2013 -- S 0986

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LC02668

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

TO CREATE THE SMITHFIELD CONSOLIDATED WATER DISTRICT AND TO PROVIDE

FOR ITS POWERS AND DUTIES

     Introduced By: Senator Stephen R. Archambault

     Date Introduced: June 05, 2013

     Referred To: Senate Housing & Municipal Government

It is enacted by the General Assembly as follows:

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     SECTION 1. Short Title. This act shall be known as the "Smithfield Consolidated Water

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District Act."

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     SECTION 2. Legislative Findings and Intent. It is hereby found and declared that:

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     (1) Water is vital to life and comprises an invaluable natural resource which is not to be

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abused by any segment of the state's population or its economy. It is the policy of the state to

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restore, enhance, and maintain the chemical, physical, and biological integrity of its waters to

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protect health.

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     (2) It is further found and declared that the waters of this state are a critical renewable

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resource which must be protected to insure the availability of safe and potable drinking water for

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present and future needs.

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     (3) It is further found and declared that public water supply systems have the

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responsibility to provide safe and potable drinking water to the state's population.

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     (4) It is further found and declared that financial and regulatory pressures may force some

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small public water supply systems into economically losing positions.

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     (5) It is further found and declared that economy and efficiency make it desirable to

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combine some small public water supply systems into one larger, more viable entity.

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     (6) It is further found that, with the approval of the qualified voters and governing bodies

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of the Smithfield water district and the East Smithfield water district, it is in the best interests of

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public health, safety and welfare that the water districts serviced by the Smithfield water supply

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board and the East Smithfield water district be consolidated into a new, independent water district

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known as the Smithfield consolidated water district.

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     SECTION 3. Definitions. As used in this act, the following words and terms shall have

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the following meanings, unless the context shall indicate another or different meaning or intent:

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     (1) "Authorized areas" means areas within and without the towns of Smithfield and North

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Providence, except areas directly provided water service by the Greenville water district or the

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Providence water supply board.

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     (2) "Board" means the board of directors of the Smithfield consolidated water district.

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     (3) "Bonds and notes" means the bonds, notes, securities or other obligations or

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evidences of indebtedness issued by the district pursuant to this act, or which were issued by the

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town of Smithfield, the Smithfield water supply board or the East Smithfield water district and

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which were lawfully assumed by the district, all of which shall be obligations of the Smithfield

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consolidated water district.

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     (4) "District" means the public corporation and instrumentality authorized, created and

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established pursuant to Section 4 hereof which is known as the Smithfield consolidated water

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district.

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     (5) "District voter" means a resident and registered voter of the town of Smithfield or the

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town of North Providence whose residence receives direct water service from the Smithfield

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consolidated water district.

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     (6) "Municipality" means any city or town now existing or hereafter created, or any state

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agency.

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     (7) "North Providence" means the town of North Providence, Rhode Island.

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     (8) "Personal property" means all tangible and intangible personal property, including,

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without limitation, contract rights, accounts receivable, rights and privileges of all kinds, all

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machinery, equipment, transportation equipment, pipelines, pipes, tools, hydrants, meters, assets,

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franchises, and all other personal property incidental to and included or necessary for the

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operation of a water supply and distribution system or water supply facility. Personal property

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shall also mean and include any and all interests in such property which are less than full title,

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such as leasehold interests, security interests and every other interest or right, legal or equitable.

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     (9) "Real property" means land, structures, new or used, franchise and interests in land,

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including lands under water, riparian rights, space rights and air rights, and all other things and

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rights included within said term. Real property shall also mean and include any and all interest in

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such property less than fee simple, such as in easements, incorporeal hereditaments and every

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estate, interest or right, legal or equitable, including terms for years and liens thereon by way of

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judgments, mortgages or otherwise, and also claims for damages to such real property.

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     (10) "Smithfield" means the town of Smithfield, Rhode Island.

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     (11) "State" means the State of Rhode Island and Providence Plantations.

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     (12) "Water supply facility" means any real or personal property, or any combination

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thereof, related to or incidental or intended or utilized for the furnishing of water for domestic,

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commercial, industrial, irrigation, fire protection, or other purposes, and including artesian wells,

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reservoirs, dams, related equipment, pipelines, treatment plants and other similar facilities.

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     SECTION 4. Creation. Subject to the requirements of section 31 and section 32 hereof,

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there is hereby authorized, created and established a public corporation of the state, having a

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distinct existence from the state and any municipality, and not constituting a department of state

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government or any municipality, which is a public instrumentality of the state to be known as the

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"Smithfield consolidated water district" with such powers as set forth in this act for the purposes

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of acquiring, constructing, developing, managing, maintaining, repairing, replacing, and

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disposing of water supply facilities to service the water needs of people within its authorized

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areas.

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     SECTION 5. Purposes. The district is authorized, created and established for the

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following purposes: to acquire, own, develop, operate, maintain, repair, improve, enlarge, and

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extend water supply facilities within and without the towns of Smithfield and North Providence,

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except in areas which are directly provided water service by the Greenville water district or the

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Providence water supply board, for the purposes of meeting the present and future water

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requirements within its authorized areas.

