2017 -- S 0810

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LC002497

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

____________

A N   A C T

RELATING TO WATERS AND NAVIGATION - THE RHODE ISLAND COOPERATIVE

WATER AUTHORITY

     Introduced By: Senator Maryellen Goodwin

     Date Introduced: April 25, 2017

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 46 of the General Laws entitled "WATERS AND NAVIGATION" is

hereby amended by adding thereto the following chapter:

CHAPTER 32

THE RHODE ISLAND COOPERATIVE WATER AUTHORITY

     46-32-1. Short title.

     This act shall be known and may be cited as "The Rhode Island Cooperative Water

Authority Act."

     46-32-2. Purpose and legislative findings.

     (a) The purpose of this chapter is to create a cooperative water supply authority having

existence separate and apart from the state, with the power and authority to acquire, lease,

manage, sell, contract, develop, operate and maintain all properties, water and water supply

systems for the purposes set forth herein.

     (b) It is hereby found and declared:

     (1) That the Rhode Island water supply systems, including protection, development,

management, financial security, and use thereof, should be fully integrated pursuant to a

statewide policy that emphasizes efficiency of management, protection of existing supplies,

demand management, drought management, conservation, climate change management, and all

other strategies to ensure that Rhode Island's water resources are able to serve the citizens of

Rhode Island in a cost-effective manner.

     (2) That there is a need in the state for a cooperative water supply authority to ensure the

future of safe, reliable, and ample water for the long-term and short-term safety, health, and

prosperity of its citizens.

     (3) That there are four hundred ninety (490) public water supply systems including

twenty-eight (28) major suppliers of water in Rhode Island; therefore, it is in the state's best

interest to coordinate the management of the water supply systems through a cooperative water

supply authority.

     (4) That by coordinating the several water supply systems certain efficiencies will be

gained inuring to the benefit of the state's municipalities and citizens.

     (5) That periodically there exists in the southern areas of the state a condition of water

shortages which causes hardship to many individuals and families, impedes economic and

physical development of the municipalities within the state, and adversely affects the welfare and

prosperity of their residents and that a cooperative water supply authority would facilitate the

provision of alternative water supplies to such areas.

     (6) That while water is a statewide natural resource, the Providence water supply board

system has grown to serve approximately sixty percent (60%) of the citizens in the state, and has

been recognized as providing some of the highest quality water in the country.

     (7) That among Rhode Island's natural resources is a plentiful supply of fresh water but

that various Rhode Island communities do not benefit from such resources; and that economic

prosperity has historically been and will be tied to water resources, especially for various

businesses and industries which depend upon such water for the growth of their businesses and

employment of Rhode Islanders.

     (8) That the creation of a cooperative water supply authority would also present an

opportunity for communities to realize the advantages of cooperation in the preservation of

Rhode Island's water resources and the importance of water to public health, the environment,

and the economic well-being of the state.

     46-32-3. Definitions.

     As used in this chapter, the following words and terms shall have the following meanings

unless the context shall indicate another or different meaning or intent:

     (1) "Authority" means the corporation created by §46-32-4.

     (2) "Board" means the board created pursuant to §46-32-5.

     (3) "Bonds and notes" means the bonds and notes or other obligations or evidences of

indebtedness issued by the authority pursuant to this chapter.

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     (4) "Property" means any or all of the properties whether tangible or intangible of any

water supply system or part thereof including plants, works, and instrumentalities and all

properties used or useful in connection therewith, and all parts thereof and all appurtenances

thereto, including lands, easements, rights in land and water rights whether legal or equitable,

rights-of-way, contract rights, management, franchises, approaches, connections, dams,

reservoirs, wells and well sites, water mains and pipelines, water storage tanks, pumping stations,

equipment, fixtures, disposal facilities, laboratories, aeration systems and intake structures or any

other property incidental to and included in the water supply system or part thereof situated

within or without the authority.

     (5) "State public body" means the state, or any city or town or any other subdivision or

public body of the state or of any city or town.

     (6) "Water supply system" means all property (as defined in subsection (4) of this

section), any and all real estate or interests in real estate, all equipment and improvements, and

any and all other property or interests in said property, real, personal or mixed, used or held to be

used in connection therewith and all appurtenances thereto.

     46-32-4. Authority created.

     There is hereby created a cooperative water supply authority to be known as the Rhode

Island cooperative water authority. The Rhode Island cooperative water authority shall be a body

corporate and politic and a political subdivision of the state having a distinct legal existence from

the state and not constituting a department of the state government. The authority is hereby

constituted an independent public instrumentality and the exercise by the authority of the powers

conferred by this chapter shall be deemed and held to be the performance of an essential public

function.

     46-32-5. Board created.

     A board to be known as the Rhode Island cooperative water authority board is hereby

created. The powers of the authority shall be vested in and exercised by a majority of the

members of the board at any meeting thereof where there is a quorum.

     46-32-6. Composition of board.

     (a) The board shall initially consist of eleven (11) members. The governor shall appoint

four (4) members with the advice and the consent of the senate of which two (2) members shall

be appointed for an initial term of three (3) years and two (2) members shall be appointed for an

initial term of two (2) years. The governor shall make their appointments within sixty (60) days

of passage of this chapter. The mayor of the city of Providence shall appoint three (3) members,

each of whom shall be a resident of Providence, one for an initial term of three (3) years, one for

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an initial term of two (2) years and one for an initial term of one year; the mayor of the city of

Cranston shall appoint two (2) members, each of whom shall be a resident of Cranston, one for an

initial term of three (3) years and one for an initial term of two (2) years; the mayor of the town of

Johnston and the mayor of the town of North Providence shall each appoint one member for an

initial term of one year, each of whom shall be a resident of Johnston or North Providence, as

applicable. All appointments by the mayors of Providence, Cranston, Johnston, and North

Providence shall be made within sixty (60) days of the passage of this chapter.

