A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 6-25-20, RELATING TO DEFINITIONS, SO AS TO PROVIDE APPROPRIATE DEFINITIONS; BY AMENDING SECTION 6-25-50, RELATING TO APPLICATION FILED WITH SECRETARY OF STATE, SO AS TO REVISE APPLICATION REQUIREMENTS; BY AMENDING SECTION 6-25-60, RELATING TO APPOINTMENT OF COMMISSIONERS, SO AS TO PROVIDE FOR ALTERNATIVE METHODS OF COMMISSIONER APPOINTMENT AND CONDITIONS OF SERVICE AS COMMISSIONER; BY AMENDING SECTION 6-25-70, RELATING TO CHANGE IN MEMBERSHIP OF JOINT SYSTEM, SO AS TO PROVIDE PROCEDURES FOR COMMISSIONER APPOINTMENT WHEN A NEW MEMBER IS ADDED TO A JOINT SYSTEM; BY AMENDING SECTION 6-25-80, RELATING TO DISSOLUTION OF SYSTEM, SO AS TO PROVIDE PROCEDURES FOR JOINT SYSTEM RECONSTITUTION AND MEMBER WITHDRAWAL; BY AMENDING SECTION 6-25-110, RELATING TO AUTHORIZATION TO INCUR DEBT AND ISSUE BONDS, SO AS TO PROVIDE PROCEDURES FOR BOND ISSUANCE BY A COMMISSION APPOINTED ENTIRELY BY THE GOVERNOR; AND BY AMENDING SECTION 6-25-128, RELATING TO CONTRACTS BETWEEN AUTHORITY AND JOINT SYSTEM;  DURATION, SO AS TO PERMIT AUTOMATIC EXTENSION OF CONTRACT PROVISIONS COMMENSURATE WITH TERMS OF BONDS OR OTHER INDEBTEDNESS.

 

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

 

SECTION 1.  Section 6-25-20 of the S.C. Code is amended to read:

 

    Section 6-25-20. For purposes of this chapter:

    (1) "Joint Authority Water and Sewer System" or "joint system" means a government entity organized under this chapter to undertake or acquire a water or sewer project.

    (2) "State" means the State of South Carolina.

    (3) "Project" means a project undertaken by a joint authority water and sewer system to:

       (a) impound, produce, treat, transmit, distribute, sell, and service water to a member, or to an authority that is not a member but who is engaged in providing water or sewer service, or to any other person or entity if water service is not otherwise available from any other source when approved by the governing body of each member;  and

       (b) collect, transport, process, treat, dispose, and control municipal, domestic, industrial, or communal waste, flood water, or storm water, whether in fluid, solid, or composite state, including specifically the control, abatement, or reduction of pollution for a member, or for an authority that is not a member and is engaged in waste and wastewater collection, treatment, and disposal, or to any other person or entity if sewer service is not otherwise available from any other source when approved by the governing body of each member.

    (4) "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.

    (5) "Governing body" means with respect to an authority;  the board, commission, council, or other entity charged by law with governing the authority.

    (6) "Authority" includes:

       (a) a county or municipality incorporated under the laws of this State;

       (b) a consolidated political subdivision of this State;

       (c) a commission of public works;  and

       (d) an agency or public body created under the laws of this State and authorized by legislation to be engaged in the sale and service of water for industrial and domestic purposes, or the collection for treatment of wastewater.

    (7) "Revenue bonds" and "bonds" mean bonds, notes, certificates, or other obligations of a joint system issued pursuant to the provisions of this chapter and include a refinancing or refunding of bonds, notes, certificates, or other obligations, but which must be paid solely from the revenue or another source of funds available to a joint system.

    (8) "Member of a joint system" means an authority that has taken the actions necessary to form or join the joint system.

    (9) "Construction note" or "note" means a note of a joint system issued to provide funding for the creation of a financing pool and the costs associated with it.

    (10) "Financing agreement" means an agreement entered into by a joint system organized to create a financing pool and a member of it in connection with the lending of the proceeds of construction notes or portion thereof by the joint system to the member so as to provide for the repayment of amounts loaned and interest on it by the member to the joint system.

    (11) "Financing pool" means a fund of money, obtained through the issuance of a construction note of a joint authority water and sewer system, which may be loaned to the members of it by way of interim financing. A joint system may not lend more than five percent of the principal amount of a financing pool to a not-for-profit corporation established pursuant to Chapter 35 of Title 33.

    (12) "Government" means the United States of America, acting through the United States Department of Agriculture, or its successor, and the agencies and divisions of it.