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     SECTION 6. Powers. Except to the extent inconsistent with any specific provision of this

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act, the district shall have the power:

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     (1) To sue and be sued, complain and defend, in its corporate name;

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     (2) To have a seal which may be altered at pleasure and to use the same by causing it, or

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a facsimile thereof, to be impressed or affixed or in any other manner reproduced;

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     (3) To purchase, take, receive, lease or otherwise acquire, own, hold, improve, operate,

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maintain and repair, use or otherwise deal in and with, both real and personal property, or any

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interest therein, wherever situated;

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     (4) To sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of,

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all or any part of its real and personal property and assets for such consideration and upon such

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terms and conditions as the district shall determine;

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     (5) To produce, distribute and sell water within or without its authorized areas;

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     (6) To sell water to and purchase water from a municipality, any municipal or quasi-

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municipal corporation, any public or private water company and/or water company owned or

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operated by a municipality, and all such selling or purchasing agencies and companies are

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authorized to enter into such contracts with the district;

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     (7) To fix rates and collect charges for the use of its water supply facilities, or for services

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rendered by, or any commodities furnished by, the district;

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     (8) To make such contracts and guarantees, to incur liabilities, and to borrow money at

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such rates of interest as the district may determine;

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     (9) To make and execute agreements of lease, conditional sales contracts, installment

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sales contracts, loan agreements, mortgages, construction contracts, operation contracts and other

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contracts and instruments necessary or convenient in the exercise of the powers and functions of

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the district granted by this act;

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      (10) To lend money for its purposes, invest and reinvest its funds and at its option to take

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and hold real and personal property as security for the funds so loaned or invested;

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     (11) To acquire, or contract to acquire, from any person, firm, corporation, municipality,

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the federal government or the state, or any agency of either the federal government or state by

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grant, purchase, lease, gift, condemnation or otherwise, or to obtain options for the acquisition of

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any property, real or personal, improved or unimproved, and interests in land less the fee thereof;

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and to own, hold, clear, develop, maintain, operate and rehabilitate, sell, assign, exchange,

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transfer, convey, lease, mortgage, or otherwise dispose or encumber the same for the purposes of

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carrying out the provisions and intent of this act for such consideration as the district shall

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determine;

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     (12) To conduct its activities, carry on its operations and have offices and exercise the

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powers granted by this act within or without the state;

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     (13) To elect or appoint officers and agents of the district, to hire employees and

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independent contractors, and to define their duties and fix their compensation, except as

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otherwise expressly limited herein;

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     (14) To make and alter bylaws not inconsistent with this act, for the administration and

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regulation of the affairs of the district, including the annual and special meetings of the district,

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and the election of directors. Such bylaws may contain provisions which authorize the

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indemnification of any person who is or was a director, officer, employee or agent of the district,

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or who is or was serving at the request of the district as a director, officer, employee or agent of

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another corporation, partnership, joint venture, trust or other enterprise, provided said

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indemnification conforms with Rhode Island law;

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     (15) To be a promoter, partner, member, associate or manager of any partnership,

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enterprise or venture;

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     (16) To enter into cooperative agreements with cities, counties, towns or water companies

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within or without the state for the interconnection of water facilities or for any other lawful

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corporate purpose necessary or desirable to effect the purposes of this act; and

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      (17) To have and exercise all powers generally incident to municipal corporations or

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which are necessary or convenient to effect the purposes of this act.

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     SECTION 7. Directors, Officers and Employees. (a) The powers of the district shall be

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vested in a board of directors which shall consist of seven (7) members, at least four (4) of whom

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must be residents of the town of Smithfield, and at least two (2) of whom must be residents of the

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town of North Providence. Directors shall be elected by the district voters at the annual meeting

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to serve three (3) year terms, except that at the initial election, two (2) directors from Smithfield

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and one director from North Providence shall be elected to three (3) three (3) year terms; one

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director from Smithfield and one director from North Providence shall be elected to two (2) two

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(2) year terms; and one director from Smithfield and the remaining director shall be elected to one

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one-year terms. The longer terms shall be awarded to the candidates with the higher vote totals, as

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determined by the bylaws. Directors shall be eligible for reelection. A director shall continue to

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serve until a successor is elected and qualified, or until the position becomes vacant.

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     (b) Only resident and registered voters of the towns of Smithfield or North Providence

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whose residence receives direct water service from the district shall be eligible to serve on the

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board.

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     (c) The board shall meet at least monthly, shall organize annually, and shall at its first

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meeting elect officers from among its members who shall have the titles of chair, vice-chair,

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secretary and treasurer, each of whom shall serve at the pleasure of the board. The chair shall

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preside at meetings of the board. The vice-chair shall act as chair during the absence or disability

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of the chair and, if a vacancy in the position of chair should occur, shall become chair and serve

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at the pleasure of the board. The chair and vice-chair shall have a voice and vote in the

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proceedings of the board. The board may adopt any rules of procedure it deems necessary or

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appropriate for the proper discharge of its duties.

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     (d) Meetings of the board shall be conducted in accordance with chapter 46 of title 42 of

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the general laws of Rhode Island, "The Rhode Island Open Meetings Act," or any successor

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thereto, as the same may be amended from time to time.

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     (e) The compensation, if any, to be paid to the district directors and the officers of the

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board shall be determined by the district voters at the annual meeting of the district.

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     (f) The office of a director shall become vacant upon the director's death, resignation,

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removal from office or forfeiture of office in any manner authorized by law or when the director

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ceases to be a registered voter and resident of the district. A director shall forfeit that office if the

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director:

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     (1) Lacks at any time during the term of office any qualification for the office prescribed

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by this act or other applicable law;

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     (2) Is convicted of a crime involving moral turpitude; or

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     (3) Fails to attend three (3) consecutive regular meetings of the board without being

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excused by the board, including a regular meeting at which a quorum is not present.

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     (g) If a vacancy shall occur on the board, it shall be filled until the next annual meeting of

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the district by the remaining members of the board, provided that the person chosen by the board

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to fill such vacancy shall be a resident of the same town as the prior incumbent. The district

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voters at the next annual meeting after the occurrence of the vacancy shall fill the vacancy for the

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unexpired term.

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     (h) Except as otherwise provided herein, four (4) directors shall constitute a quorum

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provided that at least two (2) members of the quorum reside in Smithfield and at least one

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member of the quorum resides in North Providence. A vacancy in the membership of the board

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shall not impair the right of a quorum to exercise all rights and to perform all duties of the district.

