2017 -- H 6103

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LC002445

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO TOWNS AND CITIES -- BLOCK ISLAND UTILITY DISTRICT ACT OF

2017

     

     Introduced By: Representative Blake Anthony Filippi

     Date Introduced: April 12, 2017

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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     SECTION 1. Title 45 of the General Laws entitled "TOWNS AND CITIES" is hereby

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amended by adding thereto the following chapter:

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CHAPTER 67

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BLOCK ISLAND UTILITY DISTRICT ACT OF 2017

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     45-67-1. Short title.

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     This act shall be known and may be cited as the "Block Island Utility District Act of

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2017".

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     45-67-2. Definitions.

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     Terms used in this chapter shall be construed as follows, unless another meaning is

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expressed or is clearly apparent from the language or context:

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     (1) "BIPCO" means the Block Island power company.

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     (2) "BIPCO assets" means that real property, personal property, rights in any real and

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personal property, facilities, equipment, contract rights, statutory rights and privileges, franchises

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and other tangible or intangible property of any kind.

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     (3) "BIPCO debt obligations" means the obligations represented by and inherent in any

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debt incurred by the Block Island power company for the purpose of financing any aspect of its

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electric system or operations, which obligations remain outstanding in any part as of the date of

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approval.

 

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     (4) "Qualified elector" means any person whose name appears on an active account with

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the utility district. If an active account is in the name of a corporation or other entity, the owner or

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authorized representative of such an entity shall have the right to vote as a qualified elector. No

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qualified elector shall have more than one vote.

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     (5) "Utility district" means the Block Island utility district, a quasi-municipal corporation,

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district and political subdivision of the state established and empowered by this chapter to:

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     (i) Fulfill electric utility functions, powers, rights, property and obligations;

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     (ii) Exercise certain powers as an electric distribution company and power producer; and

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     (iii) Provide additional utility services not inconsistent with the duties, powers and

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obligations of the utility district as defined in this section.

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     (6) "Utility service area" means that geographic area comprising Block Island.

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     45-67-3. Statement of purpose.

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     This chapter is intended to establish the Block Island utility district and to authorize and

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enable the utility district to provide utility products and services as may be authorized, from time

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to time, by the utility district's board of utility commissioners.

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     45-67-4. Block Island utility district established.

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     There is hereby created a quasi-municipal corporation, district and political subdivision

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of the state, to be known as the Block Island utility district, the boundaries of which shall be

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coterminous with the boundaries of Block Island, Rhode Island. The utility district shall have and

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be entitled to exercise the powers, rights and functions set forth in this chapter.

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     45-67-5. Board of utility commissioners of the Block Island utility district

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established.

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     There is hereby created a board to be known as the board of utility commissioners of the

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Block Island utility district. The powers of the utility district as set forth in this chapter, or

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conferred on the utility district by operation of this chapter, shall be vested in and exercised by a

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majority of the members of the board of utility commissioners then in office; provided, however,

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that the board of utility commissioners in its discretion may delegate executive functions to

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managers, by resolution, rule or otherwise.

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     45-67-6. Membership of board of utility commissioners.

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     (a) The board of utility commissioners shall consist of five (5) or seven (7) members as

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determined by the bylaws of the utility district. A majority of the board shall constitute a quorum

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and a majority of the members shall be necessary for all actions taken by the board. No vacancy

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in the membership of the board shall impair the right of a quorum to exercise all the rights and

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perform all the duties of the board. The initial elected members of the board of utility

 

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commissioners shall consist of five (5) members, elected with staggered terms of two (2) years

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and four (4) years. The three (3) candidates receiving the most votes will serve four (4) year

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terms; the two (2) candidates receiving the next highest number of votes will serve two (2) year

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terms. Thereafter, the members of the board of utility commissioners of the utility district shall be

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elected for a term of four (4) years by ballot of qualified electors. Elections for the board of utility

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commissioners and the mechanism for increasing or decreasing the number of commissioners can

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occur by such means as determined by the bylaws.