    (13) "Interim financing" means bond anticipation notes issued pursuant to the provisions of Sections 11-17-10 to 11-17-120 in anticipation of the issuance of bonds of an authority to be sold to the government.

    (14) "Legislative delegation" means all members of the South Carolina Senate and South Carolina House of Representatives representing any county where a joint system is located.

    (15) "Governor" means the governor of the State of South Carolina.

 

SECTION 2.  Section 6-25-50 of the S.C. Code is amended to read:

 

    Section 6-25-50. (A) The governing bodies of the members of a joint system shall form an agreement specifying the number of commissioners each member may appoint to a commission created to govern the joint system pursuant to Section 6-25-60.

    (B) Two or more commissioners The proposed members of a joint system shall jointly file an application with the Secretary of State an application signed by the commissioner of each proposed member setting forth:

       (1) the names and number of all proposed members of the joint system, the number of proposed commissioners, and their respective appointed commissioners the method of appointment pursuant to Section 6-25-60(B);

       (2) a certified copy of a resolution of each member determining it is in its best interest to participate in the proposed joint system;:

           (a) the resolution of each member determining it is in its best interest to participate in the proposed joint system;  and

           (b) the resolution appointing the member's commissioner;

       (3) the desire that the joint system be organized as a public body corporate and politic under this chapter;

       (4) the name which is proposed for the joint system;  and

       (5) the purpose for creation of the joint system.

    The Secretary of State shall file the application if after examining it and determining that it complies with the requirements in this section and that the proposed name of the joint system is not identical with that of any other corporation of the State or any agency or instrumentality or so nearly similar as to lead to confusion and uncertainty.

    After the application has been filed, the Secretary of State shall issue a corporate certificate that must be filed with the application, and the joint system then must be constituted a public body corporate and politic under the name proposed in the application. The corporate certificate shall set forth the names of all voting members and of the name of the joint system. There also must be stated upon the corporate certificate the purpose for which it has been created, as set forth in the application. Notice of the issuance of such corporate certificate must be given to all members of the joint system by the Secretary of State.

    In any suit, action, or proceeding involving the validity or enforcement of, or relating to, contract of a joint system, the joint system in the absence of establishing fraud shall be conclusively considered to have been established in accordance with the provisions of this chapter upon proof of the issuance of the certificate by the Secretary of State. A copy of the certificate, duly certified by the Secretary of State, is admissible in evidence in any suit, action, or proceeding and is conclusive proof of the filing and contents.

 

SECTION 3.  Section 6-25-60 of the S.C. Code is amended to read:

 

    Section 6-25-60. (A) The management and control of a joint system is vested in a commission that may consist of no fewer than five members and no more than eleven members. A commissioner has one vote and may have additional votes as a majority of the members of the joint system determines. Notwithstanding the provisions of this subsection requiring the commission managing a joint system to have no fewer than five members and no more than eleven members, a joint system in existence on this section's effective date and having fewer than five members or more than eleven members on this section's effective date may continue to maintain the number of members serving on this section's effective date and may add additional members as its commissioners determine.

    (B) As contemplated by the initial application to the Secretary of State, commissioners serving on the commission may be appointed under one of the following procedures:

       (1) The governing body of each voting member of a joint system shall appoint a commissioner one or more commissioners, pursuant to Section 6-25-50(A), to serve as a commissioner of the joint system. A commissioner has one vote and may have additional votes as a majority of the members of the joint system determines. A commissioner serves at the pleasure of the governing body by which he was appointed. A commissioner, before entering upon his duties, shall take and subscribe to an oath before a person authorized by law to administer oaths to execute the duties of his office faithfully and impartially, and a record of each oath must be filed with the governing body of the appointing authority.

    Notwithstanding the provisions of this subsection requiring the commission managing a joint system to have no fewer than five members and no more than eleven members, a joint system in existence on this section's effective date and having fewer than five members or more than eleven members on this section's effective date may continue to maintain the number of members serving on the section's effective date and may add additional members as its commissioners determine.

        In the event there is an even number of members of a joint system, the project contract, bylaws, or other similar agreement for the joint system may authorize one additional member of the commission; such additional commissioner shall be recommended by the legislative delegation from each county where the joint system is located, and upon receipt of such recommendation, such additional commissioner shall be appointed by the Governor. Any gubernatorial appointment shall be for a term of four years and shall serve until a duly appointed successor is appointed and qualified. Any commissioner appointed by the Governor hereunder must reside within a household receiving utility services from the joint system or a member of the joint system. Any vacancy of such member must be filled for the remainder of the unexpired term in the same manner as the original appointment. If a new member of a joint system is added under the provisions hereof such that there becomes an odd number of members of a joint system, any gubernatorial appointed commissioner shall be deemed to automatically vacate his position as a commissioner as of the date of the admission of such new member of a joint system and their respective appointment of a new commissioner.