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     (i) Notwithstanding the provisions of the foregoing subdivision (h), the following actions

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may be authorized only by the affirmative vote of not less than five (5) directors:

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     (1) Adoption or amendment of the district bylaws;

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     (2) Selection, appointment, setting the salary, or termination of the chief executive officer

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of the district, who shall have the title of general manager;

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     (3) The sale of all, or substantially all, of the real and personal property of the district;

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     (4) The exercise of the power of eminent domain by the district;

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     (5) The setting of proposed rates for the district's products or services;

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      (6) The issuance of bonds, notes, or the borrowing of amounts in excess of, or the entry

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into any one or more of a series of contracts calling for the expenditure of, one hundred thousand

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dollars ($100,000) or more; and

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     (7) The adoption of a proposed annual budget.

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     (j) The board shall appoint a general manager and such additional officers, staff members

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and employees as it shall deem appropriate, and shall determine the amount of reasonable

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compensation, if any, each shall receive. The board may, in its discretion, vest in the general

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manager the authority to appoint additional staff members or employees, and to determine the

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amount of compensation such individuals shall receive.

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     (k) Employees of the district shall not, by reason of such employment, be deemed to be

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employees of the state nor any municipality for any purpose.

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     SECTION 8. Fiscal Year. The fiscal year of the district shall begin on the first day of July

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and end on the last day of June. The board may establish a different fiscal year for the district in

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the bylaws.

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     SECTION 9. Budget and Annual Meeting. (a) The board shall conduct a public hearing

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on the proposed budget for the upcoming fiscal year no more than sixty (60) days prior to the

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district annual meeting. The date, time and place of the budget hearing shall be determined by the

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board, but said hearing must be held at a location within the boundaries of the district. All district

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voters shall have the right to be heard at said public hearing. The board shall publish in one or

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more newspapers of general circulation in the towns of Smithfield and North Providence a

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general summary of the budget including the proposed water rates and rate structure. The notice

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shall state the times and places where the proposed budget is available for public inspection, and

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the date, time and place of the public hearing, which shall be at least two (2) weeks after said

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publication.

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     (b) After the public hearing, the board shall adopt a proposed budget for the upcoming

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fiscal year including the proposed water rates and rate structure, with or without amendment. No

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amendment to the proposed budget may increase authorized expenditures to an amount greater

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than total estimated income, less any required reserves.

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     (c) The annual meeting of the district shall be held at least ten (10) days prior to the

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commencement of each fiscal year. The date, time, and place of the annual meeting shall be

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determined by the board, but said annual meeting must be held at a location within the boundaries

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of the district. The board shall publish notice of the annual meeting not less than two (2) weeks

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prior to said meeting in one or more newspapers of general circulation in the towns of Smithfield

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and North Providence. All district voters shall be entitled to be heard and to vote at the annual

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meeting.

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     (d) District voters at the annual meeting shall adopt a budget, including water rates and a

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rate structure, for the upcoming fiscal year. No budget adopted by district voters may authorize

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expenditures in a total amount greater than estimated revenues, less any required reserves.

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     (e) District voters at the annual meeting shall also elect members of the board, as

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required, in accordance with procedures set forth in the district bylaws.

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     (f) If the annual meeting fails to adopt a budget before the last day of the current fiscal

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year, the amounts appropriated for the current fiscal year and the current water rates shall be

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deemed adopted for the ensuing fiscal year on a month-to-month basis, with all budget items

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prorated accordingly, until such time as the district voters adopt a budget and water rates for the

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ensuing fiscal year.

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     (g) The board may call a special meeting of the district voters in accordance with

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procedures set out in the district by-laws in order to act on any budgetary issues facing the

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district.

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     SECTION 10. Condemnation Power. The district shall possess all the powers of

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condemnation for water supply purposes as are set forth in chapter 15 of title 39 of the general

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laws of Rhode Island, or any successor thereto, as the same may be amended from time to time.

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     SECTION 11. Bonds and Notes of the district. (a) The district shall have the power and is

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hereby authorized to issue from time to time its negotiable bonds and notes in one or more series

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in such principal amounts as, in the opinion of the district shall be necessary to provide sufficient

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funds for achieving its purposes, including the payment of interest on bonds and notes of the

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district, the establishment of reserves to secure such bonds and notes (including the reserve funds

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created pursuant to Section 14 hereof), and the making of all other expenditures of the district

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incident to and necessary or convenient to carrying out its corporate purposes and powers.

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     (b) All bonds and notes issued by the district may be secured by the full faith and credit

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of the district and may be payable solely out of the revenues, earnings and receipts of the district.

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Such bonds and notes may be executed and delivered by the district at any time from time to

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time, may be in such form and denominations, including interest coupons, if any, to be attached to

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them, and of such tenor and maturities, and may be in bearer form or in registered form, as to

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principal and interest, or at such discount in lieu of interest, or as to principal alone, all as the

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district may determine. Such bonds and notes may provide for authentication of bonds and notes

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by a trustee or fiscal agent.

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     (c) Bonds may be payable in such installments, and at such times not exceeding fifty (50)

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years from the date thereof, as shall be determined by the district.

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     (d) Except for notes issued pursuant to section 12, notes, and any renewals thereof, may

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be payable in such installments and at such times not exceeding ten (10) years from the date of

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the original issue of such notes, as shall be determined by the district.

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     (e) Bonds and notes may be payable at such places, which may be any bank or trust

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company, whether within or without the state, may bear interest at such rate or rates payable at

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such time or times and at such place or places, and evidenced in such manner, and may contain

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such provisions not inconsistent herewith, all as shall be provided in the proceedings of the

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district under which they shall be authorized to be issued. Bonds shall bear the seal of the district

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or a facsimile of the seal.