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     (b) The election of the initial board of utility commissioners shall be administered by the

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town of New Shoreham using the list of qualified electors provided by BIPCO. The town of New

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Shoreham shall reimburse BIPCO for reasonable expenses in providing the list of qualified

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electors and in providing other assistance in the election.

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     (c) The members of the board of utility commissioners shall be a resident, taxpayer,

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ratepayer or spouse of a ratepayer, or the beneficial owner of a ratepayer. Such residents,

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ratepayers and spouse, or beneficial owner of a ratepayer shall be eligible to be a candidate for

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election to any one of the above offices; provided, however, that they shall first have filed a

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declaration of candidacy with the secretary of the board of utility commissioners not later than

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thirty (30) calendar days prior to the scheduled date of the election through which such person

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seeks to be elected. In the event of a vacancy occurring on the board of utility commissioners by

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reason of death, resignation or other cause, the board itself may select an eligible candidate to fill

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the vacancy until the next annual election. In the event that an active account is in the name of a

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corporation or other entity, an owner of such an entity shall also be eligible to be a candidate for

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election to any one of the above offices.

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(d) The board of utility commissioners shall elect each year from among its members:

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     (1) A chairperson;

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     (2) A vice chairperson;

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     (3) A secretary; and

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     (4) A treasurer.

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     (e) The board of utility commissioners shall establish and adopt bylaws for the

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management and conduct of the utility district's affairs, and other aspects of the governance of the

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utility district not otherwise controlled by this chapter.

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     (f) In order to ensure that the status of the utility district as a quasi-municipal corporation,

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district and political subdivision of the state does not prejudice its ability to contribute to the

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development of effective competition in the electricity and communications industries in the

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state, it is specifically found and determined that:

 

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     (1) Strategic business planning records of the utility district (including, without

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limitation, business plans, draft contracts, proposals, financial analyses and other similar

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documents) shall not be subject to the disclosure requirements of chapter 2 of title 38 unless the

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same materials in comparable circumstances in the hands of an investor-owned utility would be

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subject to disclosure under other laws of the state; and

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     (2) Strategic business planning discussions of the board of utility commissioners,

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including such discussions with utility district employees or consultants, are deemed to fall within

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the circumstances defined in §42-46-5(a)(7).

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     45-67-7. Compensation of the board – Employees of the utility district.

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     (a) Each member of the board of utility commissioners shall be entitled to receive

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compensation for attendance at scheduled and special meetings of the board of utility

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commissioners, and shall be entitled to reimbursement of the actual and necessary expenses

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incurred in the performance of their official duties. The salaries, compensation and expenses of

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all members and officers of the board, and all employees and agents of the utility district, shall be

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paid solely out of funds of the utility district. No part of the earnings of the utility district shall

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inure to the benefit of any private person. Compensation rates and reimbursement policies shall

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be allowed as provided in the by-laws of the utility district.

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     (b) The board may enter into employment contracts with its executive employees. The

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board shall have the authority to approve employee benefit plans, including fringe benefits such

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as, but not limited to, pension, health, disability and other insurances.

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     (c) No member of the board of utility commissioners shall directly or indirectly engage or

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participate in the proceeds of any contract or agreement to supply anything of value or receive

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anything of value from the utility district. The prohibition set forth in this subsection may be

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waived by a vote of a majority of the board of utility commissioners, if and only if the board of

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utility commissioners shall have first obtained an opinion of the attorney general and/or the

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Rhode Island ethics commission based on full disclosure of all relevant facts that the waiver does

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not contravene state law and is otherwise in the best interests of the consumers served by the

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utility district.

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     45-67-8. Powers of the utility district.