       (2) The commissioners may be appointed by the Governor in accordance with the following procedures:

           (a) The Governor, based upon the recommendation of the legislative delegation from each county that the joint system operates, shall appoint each commissioner. Each appointed commissioner must reside within a household receiving utility services from the joint system or a member of the joint system. In making such appointments, there shall be at least one commissioner appointed by the Governor from the service area of each member of the joint system.

           (b) Excepting the initial appointments as necessary to create a staggered commission term which may be two or four years, respectively, each commissioner must be appointed and serve for a term of four years and until his successor is appointed and qualified, provided that the terms of the commissioners must be staggered such that approximately one-half of the total members appointed by the Governor must be appointed or reappointed every two years. A vacancy must be filled for the remainder of the unexpired term in the manner of the original appointment. Respecting the initial commission appointed herein, the minority portion of the staggered membership, representing those authorities with the lowest number of customers of the joint system, shall serve for an initial two-year term.

    (B)(C) The commissioners of the joint system shall annually, or biennially, if provided in the bylaws of the joint system, elect, with each commissioner having one vote, one of the commissioners as chairman, another as vice chairman, and other persons who may, but need not be commissioners, as treasurer, secretary and, if desired, assistant secretary. The office of treasurer may be held by the secretary or assistant secretary. The commission may also appoint such additional officers as it deems necessary. The secretary or assistant secretary of the joint system shall keep a record of the proceedings of the joint system, and the secretary must be the custodian of all books, records, documents, and papers filed with the joint system, the minute book or journal of the joint system, and its official seal.

    (C)(D) A majority of the commissioners of the joint system shall constitute a quorum. A vacancy on the commission of the joint system shall not impair the right of a quorum to exercise all rights and perform all the duties of a joint system. Any action taken by the joint system under the provisions of this chapter may be authorized by resolution at any regular or special meeting held pursuant to notice in accordance with bylaws of the joint system, and each resolution shall take effect immediately and need not be published or posted. Except as is otherwise provided in this chapter or in the bylaws of the joint system, a majority of the votes which the commissioners present are entitled to cast, with a quorum present, shall be necessary and sufficient to take any action or to pass any resolution. No commissioner of a joint system shall receive any compensation solely for the performance of duties as a commissioner, but each commissioner may be paid per diem, mileage, and subsistence expenses, as provided by law for state boards, committees, and commissions, incurred while engaged in the performance of such duties.

    (E) All commissioners shall hold the qualifications of an elector.

    (F) Commissioners appointed under subsection (B)(2) may not be an officer or employee of a member of a joint system, and no commissioner shall be permitted to serve on an ex officio basis. Separately, for commissioners appointed under subsection (B)(1), the members of the joint system may include a restriction in the project contract, bylaws, or other agreement for the joint system that no commissioner may be an officer or employee of a member of a joint system, and no commissioner shall be permitted to serve on an ex officio basis.

    (G) Any commissioner appointed hereunder shall be deemed to forfeit his respective position if such person: (1) lacks, at any time during his term of office, any qualifications for the office prescribed by general law and the Constitution; or (2) is convicted of any crime, other than civil infractions or misdemeanors for which no imprisonment is imposed.

 

SECTION 4.  Section 6-25-70 of the S.C. Code is amended to read:

 

    Section 6-25-70. (A) After the creation of a joint system, any other authority may become a member of the joint system upon:

       (1) adoption of a resolution or ordinance by the governing body complying with the requirements of Section 6-25-40 including publication of notice;

       (2) submission of an application to the joint system;  and

       (3) approval of the application by resolution of the governing body of each member of the joint system except in the case of a joint system organized for the purpose of creating a financing pool, in which case the application must be approved by resolution of the commission.

    (B) A member may withdraw from a joint system by resolution or ordinance of its governing body. A contractual right acquired or contractual obligation incurred by a member while it was a member remains in full force and effect after the member's withdrawal.

    (C) Notice of a change in membership must be filed in the Office of the Secretary of State. No change is final until this filing occurs. The filing is not required if a joint system is organized only for the purpose of creating a financing pool.

    (D) If a new member of the joint system is added hereunder, the approval documentation required under subsection (A)(3) shall determine whether any new commissioners shall be added to the commission as necessary to support such new member of the joint system. If a new commissioner is added, either by the members of the joint system or the Governor, as applicable, each such commissioner shall be appointed immediately.

