Current Status Bill Number:View additional legislative information at the LPITS web site.1263 Ratification Number:506 Act Number:456 Introducing Body:Senate Subject:Relating to joint municipal water systems
(A456, R506, S1263)
AN ACT TO AMEND SECTIONS 6-25-20 AND 6-25-100, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO JOINT MUNICIPAL WATER SYSTEMS, SO AS TO DEFINE "COST", OR "COST OF A PROJECT", CHANGE THE DEFINITION OF "MUNICIPALITY", "MEMBER OF A JOINT SYSTEM", "REVENUE BONDS", AND "BONDS", TO PROVIDE ADDITIONAL POWERS FOR JOINT MUNICIPAL WATER SYSTEMS, AND TO AMEND THE 1976 CODE BY ADDING SECTIONS 6-25-111, 6-25-112, 6-25-113, 6-25-114, 6-25-125, 6-25-126, 6-25-127, 6-25-128, 6-25-145, AND 6-25-155 SO AS TO AUTHORIZE THE ISSUANCE OF BONDS FOR JOINT MUNICIPAL WATER SYSTEMS.
Be it enacted by the General Assembly of the State of South Carolina:
Definition of "cost or cost of a project"
SECTION 1. Item (d) of Section 6-25-20 of the 1976 Code is amended to read:
"(d) 'Cost' or 'cost of a project' means, but is not limited to, the cost of acquisition, construction, reconstruction, improvement, enlargement, or extension of any project, including the cost of studies, plans, specifications, surveys, and estimates of costs and revenues relating to the project; the cost of land, land rights, rights-of-way and easements, water rights, fees, permits, approvals, licenses, certificates, franchises, and the preparation of applications for and security for them; administrative, legal, professional, engineering, and inspection expenses; financing fees, expenses, and costs; working capital; insurance; interest on the bonds during the period of construction and for a reasonable period after construction as may be determined by the commission of the joint system; establishment of reserves; and all other expenditures of the joint system incidental, necessary, or convenient to the acquisition, construction, reconstruction, improvement, enlargement, or extension of any project and the placing of the project in operation."
Definition of "municipality"
SECTION 2. Item (f) of Section 6-25-20 of the 1976 Code is amended to read:
"(f) 'Municipality' includes counties, towns, and cities incorporated under the laws of this State; consolidated political subdivisions of this State; commissioners of public works; and any agency or public body created by the General Assembly of this State or under the laws of this State and engaged in the sale and service of water for industrial and domestic purposes."
Definition of "revenue bonds and bonds"
SECTION 3. Item (g) of Section 6-25-20 of the 1976 Code is amended to read:
"(g) 'Revenue bonds' and 'bonds' means bonds, notes, certificates, or other obligations of a joint system issued pursuant to the provisions of this chapter and shall include refinancing or refunding same, but which must be paid solely from the revenues of a joint system."
Definition of "a member of a joint system"
SECTION 4. Item (h) of Section 6-25-20 of the 1976 Code is amended to read:
"(h) 'Member of a joint system' means those municipalities whose governing bodies have agreed to create a Joint Municipal Water System to undertake the impounding, acquisition, treatment, production, transmission, distribution, service, and sale of water to a municipality which is a member of the system and other municipalities, and persons which are not members when approved by the governing body of each member."
Powers of joint municipal water systems
SECTION 5. Section 6-25-100 of the 1976 Code is amended by adding:
"(v) To, prior to, and in connection with acquisition of a project, study, plan, finance, own, operate, and maintain the project and after the acquisition, to study, plan, finance, acquire, construct, reconstruct, improve, enlarge, extend, own, operate, and maintain one or more additional projects.
(w) To acquire by negotiated purchase or lease an existing project, a project under construction, or other property, either individually or jointly, with one or more municipalities in this State or any other state owning water facilities or with any political subdivisions or agencies of any other state or with any other joint system created pursuant to this chapter.
(x) To dispose of by negotiated sale or lease, an existing project, a project under construction, or other property either individually or jointly with one or more municipalities in this State or any other state owning water facilities or with any political subdivisions or agencies of any other state or with any other joint system created pursuant to this chapter.