     (b) Upon the establishment of the authority as a "public utility" pursuant to §46-32-11(c),

the board shall be reconstituted as follows: the members appointed by the governor shall continue

as members pursuant to subsection (a) of this section and the terms of the members appointed by

the mayors of Providence, Cranston, Johnston, and North Providence shall terminate. Additional

board members shall be appointed to the board as follows:

     (1) The chief executive officer of any municipality with greater than thirty thousand

(30,000) retail customer accounts serviced by the authority (by purchase, lease, or management

agreement) shall appoint three (3) members to the board within sixty (60) days of consummation

of the transaction with the water supply system;

     (2) The chief executive officer of any municipality with between twenty thousand

(20,000) and thirty thousand (30,000) retail customer accounts serviced by the authority (by

purchase, lease, or management agreement) shall appoint two (2) members to the board within

sixty (60) days of consummation of the transaction with the water supply system;

     (3) The chief executive officer of any municipality with between five thousand (5,000)

and twenty thousand (20,000) retail customer accounts serviced by the authority (by purchase,

lease, or management agreement) shall appoint one member to the board within sixty (60) days of

consummation of the transaction with the water supply system;

     (4) Each board member appointed by the chief executive officer of a municipality

pursuant to subsection (b) of this section shall be a resident of the municipality from which they

are appointed;

     (5) Each board member appointed by the chief executive officer of a municipality

pursuant to subsection (b) of this section shall be appointed for an initial term of three (3) years;

and

     (6) The membership of the board shall be reconstituted every three (3) years following

the establishment of the authority as a "public utility" pursuant to §46-32-11(c) in order to adjust

board composition to comply with subsection (b) of this section. In the event a reconstitution

shall reduce the number of members then serving, the term of each then serving member

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appointed by a chief executive officer of a municipality pursuant to subsection (b) of this section

shall terminate and new appointments shall be made pursuant to subsection (b) of this section.

     (c) Subject to subsection (b)(6) of this section, after the initial term, appointments to the

board shall be for three (3) years, and board members may serve a maximum of two (2)

consecutive three (3) year terms, except that no member may exceed a total of eight (8)

consecutive years of service on the board. Any vacancy on the board shall be filled by the

governor or the applicable municipal chief executive officer. A member appointed to fill a

vacancy in the board shall be appointed for the unexpired portion of the term of office of the

member whose vacancy is to be filled. A member shall hold office until their successor has been

duly appointed and qualified; provided, however, that a majority of the board may remove a

member for willful misconduct or failure to attend a majority of the full board meetings each

year. Each member of the board shall take an oath to administer the duties of their office

faithfully and impartially, and the oath shall be filed in the office of the secretary of state.

     (d) A majority of the board membership from time to time shall constitute a quorum. No

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

rights and perform all the duties of the board.

     (e) In the month of January of each year, the board shall make an annual report to the city

and town councils of all communities served at retail by the authority of its activities for the

preceding fiscal year. Each report shall set forth a complete operating and financial statement

covering its operations during the fiscal year. The board shall cause an annual audit of the books,

records, and accounts of the authority to be made.

     46-32-7. Officers and employees of the board.

     The chairperson of the board shall be appointed by the majority vote of the members of

the board. The chairperson of the board shall appoint one member of the board to serve as vice

chairperson, who shall serve at the pleasure of the chairperson. The board shall appoint by

majority vote the treasurer who shall be a member of the board. The board shall also appoint by

majority vote a secretary who may or may not be a member of the board, and may from time to

time hire, transfer or otherwise appoint or employ other officers, legal counsel, financial advisors

and such other experts, engineers, agents, accountants, clerks, and other consultants and

employees as it deems necessary and determine their duties and shall fix their compensation. In

the event of a vacancy occurring in the office of chairperson, treasurer or secretary by reason of

the death, resignation, or removal for willful misconduct of the chairperson, treasurer or

secretary, the board shall appoint a new chairperson, treasurer, or secretary, as applicable. The

chairperson of the authority shall appoint the executive director or general manager of the

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authority with the approval of the board, provided that the position of the executive director or

general manager must be advertised and the appointment must be approved at a public meeting of

the board. Notwithstanding the preceding sentence, in the event that the initial transaction entered

into by the authority is consummated with the city of Providence and the Providence water supply

board, the initial executive director or general manager of the authority shall be the then general

manager of the Providence water supply board to ensure continuity of management and for such

period of time as the board may determine in its discretion. The board may provide, subject to

§46-32-31, in the fixing of compensation, for a retirement program, commonly known as a

pension plan, funded by individual or group insurance or annuity contracts or otherwise, for

health and accident insurance, for life insurance, for hospital services, and for physicians services

for any one or more or all of its employees; and the board is hereby authorized to expend the

moneys of the authority for such purposes and programs as it may deem advisable. These

programs and purposes may be financed in full or in part by the moneys of the authority.

     46-32-8. Compensation of members and agents.

     The members of the board shall receive no compensation for the performance of their

duties, but shall be entitled to reimbursement for actual and necessary expenses incurred in the

performance of official duties. The salaries, compensation, and expenses of all members, officers,

employees, and agents shall be paid solely out of the funds of the authority. No part of the

revenue of the authority shall inure to the benefit of any private person.

     46-32-9. Business prohibited to members.

     No member of the board shall directly or indirectly engage in any contract or agreement

for labor or for the supply of materials for construction or reconstruction of the physical assets of

the authority or replacements or additions thereto.

     46-32-10. Powers of the authority.