 

SECTION 5.  Section 6-25-80 of the S.C. Code is amended to read:

 

    Section 6-25-80. Whenever the commission of a joint system and the governing body of each of its members shall by resolution or ordinance determine that the purposes for which the joint system was formed have been substantially fulfilled and that all bonds issued and all other obligations incurred by the joint system have been fully paid or satisfied, the commission and members may declare the joint system to be dissolved. On the effective date of the resolution or ordinance, the title to all funds and other income and property owned by the joint system at the time of dissolution must be disbursed to the voting members of the joint system according to its bylaws.

    In the discretion of the members of a joint system for the proper and efficient operation of any joint system, an existing joint system may be reconstituted by following the procedures for the creation of a new joint system, mutatis mutandis. In the event of a reconstitution, any former member may elect to withdraw from the joint system prior to the effective date of the reconstitution by submitting a petition to the joint system, which shall be filed with the new application under Section 6-25-50. No withdrawal for reconstitution shall be permitted unless and until either (i) all contractual rights and obligations, including bond payment obligations, of the withdrawing member have been fulfilled to the satisfaction of the remaining members, as certified in a resolution or ordinance of the remaining members filed with the application; or (ii) the withdrawing member remains obligated on any contract right or obligation as contemplated in Section 6-25-70(B). Upon any reconstitution withdrawal, the withdrawing member's capacity rights in the project shall immediately terminate.

 

SECTION 6.  Section 6-25-110 of the S.C. Code is amended to read:

 

    Section 6-25-110.  A joint system may incur debt for any of its purposes and may issue bonds pledging to the payment as to both principal and interest the revenues, or any portion, derived or to be derived from all or any of its projects and any additions and betterments or extensions or contributions or advances from its members or other sources of funds available to it. A joint system may not undertake a 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 which is obligated or to be obligated under any contract for the payment of amounts to be pledged as security therefore and a favorable vote of two-thirds of all commissioners. Notwithstanding the foregoing, when a commission is appointed under Section 6-25-60(B)(2), no separate approval of the governing bodies of each member shall be required for the issuance of any bonds, and such bonds shall be authorized and approved by a simple majority of the commissioners. Any project may be preauthorized, preapproved, or otherwise permitted under the terms of the project contract for the joint system, and such authority, approval, or permission shall constitute all necessary approval of the respective governing bodies of each member herein. A joint system formed only for the purpose of creating a financing pool may issue notes in anticipation of the issuance of bonds by its members to the government.

 

SECTION 7.  Section 6-25-128 of the S.C. Code is amended to read:

 

    Section 6-25-128.  An authority 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.  An authority also may contract for the collection or treatment of wastewater, including present or future capacity, or a portion or share of another project. The creation of a joint system is an alternative method whereby an authority may obtain the benefits and assume the responsibilities of ownership in a project, so a contract may provide that the authority forming the contract is obligated to make a payment 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 reduction, whether by offset or otherwise, and are not conditioned upon the performance or nonperformance of the joint system or any other member of the joint system under the contract or any other instrument. A 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 authorities also may provide that if an authority or authorities default 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 authorities 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 authority.

    A contract concerning 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. The contract may further provide that bonds or other indebtedness of the joint system may exceed the term of an initial or existing contract between or among the joint system and the respective members of the joint system, and in such event the contract, or at least the payment obligations of each member, shall be automatically extended to a period commensurate with the term of the bonds or other indebtedness.

    Payments by an authority under a contract for the purchase of capacity and output from a joint system may be made from the revenues derived from the ownership and operation of the water system of the authority or from such other sources of funds as may be available, including any amounts received as payments in lieu of taxes. An authority may not pledge its full faith, credit, and taxing power to secure its obligations to the joint system or the bonds of the joint system. An authority is obligated to fix, charge, and collect rents, rates, fees, and charges for water or sewer services, facilities, and commodities sold, furnished, or supplied through its water or sewer 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 authority for purposes related to its water or sewer system.

    An authority that is a member of a joint system may furnish the joint system with money derived from the ownership and operation of its water or sewer system or facilities and provide the joint system with personnel, equipment, and property, both real and personal, and from any other sources legally available to it for such purposes. An authority also may provide services to a joint system.

    A member of a joint system may contract for, advance, or contribute funds derived from the ownership and operation of its water or sewer system or facilities or from another legal source to a joint system as agreed upon by the joint system and the member, and the joint system shall repay the advances or contributions from the proceeds of bonds, operating revenue, or other funds of the joint system, together with interest as agreed upon by the member and the joint system.

 

SECTION 8.  This act takes effect upon approval by the Governor.

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