MISSISSIPPI LEGISLATURE
2003 Regular Session
To: Public Health and Welfare; Finance
By: Senator(s) Robertson
AN ACT TO AUTHORIZE THE CREATION OF PUBLIC WATER AUTHORITIES; TO PROVIDE FOR THE MANAGEMENT THEREOF; TO IDENTIFY THE POWERS THEREOF; TO SET FORTH THOSE PROCEDURES BY WHICH PUBLIC WATER AUTHORITIES MAY ISSUE BONDS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Legislative intent. It is the intent of the Legislature to provide a means, in addition to the incorporation of districts authorized in Sections 19-5-151 through 19-5-207, by which not-for-profit corporations involved in the sale, transmission and distribution of potable water to members of the public and others may convert their entity status from that of a body corporate to that of a body politic, thereby allowing such entities the opportunity to access the tax-exempt capital markets and thereby assuring the State of Mississippi and the customers of such entities of the lowest water rates possible.
SECTION 2. Definitions. As used in this act, unless the context otherwise requires:
(a) "Board" means the board of directors of the water authority;
(b) "Bond" means any bond, promissory note, lease purchase agreement or other evidence of indebtedness of any nature along with all debt securing instruments of every nature related thereto;
(c) "Commission" means the Mississippi Soil and Water Conservation Commission or its successors;
(d) "Indenture" means a mortgage, an indenture of mortgage, deed of trust, trust agreement, loan agreement, security agreement, or trust indenture executed by the water authority as security for any bonds;
(e) "Project" means any raw or potable water intake, treatment, distribution, transmission, storage, pumping, well site, well field or other facility, or any combination of the foregoing, which has as its purpose the providing of raw or potable water to members of the public and commercial, industrial or other users along with any and all other appurtenances, equipment, betterments or improvements related thereto. The above projects may include any lands, or interest therein, deemed by the board to be desirable in connection therewith, and necessary equipment for the proper functioning and operation of the buildings or facilities involved;
(f) "Qualified corporation" means any not-for-profit corporation which provides, distributes, transmits, treats, pumps or stores raw or potable water to or for the benefit of members of the general public and commercial industrial and other users;
(g) "United States" means the United States of America or any of its agencies or instrumentalities;
(h) "State" means the State of Mississippi; and
(i) "Water authority" means that body politic and governmental entity organized pursuant to the provisions of this act.
SECTION 3. Construction. This act shall be liberally construed in conformity with its intent. All acts and activities of the water authority performed pursuant to the authority of this act are legislatively determined and declared to be essential governmental functions.
SECTION 4. Authority generally. There is conferred upon a water authority, the authority to take such action and to do, or cause to be done, such things as shall be necessary or desirable to accomplish and implement the purposes and intent of this act according to the import of this act.
SECTION 5. Authority and procedure to incorporate. Whenever a qualified corporation desires to convert into and become reconstituted and reincorporated as a water authority under and pursuant to this act, the qualified corporation shall present to and file with the commission:
(a) Its resolution duly adopted by the board of directors of the qualified corporation which evidences the desire of the qualified corporation to convert into and become reconstituted and reincorporated as a water authority and which shall additionally certify that the qualified corporation:
(i) Was initially formed as a not-for-profit corporation;
(ii) Does not have the ability to directly access the tax-exempt capital markets other than through a conduit issuer; and
(iii) Desires to realize interest rate savings as a result of its conversion and reconstitution as a water authority pursuant to this act;
(b) Its application for reconstitution and certificate of incorporation which shall state and include the following information:
(i) The name of the water authority, which shall be "The ____________ Public Water Authority of the State of Mississippi," or some other name of similar import, it being understood that the water authority may adopt a fictitious operational name upon written request to and approval by the commission;
(ii) The location of the water authority's principal office, and the number of directors of the water authority, which shall be subject to change and modification as provided in the water authority's bylaws;
(iii) The names and addresses of the initial board of directors of the qualified corporation;
(iv) The name and address of the agent for service of process of the qualified corporation;
(v) Any other matters that the initial board of directors of the qualified corporation may deem necessary and appropriate; and
(vi) Any other matters that the commission may designate and require;
(c) A copy of the qualified corporation's bylaws along with any other information which the initial board of directors of the qualified corporation may deem necessary and appropriate;
(d) A statement and certification from the Secretary of State that the proposed name of the water authority is not identical with that of any other water authority in the state, or so nearly similar thereto as to lead to confusion and uncertainty;
(e) That filing and review fee that the commission may designate and determine from time to time; and
(f) Any other information and documents which the commission may designate and require.
