A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING ARTICLE 11 TO CHAPTER 1, TITLE 6 SO AS TO PROVIDE A METHOD TO EFFECTUATE THE TRANSFER OF WATER SYSTEMS BETWEEN POLITICAL SUBDIVISIONS.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Chapter 1, Title 6 of the S.C. Code is amended by adding:

 

Article 11

 

Transfer of Water Systems Between Political Subdivisions

 

    Section 6-1-3000.  (A) For purposes of this article:

       (1) "Eligible system transferor" means a political subdivision of this State that:

           (a) owns and operates a water system;

           (b) has, according to the most recent decennial census, fewer than two thousand five hundred individual residents within its corporate boundaries;

           (c) acquires water for its water system from a supplying subdivision by long-term contract with that supplying subdivision; and

           (d) is in arrears to its supplying subdivision for water previously supplied in an amount greater than the total amount invoiced to it by the supplying subdivision for the preceding three months.

       (2) "Long-term contract" means a contract for the wholesale supply of water to a water system, for which the period from its effective date until its stated expiration date is greater than thirty years.

       (3) "Political subdivision" means a municipality or county in this State or a special purpose district created by enactment of the General Assembly.

       (4) "Supplying subdivision" means a political subdivision that supplies water pursuant to a long-term contract to another political subdivision.

       (5) "Water system" means a system owned by a political subdivision that makes water available for distribution to residents and businesses within the corporate boundaries of that political subdivision. If the system is operated as a combined system with wastewater collection, then "water system" includes all components of the combined system.

 

    Section 6-1-3010.  (A) Notwithstanding another provision of law, an eligible system transferor may, by resolution adopted by majority vote of its governing body, transfer its water system to its supplying subdivision without a referendum, on such terms as the governing body of the eligible system transferor and its supplying subdivision may agree in writing.

    (B) Any transfer must be full and in fee simple. Upon transfer, all rights of ownership and rights to operate, manage, direct, and control the transferred water system must be held by the transferee supplying subdivision and the eligible system transferor political subdivision and its governing body has no further rights or authority with respect to the transferred water system.

    (C) The transferred water system becomes a part of the water system of the transferee supplying subdivision for all purposes of law.

    (D) For rate-setting purposes, the transferee supplying subdivision may establish the area of the transferred water system and any area into which it expands using the assets of the transferred water system as a separate cost-and-revenue accounting center, the revenues from which must be at least sufficient to cover all costs associated with it, including an allocable share of administrative and overhead costs of the supplying subdivision's water system. For purposes of that cost-and-revenue accounting of the transferred water system, the amortization over an appropriate period and at fair market interest rates of any amount that the transferee supplying subdivision pays to the eligible system transferor, including any debt that it assumes or any debt owed to it that it forbears, may be included as a cost of that center.

    (E) If agreed at the time of transfer by the eligible system transferor and the transferee supplying subdivision in the instrument of transfer, the eligible system transferor may grant to the transferee supplying subdivision an exclusive franchise to operate a water system within the corporate boundaries of the eligible system transferor for no more than ninety-nine years.

    (F) If agreed at the time of transfer by the eligible system transferor and the transferee supplying subdivision in the instrument of transfer, the eligible system transferor may impose a franchise fee on the transferee supplying subdivision as a percentage of gross revenues actually received by the transferee supplying subdivision from customers located within the corporate boundaries of the eligible system transferor; provided, however, that:

       (1) the franchise fee shall not exceed ten percent of the gross revenue actually received by the transferee supplying subdivision from the customers located within the corporate boundaries of the eligible system transferor; and

       (2) the franchise fee must be reflected as a separate line item and identified as a charge imposed by the eligible system transferor on each invoice that the transferee supplying subdivision sends to a customer located within the corporate boundaries of the eligible system transferor.

 

    Section 6-1-3020.  (A) In every instance where a transfer of a water system is authorized under the authority of this article, after authorizing resolutions are adopted by the governing bodies of both the eligible system transferor and the transferee supplying subdivision, the transferee supplying subdivision must promptly file with the clerk of court of the county or counties in which the eligible system transferor is located, with a copy of the agreement of transfer authorized by those resolutions.

    (B) No action may be commenced after the expiration of twenty-one days from the date of the filing that challenges the consummation or effect of the transfer, and that transfer on the recorded terms becomes incontestable.

 

    Section 6-1-3030.  (A) If, after a transfer authorized by this article, the governing bodies of the eligible system transferor and the transferee supplying subdivision mutually agree upon amendments to the terms of transfer embodied in the transfer agreement, they may adopt and effectuate those amendments in the same manner the transfer agreement was adopted.

    (B) Any amendment must be recorded and becomes incontestable pursuant to Section 6-1-3020.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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