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     The utility district shall have the power:

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     (1) To acquire the BIPCO assets and to assume the BIPCO debt obligations. The sale by

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voluntary purchase of such property and the assumption of such obligations shall be negotiated

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between BIPCO and the utility district. In the event that BIPCO and the utility district agree on

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the price, terms and conditions of such sale of property and assumption of such obligations, then

 

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BIPCO shall cease to be an electric utility and shall be entitled to engage in any purpose or

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purposes allowed to business corporations under the Rhode Island business corporations act,

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chapter 1.2 of title 7, as same may be amended. In the event that BIPCO and the utility district are

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unable to agree on the price, terms and conditions of such sale of personal property and

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assumption of such obligations, then BIPCO shall continue as the electric utility servicing the

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utility service area, and the Block Island utility district shall not function as an electric utility;

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     (2) To acquire such other real or personal property by voluntary purchase from the owner

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or owners of the property, and to the extent that the board of utility commissioners deems it

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advisable, to acquire property held by a corporation through acquisition of the stock of the

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corporation and dissolution of the corporation;

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     (3) To acquire real property, fixtures, and rights and interests in real property within its

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utility service area by eminent domain except for real property owned in whole or in part by the

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town of New Shoreham or the Block Island power company, subject to the supervision of the

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public utilities commission in the manner prescribed in §39-1-31;

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     (4) To own, operate, maintain, repair, improve, enlarge, and extend, in accordance with

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the provisions of this chapter, any property acquired under this section all of which, together with

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the acquisition of the property, are hereby declared to be public purposes;

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     (5) To produce, purchase, acquire, distribute, and sell electricity at wholesale or retail

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within or without its utility service area subject to franchise rights of other utilities; to lay down,

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construct, own, operate, maintain, repair, and improve mains, pipes, towers, and other equipment

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and facilities necessary, appropriate or useful for those purposes; and to contract with others for

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any or all of the foregoing purposes;

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     (6) To produce, buy, sell, and trade electric capability, power, or energy products or

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services at wholesale or retail; to purchase for its own use or for resale electric transmission

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service and ancillary services; and to engage in any other transaction with respect to electricity or

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electricity products that was heretofore authorized for investor-owned electric companies

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operating as domestic electric utilities within the state (including participation in generating

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facilities as authorized by chapter 20 of title 39); provided, that the utility district shall operate

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and be subject to regulation of its retail rates for electricity under title 39 when operating within

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its utility service area;

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     (7) To acquire, own, lease, operate, maintain, repair, and expand facilities and equipment

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necessary, appropriate, or useful to the operation of an electric utility.

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     (8) To acquire, own, lease, operate, maintain, repair, and expand facilities and equipment

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necessary, appropriate, or useful to the operation of other utilities, including, but not limited to,

 

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communications services such as Internet service, high-speed data transfer, local and long-

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distance telephone service, community antenna television service, and to engage in the operation

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of such utilities;

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     (9) To sue and be sued;

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     (10) To adopt and alter a corporate seal;

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     (11) To acquire, hold, use, lease, sell, transfer, assign, or otherwise dispose of any

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property, real, personal, or mixed, or any interest therein, for its corporate purposes, and to

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mortgage, pledge, or lease any such property;

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     (12) To make and adopt bylaws for the management and regulation of its affairs;

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     (13) To borrow money for any of the purposes or powers granted to it under or by

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operation of this chapter, including the creation and maintenance of working capital, and to issue

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negotiable bonds, notes, or other obligations, to fund or refund the same, and to secure the

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obligation of such bond, notes, or other obligations in any case by pledge of, or security interest

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in, the revenues and property of the utility district.

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     (14) To fix rates (subject to the requirements of title 39 in the case of retail electric rates

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within its utility service area) and collect charges for the use of the facilities or services rendered

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by or any commodities furnished by the utility district; and

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     (15) To contract in its own name for any lawful purpose that would effectuate the

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purposes and provisions of this chapter; to execute all instruments necessary to carry out the

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purposes of this chapter; and to do all things necessary or convenient to carry into effect and

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operation the powers granted by this chapter.

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     45-67-9. Limitation of powers.

