor of bondholders; providing for the requirement that the authority establish appropriate rates and charges for the use of services rendered; and providing for partial invalidity.

Be it enacted by the Legislature of West Virginia:
That chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article thirteen-c, to read as follows:
§16-13C-1. Statement of purpose.

It is the purpose of this article, to permit certain public agencies to make the most efficient use of their powers relating to public water supplies by enabling them to cooperate with other public agencies on a basis of mutual advantage and thereby to provide services and facilities to participating public agencies and to provide for the establishment for such purpose of a quasi-governmental public corporation which shall be known as a regional water authority. The function of the regional water authority shall be to secure a source of water on a scale larger than is feasible for individual public agencies acting alone, and to sell such water at wholesale to public service districts, municipalities, and publicly and privately owned water utilities.
§16-13C-2. Definitions.
For the purposes of this article:
(1) The term "public agency" shall mean any municipality, county, public service district or other political subdivision of this state; and
(2) The term "authority" shall mean any regional water authority organized pursuant to the provisions of this article.
§16-13C-3. Joint exercise of powers by certain public agencies;

agreements among agencies, contents; submission to

public service commission; filing of agreement.

(a) Any powers, privileges or authority of a public agency of this state relating to public water supplies may be exercised jointly with any other public agency of this state, or with any agency of the United States to the extent that the laws of the United States permit. Any agency of the state government when acting jointly with any public or private agency may exercise all of the powers, privileges and authority conferred by this article upon a public agency.
(b) Any public agency may enter into agreements with one or more other public agencies for the purpose of organizing a regional water authority. Appropriate action by ordinance, resolution or otherwise pursuant to law of the governing bodies of the participating public agencies shall be necessary before any agreement may enter into force.
(c) Any agreement shall specify the following:
(1) Its duration;
(2) The precise organization, composition and nature of the authority created thereby together with the powers delegated thereto;

(3) Its purpose or purposes;
(4) The manner of financing the authority and of establishing and maintaining a budget therefor;
(5) The permissible methods for partial or complete termination of the agreement and for disposing of property upon partial or complete termination;
(6) The manner of acquiring, holding and disposing of real and personal property of the authority; and
(7) Any other necessary and proper matters.
(d) Any agreement may be amended to include additional public agencies by consent of two thirds of the signatories to the agreement, if no terms of agreement are changed, otherwise a new agreement with the new public agency shall be drawn. Where fewer than three public agencies come together to form an authority, both parties must consent to the amendment of the agreement to include additional public agencies.
(e) Prior to taking effect, every agreement made hereunder shall be submitted to the public service commission for its approval as to form and as to compliance with the provisions of this article. The public service commission's authority hereunder is limited to the review stated in this paragraph and it shall approve any agreement submitted hereunder unless it shall find that the agreement does not meet the conditions set forth herein, in which case it shall detail in writing addressed to the governing bodies of the public agencies concerned the specific respects in which the proposed agreement fails to meet the requirements of law. Failure to disapprove an agreement submitted hereunder within thirty days of its submission shall constitute approval thereof.
(f) Prior to taking effect, an agreement made hereunder shall be filed with the clerk of the county commission of that county wherein the authority is to be located and the agreement then also shall be filed with the secretary of state, accompanied by a certificate from the clerk of the county commission of the county where filed, stating that the agreement has been filed in the county.
§16-13C-4. Furnishing of funds, personnel or services by certain
public agencies: Agreements between public agencies and wholesale water supply authorities for purchase and sale of water; terms and conditions.

Any public agency entering into an agreement pursuant to this article may appropriate funds and may sell, lease, give or otherwise supply to the authority created such personnel or services for the operation of the authority as may be within its legal power to furnish. Any public agency, whether or not a party to an agreement pursuant to this article, and any publicly or privately owned water distribution company may enter into contracts with any authority created pursuant to this article for the purchase of water from the authority or the sale of water to the authority, the treatment of water by either party and/or the distribution or transmission of water by either party and any authority may enter into such contracts, subject to the prior approval of the public service commission pursuant to the provisions of section twelve, article two of chapter twenty-four of this code: Provided, That if the public service commission has not acted on the proposed contract within sixty days of its filing, the approval shall be deemed to have been granted. Any contract may include an agreement for the purchase of water not actually received. No contract shall be made for a period in excess of forty years, but renewal options in favor of the purchasing entity may be included therein. The obligations of any public agency under any contract shall be payable solely from the revenues produced from public agency's water system, and the public service commission, in the case of a public agency whose rates are subject to its jurisdiction, shall permit the public agency to recover through its rates revenues sufficient to meet its obligations under the agreement.
§16-13C-5. Declaration of authority organization, when
quasi-governmental public corporation.