     The authority shall have all the rights and powers necessary or convenient to carry out

and effectuate this chapter, including, but without limiting the generality of the foregoing, the

rights and powers:

     (1) To acquire, within or outside of the state, by voluntary purchase, contract, lease,

lease-purchase, sale and leaseback, gift or devise, any existing state enabled, regional, municipal,

or private water supply system, any water or water rights, any management, and any other

property, real, personal, or mixed, tangible or intangible, or interest therein, from the owner or

owners thereof.

     (2) To own and operate, construct, maintain, repair, improve, enlarge, extend, and

provide management in accordance with the provisions of this chapter, any property of a water

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supply system acquired hereunder, all of which, together with the acquisition of such property,

are hereby declared to be public purposes.

     (3) To collect, purify, distribute, and sell water.

     (4) To sue and be sued and to prosecute and defend actions relating to its properties and

affairs; provided that only property of the authority other than revenues pledged to the payment of

bonds and notes shall be subject to attachment or levied upon execution or otherwise.

     (5) To adopt and alter a corporate seal.

     (6) To maintain an office at such place or places as it may determine.

     (7) To hold, use, lease, sell, transfer, and dispose of any property, real and personal, or

mixed, tangible or intangible, or interest therein for its corporate purposes, and to mortgage,

pledge, or lease any such property; provided, however, that in the case of any sale or proposed

sale of any real property by the authority, which is not otherwise governed by contracts,

including, but not limited to, any purchase and sale agreement, lease, or management agreement,

the authority shall first grant to the municipality in which the real property, or any part thereof, is

situated the right to purchase such real property, or a portion thereof situated within its

boundaries, upon the same terms and conditions as the authority offers or proposes to offer or has

conditionally agreed to sell to any other prospective purchaser.

     (8) Mortgage, exchange, transfer or otherwise dispose of, or to grant options for any such

purposes with respect to, any water, water rights, and any other property, real or personal,

tangible or intangible, or any interest therein.

     (9) To make bylaws for the management and regulation of its affairs, to promulgate rules,

regulations and procedures in connection with the performance of its functions and duties, and to

fix, enforce and collect penalties for the violation thereof, and such bylaws may contain

provisions indemnifying any person who is or was a board member, officer, employee or agent of

the authority in the manner and to the extent provided in the Rhode Island business corporation

act, chapter 1.2 of title 7.

     (10) To borrow money for any of its corporate purposes, including the creation and

maintenance of working capital, and to issue negotiable bonds, notes, or other obligations and to

fund or refund the same.

     (11) To pledge or assign any money, fees, charges, or other revenues of the authority and

any proceeds derived by the authority from the sale of property or insurance awards.

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

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

     (13) To establish rates and collect charges for the use of the properties of or services

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rendered by or any water furnished by the authority such as to provide revenues sufficient at all

times to pay, as the same shall become due, the principal and interest on the bonds of the

authority, together with the maintenance of proper reserves therefor, in addition to paying, as the

same shall become due, all expenses of operating and maintaining the properties of the authority,

together with proper reserves for depreciation, maintenance, and contingencies and all other

obligations and indebtedness of the authority. The authority shall charge any municipality,

municipal water supply system, state enabled water supply system, or regional water supply

system for the use of any property of or service rendered by or any water furnished to it by the

authority at rates applicable to other users taking similar service.

     (14) To contract in its own name for any lawful purpose which would effectuate the

provisions of this chapter for such term of years as is necessary to carry out the purpose of the

contract and which term shall not be limited to the term of board members set forth in §46-32-6;

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

necessary or convenient to carry out the powers expressly granted by this chapter; provided,

however, that the full faith, credit, and taxing power of the state or of any municipality, county, or

other political subdivision shall never be pledged, nor shall any bond, note, or other evidence of

indebtedness of the authority constitute the obligation of the state or of any municipality, county,

or other political subdivision, but shall be solely the obligation of the authority. It is the intention

of the legislature that any property of a water supply system acquired by the authority pursuant to

the provisions of this chapter shall be financed as a self-liquidating enterprise, and that any

indebtedness incurred by the authority shall be payable solely from the revenues derived from all

or part of such property acquired by the authority.

     (15) To enter into cooperative agreements, management agreements, employee lease

agreements, or water supply service agreements with municipalities or counties, municipal,

regional, state enabled or private water supply systems, boards, or commissions, or municipal

water companies within or without the state including for the interconnection of facilities, to

provide for the joint operation of water supply activities and the wholesale purchase or sale of

water, to purchase and sell management related to water supply systems, or for any other lawful

corporate purposes necessary or desirable to effect the purposes of this chapter.

     (16) To apply for, receive, accept, administer, expend and comply with the conditions,

obligations and requirements respecting any grant, gift, loan, including, without limitation any

grant, gift or loan from agencies of local, state and federal governments, donation or

appropriation of any property or money in aid of the purposes of the authority and to accept

contributions of money, property, labor or other things of value.

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     (17) To enter onto any land to make surveys, borings, soundings and examinations

thereon, provided that said authority shall make reimbursements for any injury or actual damage

resulting to such lands and premises caused by any act of its authorized agents or employees and

shall so far as possible restore the land to the same condition as prior to making of such surveys,

borings, soundings and examinations. The authority is not authorized to acquire any existing

water supply system without the agreement of such water supply system.

     (18) Without limiting the generality of the preceding, the authority is expressly

empowered to lease or sell any property or management thereof to a state public body. Any lease

by the authority to such state public body may be for a period, upon terms and conditions, with or

without an option to purchase, that the authority may determine. Nothing in this chapter shall be

deemed to authorize the authority to sell any water supply system to a private entity.

