House File 861 - Introduced
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HSB 182)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to telecommunications projects and facilities,
2 including requirements regarding feasibility studies and
3 reports and requirements regarding financing, and providing an
4 effective date.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 384.96, Code 2005, is amended by adding
1 2 the following new unnumbered paragraph:
1 3 NEW UNNUMBERED PARAGRAPH. The requirements of this section
1 4 shall apply to a contract for the operation, management, or
1 5 control of a telecommunications facility, as defined in
1 6 section 388.1.
1 7 Sec. 2. Section 388.1, Code 2005, is amended by adding the
1 8 following new subsections:
1 9 NEW SUBSECTION. 1A. "Telecommunications facility" means a
1 10 system or network of cable, optical fiber, radio, or other
1 11 wireless equipment or technology or any combination thereof,
1 12 or other equipment, items, system, infrastructure, or
1 13 facilities that are used or intended to be used by a city,
1 14 city utility, combined utility system, city enterprise,
1 15 combined city enterprise, or nongovernmental entity or person
1 16 to provide telecommunications services to residential or
1 17 business users. "Telecommunications facility" does not
1 18 include a facility of a municipal hospital.
1 19 NEW SUBSECTION. 1B. "Telecommunications project" means a
1 20 project, plan, or proposal for a city, city utility, combined
1 21 utility system, city enterprise, or combined city enterprise
1 22 to directly or indirectly build, lease, or otherwise acquire,
1 23 invest in, maintain, improve, expand, finance, or refinance a
1 24 telecommunications facility not owned or operated by the city,
1 25 city utility, combined utility system, city enterprise, or
1 26 combined city enterprise on or before January 1, 2005.
1 27 "Telecommunications project" does not include a project of a
1 28 municipal hospital.
1 29 Sec. 3. Section 388.2, Code 2005, is amended to read as
1 30 follows:
1 31 388.2 SUBMISSION TO VOTERS.
1 32 1. The proposal of a city to establish, acquire, lease, or
1 33 dispose of a city utility, except a sanitary sewage or storm
1 34 water drainage system, in order to undertake or to discontinue
1 35 the operation of the city utility, or the proposal to
2 1 establish or dissolve a combined utility system, or the
2 2 proposal to establish or discontinue a utility board, is
2 3 subject to the approval of the voters of the city, except that
2 4 a board may be discontinued by resolution of the council when
2 5 the city utility, city utilities, or combined utility system
2 6 it administers is disposed of or leased for a period of over
2 7 five years.
2 8 2. The proposal may be submitted to the voters at any city
2 9 election by the council on its own motion. Upon receipt of a
2 10 valid petition as defined in section 362.4, requesting that a
2 11 proposal be submitted to the voters, the council shall submit
2 12 the proposal at the next regular city election or a special
2 13 election.
2 14 3. A city, city utility, combined city utility, city
2 15 enterprise, or combined city enterprise may not establish,
2 16 acquire, or lease the facilities of a telecommunications
2 17 project, in whole or in part, without the approval of the
2 18 voters of the city.
2 19 a. Prior to the city election to obtain voter approval,
2 20 the city shall prepare a report on the feasibility of the
2 21 telecommunications project which shall, at a minimum, address
2 22 and disclose all of the following:
2 23 (1) The costs of establishing, acquiring, or leasing the
2 24 facilities of the telecommunications project and an
2 25 explanation of how those costs will be paid.
2 26 (2) Projected operating costs, including losses, for each
2 27 of the first five years of operation of the telecommunications
2 28 facilities, including costs of necessary upgrades to maintain
2 29 continuing technological viability.
2 30 (3) Projected revenues of the telecommunications project
2 31 for each of the first five years of operation.
2 32 (4) Assumptions used in developing the cost and revenue
2 33 projections.
2 34 (5) Risks associated with the fiscal viability of the
2 35 telecommunications project and its operations, including
3 1 technological, financial, and market risks.
3 2 (6) The fiscal impact on the city of the capital and other
3 3 investment required for the telecommunications project,
3 4 including but not limited to the investment required to
3 5 construct, maintain, and operate the facilities and to avoid
3 6 their technical obsolescence.
3 7 (7) The impact on the city, utility ratepayers, and
3 8 taxpayers if the telecommunications project is not a financial
3 9 success, including the impact on the creditworthiness of the
3 10 city and the alternatives available to the city if the
3 11 telecommunications project is unsuccessful.
3 12 b. (1) The feasibility report shall be reviewed by an
3 13 independent investment banking firm experienced in public
3 14 finance in the telecommunications industry, which shall
3 15 provide a written opinion regarding the reasonableness of
3 16 projections and conclusions in the report. The investment
3 17 banking firm's opinion and the report shall be available as
3 18 public records for public inspection and copying.
3 19 (2) Not less than sixty days prior to the date of the city
3 20 election for voter approval, but after the issuance of the
3 21 banking firm's opinion, the city shall hold a public hearing
3 22 regarding the feasibility report. Public notice of the
3 23 hearing shall be given in the manner directed by section
3 24 362.3. Such notice shall inform the public of the
3 25 availability of the feasibility report for inspection and
3 26 copying.