(y) To fix, charge, and collect rents, rates, fees, and charges for water and other services, facilities, and commodities sold, furnished, or supplied through any project.
(z) To negotiate and enter into contracts for the purchase, sale, or use of water with any joint system, municipality, or any political subdivisions or agencies or any public or private water utility.
(aa) To acquire and operate any water treatment system or any water distribution system, including the systems of any member if the consent of the member is first obtained and referendum approval is obtained in those instances where required by law.
(bb) To sell water at retail and at wholesale."
Bonds may be issued
SECTION 6. Chapter 25 of Title 6 of the 1976 Code is amended by adding:
"Section 6-25-111. (A) A joint system may issue at one time or from time to time its bonds for the purpose of paying all or any part of the cost of any of the purposes authorized in this chapter. The principal of, premium, if any, and the interest on the bonds are payable solely from the respective funds provided for such payment by this chapter. The bonds of each issue may be sold at public or private sale. The bonds may be sold at a price, and must bear interest at a rate, as may be determined by the commission of the joint system. The bonds of each issue must be dated and must mature in amounts and at times not exceeding fifty years from their respective dates, as may be determined by the commission of the joint system, and may be made redeemable before maturity at a price and under terms and conditions as may be fixed by the commission of the joint system prior to the issuance of the bonds. The commission of the joint system shall determine the form and the manner of execution of the bonds, including any interest coupons to be attached to them, and shall fix the denomination of the bonds and the place of payment of principal and interest, which may be at any bank or trust company within or without the State. In case any officer whose signature or a facsimile of whose signature appears on any bonds or coupons ceases to be an officer before the delivery of the bonds, the signature of the facsimile is nevertheless valid and sufficient for all purposes the same as if he had remained in office until the delivery. The commission of the joint system may also provide for the authentication of the bonds by a trustee or fiscal agent. The bonds may be issued in coupon or in fully registered form, or both, as the commission of the joint system may determine, and provisions may be made for the registration of any coupon bonds as to the principal alone and also as to both principal and interest; and for the reconversion into coupon bonds of any bonds registered as to both principal and interest, and for the interchange of registered and coupon bonds.
(B) The proceeds of the bonds of each issue may be used solely for the purposes for which the bonds are issued, and must be disbursed in a manner and under restrictions, if any, as the commission of the joint system may provide in the resolution authorizing the issuance of the bonds or in any trust agreement securing them. The joint system may issue interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds when the bonds have been executed and are available for delivery. The joint system may also provide for the replacement of any bonds which have become mutilated or have been destroyed or lost.
(C) Bonds may be issued under provisions of this chapter without obtaining the consent or approval of the State or any political subdivision or any agency, commission, or instrumentality of them, but no joint system shall undertake any project required to be financed, in whole or in part, with the proceeds of bonds without the approval of the governing bodies of each member as prescribed in Section 6-25-110.
Section 6-25-112. In the discretion of the commission of the joint system, any bonds issued under the provisions of this chapter may be secured by a trust agreement by and between the joint system and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the State. The trust agreement or the resolution providing for the issuance of the bonds may contain provisions for protecting and enforcing the rights and remedies of the bondholders and of the trustees as may be reasonable and proper and not in violation of law, and may restrict the individual right of action by bondholders. The trust agreement or the resolution providing for the issuance of the bonds may contain covenants including, but not limited to, the following:
(a) the pledge of all or any part of the revenues derived or to be derived from the project to be financed by the bonds or from the water system or facilities of a joint system;
(b) the rents, rates, fees, and charges to be established, maintained, and collected, and the use and disposal of revenues, gifts, grants, and funds received or to be received by the joint system;
(c) the setting aside of reserves and the investment, regulation, and disposition of the reserves;
(d) the custody, collection, securing, investment, and payment of any monies held for the payment of bonds;
(e) limitations or restrictions on the purposes to which the proceeds of sale of bonds then or thereafter issued may be applied;
(f) limitations or restrictions on the issuance of additional bonds; the terms upon which additional bonds may be issued and secured; or the refunding of outstanding or other bonds;
(g) the procedure, if any, by which the terms of any contract with bondholders may be amended, the percentage of bonds the bondholders of which must consent thereto, and the manner in which the consent may be given;
(h) events of default and the rights and liabilities arising on default, the terms and conditions upon which bonds issued under this chapter become or may be declared due before maturity, and the terms and conditions upon which the declaration and its consequences may be waived;
(i) the preparation and maintenance of a budget;
(j) the retention or employment of engineers, independent auditors, and other technical consultants;
(k) limitations on or the prohibition of free service to any public or private person;
(l) the acquisition and disposal of property, but no project or part of a project may be mortgaged by the trust agreement or resolution;
(m) provisions for insurance and for accounting reports and the inspection and audit of them;
(n) the continuing operation and maintenance of the project;
(o) conditions under which the bonds may be defeased.