     (19) The provisions of any charter, other laws or ordinances, general, special, or local, or

of any rule or regulation of any state public body, restricting or regulating in any manner the

power of any state public body, regional water supply system, or state enabled water supply

system to purchase, acquire, lease (as lessee or lessor) or sell property, real, personal, or mixed,

tangible or intangible, shall not apply to any purchase, acquisition, lease, sale, or management

agreement made with the authority pursuant to this chapter.

     (20) Any municipality or municipal water supply system, notwithstanding any contrary

provision of any charter, other laws or ordinances, general, special or local (including, but not

limited to, chapter 30 of title 46), or of any rule or regulations of the state or any municipality, is

authorized and empowered to contract for the sale, lease, lend, pledge, grant, convey, or the

assignment of management to the authority, at its request, upon terms and conditions that the

chief executive officer of the municipality has negotiated with the authority, and, if applicable,

the approval of any municipal water authority, board or commission, or where no chief executive

officer exists, upon the terms and conditions that the city or town council has negotiated with the

authority, with the approval of the city or town council of the municipality and, if applicable, the

approval of any municipal water authority, board or commission, may deem reasonable and fair

and without the necessity for any advertisement, order of court, or other action or formality, any

real property or personal property which may be necessary or convenient to the effectuation of

the authorized purpose of the authority, including public roads and other real property already

devoted to public use; and, subject to what has been stated, the municipality consents to the use of

all lands owned by the municipality which are deemed by the authority to be necessary for the

construction or operation of any project it authorizes.

     (21) The authority is authorized and empowered to contract for the acquisition of any of

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its projects or portions of them by the federal government; and to contract with any state, federal,

or municipal agencies for the performance of any services essential or convenient to its purposes

under this chapter.

     46-32-11. Rate determinations.

     (a) Any existing rates and charges which are in effect at the time when the authority

acquires properties of any municipal, regional, or state enabled water supply system pursuant to

the provisions of §46-32-10, shall continue in full force and effect.

     (b) Subject to §§46-32-20 and 46-32-29, the payments, fees, rates, rents, assessments and

other charges established by the authority pursuant to any purchase and sale agreement, lease, or

management agreement in accordance with subsection (a) of this section shall be so fixed and

adjusted in respect to the aggregate thereof so as to provide revenues, which, are at least

sufficient:

     (1) To pay the expenses of the authority as described in §46-32-29;

     (2) To pay the principal of, premium, if any, and interest on bonds, notes, or other

evidences of indebtedness issued by the authority to finance the purchase price, lease payments,

or management fees required pursuant to any purchase and sale agreement, lease, or management

agreement as the same become due and payable;

     (3) To create and maintain such reasonable reserves as may be reasonably required by

any trust agreement or resolution securing such bonds and notes;

     (4) To provide funds for paying the cost of all necessary repairs, replacements and

renewals of the water supply system to the extent specified in such purchase and sale agreement,

lease, or management agreement; and

     (5) To pay or provide for any amounts which the authority may be obligated to pay or

provide for by law or contract including any resolution or contract with or for the benefit of the

holders of its bonds and notes. No purchase and sale agreement, lease, or management agreement

shall materially alter the allocation on a percentage basis of the obligation to pay rates and

charges which are in effect when the authority acquires any property of any water supply system

between different classes of rate payers.

     (c) Upon the consummation of a purchase and sale agreement, lease, and/or management

agreement whereby property of a water supply system is transferred from a water supply system

to the authority, subject to §§46-32-20 and 46-32-29, the authority shall be considered a "public

utility" as defined in §39-1-2 with respect to such water supply system.

     (d) In order to provide for the collection and enforcement of its fees, rates, rents,

assessments and other charges, the authority is hereby granted all the powers and privileges with

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respect to such collection and enforcement held by a city or town of liens for unpaid taxes;

provided, however, that the authority may charge interest on delinquent payments at a rate of not

more than eighteen percent (18%) per annum. In addition to the other enforcement powers and

remedies provided in this chapter, if any fees, rates, rents, assessments or other charges billed by

the authority against any premises which are connected with the water supply system remain

unpaid for a period of more than sixty (60) days from the due date thereof, and following such

period notice and demand have been posted on such premises and have been given to the owner

of said premises, by mail addressed to said premises and to the address of said owner as shown on

the records of the assessor of the municipality where the premises is located, to pay the same

within fifteen (15) days from the date of mailing of said notice, and such fees, rates, rents,

assessments or other charges remain unpaid the authority shall have the power and is hereby

authorized to shut off the supply of water to said premises until said fees, rates, rents, assessments

or other charges and penalties are paid, together with interest thereon at the applicable rate and

the standard charge of the authority for restoring water service to said premises.

     46-32-12. Issuance of bonds and notes.

     For the purpose of raising money to carry out the provisions of this chapter, the authority

is authorized and empowered to issue bonds and notes in anticipation of bonds. Such bonds and

notes shall be issued hereunder as special obligations payable solely from revenues. Without

limiting the generality of the foregoing, such bonds and notes may be issued to pay or refund

notes issued in anticipation of the issuance of bonds, to pay the cost of any acquisition,

construction, extension, enlargement, management, or improvement of the water supply system,

to pay expenses of issuance of the bonds and the notes, to provide such reserves for debt service,

repairs and replacements or other costs or current expenses as may be required by a trust

agreement or resolution securing bonds or notes of the authority, or for any combination of the

foregoing purposes. The bonds of each issue shall be dated, bear interest at a rate or rates, and

mature at a time or times not exceeding forty (40) years from their dates of issue, as may be

determined by the officers of the authority, and may be made redeemable before maturity at a

price or prices and under terms and conditions that may be fixed by the officers of the authority

prior to the issue of the bonds. The officers of the authority shall determine the form of the bonds

and notes, including interest coupons, if any, to be attached to them, and the manner of their

execution, and shall fix the denomination or denominations of the bonds and notes and the place

or places of payment of the principal and interest, which may be at any bank or trust company

within or without the state. The bonds shall bear the seal of the authority or a facsimile of the

seal. In case any officer whose signature or a facsimile of whose signature shall appear on any