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     (f) There may be retained by provision made in the proceedings under which any bonds

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or notes of the district are authorized to be issued an option to redeem all or any part thereof at

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such prices and upon such notice, and on such further terms and conditions as shall be set forth in

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the record of such proceedings and on the face of the bonds or notes.

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     (g) Any bonds or notes of the district may be sold from time to time at such prices, at

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public or private sale, and in such manner as shall be determined by the district, and the district

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shall pay all expenses, premiums and commissions that it shall deem necessary or advantageous

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in connection with the issuance and sale thereof.

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     (h) Moneys of the district, including proceeds from the sale of bonds or notes, and

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revenues, receipts and income from any of its water supply facilities, may be invested and

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reinvested in such obligations, securities and other investments consistent herewith as shall be

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specified in the resolutions under which such bonds or notes are authorized.

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     (i) Issuance by the district of one or more series of bonds or notes for one or more

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purposes shall not preclude it from issuing other bonds or notes, but the proceedings whereunder

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any subsequent bonds or notes may be issued shall recognize and protect a prior pledge or

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mortgage made for a prior issue of bonds or notes unless in the proceedings authorizing such

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prior issue the right is reserved to issue subsequent bonds or notes on a parity with such prior

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issue.

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     (j) The district is authorized to issue bonds or notes for the purpose of refunding its bonds

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or notes then outstanding, including the payment of any redemption premium thereon and any

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interest accrued or to accrue to the earliest or subsequent date of redemption, purchase or maturity

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of such bonds or notes, payment of any expenses of issuance of such bonds or notes, payment of

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any expenses of redeeming bonds or notes being refunded, reserves for debt service, and, if

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deemed advisable by the district, for the additional purpose of paying all or part of the cost of

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acquiring, constructing, reconstructing, rehabilitating, or improving any water supply facility. The

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proceeds of any issuance of bonds or notes for the purpose of refunding outstanding bonds or

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notes may be applied, in the discretion of the district, to the purchase, retirement at maturity, or

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redemption of such outstanding bonds or notes either on their earliest or a subsequent redemption

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date, and may, pending such application, be placed in escrow. Any such escrowed proceeds may

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be invested and reinvested in obligations of or guaranteed by the United States of America, or in

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certificates of deposit or time deposits secured or guaranteed by the state or the United States, or

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an instrumentality of either, maturing at such time or times as shall be appropriate to assure the

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prompt payment, as to principal, interest and redemption premium, if any, of the outstanding

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bonds or notes to be so refunded. The interest, income and profits, if any, earned or realized on

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any such investment may also be applied to the payment of the outstanding bonds or notes to be

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so refunded. After the terms of the escrow have been fully satisfied and carried out, any balance

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of such proceeds and interest, income and profits, if any, earned or realized on the investments

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thereof may be returned to the district for use by it in furtherance of its purposes. The portion of

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the proceeds of bonds or notes issued for the additional purpose of paying all or part of the cost of

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acquiring, constructing, reconstructing, rehabilitating, developing or improving any water supply

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facility, may be invested and reinvested in such obligations, securities and other investments

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consistent herewith as shall be specified in the resolutions under which such bonds or notes are

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authorized and which shall mature not later than the times when such proceeds will be needed for

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such purpose. The income, interest, and profits, if any, earned or realized on such investments

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may be applied to the payment of all parts of such costs, or to the making of such loans, or may

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be used by the district otherwise in furtherance of its purposes. All such bonds or notes shall be

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issued and secured and shall be subject to the provisions of this act in the same manner and to the

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same extent as any other bonds or notes issued pursuant to this act.

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     (k) The directors, the general manager of the district and other persons executing such

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bonds or notes shall not be subject to personal liability by reason of the issuance thereof.

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     (l) Bonds or notes issued under any of the provisions of this act shall require the approval

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of the annual or a special meeting of the district voters, but otherwise shall not require the consent

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of any department, division, commission, board, body, bureau or agency of the state, arid may be

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issued without any other proceedings or the happening of any conditions or things other than

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those proceedings, conditions or things which are specifically required by this act and by the

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provisions of the resolution authorizing the issuance of such bonds or notes or the trust agreement

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securing the same.

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     (m) The district, subject to such agreements with noteholders or bondholders as may then

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be in force, shall have the power out of any funds available therefor to purchase bonds or notes of

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the district, which shall thereupon be cancelled, at a price not exceeding:

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     (1) If the bonds or notes are then redeemable, the redemption price then applicable plus

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accrued interest to the next interest payment date; or

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     (2) If the bonds or notes are not then redeemable, the redemption price applicable on the

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earliest date that the bonds or notes become subject to redemption, plus the interest that would

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have accrued to such date.

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     (n) Whether or not the bonds and notes are of such form and character as to be negotiable

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instruments under Rhode Island law, the bonds and notes are hereby made negotiable instruments

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within the meaning of and for all the purposes of Rhode Island law, subject only to the provisions

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of the bonds and notes for registration.

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     (o) If a director or officer of the district whose signature appears on bonds, notes or

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coupons shall cease to be a director or officer before the delivery of such bonds or notes, such

11-4

signature shall, nevertheless, be valid and sufficient for all purposes, the same as if such director

11-5

or officer had remained in office until such delivery.

11-6

     (p) Any bonds or notes issued under authority of this act may be issued by the district in

11-7

the form of lines of credit, loans or other banking arrangements and under such terms and

11-8

conditions not inconsistent with this act, and under such agreements with the purchasers or

11-9

makers thereof, as the district may determine to be in the best interest of the district.