Upon the approval of the public service commission and filing with the secretary of state, the secretary of state shall declare the authority organized and give it the corporate name of regional water authority number . Thereupon the authority
shall be a quasi-governmental public corporation.
§16-13C-6. Governing body; appointments; terms of members.
The governing body of the authority shall consist of:
(a) At least one and not more than two members appointed by each participating public agency and each representative's full term shall be not less than one year nor more than four years and initial terms shall be staggered in accordance with procedures set forth in the agreement provided for in section three of this article and amendments thereto; or
(b) Not less than three persons selected by the participating public agencies and the manner of selection of the governing body and terms of office shall be set forth in the agreement provided for in section three of this article and amendments thereto. The governing body of the authority shall elect one of its members as president, one as treasurer and one as secretary.
§16-13C-7. Meetings of governing body; annual audit.
The governing body of the authority shall meet as often as the needs of the authority require. The governing body shall cause to be made an annual audit of the financial records of the authority, the cost of the audit to be paid by the authority.
§16-13C-8. Powers of governing body.
For the purpose of providing a water supply to the participating public agencies the governing body of the authority shall have the following powers, authorities and privileges:
(1) To accept by gift or grant from any person, firm, corporation, trust or foundation, or from this state or any other state or any political subdivision or municipality thereof, or from the United States, any funds or property or any interest therein for the uses and purposes of the authority and to hold title thereto in trust or otherwise and to bind the authority to apply the same according to the terms of the gift or grant;
(2) To sue and be sued;
(3) To enter into franchises, contracts and agreements with this or any other state or the United States or any municipality, political subdivision or authority thereof, or any of their agencies or instrumentalities, or any public or private person, partnership, association, or corporation of this state or of any other state or the United States, and this state and any municipality, political subdivision, authority, or any of their agencies or instrumentalities, and any public or private person, partnership, association, or corporation is hereby authorized to enter into contracts and agreements with the authority for any term not exceeding forty years for the planning, development, construction, acquisition or operation of any facility or for any service rendered to, for or by the authority;
(4) To borrow money and evidence the same by warrants, notes, or bonds as hereinafter provided in this article, and to refund the same by the issuance of refunding obligations;
(5) To acquire land and interests in land by gift, purchase, exchange or eminent domain, the power of eminent domain to be exercised within or without the boundaries of the authority in accordance with provisions of article two, chapter fifty-four of this code;
(6) To acquire by purchase or lease, construct, install, and operate reservoirs, pipelines, wells, check dams, pumping stations, water purification plants and other facilities for the production, wholesale distribution and utilization of water and to own and hold real and personal property as may be necessary to carry out the purposes of its organization, subject to the advance approval of the public service commission for any proposed acquisition, construction, installation or operation: Provided, That the public service commission shall act on all proposals submitted under this paragraph within one hundred twenty days of filing with the commission: Provided, however, That if the public service commission has not acted within the period of time, approval of the proposal shall be deemed granted;
(7) To have the general management, control, and supervision of all the business, affairs, property, and facilities of the authority, and of the construction, installation, operation, and maintenance of authority improvements and to establish regulations relating thereto;
(8) To hire and retain agents, employees, engineers and attorneys and to determine their compensation. The governing body shall select and appoint a general manager of the authority who shall serve at the pleasure of the governing body. The general manager shall have training and experience in the supervision and administration of water systems and shall manage and control the water system under the general supervision of the governing body. All employees, servants and agents of the authority shall be under the immediate control and management of the general manager. The general manager shall perform all other duties as may be prescribed by the governing body and shall give the governing body a good and sufficient surety company bond in a sum to be set and approved by the governing body conditioned upon the satisfactory performance of the general manager's duties. The governing body may also require that any other employees be bonded in an amount as it shall determine. The cost of the bonds shall be paid out of the funds of the authority;
(9) To adopt and amend rules not in conflict with the Constitution and laws of this state, necessary for the carrying on of the business, objects and affairs of the governing body and of the authority; and
(10) To have and exercise all rights and powers necessary or incidental to or implied from the specific powers granted herein. The specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes of this article.
§16-13C-9. Revenue bonds.