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     All services provided by the utility district that constitute public utility services within the

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meaning of §39-1-2 shall be subject to the applicable jurisdictions of the public utilities

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commission and the division of public utilities and carriers.

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     45-67-10. Exemptions.

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     (a) The exemption waiver provided by the utilities commission to the Block Island power

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company from the terms of §39-1-27 shall also apply to the utility district and the utilities

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commission shall have the authority to provide such other waivers from this section as may be in

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the public interest.

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     (b) The utility district shall, from time to time, submit plans to the utilities commission on

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retail choice as defined in §39-1-27.3. The utilities commission shall have the authority to

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approve those plans as may be in the interests of all ratepayers of the utility district, including the

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option of not offering retail choice. Any waiver on retail choice granted by the utilities

 

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commission to the Block Island power company shall also apply to the utility district.

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     (c) The exemptions provided for the Pascoag utility district and the Block Island power

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company under §§39-1-27.3.1, 39-1-27.12, 39-2-1.2(b), 39-2-25, 39-26.1-1 through and including

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39-26.1-6, and chapters 1.1, 26, 26.2, 26.4, and 26.6 of title 39 shall also apply to the Block

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Island utility district.

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     (d) As long has the utility district has a waiver from the restructuring provisions of §39-1-

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27, then the utility district shall also be granted a waiver from the provisions of §39-1-27.6 such

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that the employees of the utility district may be allowed to provide both electrical generation and

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distribution services.

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     45-67-11. Bonds.

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     (a) The utility district shall have the power and is hereby authorized from time to time to

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issue its negotiable bonds for any of its corporate or district purposes and to secure the payment

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of the bonds in such manner and by such means as may be provided in the resolution or

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resolutions of the utility district authorizing the bonds, subject to the regulatory jurisdiction of the

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division of public utilities and carriers in the manner prescribed in §39-3-15, where applicable.

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     (b) The utility district is specifically authorized to secure bonds that it may issue from

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time to time by a pledge of, or creation of other security interest in, the revenues of the utility

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district, which pledge or security interest may be enforceable by the grant of a conditional

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franchise, in the event of default in the payment of the bonds, entitling the secured party or trustee

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to enter upon and take control of the utility district's facilities and service and to provide utility

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service and receive the revenues from the utility district's facilities and service for such period,

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not exceeding twenty (20) years, as may be necessary to recover all payments due on the bonds.

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     (c) The bonds of the utility district shall be authorized by resolution of the board of utility

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commissioners. The bonds shall bear such date or dates, mature at such time or times not

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exceeding forty (40) years from their issuance, bear interest at such rate or rates payable at such

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time or times, be in such denominations and in such form, carry such registration privileges, be

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executed in such manner, be payable in such medium of payment, at such place or places and

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such time or times and be subject to redemption at such premium, if required, and on such terms,

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as the resolution may provide. The bonds so authorized and issued pursuant to this chapter may

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be sold at public or private sale for any price or prices that the utility district shall determine.

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     (d) Pending the issuance of bonds in definitive form, the utility district may issue bond

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anticipation notes or interim receipts in such form as the board of utility commissioners may

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elect.

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     (e) The utility district is hereby authorized to provide for the issuance of refunding bonds

 

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of the utility district for the purpose of refunding any bonds then outstanding which shall have

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been issued under the provisions of this chapter, including the payment of any redemption

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premium on the bonds or interest accrued or to accrue to the earliest or subsequent date of

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redemption, purchase or maturity of the bonds and, if deemed advisable by the utility district, for

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the additional purpose of paying all or a part of the cost of acquiring, constructing, reconstructing,

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rehabilitating, or improving any property, facilities or systems or parts of property facilities or

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systems of the utility district. The proceeds of bond or notes issued for the purpose of refunding

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outstanding bonds or notes may be applied, in the discretion of the utility district, to the purchase,

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retirement at maturity or redemption of outstanding bonds or notes either on their earliest or a

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subsequent redemption date and may, pending that application, be placed in escrow in the same

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manner and through the same means as are generally available to and incumbent upon political

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subdivisions of the state.