SECTION 6. Execution and recording. The application for reconstitution and certificate of incorporation shall be signed and acknowledged by a majority of the board of directors of the qualified corporation. When the application for reconstitution and certificate of incorporation and other required documents have been so filed with and accepted by the commission as evidenced by the issuance by the commission of its certificate of existence in that form that the commission may deem appropriate, the water authority referred to therein shall come into existence and shall constitute a body corporate and politic, and a political subdivision of the state under the name set forth in the certificate of incorporation, whereupon the water authority shall be vested with the rights and powers granted in this act, and contemporaneously therewith, the qualified corporation shall cease to exist and all assets and liabilities of every nature, including without limitation, all real property, personal property, contractual obligations, lending obligations outstanding, rights afforded borrowers of federal and state funds and other tangible and intangible assets and liabilities of every nature shall, without need for further action or approval by any third party, be vested in and shall accrue to the benefit of the water authority. All meetings and records of the water authority shall be subject to the Mississippi Open Meetings Act and the Mississippi Public Records Act. A copy of the water authority's application for reconstitution and certificate of incorporation shall additionally be filed in the Office of the Secretary of State after its receipt, acceptance and approval by the commission. The Secretary of State may require the payment of that reasonable filing and receipt fee not in excess of the filing fee charged by the Secretary of State in connection with the receipt and filing of a corporation's articles of incorporation. Filing with the Secretary of State of a copy of the application for reconstitution and certificate of incorporation as accepted and approved by the commission shall serve to terminate and dissolve the previous corporate existence of the qualified corporation.
SECTION 7. Board of directors. (1) The water authority shall have a board of directors composed of the number of directors provided in the certificate of incorporation. All powers of the water authority shall be exercised by the board or pursuant to its authorization.
(2) The directors shall be elected and determined, and shall serve in accordance with those procedures that the water authority may specify in its bylaws. The water authority's bylaws shall contain provisions and procedures for the election and appointment of its directors that are identical in nature to those same provisions and procedures as contained in the qualified corporation's bylaws unless approval to modify and amend such procedures is expressly granted in writing by the commission.
(3) A majority of the members of the board shall constitute a quorum for the transaction of business. No vacancy in the membership of the board shall impair the right of a quorum to exercise all the powers and duties of the water authority. A director shall continue in office until the director's successor is properly elected and accepts office.
(4) The members of the board and the officers of the water authority shall serve without compensation except that they may be reimbursed for actual expenses incurred in and about the performance of their duties.
(5) All proceedings of the board shall be reduced to writing by the secretary of the water authority and appropriately recorded and maintained in a well-bound book.
SECTION 8. Officers. The officers of the water authority shall consist of a chairman, vice chairman, a secretary, a treasurer, and such other officers as the board shall deem necessary to accomplish the purposes for which the water authority was organized. All officers of the water authority shall be persons who receive water service from the water authority. The offices of secretary and treasurer may, but need not, be held by the same person. All officers of the water authority shall be elected by the board and shall serve for those terms of office as specified in the bylaws.
SECTION 9. Powers generally. The water authority shall have the following powers, together with all powers incidental thereto or necessary to the discharge thereof:
(a) To have succession in its designated name;
(b) To sue and be sued and to prosecute and defend suits in any court having jurisdiction of the subject matter and of the parties;
(c) To make use of a seal and to alter it at pleasure;
(d) To adopt and alter bylaws for the regulations and conduct of its affairs and business;
(e) To acquire, whether by purchase, gift, lease, devise, or otherwise, property of every description which the board may deem necessary to the acquisition, construction, equipment, improvement, enlargement, operation, administration, or maintenance of a project, and to hold title thereto;
(f) To construct, enlarge, equip, improve, maintain, administer and operate one or more projects;
(g) To borrow money for any of its purposes;
(h) To sell and issue its interest-bearing bonds;
(i) To sell and issue refunding bonds;
(j) To secure any of its bonds by pledge and indenture as provided in this act;
(k) To appoint, employ, and compensate such general managers, executive directors, agents, architects, engineers, attorneys, accountants and other persons and employees as the business of the water authority may require;
(l) To provide for such insurance as the board may deem advisable;
(m) To invest in obligations that are direct or guaranteed obligations of the United States of America, or other securities in which public funds may be invested under the laws of this state, any of its funds that the board may determine are not presently needed for its operational purposes;
(n) To contract, lease and make lease agreements respecting its properties or any part thereof;
(o) To exercise the power of eminent domain in accordance with the procedures prescribed by Title 11, Chapter 27, Mississippi Code of 1972; and
(p) To sell, convey or otherwise dispose of any of its properties that may have become obsolete or worn out, or that may no longer be needed or useful in connection with, or in the operation of any project.