Section 6-25-113. The bonds are special obligations of the joint system issuing them. The principal of, premium, if any, and interest on the bonds are not payable from the general funds of the joint system, nor shall they constitute a legal or equitable pledge, charge, lien, or encumbrance upon any of its property or upon any of its income, receipts, or revenues, except the funds which are pledged under the resolution authorizing the bonds or the trust agreement securing the bonds. Neither the faith and credit nor the taxing power of the State or any municipality is, or may be, pledged for the payment of the principal of or interest on the bonds, and no holder of the bonds has the right to compel the exercise of the taxing power by the State or any municipality or the forfeiture of any of its property in connection with any default. Every bond must recite in substance that the principal of and interest on the bond is payable solely from the revenues pledged to its payment and that the joint system is not obligated to pay the principal or interest except from the revenues.
Section 6-25-114. A joint system may provide by resolution for the issuance of refunding bonds of the joint system for the purpose of refunding any bonds then outstanding which have been issued under the provisions of this chapter, including the payment of any redemption premium and any interest accrued or to accrue to the date of redemption of the bonds. The issuance of the bonds, their maturities, and other details, the rights of their holders, and the rights, duties, and obligations of the joint system in respect to the bonds are governed by the provisions of this chapter which relate to the issuance of bonds, insofar as the provisions may be appropriate."
Joint system may fix charge and collect rents,
etc. for services
SECTION 7. Chapter 25 of Title 6 of the 1976 Code is amended by adding:
"Section 6-25-125. The joint system may fix, charge, and collect rents, rates, fees, and charges for water and other services, related to the impounding, production, treatment, transmission, distribution, sale, and service of water. For so long as any bonds of a joint system are outstanding and unpaid, the rents, rates, fees, and charges are fixed to provide revenues at least sufficient, together with other available funds, to pay all costs of and charges and expenses in connection with the proper operation and maintenance of its projects, and all necessary repairs, replacements, or renewals; to pay when due the principal of, premium, if any, and interest on all bonds payable from the revenues; to create and maintain reserves and comply with covenants as may be required by any resolution or trust agreement authorizing and securing bonds; and to pay any and all amounts which the joint system may be obligated to pay from the revenues by law or contract.
Any pledge made by a joint system pursuant to this chapter is valid and binding from the date the pledge is made. The revenues, securities, and other monies so pledged and then held or thereafter received by the joint system or any fiduciary is immediately subject to the lien of the pledge without any physical delivery or further act, and the lien of the pledge is valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the municipality or joint system without regard to whether the parties have notice.
Section 6-25-126. The resolution authorizing the bonds of any issue or the trust agreement securing the bonds may provide that any of the monies may be temporarily invested and reinvested pending disbursements and the securities and other investments provided in the resolution or trust agreement, and must provide that any bank or trust company with which the monies are deposited shall act as trustee of the monies and shall hold and apply them for the purposes of this chapter, subject to regulation as this chapter and the resolution or trust agreement may provide.