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notes, bonds or coupons shall cease to be such officer before the delivery thereof, such signature

or such facsimile shall nevertheless be valid and sufficient for all purposes as if they had

remained in office until after such delivery. The authority may also provide for authentication of

bonds or notes by a trustee or fiscal agent. Bonds shall be issued in registered form, and, if notes,

may be made payable to bearer or to order, as the authority may determine, and provision may be

made for the registration of any coupon bonds as to principal alone and also as to both principal

and interest, for the reconversion into coupon bonds of bonds registered as to both principal and

interest and for the interchange of bonds registered as to both principal and interest. The issue of

notes shall be governed by the provisions of this chapter relating to the issue of bonds in

anticipation of bonds as the same may be applicable. Notes issued in anticipation of the issuance

of bonds including any renewals, shall mature no later than five (5) years from the date of the

original issue of such notes. The authority may by resolution delegate to any member of the board

or any combination of them the power to determine any of the matters set forth in this section

including the power to award such bonds or notes to a purchaser or purchasers at public sale. The

authority may sell its bonds and notes in such manner, either at public or private sale, for such

price, at such rate or rates of interest, or at such discount in lieu of interest, as it may determine

will best effect the purposes of this chapter.

     46-32-13. Issuance of notes in anticipation of revenue or receipt of grants or other

aid.

     The authority may also provide by resolution for the issuance from time to time of

temporary notes in anticipation of the revenues to be collected or received by the authority in any

year, or in anticipation of the receipt of federal, state or local grants or other aid. Notes issued in

anticipation of revenues, including any renewals thereof shall mature no later than one year from

their respective dates, and issued in anticipation of federal, state or local grants or other aid

including any renewals thereof shall mature no later than three (3) years from their respective

dates. The issue of such notes shall be governed by the provisions of this chapter relating to the

issue of bonds or other notes as the same may be applicable.

     46-32-14. Payment of bonds and notes.

     (a) The principal of, premium, if any, and interest on all bonds and notes issued under the

provisions of this chapter, unless otherwise provided herein, shall be payable solely from the

funds provided therefor from revenues as herein provided.

     (1) In the discretion of the board, any bonds and notes issued hereunder may be secured

by a resolution of the board or by a trust agreement between the authority and a corporate trustee,

which may be any trust company or bank having the powers of a trust company within or without

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the state, and such trust agreement shall be in such form and executed in such manner as may be

determined by the authority. Such trust agreement or resolution may pledge or assign, in whole or

in part, the revenues and other moneys held or to be received by the authority, including the

revenues from any facilities already existing when the pledge or assignment is made, and any

contract or other rights to receive the same, whether then existing or thereafter coming into

existence and whether then held or thereafter acquired by the authority, and the proceeds thereof.

In the discretion of the board any bonds or notes issued under authority of this chapter, may be

issued by the authority in the form of lines of credit, loans, or other banking arrangements and

under such terms and conditions, not inconsistent with this chapter, and under such agreements

with the purchasers or makers thereof, as the board may determine to be in the best interest of the

authority. Notwithstanding anything to the contrary in §39-16-8, in addition to other security

provided herein or otherwise by law, bonds or notes issued by the authority under any provision

of this chapter may be secured, in whole or in part, by insurance or letters or lines of credit or

other credit facilities, and the authority may pledge or assign any of its revenues as security for

the reimbursement by the authority to the issuers of such insurance, letters or lines of credit or

other credit facilities of any payments made under the insurance or letters or lines of credit or

other credit facilities.

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

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

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

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

pursuant to this chapter shall be valid and binding and shall be deemed continuously perfected

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

then held or thereafter acquired or received by the authority shall immediately be subject to the

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

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

tort, contract or otherwise against the authority, irrespective of whether such parties have notice

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

created need be filed or recorded except in the records of the authority.

     (c) Any holder of a bond or note issued by the authority pursuant to the provisions of this

chapter or of any of the coupons appertaining thereto and any trustee pursuant to a trust

agreement or resolution securing the same, except to the extent the rights herein given may be

restricted by such trust agreement or resolution securing the same, may bring suit upon the bonds

or notes or coupons and may, either at law or in equity, by suit, action, mandamus, or other

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proceedings for legal or equitable relief, including proceedings for the appointment of a receiver

to take possession and control of the business and properties of the authority, to operate and

maintain the same, to make any necessary repairs, renewals and replacements in respect thereof

and to fix, revise and collect fees and charges, protect and enforce any and all rights under such

trust agreement, resolution or other agreement, and may enforce and compel the performance of

all duties required by this chapter or by such trust agreement or resolution to be performed by the

authority or by any officer thereof.

     46-32-15. Refunding bonds and notes.

     The authority may issue refunding bonds and notes for the purpose of paying any of its

bonds or notes at maturity or redemption. Refunding bonds and notes may be issued at such time

prior to the maturity or redemption of the refunded bonds or notes as the authority deems to be in

the public interest. Refunding bonds and notes may be issued in sufficient amounts to pay or

provide the principal of the bonds or notes being refunded, together with any redemption

premium thereon, any interest accrued or to accrue to the date of payment of such bonds or notes,

the expenses of issue of refunding bonds or notes, the expenses of redeeming bonds or notes

being refunded and such reserves for debt service or other capital or current expenses from the

proceeds of such refunding bonds or notes as may be required by a trust agreement or resolution

securing bonds or notes. The issue of refunding bonds or notes, the maturities and other details

thereof, the security therefor, the rights of the holders thereof, and the rights, duties and

obligations of the authority in respect of the same shall be governed by the provisions of this

chapter relating to the issue of bonds or notes other than refunding bonds or notes insofar as the

same may be applicable.