11-10

     (q) The district may at any time deposit with a trustee, a sum sufficient, with amounts

11-11

then on deposit, including the debt service reserve fund, to purchase direct or guaranteed

11-12

obligations of the United States of America which are adequate to pay the entire principal amount

11-13

of the bonds or notes of a series, together with the interest to maturity, or to an applicable

11-14

redemption date specified by the district to the trustee and any applicable redemption premium; or

11-15

the district may deposit direct or guaranteed obligations of the United States of America in lieu of

11-16

money for their purchase. The obligations are deemed adequate if the principal and interest

11-17

payable on them are sufficient to pay the previously mentioned sums when due. Upon any deposit

11-18

of money and a request by the district, the trustee shall purchase direct or guaranteed obligations

11-19

of the United States of America. When adequate direct or guaranteed obligations of the United

11-20

States of America are held by the trustee pursuant to this section, the bond resolution or indenture

11-21

shall cease to be in effect with respect to such series of bonds or notes. The obligations and their

11-22

proceeds shall be held in trust for the benefit of the bondholders or noteholders, and the trustee

11-23

shall, on behalf of the district, call bonds or notes for redemption on the applicable redemption

11-24

date. Any compensation or expenses of the trustee in carrying out this section shall be paid by the

11-25

district, and any surplus funds held by the trustee under this section shall be remitted by the

11-26

trustee to the district.

11-27

     (r) The district may covenant in any resolution, trust indenture or other agreement that as

11-28

long as any bonds or notes are outstanding the district shall establish and maintain its rates and

11-29

charges adequate at all times to pay and provide for all operating expenses of the district, all

11-30

payments of principal, redemption premium, if any, and interest on bonds, notes or other

11-31

evidences of indebtedness of or assumed by the district, all renewals, repairs, or replacements to

11-32

the property of the district deemed necessary, and all other amounts which the district may by

11-33

law, resolution or contract be obligated to pay. On or before the last day of the district's fiscal

11-34

year, the district shall review the adequacy of its rates and charges to satisfy the above

12-1

requirements for the next succeeding fiscal year. If the review indicates that the rates and charges

12-2

are, or are likely to be, insufficient to meet the requirements of this act, the district shall promptly

12-3

take such steps as are necessary to cure or avoid the deficiency, including but not limited to,

12-4

raising its rates and charges.

12-5

     (s) It shall be lawful for any bank or trust company to act as a depository or trustee of the

12-6

proceeds of bonds, notes, revenues or other moneys under any such trust agreement or resolution

12-7

and to furnish such indemnification or to pledge such securities and issue such letters of credit as

12-8

may be required by the district. Any pledge of revenues or other property made by the district

12-9

under this act shall be valid and binding and shall be deemed continuously perfected from the

12-10

time when the pledge is made; the revenues, moneys, rights and proceeds so pledged and then

12-11

held or thereafter acquired or received by the district shall immediately be subject to the lien of

12-12

such pledge without any physical delivery or segregation thereof or further act; and the lien of

12-13

any such pledge shall be valid and binding against all parties having claims of any kind in tort,

12-14

contract or otherwise against the district, irrespective of whether such parties have notice thereof.

12-15

Neither the resolution, any trust agreement nor any other agreement by which a pledge is created

12-16

need be filed or recorded except in the records of the district.

12-17

     SECTION 12. Short Term Notes. Money borrowed by the district for the purpose of

12-18

providing temporary financing of the district operations pending the issuance of bonds or other

12-19

notes shall be evidenced by notes or other obligations. The principal and interest of all notes or

12-20

other obligations of the district so issued under the provisions of this section 12 shall be payable

12-21

no later than the fifth anniversary of the date of issue thereof, and shall be payable from the

12-22

following:

12-23

     (1) From the proceeds of bonds subsequently issued; or

12-24

     (2) From the proceeds of subsequent borrowings which comply with the provisions

12-25

hereof; or

12-26

     (3) From general revenues of the district which may be equal and proportionate with but

12-27

not superior to that securing bonds then outstanding or subsequently issued. Notwithstanding any

12-28

other provisions of this act, all such notes shall be deemed to be negotiable instruments under the

12-29

laws of the state subject only to the provisions for registration contained therein. Such notes or

12-30

other obligations or any issue thereof shall be in a form and contain such other provisions as the

12-31

district may determine and such notes or resolutions or proceedings authorizing such notes or

12-32

other obligations or any issue thereof may contain, in addition to any provisions, conditions,

12-33

covenants or limitations authorized by this act, any provisions, conditions, covenants or

12-34

limitations which the district is authorized to include in any resolution or resolutions authorizing

13-1

bonds or notes or in any trust indenture relating thereto. The district may issue such notes or other

13-2

obligations in such manner either publicly or privately on such terms as it may determine to be in

13-3

its best interests.

13-4

     SECTION 13. Security for Bonds or Notes. (a) The principal of and interest on any bonds

13-5

or notes issued by the district may be secured by a pledge of any revenues and receipts of the

13-6

district and may be secured by a mortgage or other instrument covering all or any parts of one or

13-7

more water supply facilities, including all or part of any additions, improvements, extensions to

13-8

or enlargements of such facilities thereafter made.

13-9

     (b) The resolution under which the bonds or notes are authorized to be issued and any

13-10

such mortgage, lease, sales agreement or loan agreement, or other instrument may contain

13-11

agreements and provisions respecting the maintenance of the facilities covered thereby, the fixing

13-12

and collection of rents, payments or repayments or other revenues therefrom, including moneys

13-13

received in repayment of loans, and interest thereon, the creation and maintenance of special

13-14

funds from such rents or other revenues and the rights and remedies available in the event of

13-15

default, all as the district shall deem advisable.

13-16

     (c) Each pledge, agreement, mortgage or other instrument made for the benefit or security

13-17

of any of the bonds or notes of the distinct shall continue in effect until the principal of and

13-18

interest on the bonds or notes for the benefit of which the same was made shall have been fully

13-19

paid, or until provision shall have been made for such payment in the manner provided in the

13-20

resolutions under which such bonds or notes were authorized.