SECTION 10. Tax exemption of projects. Each project, and all income therefrom, is determined and declared by the Legislature to be public property used exclusively for a public purpose and shall be exempt from ad valorem taxation by all taxing authorities.
SECTION 11. Issuance of bonds. (1) The water authority is authorized at any time, and from time to time, to issue its interest-bearing bonds for the purpose of acquiring, constructing, improving, enlarging, completing and equipping one or more projects.
(2) Prior to the water authority's proposed issuance of bonds, the water authority shall publish one (1) time in a newspaper of general circulation in the affected county or counties, notice of the proposed issuance of bonds, the approximate principal amount of bonds contemplated to be sold, a general description of the project contemplated to be constructed with bond proceeds and the date of a public meeting at which members of the public may obtain further information regarding the sale of the bonds and the development of the project. Notice hereunder shall be published at least ten (10) days prior to the date of the hearing hereunder. The water authority chairman or his or her designee shall be responsible for conducting the hearing and shall require all public comments which might pertain to the proposed issuance of bonds by the water authority. Upon compliance with the provisions hereof, no other notice, hearing or approval by any other entity or governmental unit shall be required as a condition to the issuance by the water authority of its contemplated bonds.
(3) The principal of, and the interest on, any bonds may be payable out of the revenues derived from the projects with respect to which the bonds are issued, or from any other source available to the water authority.
(4) None of the bonds of the water authority shall ever constitute an obligation or debt of the state, the city or county in which the water authority operates, the commission, or any officer or director of the water authority, or a charge against the credit or taxing powers of the state.
(5) As the water authority shall determine, bonds of the water authority may;
(a) Be issued at any time and from time to time;
(b) Be in such form and denominations;
(c) Have such date or dates;
(d) Mature at such time or times and in such amount or amounts, provided that no bonds may mature more than forty (40) years after the date of issuance;
(e) Bear interest payable at such times and such rate or rates as may be established by the board;
(f) Be payable at such place or places within or without the State of Mississippi;
(g) Be subject to such terms of redemption in advance of maturity at such prices, including such premiums; and
(h) Contain such other terms and provisions as may be appropriate or necessary.
(6) Bonds of the water authority may be sold at either public or private sale in such manner, and from time to time, as may be determined by the board to be most advantageous. The water authority may pay all expenses, premiums, and commissions that the board may deem necessary or advantageous in connection with the authorization, sale, and issuance of its bonds.
(7) All bonds shall contain a recital that they are issued pursuant to the provisions of this act, which recital shall be conclusive that they have been duly authorized pursuant to the provisions of this act.
(8) All bonds issued under the provisions of this act shall be and are declared to be negotiable instruments within the meaning of the negotiable instruments law of the state and shall be in registered form.
SECTION 12. Execution of bonds. Bonds shall be executed by the manual or facsimile signature of the chairman of the water authority and by manual or facsimile signature of the secretary of the water authority. In case any of the officers whose signatures appear on the bonds shall cease to be such officer before the delivery of the bonds, their signatures shall nevertheless be valid and sufficient for all purposes. The bonds shall be sealed with the seal of the water authority.
SECTION 13. Security for bonds. (1) The principal of, and interest on the bonds, may be secured by a pledge of the revenues of the water authority of that project financed by the water authority through its issuance of bonds, or from any other source that the water authority may deem necessary and appropriate, and may be secured by the creation of a mortgage and security interest encumbering the real property of the water authority, or security interest in all personal property and revenues of the water authority as set forth in the indenture.
(2) The trustee under any indenture may be a trust company or bank having trust powers, whether located within or without the state.