     46-32-16. Defeasance of bonds or notes.

     The authority may at any time deposit with a trustee, a sum sufficient, with amounts then

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

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

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

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

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

their purchase. The obligations are deemed adequate if the principal and interest payable on them

are sufficient to pay the previously mentioned sums when due. Upon any deposit of money and a

request by the authority, the trustee shall purchase direct or guaranteed obligations of the United

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

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

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

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

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

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

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

trustee to the authority.

     46-32-17. Covenants permissible in trust agreement or bond resolution.

     Any trust agreement or resolution authorizing any bonds or any issue of bonds may

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

authorized, as to:

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

from all or any part of the property of the authority to secure the payment of any bonds or of any

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

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

each year, and the use and disposition of the earnings and other revenues;

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

disposition thereof;

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

properties in connection with which the bonds are issued;

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

be applied;

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

terms upon which additional bonds may be issued and secured;

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

amended or abrogated, the amount of bonds the holders of which must consent thereto, and the

manner in which consent may be given;

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

may be deposited, and the investment of the funds;

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

     (10) Limitations on the power of the authority to sell, lease or otherwise dispose of its

properties;

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

consulting engineers and auditors;

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

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authority to perform any agreement;

     (13) Covenanting that as long as any bonds are outstanding the authority shall establish

and maintain its rights and charges adequate at all times to pay and provide for all operating

expenses of the authority, all payments of principal, redemption premium, if any, and interest on

bonds, notes or other evidences of indebtedness of or assumed by the authority, all renewals,

repairs, or replacements to the property of the authority deemed necessary, and all other amounts

which the authority may by law, resolution or contract be obligated to pay. On or before the last

day of the authority's fiscal year, the authority shall review the adequacy of its rates and charges

to satisfy the above requirements for the next succeeding fiscal year. If the review indicates that

the rates and charges are, or are likely to be, insufficient to meet the requirements of this chapter,

the authority shall promptly take such steps as are necessary to cure or avoid the deficiency,

including, but not limited to, making an emergency request to raise its rates and charges;

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

or protection of the bonds.

     46-32-18. Credit of state and municipalities not pledged.

     Bonds, notes and other evidences of indebtedness issued or entered into under the

provisions of this chapter shall not be deemed to be a debt or a pledge of the faith and credit of

the state or of any city or town, but shall be payable solely from the revenues of the authority. All

bonds, notes and other evidences of indebtedness, shall contain on the face thereof a statement to

the effect that neither the state nor any city or town shall be obligated to pay the same and that

neither the faith and credit nor the taxing power of the state or of any city or town is pledged to

the payment of the principal of or interest on such bonds or notes. Each bond or note shall also

recite that it is a special obligation of the authority payable solely from particular funds pledged

to its payment.

     46-32-19. Money received deemed to be trust funds.

     All moneys received pursuant to the provisions of this chapter, whether as proceeds from

the issue of bonds or notes or as revenues or otherwise, shall be deemed to be trust funds to be

held and applied solely as provided in this chapter.

     46-32-20. Bonds and notes issued without consent of other entities.

     Bonds and notes may be issued under this chapter to finance the payment of any purchase

payment, lease payment, or management fee by the authority or payment of any other expense

specified in §46-32-11(b) or to fund any reserve specified in §46-32-11(b) pursuant to any

purchase and sale agreement, lease, or management agreement without obtaining the consent of

any department, division, commission, board, bureau or agency of the state or any municipality,

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including the public utilities commission and the division of public utilities and carriers pursuant

to chapters 1 through 5 of title 39, and without any other proceedings or the happening of any

other conditions or things than those proceedings, conditions or things which are specifically

required therefor by this chapter, and the validity of and security for any bonds and notes issued

by the authority shall not be affected by the existence or nonexistence of any such consent or

other proceedings, conditions or things.

     46-32-21. Tax exemption.

     The authority shall not be required to pay taxes of any kind or description, or any excise

or special assessments or sums in lieu of taxes, except as provided in §46-32-22, to the state or

any political subdivision thereof upon any of the property acquired by it or under its jurisdiction,

control, possession, or supervision or upon its activities in the management, operation, and

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

the authority. Bonds and notes issued by the authority and their transfer and the income

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

from taxation by the state and all political subdivisions of the state. The authority shall not be

required to pay any transfer tax of any kind on account of instruments recorded by it or on its

behalf.

     46-32-22. Payments in lieu of taxes.

     Any and all tax agreements and payment in lieu of tax agreements in force on the

effective date of the enactment of this chapter shall remain in full force and effect until the

expiration of such agreements, and the authority shall have the power to exercise any option to

extend or renew such agreements. Upon expiration of such agreements, the authority shall

negotiate in good faith to enter into a tax agreement and/or payment in lieu of tax agreement with

the applicable municipality. In any community in which no tax agreement is in effect on the

effective date of the enactment of this chapter, the authority shall pay annually, having first made

provision for the payment of principal and interest on any bonds outstanding and any other

charges payable from revenues due in such year as may be provided in the resolution or

resolutions authorizing any bonds, in lieu of any property tax, as a charge upon its earnings or

revenues, to each municipality in which no tax agreement is in effect on the date of the enactment

of this chapter, a sum equal in amount to the property tax lawfully levied on the property of the

authority by or on behalf of the municipality during the year preceding the acquisition, lease or

management of such property by the authority, or if the municipality was not levying taxes on the

properties acquired by the authority during the year preceding the acquisition, lease, or

management, the amount of the payments shall be based on the levy established on the property

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in the year immediately after the transfer, lease or management of property; provided, however,

that in either case, the property tax lawfully levied on the property of the authority by or on behalf

of the municipality shall be subject to property value revaluations conducted by such city or town

in accordance with chapter 5 of title 44. Pipe lines and other water appurtenances including, but

not limited to, pump stations, treatment and sub-treatment facilities and water storage tanks, of

the authority shall be fully exempt from assessment and taxation of any kind, and they shall also

be exempt from any calculation of payments in lieu of taxes. The authority shall be entitled to the

full benefits of the farm, forest, and open space land act (chapter 27 of title 44) on any such

assessment and shall be entitled to contest any such assessment as if it were a taxpayer. The

authority shall have no power to levy or collect ad valorem property taxes.