13-21

     (d) The district may provide in any proceedings under which bonds or notes may be

13-22

authorized that any water supply facility or part thereof may be constructed, reconstructed,

13-23

rehabilitated or improved by the district, or any lessee, vendee, obligor or any designee of the

13-24

district and may also provide in such proceedings for the time and manner of and requisitions for

13-25

disbursements to be made for the cost of such construction, and for all such certificates and

13-26

approvals of construction and disbursements as the district shall deem necessary and provide for

13-27

in such proceedings.

13-28

     (e) Any resolution under which bonds or notes of the district are authorized to be issued

13-29

(and any trust indenture established thereby) may contain provisions for vesting in a trustee or

13-30

trustees such properties, rights, powers and duties in trust as the district may determine including

13-31

any or all of the rights, powers and duties of the trustee appointed by the holders of any issue or

13-32

bonds or notes pursuant to Section 19; in which event the provisions of section 19 authorizing the

13-33

appointment of a trustee by such holders of bonds or notes shall not apply.

14-34

     SECTION 14. Reserve Funds and Appropriations. To assure the contained operation and

14-35

solvency of the district for the carrying out of its corporate purposes:

14-36

     (1) The district may create and establish one or more special funds (herein referred to as

14-37

"capital reserve funds"), and may pay into each such capital reserve fund:

14-38

     (i) Any moneys appropriated and made available by the state, or any municipality for the

14-39

purpose of such fund;

14-40

     (ii) Proceeds from the sale of notes or bonds to the extent provided in the resolution or

14-41

resolutions of the district authorizing the issuance thereof; and

14-42

     (iii) Any other moneys that may be made available to the district for the purpose of such

14-43

fund from any other source. All moneys held in a capital reserve fund, except as hereinafter

14-44

provided, shall be used solely for the payment of the principal of bonds secured in whole or in

14-45

part by such fund or of the sinking fund payments hereinafter mentioned with respect to such

14-46

bonds, the purchase or redemption of such bonds, the payment of interest on such bonds or the

14-47

payment of any redemption premium required to be paid when such bonds are redeemed prior to

14-48

maturity, provided that moneys in such fund shall not be withdrawn therefrom except for the

14-49

purpose of making (with respect to bonds secured in whole or in part by such fund) payment

14-50

when due of principal, interest, redemption premiums and the sinking fund payments hereinafter

14-51

mentioned, for the payment of which other moneys of the district are not available if such

14-52

withdrawal would reduce the amount of such fund to less than the minimum capital reserve

14-53

requirement established for such fund as hereinafter provided. Any income or interest earned by,

14-54

or incremental to, any capital reserve fund due to the investment of the funds thereof may be

14-55

transferred by the district to other funds or accounts of the district if such transfer would not

14-56

reduce the amount of the capital reserve fund below the minimum capital reserve fund

14-57

requirement for such fund.

14-58

     (2) The district shall not at any time issue bonds secured in whole or in part by a capital

14-59

reserve fund if, upon the issuance of such bonds, the amount of such capital reserve fund would

14-60

be less than the minimum capital reserve required for such fund, unless the district, at the time of

14-61

issuance of such bonds, shall deposit in such fund from the proceeds of the bonds so to be issued,

14-62

or from other sources, an amount that, together with the amount then in such fund, is not less than

14-63

the minimum capital reserve fund requirement for such fund. For the purpose of this section, the

14-64

term "minimum capital reserve fund requirement" shall mean, as of any particular date of

14-65

computation, an amount of money, as provided in the resolution or resolutions of the district

14-66

authorizing the bonds or notes with respect to which such fund is established, equal to not more

14-67

than the greatest of the respective amounts, for the current or any future fiscal year of the district,

14-68

of annual debt service on the bonds of the district secured in whole or in part by such fund, such

15-1

annual debt service for any fiscal year being the amount of money equal to the sum of:

15-2

     (i) The interest payable during such fiscal year on all bonds secured in whole or in part by

15-3

such fund outstanding on the date of computation; plus

15-4

     (ii) The principal amount of all such bonds and bond anticipation notes outstanding on

15-5

said date of computation that mature during such fiscal year; plus

15-6

     (iii) All amounts specified in any resolution of the district authorizing such bonds as

15-7

payable during such fiscal year as a sinking fund payment with respect to any of such bonds that

15-8

mature after such fiscal year, all calculated on the assumption that such bonds will after said date

15-9

of computation cease to be outstanding by reason, but only by reason, of the payment of bonds

15-10

when due and application in accordance with the resolution authorizing those bonds of all of such

15-11

sinking fund payments payable at or after said date of computation.

15-12

     (3) In computing the amount of the capital reserve funds for the purpose of this section,

15-13

securities in which all or a portion of such funds shall be invested, shall be valued as provided in

15-14

the proceedings under which the bonds are authorized but in no event shall be valued at a value

15-15

greater than par.

15-16

     (4) The district may create and establish such other fund or funds as may be necessary or

15-17

desirable for its corporate purposes.

15-18

     (5) The district may by resolution permit the issuance of bonds and notes to carry out the

15-19

purposes of this act without establishing a capital reserve fund pursuant to this section and

15-20

without complying with the limitations set forth in this section. Bonds and notes issued pursuant

15-21

to this paragraph may be secured by such other funds or methods as the district may in its

15-22

discretion determine by resolution.

15-23

     SECTION 15. Trust Funds. All moneys received as proceeds from the sale of bonds or

15-24

notes or as revenues, receipts or income therefrom, shall be trust funds to be held and applied

15-25

solely as provided in the proceedings under which such bonds or notes are authorized. Any

15-26

officer with whom or any bank or trust company with which such moneys shall be deposited as

15-27

trustee hereof shall hold and apply the same for the purposes thereof, subject to the applicable

15-28

provisions of this act, the proceedings authorizing the bonds or notes and the trust agreement

15-29

securing such bonds or notes, if any.