For constructing or acquiring any water supply system for the authorized purposes of the authority, or necessary or incidental thereto, and for constructing improvements and extensions thereto, and also for reimbursing or paying the costs and expenses of creating the authority, the governing body of any authority is hereby authorized to borrow money from time to time and in evidence thereof issue the revenue bonds of the authority. The revenue bonds are hereby made a lien on the revenues produced from the water supply system, but shall not be general obligations of the public agencies participating in the agreement. All revenue bonds issued under this article shall be signed by the president of the governing body of the authority and attested by the secretary of the governing body of the authority and shall contain recitals stating the authority under which the bonds are issued and that they are to be paid by the authority from the net revenue derived from the operation of the water supply system and not from any other fund or source and that the bonds are negotiable and payable solely from the revenues derived from the operation of the water supply system under control of the authority. The bonds may be issued in one or more series, may bear the date or dates, may mature at the time or times not exceeding forty years from their respective dates, may bear interest at the rate or rates not exceeding eighteen percent per annum payable at such times, may be in such form, may carry the registration privileges, may be executed in such manner, may be payable at the place or places, may be subject to the terms of redemption with or without premium, may be declared or become due before maturity date thereof, may be authenticated in any manner, and upon compliance with the conditions, and may contain the terms and covenants as may be provided by resolution or resolutions of the governing body of the authority. Notwithstanding the form or tenor thereof, and in the absence of any express recital on the face thereof, that the bond is nonnegotiable, all the bonds shall be, and shall be treated as, negotiable instruments for all purposes. Bonds bearing the signatures of officers in office on the date of the signing thereof shall be valid and binding for all purposes notwithstanding that before the delivery thereof any or all of the persons whose signatures appear thereon shall have ceased to be such officers. Notwithstanding the requirements or provisions of any other law, any bonds may be negotiated or sold in a manner and at the time or times as is found by the governing body to be most advantageous, and all the bonds may be sold at the price that the interest cost of the proceeds therefrom does not exceed nineteen percent per annum, based on the average maturity of the bonds and computed according to standard tables of bond values. Any resolution or resolutions providing for the issuance of the bonds may contain the covenants and restrictions upon the issuance of additional bonds thereafter as may be deemed necessary or advisable for the assurance of the payment of the bonds thereby authorized.
§16-13C-10. Items included in cost of properties.
The cost of any water supply system acquired or constructed under the provisions of this article shall be deemed to include the cost of the acquisition or construction thereof, the cost of all property rights, easements and franchises deemed necessary or convenient therefor and for the improvements and extensions thereto; interest upon bonds prior to and during construction or acquisition and for six months after completion of construction or of acquisition of the improvements and extensions; engineering, fiscal agents and legal expenses; expenses for estimates of cost and of revenues, expenses for plans, specifications and surveys; other expenses necessary or incident to determining the feasibility or practicability of the enterprise, administrative expense, and other expenses as may be necessary or incident to the financing herein authorized, and the construction or acquisition of the properties and the placing of same in operation, and the performance of the things herein required or permitted, in connection with any thereof.
§16-13C-11. Bonds may be secured by trust indenture.
In the discretion and at the option of the governing body of the authority, the bonds may be secured by a trust indenture by and between the authority and a corporate trustee, which may be a trust company or bank having powers of a trust company within or without the state of West Virginia, but no trust indenture shall convey, mortgage or create any lien upon the water supply system or any part thereof of the authority or its member public agencies. The resolution authorizing the bonds and fixing the details thereof may provide that the trust indenture may contain the provisions for protecting and enforcing the rights and remedies of bondholders as may be reasonable and proper, not in violation of law, including covenants setting forth the duties of the authority and the members of its governing body and officers in relation to the construction or acquisition of water supply system and the improvement, extension, operation, repair, maintenance and insurance thereof, and the custody, safeguarding and application of all moneys, and may provide that all or any part of the construction work shall be contracted for, constructed and paid for, under the supervision and approval of consulting engineers employed or designated by the governing body and satisfactory to the original bond purchasers, their successors, assignees or nominees, who may be given the right to require the security given by contractors and by any depository of the proceeds of bonds or revenues of the water supply system or other money pertaining thereto be satisfactory to the purchasers, their successors, assignees or nominees. Such indenture may set forth the rights and remedies of the bondholders and the trustee.
§16-13C-12. Sinking fund for revenue bonds.
At or before the time of the issuance of any bonds under this article the governing body of the authority shall by resolution or in the trust indenture provide for the creation of a sinking fund and for monthly payments into the fund from the revenues of the water supply system operated by the authority the sums in excess of the cost of maintenance and operation of the properties as will be sufficient to pay the accruing interest and retire the bonds at or before the time each will respectively become due and to establish and maintain reserves therefor. All sums which are or should be, in accordance with the provisions, paid into the sinking fund shall be used solely for payment of interest and for the retirement of the bonds at or prior to maturity as may be provided or required by the resolutions.
§16-13C-13. Collection, etc., of revenues and enforcement of

