Senate Study Bill 1146 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON AGRICULTURE BILL BY CHAIRPERSON ZUMBACH) A BILL FOR An Act providing for the creation of regional water authorities 1 and regional water authority boards to assume the powers, 2 duties, assets, and liabilities of certain water utilities, 3 and including effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2070XC (2) 87 aw/rn/rj

S.F. _____ Section 1. NEW SECTION . 388.12 Water utility discontinuance 1 —— transfers and transition provisions. 2 1. On or before January 1, 2018, the board of a water 3 utility shall be discontinued and its powers and duties, and 4 the assets and liabilities of the water utility, shall be 5 separately transferred to each city in which the utility’s main 6 water production is located that has a population greater than 7 thirty-nine thousand, as determined by the most recent federal 8 decennial census. The board of the water utility shall by 9 resolution provide for the equitable transfer of the assets, 10 and equitable transfer and assumption of the liabilities and 11 powers and duties, under this subsection to allow for the 12 continued provision of water services to customers. Each 13 transfer shall be completed upon the agreement, by resolution, 14 of each city council for each city receiving a transfer and 15 assuming liabilities and powers and duties as provided in this 16 section. 17 2. a. If a city council under subsection 1 cannot agree 18 on such transfers and assumptions with the associated water 19 utility board, the matters on which they differ shall be 20 decided by disinterested arbitrators, one selected by the 21 board, one selected by the city council failing to agree to the 22 transfers and assumptions, and one selected by the mayor of the 23 city who appointed the members of the board. 24 b. The decision of the arbitrators shall be made in writing 25 and filed with the board, and a party to the proceedings may 26 appeal the decision to the district court by serving notice 27 on the board within twenty days after the decision is filed. 28 The appeal shall be tried in equity and a decree entered 29 determining the entire matter. 30 3. Following the discontinuance of the board, the city 31 manager employed by the city council that set the compensation 32 of the members of the board shall designate the administrator 33 of a department or administrative division of that city to be 34 the manager of the water supply system until the establishment 35 -1- LSB 2070XC (2) 87 aw/rn/rj 1/ 8

S.F. _____ or designation of a regional water authority pursuant to 1 section 389.6, subject to the approval of the city council. 2 The administrator designated under this subsection shall not be 3 considered a civil service employee under section 400.17 and 4 shall serve under the control and direction of the city manager 5 of that city. The administrator may be terminated at will, 6 subject to any contract in place on the effective date of this 7 Act. 8 4. On and after the effective date of this Act, a water 9 utility and any city receiving powers, duties, assets, or 10 liabilities under this section shall not, related to the water 11 supply system: 12 a. Lease, sell, or otherwise dispose of any real property or 13 acquire any new real property or debt obligations. 14 b. Issue revenue bonds or assume any other form of 15 obligations payable from the revenues of the water utility. 16 c. Expend moneys for any purpose other than ongoing 17 operations or capital expenditures below the amount of one 18 hundred thousand dollars, unless an emergency affecting public 19 safety requires an emergency capital repair, in which case a 20 vote of at least three-fourths of all the members of the city 21 council shall be required to approve the emergency expenditure. 22 5. On and after the effective date of this Act, a water 23 utility and any city receiving powers, duties, assets, or 24 liabilities under this section are prohibited from expending 25 any moneys or staff time to plan, design, or construct any new 26 water plant or other water-producing facility. 27 6. For the purposes of this section, “water utility” means 28 a city utility that provides water services, that is located in 29 a federally designated standard metropolitan statistical area 30 that has a population greater than five hundred thousand, as 31 shown by the most recent federal decennial census, and that is 32 located entirely within the state. 33 Sec. 2. Section 389.1, Code 2017, is amended to read as 34 follows: 35 -2- LSB 2070XC (2) 87 aw/rn/rj 2/ 8