     46-32-23. Pledge not to alter rights of the authority.

     The state does hereby pledge to and agree with the holders of the bonds, notes, and other

evidences of indebtedness of the authority that the state will not limit or alter rights hereby vested

in the authority until the bonds, notes, or other evidences of indebtedness, together with interest

thereon, with interest on any unpaid installment of interest and all costs and expenses in

connection with any actions or proceedings by or on behalf of the bondholders, are fully met and

discharged.

     46-32-24. Bonds as legal investments.

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

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

other persons carrying on an insurance business, all banks, bankers, trust companies, savings

banks, and savings associations, including savings and loan associations, building and loan

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

administrators, guardians, executors, trustees, and other fiduciaries and all other persons,

whomsoever who are now or may hereafter be authorized to invest in bonds or other obligations

of the state, may properly and legally invest funds including capital in their control or belonging

to them. The bonds are also hereby made securities which may be deposited with and shall be

received by all public officers and bodies of this state, and all municipalities and municipal

subdivisions, for any purpose for which the deposit of bonds or other obligations of this state is

now or may hereafter be authorized.

     46-32-25. Transfer on dissolution.

     If the authority shall be dissolved, including, but not limited to, dissolution by bankruptcy

or legislative act, title to all funds and other properties of the authority, not required for the

payment of bonds or other debts of the authority, the disposition of which is not otherwise

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governed by contracts, including, but not limited to, any lease, purchase and sale agreement, or

management agreement to which the authority may be party, shall vest in the municipalities

wherein the properties lie, with such allocations of funds as may be agreed by the municipalities.

Upon termination of any lease or management agreement, all rights, interests, title, and authority

shall revert to the contracting municipality, municipal water supply system, regional water supply

system, or state enabled water supply system.

     46-32-26. Additional leasing provisions.

     In the event the authority shall lease property of a water supply system subject to §§46-

32-20 and 46-32-29, rental payments pursuant to a lease shall be as negotiated by and between

the authority and such water supply system and such rental payments shall be based on an

independent appraisal or appraisals and such other factors as determined by the parties in their

discretion. A lease may include provisions to the effect that the authority will pay to the lessor for

deposit in the lessor's pension or retirement plan, an amount equal to the amount the lessor would

otherwise have paid into such pension or retirement system for its water supply system's retirees

as of the effective date of such lease as an annual payment obligation of the authority, and such

payments shall be in addition to any lease payments. The lease may be for a term up to ninety-

nine (99) years, or for such term which the authority deems necessary to carry out the

governmental purpose of the lease, may be extended from time to time, and shall not be limited to

the term of board members set forth in §46-32-6. If property of a water supply system is acquired

by lease, such water supply system shall remain the owner of such property.

     46-32-27. Purchase and sale provisions.

     In the event the authority shall purchase property of a water supply system subject to

§§46-32-20 and 46-32-29, the purchase amount for the property of the water supply system shall

be as negotiated between the authority and such water supply system and such purchase amount

shall be based on an independent appraisal or appraisals and such other factors as determined by

the parties thereto in their discretion. The authority may also assume existing debt of property of

such water supply system whether that debt be in the form of notes, bonds, or otherwise. If

property of a water supply system is purchased by the authority, then the authority shall become

the owner of such property upon completion of the purchase.

     46-32-28. Management provision.

     In the event the authority shall enter into a contract to provide management to a water

supply system subject to §§46-32-20 and 46-32-29, management fees or any other fee for such

services pursuant to a management agreement shall be as negotiated between the authority and

such water supply system and such management fee or fees shall be based on an independent

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appraisal or appraisals and such other factors as determined by the parties in their discretion. A

management agreement may include provisions to the effect that the authority will pay to the

assignor of management for deposit in the assignor's pension or retirement plan, an amount equal

to the amount the assignor would otherwise have paid into such pension or retirement system for

its water supply system's retirees as of the effective date of such management agreement as an

annual payment obligation of the authority, and such payments shall be in addition to any

management fee payments.

     46-32-29. Special provisions applicable to purchase and sale, leasing, and

management.

     (a) Each party to a potential purchase and sale, lease, or management agreement shall pay

its own reasonably incurred fees, costs and expenses, including, but not limited to, legal,

accounting, and engineering fees. In the event a purchase, lease, or management agreement is

successfully consummated, then the purchase and sale, lease, or management agreement may

provide for reimbursement to the seller, lessor, or assignor of management and the authority of

the aforesaid fees, costs, and expenses, which may be financed to the extent permitted under

applicable law. In the event that the authority's or the seller's, lessor's, or assignor's costs are

financed pursuant to a purchase and sale agreement, lease, or management agreement, payment of

such costs shall not be subject to review and approval by the Rhode Island public utilities

commission or the Rhode Island division of public utilities and carriers.

     (b) In any purchase, lease, or management of property of a water supply system, the

authority is authorized to assume such debts related to such properties being acquired, purchased,

leased, or managed as the authority shall deem appropriate. Such debts may include notes, bonds,

and any other outstanding debts.

