HSB 111 (LSB 2004YC (2) 85)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON ECONOMIC GROWTH BILL BY CHAIRPERSON HANUSA)

A BILL FOR

An Act relating to rural water providers by making changes to water service requirements and changes related to compensation for the acquisition of certain facilities by a city.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 357A.1, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  6A.  “Rural water association” or “association” means a rural water association organized and incorporated as a cooperative association under chapter 499 or as a nonprofit corporation under chapter 504.
    Sec. 2.  Section 357A.2, subsections 3 and 4, Code 2013, are amended to read as follows:
   3.
  a.  Water services, other than water services provided as of April 1, 1987, shall not be provided within two miles of the limits of a city by a rural water district incorporated under this chapter or chapter 504 except as provided in this section.
   b.  Water services, other than water services provided as of July 1, 2013, shall not be provided within two miles of the limits of a city by a rural water association, except as otherwise provided for in this section.
   4.
  a.  A rural water district incorporated under this chapter or chapter 504 may
 
or rural water association shall give notice of intent to provide water service to a new area within two miles of a city
 
or to replace or substantially increase the capacity of existing facilities or infrastructure within two miles of a city by submitting a water plan to the city.

If city water service is governed by a board of trustees established under chapter 388, the water plan shall be filed with the board of trustees. 
   b.  The plan is only required to
 
shall indicate the area within two miles of the city which the rural water district
 
or rural water association intends to serve
 
within four years of the date the plan is filed.
   c.  The plan shall describe whether federal financing of the rural water district or rural water association may directly or indirectly create an exclusive right, franchise, or privilege. The plan shall also describe whether such financing may limit, curtail, or preempt rights or privileges of a city to serve current or future customers. The plan shall further describe whether the district or association facilities will provide sufficient capacity for fire protection services to be provided in the area within two miles of a city. The plan shall include the number of customers that existing facilities are meant to serve or, in the case of notification of intent to replace or substantially increase capacity, the number of new customers to be served by replaced or expanded facilities.
   d.  If the city fails to respond to the rural water district’s
 
such a plan within ninety days of receipt of the plan, the rural water district
 
or rural water association may provide service in the area designated in the plan. The city may inform the rural water district
 
or association within ninety days of receipt of the plan that the city requires additional time or information to study the question of providing water service outside the limits of the city. If additional time or information is required, the city shall respond to the rural water district’s plan within one hundred eighty days of receipt of the plan.
   e.  In responding to the plan, the city may waive its right to provide water service within the areas designated for service by the rural water district
 
or rural water association, or the city may reserve the right to provide water service in some or all of the areas which the rural water district
 
or association intends to serve. If the city reserves the right to provide water service within some or all of the areas which the rural water district
 
or association intends to serve, the city shall provide service within four years of receipt of the plan.

The city may rescind a waiver after four years from the date the plan is filed for any area in which the district or association has not provided service.
   f.  This section does not preclude a city from providing water service in an area which is annexed by the city
 
accordance with section 357A.21.
    Sec. 3.  Section 357A.2, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  A city shall compensate a rural water district or rural water association for any existing facilities displaced by the city’s provision of water service in accordance with section 357A.21.
    Sec. 4.  NEW SECTION.  357A.4A  Notice of intent to apply for a federal loan —— requirements.
   1.
  a.  No later than ninety days prior to a rural water district or rural water association filing an application for a federal loan or a federal loan extension that directly or indirectly creates an exclusive right, franchise, or privilege or limits, curtails, or preempts rights or privileges of a city to serve current or future water customers if the city is within two miles of the proposed service area or estimated growth area of the district or association, the district or association shall send by certified mail a notice of intent to apply for such a loan or loan extension to each such city.
   b.  The notice shall include the purpose of the loan or loan extension, the amount of the requested loan or loan extension, the estimated length of the loan or loan extension term, and the estimated growth needs of the area that the rural water district or rural water association intends to serve during the estimated loan or loan extension term. A map of the area shall be attached to the notice. The notice shall also describe whether existing or future industrial, commercial, or institutional water users within two miles of the proposed service area or estimated growth area would be economically and adequately served, as that phrase is defined in section 357A.16, by the district or association.
   2.  Any city within two miles of a proposed service area or estimated growth area described in subsection 1 shall have sixty days to respond to the rural water district or rural water association and to state the city’s intent to provide service within four years to an area within the proposed service area or estimated growth area. Any area to be served by a city, as well as any current or future customers located in that area, shall not be included in the district’s or association’s proposed service area. A district or association shall not use any area to be served by a city, pursuant to this subsection, for any purpose related to a federal loan or loan extension.
    Sec. 5.  Section 357A.16, Code 2013, is amended to read as follows:
   357A.16  Detaching real property from
 
a district
 
or association.
   1.  If it becomes apparent that any real property included within a
 
rural water district
 
or a rural water association cannot economically or adequately be served by the facilities of the district
 
or association, the owners of the real property may file with the auditor a petition to the supervisors requesting that the real property be detached from the district
 
or association. The petition shall:
   1.