covenants; default; suit, etc., by bondholder or

trustee to compel performance of duties; appointment and powers of receiver.

The governing body of any authority shall have power to insert enforceable provisions in any resolution authorizing the issuance of bonds relating to the collection, custody and application of revenues of the authority from the operation of the water supply system under its control and to the enforcement of the covenants and undertakings of the authority. In the event there shall be default in the sinking fund provisions aforesaid or in the payment of the principal or interest on any of the bonds or, in the event the authority or its governing body or any of its officers, agents or employees, shall fail or refuse to comply with the provisions of this article, or shall default in any covenant or agreement made with respect to the issuance of the bonds or offered as security therefor, then any holder or holders of the bonds and any trustee under the trust indenture, if there be one, shall have the right by suit, action, mandamus or other proceeding instituted in the circuit court for the county or any of the counties wherein the authority extends, or in any other court of competent jurisdiction, to enforce and compel performance of all duties required by this article or undertaken by the authority in connection with the issuance of the bonds, and upon application of any holder or holders, or trustee, the court shall, upon proof of such defaults, appoint a receiver for the affairs of the authority and its properties, which receiver so appointed shall forthwith directly, or by his agents and attorneys, enter into and upon and take possession of the affairs of the authority and each and every part thereof, and hold, use, operate, manage and control the same, and in the name of the authority exercise all of the rights and powers of authority as shall be deemed expedient, and the receiver shall have power and authority to collect and receive all revenues and apply same in the manner as the court shall direct. Whenever the default causing the appointment of such receiver shall have been cleared and fully discharged and all other defaults shall have been cured, the court may in its discretion and after notice and hearing as it deems reasonable and proper direct the receiver to surrender possession of the affairs of the authority to its governing body. The receiver so appointed shall have no power to sell, assign, mortgage or otherwise dispose of any assets of the authority except as hereinbefore provided.
§16-13C-14. Statutory mortgage lien created; foreclosure

There shall be and is hereby created a statutory mortgage lien upon such water supply system of the authority, which shall exist in favor of the holders of bonds hereby authorized to be issued, and each of them, and the coupons attached to said bonds, and the water supply system shall remain subject to statutory mortgage lien until payment in full of all principal of and interest on the bonds. Any holder of the bonds, of any coupons attached thereto, may, either at law or in equity, enforce said statutory mortgage lien conferred hereby and upon default in the payment of the principal of or interest on bonds, may foreclose the statutory mortgage lien in the manner now provided by the laws of the state of West Virginia for the foreclosure of mortgages on real property.
§16-13C-15. Rates and charges.
The governing body shall by appropriate resolution make provisions for the payment of said bonds by fixing rates, fees and charges, for the use of all services rendered by the water authority, which rates, fees and charges shall be sufficient to pay the costs of operation, improvement and maintenance of the water supply system, to provide an adequate depreciation fund, provide an adequate sinking fund to retire the bonds and pay interest thereon when due, and to create reasonable reserves for such purposes. Said fees, rates or charges shall be sufficient to allow for miscellaneous and emergency or unforeseen expenses. The resolution of the governing body authorizing the issuance of revenue bonds may include agreements, covenants or restrictions deemed necessary or advisable by the governing body to effect the efficient operation of the system and to safeguard the interests of the holders of the revenue bonds and to secure the payment of the bonds and the interest thereon.
§16-13C-16. Invalidity of part.
If any section or sections of this article be declared unconstitutional or invalid, this shall not invalidate any other section of this article.
§16-13C-17. Citation of article.
This act may be known and cited as the Regional Water Authority Act.

NOTE: The purpose of this bill is to create the Regional Water Authority Act, to authorize public agencies to join together to construct and acquire water sources for resale and authorizing the issuance of bonds by such authority to fund the projects of the authority.

This article is new; therefore, strike-throughs and underscoring have been omitted.