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     (f) It is hereby declared that the utility district and the carrying out of its corporate,

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district and political subdivision purposes is in all respects for the benefit of the people of the

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state and for the improvement of their health, welfare and prosperity, and the utility district will

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be performing an essential governmental function in the exercise of the powers conferred by this

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chapter. The state therefore covenants with the holders of the utility district's bonds that the utility

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district shall not be required to pay taxes or payments in lieu of taxes to the state or any other

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political subdivision of the state upon any property of the utility district or under its jurisdiction,

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control or supervision, or upon any of the utility district's activities in the operation or

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maintenance of the property or upon any earnings, revenues, monies or other income derived by

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the utility district, and that the bonds of the utility district and the income from the bonds shall at

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all times be exempt from taxation by the state and its political subdivisions. Notwithstanding the

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foregoing, nothing in this section shall be deemed to prohibit the division of public utilities and

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carriers, the public utilities commission and the department of attorney general from assessing the

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utility in accordance with the provisions of §§39-1-23, 39-1-26, 39-19-9 and 39-19-14.

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     (g) Any resolution or resolutions authorizing any bond, or any issue of bonds, may

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contain provisions which shall be a part of the contract with the bondholders of the bonds thereby

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authorized, as to:

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     (1) Pledging all or any part of the money, earnings, income, and revenues derived from

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all or any part of the property of the utility district to secure the payment of any bonds or of any

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issue of bonds subject to such agreements with bondholders as may then exist;

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     (2) The rates to be fixed and the charges to be collected and the amounts to be raised in

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each year and the use and disposition of the earnings and other revenue;

 

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     (3) The setting aside of reserves and the creation of sinking funds and the regulation and

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disposition thereof;

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     (4) Limitations on the right of the utility district to restrict and regulate the use of the

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properties in connection with which the bonds are issued;

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     (5) Limitations on the purposes to which the proceeds of sale of any issue of bonds may

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be put;

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     (6) Limitations on the issuance of additional bonds, including refunding bonds and the

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terms upon which additional bonds may be issued and secured;

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     (7) The procedure, if any, by which the terms of any contract with bondholders may be

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amended or abrogated, the percentage of bondholders whose consent shall be required for such

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amendment or abrogation, and the manner in which consent may be given;

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     (8) The creation of special funds into which any earnings or revenues of the utility district

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may be deposited, and the investment of the funds;

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     (9) The appointment of a fiscal agent and the determination of its powers and duties;

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     (10) Limitations on the power of the utility district to sell or otherwise dispose of its

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properties;

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     (11) The preparation of annual budgets by the authority and the employment of

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consultants and auditors;

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     (12) The rights and remedies of bondholders in the event of failure on the part of the

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utility district to perform any covenant or agreement relating to a bond indenture;

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     (13) Covenanting that as long as any bonds are outstanding the utility district shall use its

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best efforts to establish and maintain its rates and charges at levels adequate at all times to pay

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and provide for all operating expenses of the utility district, all payments of principal, redemption

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premium (if any), and interest on bonds, notes or other evidences of indebtedness incurred or

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assumed by the utility district, all renewals, repairs and replacements to the property and facilities

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of the utility district, and all other amounts which the utility district may be required by law to

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pay; and

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     (14) Any other matters of like or different character which in any way affect the security

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or protection of the bonds.

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     (h) The bonds of the utility district are hereby made securities in which all public officers

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and bodies of this state and all municipalities and municipal subdivisions, all insurance

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companies and associations and other persons carrying on an insurance business, all banks,

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bankers, trust companies, savings banks, and savings associations (including savings and loan

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associations), building and loan associations, investment companies and other persons carrying

 

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on a banking business, all administrators, guardians, executors, trustees and other fiduciaries and

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all other persons whomsoever, who are now or may thereafter be authorized to invest in bonds or

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other obligation of the state may properly and legally invest funds including capital in their

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control or belonging to them. The bonds are also hereby made securities which may be deposited

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with and shall be received by all public officers and bodies of this state, and all municipalities and

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municipal subdivisions, for any purpose for which the deposit of bonds or other obligations of

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this state is now or may thereafter be required.