a.  Describe by section, or fraction thereof, and by township and range, the real property which it is proposed to detach from the
 
rural water district
 
or rural water association.
   2.

b.  State that the real property cannot economically or adequately be served by the facilities of the
 
rural water district
 
or rural water association, and that it is not feasible for the district
 
or association to enlarge or extend its facilities so as to economically and adequately serve the real property.
   3.

c.  Be signed by the owners of all the real property which it is desired to detach from the
 
rural water district
 
or rural water association.
   2.  For the purposes of this section and section 357A.4A, “economically or adequately served” means that the facilities of the rural water district or rural water association do not create an impediment to economic development and includes but is not limited to the district or association offering reasonable water service rates to the owners of real property, the sufficient provision of water and infrastructure for fire protection and fire suppression, and the ability to provide any reasonably anticipated future water service needs as specified by the owners of the real property.
    Sec. 6.  Section 357A.21, Code 2013, is amended to read as follows:
   357A.21  Annexation
 
Condemnation of facilities and annexation of land by a city —— arbitration.
   1.  A
 
rural water district
 
or rural water association, or a water district organized under this chapter, chapter 357, 499, or 504 shall be fairly compensated for losses resulting from annexation
 
distribution facilities acquired by a city.

Where such distribution facilities located within the corporate limits of a city are acquired by the city through condemnation, compensation shall be based upon the original cost of the distribution facilities less depreciation, but shall not be less than the remaining portion of the original debt for the distribution facilities being acquired nor more than the original cost of the distribution facilities. A city may provide compensation to a district or association for a service that was proposed or intended to be provided by the district or association at the time of the acquisition.
   2.  The
 
If a city annexes territory containing facilities owned by a district or association, the governing body of a
 
the city or
 
the city’s water utility and the
 
governing board of directors or trustees of the water district
 
or association may agree to terms which provide that the facilities owned by the water district
 
or association and located within the city shall be retained by the water district
 
or association for the purpose of transporting water to customers outside the city. If an agreement is not reached within ninety days, the issues may be submitted to arbitration. If submitted, an arbitrator shall be selected by a committee which includes one member of the governing body of the city or its designee, one member of the water district’s
 
or association’s governing board of directors or trustees or its designee, and a disinterested party selected by the other two members of the committee. A list of qualified arbitrators may be obtained from the American arbitration association or other recognized arbitration organization or association.
EXPLANATION
   This bill relates to rural water providers by making changes to water service requirements and changes related to compensation for certain facilities takings.
   The bill defines “rural water association”.
   The bill places certain limitations on the provision of water services by rural water associations to areas that are within two miles of a city after July 1, 2013.
   Current law provides that a rural water district may provide notice of intent to provide water service to a new area within two miles of a city. The bill requires that rural water associations also provide such notice. The bill requires that notice also be provided by a district or association intending to replace or substantially increase the capacity of existing facilities within two miles of a city. The bill further requires that if a city’s water service is governed by a board of trustees that the notice shall be filed with the board. 
   Current law requires that a water plan submitted by a rural water district only include an indication of the new area that the district intends to serve. The bill requires that a district or association indicate any such area that the district or association intends to serve within four years following the date that the plan is filed with a city. Additionally, the plan is also required to provide information relating to federal financing, fire protection service capacity, and information related to the number of customers served or intended to be served.
   Current law provides that a city may waive its right to provide water service within the areas designated in a water plan. The bill provides that a city may rescind such a waiver after four years following the date the water plan is filed with the city, provided that the district or association has not provided service to the area.
   The bill requires that a rural water district or rural water association provide a city within two miles of a proposed service area or estimated growth area with notice of an application for a federal loan or federal loan extension. The district or association is required to provide such notice no later than 90 days prior to filing such an application. The notice is required to include specified information regarding the loan or loan extension, loan term, and certain information pertaining to the proposed service area or estimated growth area. The bill provides that any city within two miles of the proposed service area or estimated growth area shall have 60 days to respond to the notice and state the city’s intent to provide service within four years to an area within the proposed service area or estimated growth area. The bill requires that any area in which a city has stated an intent to provide service shall not be included in the district’s or association’s water plan or be used for any purposes related to a federal loan or loan extension.
   The bill provides a definition for the term “economically or adequately served” related to the provision of water service by a district or association.
   Current law provides that a water district be compensated for losses resulting from annexation. The bill strikes that provision and provides that a district be compensated for distribution facilities acquired by a city through condemnation procedures and provides a formula for determining the amount of compensation to be paid. The bill further provides that a city may provide compensation to a district or association for service that was proposed or intended to be provided by the district or association at the time of acquisition.