(3) The indenture may contain any agreements and provisions customarily contained in instruments securing evidences of indebtedness including, without limiting, the generality of the foregoing provisions respecting the nature and extent of the security; the collection, segregation and application of the revenues generated from the operation of any project covered by the indenture; covenants to always operate the project as a revenue-producing undertaking and to charge and collect, including the obligation to increase from time to time, sufficient revenue to maintain income at required levels; the maintenance and insurance of the project; the creation and maintenance of reserve and other special funds; and the rights and remedies available in the event of default to the holders of the bonds or the trustees under the indenture, all as the board shall deem advisable and as shall not be in conflict with the provisions of this act.
(4) If there is any default by the water authority in payment of the principal of, or the interest on the bonds or in any of the agreements on the part of the water authority that may properly be included in any indenture securing the bonds, the bondholders or the trustee under any indenture, as authorized in such indenture, may either in law or in equity, by suit, action, mandamus, or other proceeding, enforce payment of the principal or interest and compel performance of all duties of the board and officers of the water authority, and shall be entitled as a matter of right and regardless of the sufficiency of any such security to the appointment of a receiver in equity with all the powers of such receiver for the operation and maintenance of the project covered by such indenture and the collection, segregation, and applications of income and revenues therefrom.
(5) The indenture may contain provisions regarding the rights and remedies of any trustee thereunder and the holders of the bonds and the coupons and restricting the individual rights of action of the holders of the bonds and coupons.
SECTION 14. Bonds - tax exemption. The principal of and interest on bonds issued under the authority of this act shall be exempt from all state, county, and municipal taxes. This exemption shall include income, inheritance, and estate taxes.
SECTION 15. Proceeds from issuance of bonds. (1) The proceeds derived from all of the bonds, other than refunding bonds, may be used only to pay the costs of acquiring, constructing, improving, enlarging, and equipping the project with respect to which they were issued, as may be specified in the proceedings in which the bonds are authorized to be issued and all costs incidental thereto including without limitation:
(a) The costs of any land forming a part of the project and all easements which may pertain to or be associated with any project;
(b) The costs of the labor, materials, and supplies used in any construction, improvement, and enlargement, including architect's and engineer's fees and the cost of preparing contract documents and advertising for bids along with all other reasonable and necessary project cost;
(c) The purchase price of and the cost of installing equipment for the project;
(d) Legal, fiscal, accounting and recording fees and expenses incurred in connection with the authorization, sale, and issuance of the bonds issued in connection with the project;
(e) Interest on bonds for a reasonable period prior to, during, and after the time required for such construction equipment;
(f) The amount necessary to fund a debt service reserve in an amount deemed appropriate by the water authority;
(g) Cost associated with the obtaining of default insurance ratings and other credit enhancements of every nature; and
(h) Other operational expenses reserves and other accounts of every nature.
(2) If any of the proceeds derived from the issuance of bonds remains undisbursed after completion of the project and the making of all such expenditures, the balance shall be used for the redemption of bonds of the same issue.
SECTION 16. Refunding bonds. (1) The water authority may at any time, and from time to time, issue refunding bonds for the purpose of refunding the principal of and interest on any bonds of the water authority theretofore issued under this act and then outstanding, whether or not the principal and interest shall have matured at the time of the refunding under this act, and for the payment of any expenses incurred in connection with the refunding and any premium necessary to be paid in order to redeem or retire the bonds to be refunded.
(2) The proceeds derived from the sale of any refunding bonds shall be used only for the purposes for which the refunding bonds were authorized to be issued.
(3) Any such refunding may be effected either by sale of the refunding bonds and the application of the proceeds thereof by immediate application or by escrow deposit, with the right to invest monies in the escrow deposit until needed for the redemption, or by exchange of the refunding bonds for the bonds or interest coupons to be refunded thereby. However, the holders of any bonds so to be refunded shall not be compelled without their consent to surrender their bonds for payment or exchange prior to the date on which they may be paid or redeemed by the water authority under their respective provisions.
(4) Any refunding bonds of the water authority shall be payable solely from the revenues out of which the bonds to be refunded were payable or from those other sources or other revenues which might be identified in the indenture.
(5) All provisions of this act pertaining to bonds of the water authority that are not inconsistent with the provisions of this section shall, to the extent applicable, also apply to refunding bonds issued by the water authority.
SECTION 17. Dissolution. A water authority shall be dissolved upon the expiration of its term of existence as set forth in the water authority's application for reconstitution and certificate of incorporation, if the term of existence is less than perpetual in nature. A water authority may additionally be dissolved upon application to, and the approval in writing by the commission.
SECTION 18. This act shall take effect and be in force from and after July 1, 2003.