S.F. _____ 389.1 Definitions. 1 As used in this chapter subchapter , unless the context 2 otherwise requires: 3 1. “Joint water utility” means a water utility established 4 by two or more cities which owns or operates or proposes to 5 finance the purchase or construction of all or part of a 6 water supply system or the capacity or use of a water supply 7 system pursuant to this chapter subchapter . A water supply 8 system includes all land, easements, rights-of-way, fixtures, 9 equipment, accessories, improvements, appurtenances, and other 10 property necessary or useful for the operation of the system. 11 2. “Joint water utility board” means the board of trustees 12 established to operate a joint water utility. 13 3. “Project” means any works or facilities useful or 14 necessary for the operation of a joint water utility. 15 Sec. 3. Section 389.3, subsection 1, Code 2017, is amended 16 to read as follows: 17 1. Upon adoption of a proposal to establish a joint water 18 utility, the member cities shall establish a joint water 19 utility board, consisting of at least five members. The 20 mayors of the participating cities shall appoint the members, 21 subject to the approval of the city councils, and at least one 22 member shall be appointed from each participating city. The 23 board shall be responsible for the planning and operation of a 24 joint water utility, subject to the provisions of this chapter 25 subchapter . 26 Sec. 4. Section 389.5, Code 2017, is amended to read as 27 follows: 28 389.5 Construction. 29 This chapter subchapter being necessary for the public 30 health, public safety, and general welfare, shall be liberally 31 construed to effectuate its purposes. This chapter subchapter 32 shall be construed as providing a separate and independent 33 method for accomplishing its purposes, and shall take 34 precedence over any contrary provision of the law. 35 -3- LSB 2070XC (2) 87 aw/rn/rj 3/ 8

S.F. _____ Sec. 5. NEW SECTION . 389.6 Regional water authority —— 1 established. 2 1. On or before January 1, 2020, each receiving city 3 shall enter into an agreement under chapter 28E, approved by 4 the city council of each city, to establish or designate a 5 regional water authority that shall provide water services, as 6 previously provided by the discontinued water utilities. 7 2. a. The agreement under this section shall provide 8 for the creation of a regional water authority board. The 9 agreement shall provide for staggered six-year terms of the 10 board’s members, and provide the board with the authority to 11 set the compensation for the board members by resolution. 12 b. The agreement shall provide that the members of the 13 regional water authority board shall be appointed as the 14 negotiated chapter 28E agreement provides, utilizing the 15 following criteria for determining the composition and 16 proportional representation of each receiving city on the 17 board: 18 (1) Population of each receiving city. 19 (2) Total value of water production facilities located 20 within a receiving city, if any. 21 (3) Total value of water distribution facilities located 22 within a receiving city’s water supply system. 23 (4) If the receiving cities cannot agree on the composition 24 of and the proportional representation on the regional water 25 authority board, the matters on which they differ shall be 26 decided by disinterested arbitrators utilizing the criteria 27 provided in subparagraphs (1) through (3), one selected by each 28 of the receiving cities and an additional arbitrator selected 29 by those arbitrators if the number of arbitrators selected by 30 receiving cities results in an even number of arbitrators. 31 c. The decision of the arbitrators shall be made in writing 32 and filed with each receiving city, and a receiving city 33 subject to the proceedings may appeal the decision to the 34 district court by serving notice on the other receiving cities 35 -4- LSB 2070XC (2) 87 aw/rn/rj 4/ 8

S.F. _____ within twenty days after the decision is filed. The appeal 1 shall be tried in equity and a decree entered determining the 2 entire matter. 3 d. Population determinations under this subsection shall be 4 as determined by the most recent federal decennial census. 5 3. The agreement shall provide for the transfer of assets 6 and liabilities from each city under subsection 1 to the 7 regional water authority. 8 4. The agreement shall provide the regional water authority 9 board with the same powers and duties of a city utility under 10 chapter 388, and may provide the regional water authority board 11 with additional powers and duties. 12 5. The agreement shall provide that other cities that are 13 not receiving cities may join the regional water authority 14 under terms specified in the agreement creating the regional 15 water authority, with proportional representation based 16 upon the criteria identified in section 389.6, subsection 2, 17 paragraph “b” . 18 6. A regional water authority shall not expend any moneys or 19 staff time to plan, design, or construct any new water plant or 20 other water-producing facility before July 1, 2018. 21 7. For the purposes of this section, “receiving city” means 22 a city receiving powers and duties and assuming assets and 23 liabilities under section 388.12. 24 Sec. 6. CODE EDITOR. The Code editor shall codify sections 25 389.1 through 389.5 as subchapter I, and section 389.6 as 26 enacted by this Act as subchapter II of chapter 389. 27 Sec. 7. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 28 immediate importance, takes effect upon enactment. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill provides for the creation of a regional water 33 authority and regional water authority board to assume the 34 transfer of powers, duties, assets, and liabilities of a water 35 -5- LSB 2070XC (2) 87 aw/rn/rj 5/ 8