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     45-67-12. Money of the utility district.

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     (a) All money of the utility district, from whatever source derived, shall be paid to the

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treasurer of the utility district. The money on receipt shall be deposited forthwith in a separate

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bank account or accounts. The money in the accounts shall be paid out with a check of the

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treasurer, on requisition by the utility district, or of any other person or persons that the utility

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district may authorize to make the requisitions. All deposits of money shall be secured by

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obligations of the United States or of the state, of a market value at all times not less than the

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amount of deposits, and all banks and trust companies are authorized to give security for the

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deposits. The utility district shall have the power, notwithstanding the provisions of this section,

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to contract with the holders of any of its bonds as to the custody, collection, security, investment

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and payment of any money of the authority, or any money held in trust or otherwise for the

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payment of bonds or in any way to secure the bonds, and to carry out any contract

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notwithstanding that the contract may be inconsistent with the previous provisions of this section.

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Money held in trust or otherwise for the payment of bonds or in any way to secure bonds and

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deposits of money may be secured in the same manner as the money of the authority, and all

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banks and trust companies are authorized to give security for the deposits.

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     (b) Notwithstanding subsection (a) of this section, or any other provision of this chapter,

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the board of utility commissioners shall have the power to authorize by resolution a loan or

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advance from one utility fund of the utility district to another. Any such interfund advance or loan

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shall be for a term specified in the authorizing resolution of the board of utility commissioners

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and shall bear interest at a rate reasonably determined by the board of utility commissioners to be

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consistent with the public interest implicated in all funds involved in the interfund loan or

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advance; provided, however, that an interest rate set at the rate applicable to the utility district's

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most recent borrowing from a bank or other financial institution shall be presumptively

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reasonable as the rate of interest for an interfund loan or advance.

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     45-67-13. Alteration, amendment, repeal or severability.

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     The right to alter, amend or repeal this chapter is reserved to the state, but no such

 

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alteration, amendment or repeal shall operate to impair the obligation of any contract made by the

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utility district under any power conferred by this chapter. If any section, clause, provision or term

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of this chapter shall be declared unconstitutional, void, ultra vires or otherwise ineffective in

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whole or in part, such determination of invalidity shall not otherwise affect the validity or

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enforceability of any other provision of this chapter.

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     45-67-14. Tax exemption.

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     It is hereby declared that the utility district, in the carrying out of its quasi-municipal

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purposes, is in all respects providing essential services to the people of the state of Rhode Island

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that improves their health, safety and welfare. Accordingly, the district shall not be required to

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pay taxes, assessments or sums in lieu of taxes to the state of Rhode Island or any political

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subdivision thereof upon any of the property now owned or acquired in the future by the district,

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or under its jurisdiction and/or control, possession or supervision or upon its activities or

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operations, or upon any earnings, revenues, monies or other income derived by the district. The

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bonds issued by the district and any income therefrom shall at all times be exempt from taxation;

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provided, however, nothing in this section shall have any effect upon the water resources board,

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or the division of public utilities and carriers, and/or the public utilities commission's authority to

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impose regulation-related assessments and charges on the utility district.

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     45-67-15. Reversion upon dissolution or termination.

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     Upon dissolution or termination of the utility district, the assets of the utility district that

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remain after payment or making provision for payment of all bonds, notes and other obligations

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of the utility district shall be distributed to the town of New Shoreham or to one or more states,

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political subdivision thereof, or other organizations, the income of which is excluded from gross

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income under Section 115(1) of the United States Code.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- BLOCK ISLAND UTILITY DISTRICT ACT OF

2017

***

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     This act would create the Block Island utility district to provide utility products and

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services to the town of New Shoreham.

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     This act would take effect upon passage.

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