15-30

     SECTION 16. Notes and Bonds as Legal Investments. The notes and bonds of the district

15-31

are hereby made securities in which all public officers and bodies of this state and all

15-32

municipalities and municipal subdivisions, all insurance companies and associations, and other

15-33

persons carrying on an insurance business, all banks, bankers, trust companies, saving banks and

15-34

saving associations, including savings and loan associations, building and loan associations,

16-1

investment companies and other persons carrying on a banking business, all administrators,

16-2

guardians, executors, trustees and other fiduciaries, and all other persons whatsoever who are now

16-3

or may hereafter be authorized to invest in bonds or other obligations of the state, may properly

16-4

and legally invest funds, including capital, in their control or belonging to them.

16-5

     SECTION 17. Agreement of the State. The state does hereby pledge to and agree with the

16-6

holders of any bonds or notes issued under this act, that the state will not limit or alter the rights

16-7

hereby vested in the district to fulfill the terms of any agreements made with the holders until

16-8

such bonds or notes, together with the interest thereon, with interest on any unpaid installments of

16-9

interest, and all costs and expenses in connection with any action or proceeding by or on behalf of

16-10

such holders, are fully met and discharged. The district is authorized to include this pledge and

16-11

agreement of the state in any agreement with the holders of such bonds or notes.

16-12

     SECTION 18. Credit of State. Obligations issued under the provisions of this act, shall

16-13

not constitute a debt, liability or obligation of the state or of any political subdivision thereof

16-14

other than the district or a pledge of the faith and credit of the state or any political subdivision

16-15

thereof other than the district, but shall be payable solely from the revenues or assets of the

16-16

district. Each obligation issued under this act shall contain on the face thereof a statement to the

16-17

effect that the district shall not be obligated to pay the same or interest thereon except from

16-18

revenues or assets pledged therefor and that neither the faith and credit nor the taxing power of

16-19

the state or any political subdivision thereof other than the district is pledged to the payment of

16-20

the principal of or the interest on such obligation.

16-21

     SECTION 19. Remedies of Bondholders and Noteholders. Any holder of a bond or note

16-22

issued by the district under the provisions of this act or of any of the coupons appertaining thereto

16-23

and any trustee under a trust agreement or resolution securing the same, except to the extent the

16-24

rights herein given may be restricted by such trust agreement or resolution securing the same,

16-25

may bring suit upon the bonds or notes or coupons and may, either at law or in equity, by suit,

16-26

action, mandamus, or other proceedings for legal or equitable relief, including proceedings for the

16-27

appointment of a receiver to take possession and control of the business and properties of the

16-28

district, to operate and maintain the same, to make any necessary repairs, renewals and

16-29

replacements in respect thereof and to fix, revise and collect fees and charges, protect and enforce

16-30

any and all rights under such trust agreement, resolution or other agreement, and may enforce and

16-31

compel the performance of all duties required by this act or by such trust agreement or resolution

16-32

to be performed by the district or by any officer thereof.

16-33

     SECTION 20. Authorization to Accept Appropriated Moneys. The district is authorized

16-34

to accept such moneys as may be appropriated from time to time by the general assembly, any

17-1

municipality, or any other source, for effectuating its corporate purposes including, without

17-2

limitation, the payment of the initial expenses of administration and operation and the

17-3

establishment of reserves or contingency funds to be available for the payment of the principal of

17-4

and the interest on any bonds, notes or other obligations of the district.

17-5

     SECTION 21. Exemption from Taxation. The exercise of the powers granted by this act

17-6

will be in all respects for the benefit of the people of this state, the increase of their commerce,

17-7

welfare and prosperity and for the improvement of their health, safety and welfare and will in all

17-8

respects constitute the performance of an essential governmental function. Therefore, the district

17-9

shall not be required to pay taxes or assessments of any kind upon or in respect to any of its

17-10

operations, real or personal property, or any water supply facilities, or on account of instruments

17-11

recorded by it or on its behalf, or upon any earnings, revenues, moneys or other income derived

17-12

by the district. The bonds and notes of the district and the income therefrom shall at all times be

17-13

exempt from taxation.

17-14

     Bonds and notes issued by the district and their transfer and the income therefrom,

17-15

including any profit made on the sale or exchange thereof, shall at all times be exempt from

17-16

taxation by the state and all political subdivisions of the state. The district shall not be required to

17-17

pay any transfer tax of any kind on account of instruments recorded by it or on its behalf.

17-18

     SECTION 22. Water Charges as a Lien Against Property. The district's charges for the

17-19

provision of water shall constitute a lien upon the estates to which the water is provided in

17-20

accordance with section 39-15-12, or any successor thereto, as it may be amended from time to

17-21

time.

17-22

     SECTION 23. Right to Alter, Remand or Repeal. The right to alter, amend or repeal this

17-23

act is hereby expressly reserved to the general assembly, but no such alteration, amendment or

17-24

repeal shall operate to impair the obligation of any contract made by the district under any power

17-25

conferred by this act.

17-26

     SECTION 24. Transfer of Assets and Liabilities. Upon the effective date of this section

17-27

24 as set forth in section 32 hereof, the district shall acquire and take legal title to all real

17-28

property, personal property, and all water supply facilities then held by the Smithfield water

17-29

supply board and the East Smithfield water district and shall assume all outstanding liabilities,

17-30

debts, bonds, notes and other obligations of the Smithfield water supply board and the East

17-31

Smithfield water district. The Smithfield town council and the East Smithfield water district

17-32

board of directors are hereby authorized to assign, sell or otherwise transfer the same to the

17-33

district, and in the case of the assignment, sale or transfer of water supply facilities pursuant to

17-34

this provision, it shall be lawful to dissolve such transferring entity, any other provisions of law to

18-1

the contrary notwithstanding.