3 27 (3) The ballot issue for voter approval of the proposal
3 28 shall include, in addition to any other information required
3 29 by law, a statement of the maximum costs disclosed pursuant to
3 30 paragraph "a", subparagraphs (1) and (2), to establish,
3 31 acquire, lease, maintain, or operate the facilities of the
3 32 telecommunications project as shown in the feasibility report,
3 33 which shall not be exceeded without voter approval in another
3 34 election.
3 35 4. A city which has undertaken a telecommunications
4 1 project in compliance with subsection 3 may extend the
4 2 telecommunications facilities within the city's existing
4 3 service area and add functionality to the facilities without
4 4 preparing another business plan or obtaining the approval of
4 5 voters, provided that the city continues to be in compliance
4 6 with all other applicable requirements of subsection 1.
4 7 5. A proposal for the establishment of a utility board
4 8 must specify a board of either three or five members.
4 9 6. If a majority of those voting for and against the
4 10 proposal approves the proposal, the city may proceed as
4 11 proposed.
4 12 7. If a majority of those voting for and against the
4 13 proposal does not approve the proposal, the same or a similar
4 14 proposal may not be submitted to the voters of the city for at
4 15 least four years from the date of the election at which the
4 16 proposal was defeated.
4 17 Sec. 4. Section 388.10, Code 2005, is amended by adding
4 18 the following new subsection:
4 19 NEW SUBSECTION. 1A. a. Notwithstanding any other
4 20 provision of this Code, a city, city utility, combined city
4 21 utility, city enterprise, or combined city enterprise shall
4 22 not, directly or indirectly, finance, refinance, pay the costs
4 23 or expenses of, or otherwise fund a telecommunications project
4 24 or the operation of a telecommunications facility established
4 25 through a telecommunications project, except through use of
4 26 the revenues directly earned or to be earned by the
4 27 telecommunications project or facility. This subsection shall
4 28 not prevent any of the following:
4 29 (1) The use of otherwise available funds to pay the
4 30 reasonable costs of studying the feasibility of a
4 31 telecommunications project or conducting an election on a
4 32 proposal for a telecommunications project.
4 33 (2) The sale to nongovernmental investors of revenue bonds
4 34 to fund a telecommunications project if principal, interest,
4 35 and premium are payable upon maturity or default and are
5 1 actually paid solely from, and all obligations under the bonds
5 2 are secured solely by, the net revenues earned or to be earned
5 3 by, the telecommunications project.
5 4 b. A city, city utility, combined city utility, city
5 5 enterprise, or combined city enterprise shall not, directly or
5 6 indirectly, finance, refinance, pay the costs or expenses of,
5 7 or otherwise fund a telecommunications project or the
5 8 operation of a telecommunications facility established through
5 9 a telecommunications project through the issuance of revenue
5 10 bonds without approval of the voters of the city. The ballot
5 11 issue for voter approval shall require approval of at least
5 12 sixty percent of those voting and may be held in the same
5 13 election required by section 388.2, subsection 3.
5 14 Sec. 5. EFFECTIVE DATE. This Act, being deemed of
5 15 immediate importance, takes effect upon enactment.
5 16 EXPLANATION
5 17 This bill relates to the financing of telecommunications
5 18 projects and facilities by a city, city utility, combined city
5 19 utility, city enterprise, or combined city enterprise.
5 20 The bill requires cities that contract for the operation,
5 21 management, or control of a telecommunications facility to
5 22 advertise for sealed bids. The bill provides definitions for
5 23 the terms "telecommunications facility", "telecommunications
5 24 project", and "telecommunications services".
5 25 The bill prohibits a city, city utility, or city enterprise
5 26 from financing or funding a telecommunications project or
5 27 operation of a telecommunications facility established through
5 28 a project except through use of the revenues directly earned
5 29 or to be earned by the project.
5 30 The bill provides that a city, city utility, or city
5 31 enterprise shall not establish, acquire, or lease
5 32 telecommunications facilities of a telecommunications project
5 33 without voter approval. A feasibility report must be prepared
5 34 concerning the telecommunications project prior to the city
5 35 election to obtain voter approval. The feasibility report
6 1 must contain certain provisions regarding costs, revenues,
6 2 risks, and the fiscal impact on the city. The feasibility
6 3 report must be reviewed by an independent investment banking
6 4 firm. The city shall also hold a public hearing regarding the
6 5 feasibility report prior to the city election to obtain voter
6 6 approval. The ballot issue shall include a statement of the
6 7 maximum cost shown in the feasibility report to establish,
6 8 acquire, or lease the facilities of telecommunications
6 9 projects. The bill prohibits the city from exceeding the
6 10 feasibility report's projected cost without approval by
6 11 another city election.
6 12 The bill provides that a city may extend telecommunications
6 13 facilities and add functionality without a business plan or
6 14 voter approval if the city maintains compliance with other
6 15 requirements. The bill provides that a city shall not finance
6 16 a telecommunications project through the issuance of revenue
6 17 bonds without voter approval of at least 60 percent of those
6 18 voting which may be held in the same election as the voter
6 19 approval to establish, acquire, or lease the facilities of a
6 20 telecommunications project.
6 21 The bill is effective upon enactment.
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