Section 6-25-127. Any holder of bonds issued under the provisions of this chapter or any of the coupons appertaining to them, and the trustee under any trust agreement, except to the extent the rights given by this chapter may be restricted by the trust agreement or the resolution authorizing the issuance of the bonds, may, either at law or in equity, by suit, action, mandamus or other proceeding, protect and enforce any and all rights under the laws of the State or granted under this chapter, or, to the extent permitted by law, under the trust agreement or resolution authorizing the issuance of the bonds or under any agreement or other contract executed by the joint system pursuant to this chapter, and may enforce and compel the performance of all duties required by this chapter or by the trust agreement or resolution to be performed by any joint system or municipality or by their officers, including the fixing, charging, and collecting of rents, rates, fees, and charges.
Section 6-25-128. Any municipality may contract to buy from the joint system water required for its present or future requirements, including the capacity and output, or a portion or share of one or more specified projects. As the creation of a joint system is an alternative method whereby a municipality may obtain the benefits and assume the responsibilities of ownership in a project, any contract may provide that the municipality so contracting is obligated to make the payments required by the contract whether or not a project is completed, operable, or operating notwithstanding the suspension, interruption, interference, reduction, or curtailment of the output of a project or the water contracted for, and that the payments under the contract are not subject to any reduction, whether by offset or otherwise, and are not conditioned upon the performance or nonperformance of the joint system or any other members of the joint system under the contract or any other instrument. Any contract with respect to the sale or purchase of capacity or output, or a portion or share of them, of a project entered into between a joint system and its member municipalities may also provide that if one or more of the municipalities defaults in the payment of its or their obligations with respect to the purchase of the capacity or output, or a portion or share of them, in that event the remaining member municipalities which are purchasing capacity and output under the contract are required to accept and pay for and are entitled proportionately to and may use or otherwise dispose of the capacity or output which was to be purchased by the defaulting municipality.
Any contracts with respect to the sale or purchase of capacity and output from a project may extend for a period not exceeding fifty years from the date of the contract and may be renewable and extended upon terms as the parties may agree for not exceeding an additional fifty years; and the execution and effectiveness is not subject to any authorizations or approvals by the State or any agency, commission, or instrumentality or political subdivision of them.
Payments by a municipality under any contract for the purchase of capacity and output from a joint system must be made from the revenues derived from the ownership and operation of the water system of the municipality and any obligation under the contract does not constitute a legal or equitable pledge, charge, lien, or encumbrance upon any property of the municipality or upon any of its income, receipts, or revenues, except the revenues of its water system, and neither the faith and credit nor the taxing power of the municipality are, or may be pledged for the payment of any obligation under any contract. A municipality is obligated to fix, charge, and collect rents, rates, fees, and charges for water and other services, facilities, and commodities sold, furnished, or supplied through its water system sufficient to provide revenues adequate to meet its obligations under any contract and to pay any and all other amounts payable from or constituting a charge and lien upon the revenues, including amounts sufficient to pay the principal of and interest on general obligation bonds, if any, heretofore or hereafter issued by the municipality for purposes related to its water system.
Any municipality which is a member of a joint system may furnish the joint system with money derived from the ownership and operation of its water system or facilities and provide the joint system with personnel, equipment, and property, both real and personal. Any municipality may also provide any services to a joint system.
Any member of a joint system may contract for, advance or contribute funds derived solely from the ownership and operation of its water system or facilities to a joint system as may be agreed upon by the joint system and the member, and the joint system shall repay the advances or contributions from the proceeds of bonds, from operation revenues, or from any other funds of the joint system, together with interest as may be agreed upon by the member and the joint system."
Fiduciary may not invest monies
SECTION 8. Chapter 25 of Title 6 of the 1976 Code is amended by adding:
"Section 6-25-145. It is lawful for any executor, administrator, guardian, committee, or other fiduciary to invest any monies in his hand in bonds issued under the provisions of this chapter."
Investment securities
SECTION 9. Chapter 25 of Title 6 of the 1976 Code is amended by adding:
"Section 6-25-155. Whether or not the bonds and interest coupons appertaining to them are of a form and character as to be investment securities under Chapter 8, of Title 36, all bonds and interest coupons appertaining to them issued under this chapter are hereby made investment securities within the meaning of and for all the purposes of Chapter 8 of Title 36, subject only to the provisions of the bonds pertaining to registration."
Time effective
SECTION 10. This act shall take effect upon approval by the Governor.