     (c) Notwithstanding §§39-3-24, 39-3-25 or any other general law to the contrary, neither

the Rhode Island public utilities commission nor the Rhode Island division of public utilities and

carriers shall have any jurisdiction, authority, or other power to approve, reject, review, or in any

way affect any acquisition, lease, or management agreement of any water supply system or the

terms of any purchase and sale agreement, lease, or management agreement by and between the

authority and such water supply system. Moreover, payments to be made by the authority to the

seller, lessor, or assignor of management shall not be subject in any way to the review, approval,

or jurisdiction of the public utilities commission or the division of public utilities and carriers, and

the public utilities commission and the division of public utilities and carriers shall not have

jurisdiction or authority of any kind to direct, order, or require that any purchase payment, lease

payment, or management fee be made to or inure to benefit directly or indirectly of the ratepayers

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of the water supply system being acquired, leased, or managed by the authority. Furthermore, the

Rhode Island public utilities commission and the Rhode Island division of public utilities and

carriers shall recognize and apply all payments made by the authority pursuant to a purchase and

sale agreement, lease, or management agreement in its review and approval of rates.

     46-32-30. Lease of employees.

     (a) The authority and any municipality, municipal water supply system, regional water

supply system, or state enabled water supply system that is acquired pursuant to a purchase and

sale agreement, or is leased, or becomes managed by the authority are authorized to enter into an

employee lease agreement. Each leased employee shall remain an employee of the lessee

municipality, municipal water supply system, regional water supply system, or state enabled

water supply system.

     (b) Subject to §§46-32-20 and 46-32-29, in the event any employee lease agreement is

entered into by and between the authority and the lessee municipality, municipal water supply

system, regional water supply system, or state enabled water supply system, the employee lease

agreement shall be deemed for all purposes to be a part of such purchase and sale agreement,

lease, or management agreement and shall provide for not less than the benefits of transferred

employees described in §46-32-31.

     (c) Any employee lease agreement that is part of a purchase and sale agreement, lease,

and/or management agreement with the authority shall not affect any collective bargaining

agreement between the lessee employer and the labor union local unit representing the leased

employees or any negotiation and bargaining with the labor union local unit representing the

employees with respect to such matters and issues related to any collective bargaining agreement.

Such lessee employer shall negotiate and bargain with the labor union local unit representing the

employees with respect to such matters and issues regarding future collective bargaining

agreements.

     46-32-31. Transfer of employees.

     (a) The authority and any municipality, municipal water supply system, regional water

supply system, or state enabled water supply system that is acquired pursuant to a purchase and

sale agreement, or is leased, or becomes managed by the authority that does not enter into an

employee lease agreement are authorized to transfer any employee of such municipality,

municipal water supply system, regional water supply system, or state enabled water supply

system to the authority. Each transferred employee shall be offered continued employment in

accordance with the provisions of this section. In the event employees are transferred, the salary

or compensation of any employee shall be established and paid by the authority. Any purchase

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and sale agreement, lease, or management agreement with such municipality, municipal water

supply system, regional water supply system or state enabled water supply system shall provide

that each transferred employee shall:

     (1) Be offered employment with the authority in a position having the same or better

wages as set forth in the collective bargaining agreement with the transferring entity;

     (2) Be provided by the authority with a substantially equivalent or better package of

wages and benefits, including, but not limited to, health insurance, dental insurance, sick days,

vacation days, personal days, longevity pay, and recognition of prior years of service with the

transferring employer; and

     (3) Be provided with a substantially equivalent or better employee pension benefit plan,

provided that this requirement shall not be construed as an agreement by the authority or the

transferring employer to any specific form of pension or retirement benefit plan, and provided

that any contributions to any pension or retirement fund or system to be paid by the employer on

the account of any employee shall be paid by the authority.

     (b) The authority and the transferring employer shall in the contract for transfer of such

water supply system by purchase and sale agreement, lease, or management agreement provide

that the labor union local unit that participated in the collective bargaining agreement with the

transferring employer will be recognized by the authority as the exclusive bargaining agent for

the transferred employees and that the authority will ensure the terms of employment described in

subsections (a)(1), (a)(2) and (a)(3) of this section are included in the first collective bargaining

agreement between the authority and the labor union local representing the employees.

     (c) The transferring employer shall negotiate and bargain with the labor union local unit

representing the employees with respect to such matters and issues under the current collective

bargaining agreement as may be necessary to ensure the transfer of such employees to the

authority.

     46-32-32. Labor agreements and other contracts not impaired.

     Subject to §46-32-30, any and all collective bargaining agreements and other contracts in

force and effect at the time of any purchase and sale agreement, lease, or management agreement

by the authority shall remain in full force and effect according to the terms of said contracts,

unless amended to the extent required pursuant to any purchase and sale agreement, lease, or

management agreement at which time all future collective bargaining agreements and contracts

will be negotiated with the authority.

     46-32-33. Alteration, amendment, repeal, or severability.

     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 Rhode Island cooperative water authority under any power conferred by this chapter. If any

section, clause, provision or term of this chapter shall be declared unconstitutional, void, ultra

vires or otherwise ineffective in whole or in part, such determination of invalidity shall not

otherwise affect the validity or enforceability of any other provision of this chapter.

     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 WATERS AND NAVIGATION - THE RHODE ISLAND COOPERATIVE

WATER AUTHORITY

***

     This act would establish the Rhode Island cooperative water authority. The authority

would have the power to acquire, lease, manage, sell, and otherwise deal with land and water

supply systems. The authority would be authorized to issue bonds and notes in furtherance of its

mission.

     This act would take effect upon passage.

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