S.F. _____ utility. 1 Under the bill, the boards of certain city water utilities 2 are discontinued. The only utilities impacted under the bill 3 are those that provide water services and that are located 4 in a federally designated standard metropolitan statistical 5 area located entirely within the state and have populations 6 greater than 500,000. The bill requires that the water 7 utility’s powers, duties, assets, and liabilities be separately 8 transferred to each city in which the utility’s main water 9 production is located that has a population greater than 10 39,000. 11 The board of the water utility is required, by resolution, to 12 provide for the equitable transfer of the assets, and equitable 13 transfer and assumption of the liabilities and powers and 14 duties, of the utility to allow for the continued provision of 15 water services to customers. The transfers are completed upon 16 the agreement, by resolution, of each city council receiving 17 assets, liabilities, or responsibilities under the bill. The 18 bill requires that if a city council cannot agree on such 19 distributions and assumptions with the associated board, the 20 matters on which they differ must be decided by disinterested 21 arbitrators, one selected by the board of the water utility, 22 one selected by the city council that fails to agree to the 23 transfers and assumptions, and one selected by the mayor of the 24 city who appointed the members of the board. The bill provides 25 that the decision of the arbitrators shall be made in writing 26 and filed with the board, and allows a party to the proceedings 27 to appeal the decision to the district court, with the appeal 28 tried in equity and a decree entered determining the entire 29 matter. 30 The bill requires that the city manager employed by the 31 city council that set the compensation of the members of the 32 discontinued water utility designate the administrator of a 33 department or administrative division of that city, meeting 34 certain other qualifications, to be the manager of the water 35 -6- LSB 2070XC (2) 87 aw/rn/rj 6/ 8

S.F. _____ supply system until the establishment or designation of a 1 regional water authority and subject to the approval of the 2 city council. 3 The bill prohibits a water utility and any city receiving 4 powers, duties, assets, or liabilities from the water utility 5 from expending any moneys or staff time to plan, design, 6 or construct any new water plant or other water-producing 7 facility. The bill also prohibits a water utility and certain 8 cities from the following activities related to the water 9 supply system: 10 1. Leasing, selling, or otherwise disposing of any 11 real property or acquiring any new real property or debt 12 obligations. 13 2. Issuing revenue bonds or assuming any other form of 14 obligations payable from the revenues of the water utility. 15 3. Expending moneys for any purpose other than ongoing 16 operations except as otherwise provided in the bill. 17 The bill provides a definition for the term “receiving 18 city”, which includes a city receiving powers, duties, assets, 19 or liabilities from the discontinued water utility. The 20 bill requires each receiving city to enter into an agreement 21 under Code chapter 28E before January 1, 2020, to establish 22 or designate a regional water authority that shall provide 23 water services, as previously provided by the discontinued 24 water utility. The Code chapter 28E agreement is required to 25 provide for the creation of a regional water authority board 26 and staggered six-year terms for the board’s members. The bill 27 also requires that the Code chapter 28E agreement provide the 28 board with the authority to set the compensation for the board 29 members. 30 The bill requires the agreement to contain provisions for 31 the appointment of members of the regional water authority 32 board. The agreement must contain provisions for the 33 composition of the regional water authority board and for 34 the proportional representation of each receiving city, as 35 -7- LSB 2070XC (2) 87 aw/rn/rj 7/ 8

S.F. _____ specified in the bill. The bill also establishes arbitration 1 and judicial review procedures in the event that receiving 2 cities cannot agree on the composition of and proportional 3 representation on the regional water authority board. 4 The bill requires that the Code chapter 28E agreement 5 provide for the transfer of assets and liabilities of the water 6 supply system to the regional water authority and provide the 7 regional water authority board with the same powers and duties 8 of a city utility under Code chapter 388. The bill authorizes 9 the agreement to provide the regional water authority board 10 with additional powers and duties. The bill also requires 11 that the agreement provide a means for other cities to join 12 the regional water authority, and requires proportional 13 representation of such cities on the regional water authority 14 board. 15 The bill also prohibits a regional water authority from 16 expending any moneys or staff time to plan, design, or 17 construct any new water plant or other water-producing facility 18 before July 1, 2018. 19 All population determinations under the bill are required to 20 be based upon the most recent federal decennial census. 21 The bill takes effect upon enactment. 22 -8- LSB 2070XC (2) 87 aw/rn/rj 8/ 8