18-2

     SECTION 25. Other Statutes. (a) Nothing herein contained shall restrict or limit the

18-3

powers of the district arising under any laws of this state, except if such powers are expressly

18-4

contrary to the provisions of this act.

18-5

     (b) All provisions of state law relating to conflict of interest and ethics, including chapter

18-6

14 of title 36 of the general laws of Rhode Island, "The Rhode Island code of ethics" and all

18-7

applicable regulations of the Rhode Island ethics commission, shall apply to the district and its

18-8

officials and employees. The board may in its discretion adopt additional conflict of interest and

18-9

ethics regulations by resolution which are not in conflict with state law.

18-10

     (c) All records of the district shall be governed by "The Rhode Island Access to Public

18-11

Records Act," chapter 2 of title 38, of the general laws of Rhode Island, or any successor thereto,

18-12

as the same may be amended from time to time.

18-13

     (d) The district shall not be considered a "public utility" within the meaning of section

18-14

39-1-2, or any successor thereto, and the district shall not be subject to regulation by the public

18-15

utilities commission, or any successor thereto.

18-16

     (e) All purchases and contract awards of the district shall be governed by chapter 55 of

18-17

title 45 of the Rhode Island general laws, "Award of Municipal Contracts," or any successor

18-18

thereto, as the same may be amended from time to time.

18-19

     (f) All functions of the district are governmental in nature and the sovereign immunity

18-20

provisions contained in chapter 31 of title 9 of the general laws of Rhode Island, "Governmental

18-21

Tort Liability," or any successor thereto, as the same may be amended from time to time, shall

18-22

apply to the district.

18-23

     SECTION 26. Inconsistent Provisions. Insofar as the provisions of this act are

18-24

inconsistent with the provisions of any other law or ordinance, general, special or local, the

18-25

provisions of this act shall be controlling.

18-26

     SECTION 27. Liberal Construction. This act being necessary for the welfare of the state

18-27

and its inhabitants shall be liberally construed so as to effect its purposes.

18-28

     SECTION 28. Severability. If any clause, sentence, paragraph, section, or part of this act

18-29

shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not

18-30

affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the

18-31

clause, sentence, paragraph, section, or part directly involved in the controversy in which such

18-32

judgment shall have been rendered.

18-33

     SECTION 29. Repeals. All acts or parts of acts inconsistent with the provisions of this

18-34

act are hereby repealed to the extent of such inconsistency, including Acts and Resolves, 1934,

19-1

pp. 313-322 (Vol. 101 #13); Public Laws 1936, Chapter 2445; Public Laws 1939, Chapter 794;

19-2

Acts & Resolves, 1952, pp. 626-628 (Vol. II #24), Public Laws 1953, Chapter 3079; Public Laws

19-3

1957, Chapter 137; Public Laws 1958, Ch. 10; and Public Laws 1963, Chapter 57. All portions of

19-4

said acts which authorized bonds or notes which remain outstanding shall remain in full force and

19-5

effect. Until this act shall become fully effective in accordance with section 32 hereof, said

19-6

inconsistent acts and parts of acts and the powers and duties of the Smithfield water supply board

19-7

and the East Smithfield water district shall remain in full force and effect.

19-8

     SECTION 30. Transfer on dissolution. If the district shall be dissolved, title to all funds

19-9

and other properties of the district, not required for the payment of bonds or other debts of the

19-10

district, the disposition of which is not otherwise governed by contracts to which the district may

19-11

be party, shall vest in the municipalities wherein the properties lie, with such allocation of funds

19-12

as may be determined by the board.

19-13

     SECTION 31. Special Election. After the adoption of a joint resolution by the Smithfield

19-14

town council and the East Smithfield water district board of directors approving this act and

19-15

establishing an election date and procedure, the question of the approval of this act shall be

19-16

submitted to the qualified voters of the towns of Smithfield and North Providence who receive

19-17

water service from the Smithfield water supply board or the East Smithfield water district at a

19-18

special election. The question shall be submitted substantially in the following form:

19-19

     "Shall an Act passed at the 2013 session of the general assembly entitled 'An Act to

19-20

Create the Smithfield Consolidated Water District and to Provide for Its Powers and Duties' be

19-21

approved," and the warning for the election shall contain the question to be submitted. From the

19-22

time the election is warned and until it is held, it shall be the duty of the town clerks of Smithfield

19-23

and North Providence to keep a copy of the act available for public inspection, but the failure of a

19-24

clerk to perform this duty shall not affect the validity of the election.

19-25

     SECTION 32. Effective Date. This section 32 and section 31 hereof shall take effect

19-26

upon the passage of this act. If this act is approved by said qualified voters at the special election,

19-27

then the Smithfield town council and the East Smithfield water district board of directors shall by

19-28

joint resolution appoint an interim district board of directors whose members must satisfy the

19-29

qualifications set forth in section 7 hereof. Said interim board shall serve until the election of

19-30

directors at the first district annual meeting. Sections 1 through 30 of this act shall take effect

19-31

when said interim board of directors has been duly appointed, qualified and has taken office.

=======

LC02668

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

TO CREATE THE SMITHFIELD CONSOLIDATED WATER DISTRICT AND TO PROVIDE

FOR ITS POWERS AND DUTIES

***

20-1

     This act would repeal the public laws which created the Smithfield and East Smithfield

20-2

water districts serving Smithfield and a portion of North Providence and would create a single

20-3

consolidated district.

20-4

     This act would take effect upon passage and by approval by the voters within the district.

=======

LC02668

=======