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S.B. 170





Chief Sponsor: Dennis E. Stowell

House Sponsor: Sylvia S. Andersen

             7      LONG TITLE
             8      General Description:
             9          This bill amends provisions regarding the financing of a water project.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    allows the Board of Water Resources to:
             14              .    accept a bond from private sponsors in lieu of taking title to a project;
             15              .    give a preference to a project that is for the benefit of the state or a political
             16      subdivision; and
             17              .    consider market conditions and other factors when establishing an interest rate;
             18      and
             19          .    makes technical changes.
             20      Monies Appropriated in this Bill:
             21          None
             22      Other Special Clauses:
             23          None
             24      Utah Code Sections Affected:
             25      AMENDS:
             26          73-10-26, as last amended by Laws of Utah 2007, Chapter 179
             27          73-10-27, as last amended by Laws of Utah 2005, Chapter 25

             28          73-10-28, as enacted by Laws of Utah 1978, Chapter 22
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 73-10-26 is amended to read:
             32           73-10-26. Construction of a project by board -- Ownership and operation --
             33      Transfer of a water right -- Purchase of a bond from an Indian tribe.
             34          (1) As used in this section:
             35          (a) "Board" means the Board of Water Resources created in Section 73-10-1.5 .
             36          (b) "Bond" means:
             37          (i) a written obligation to repay borrowed money, whether denominated a bond, note,
             38      warrant, certificate of indebtedness, or otherwise; and
             39          (ii) a lease agreement, installment purchase agreement, or other agreement that
             40      includes an obligation to pay money.
             41          (c) "Division" means the Division of Water Resources created in Section 73-10-18 .
             42          (d) "Project" means a facility, works, or other real or personal property that:
             43          (i) conserves or develops the water or hydroelectric power resources of the state; or
             44          (ii) controls flooding.
             45          [(1)] (2) (a) The board [of Water Resources], through the division [of Water
             46      Resources], may construct [works and facilities, including hydroelectric generating works , that
             47      are necessary and desirable to conserve and develop the water and power resources of the state]
             48      a project.
             49          (b) An electric public utility or a municipality of the state may construct an electrical
             50      [facilities] facility incidental to a [hydroelectric] project.
             51          (c) If the state constructs the electrical [facilities] facility, the state must first offer the
             52      power and energy derived from the hydroelectric generating [plant] project to an electric public
             53      [utilities or municipalities] utility or municipality in the state for distribution to electric
             54      consumers.
             55          [(2)] (3) (a) The board [of Water Resources], through the division [of Water
             56      Resources], may consider [any] a flood control project [provided for in Title 4, Chapter 18,
             57      Conservation Commission Act,] in the same manner[,] and apply the same procedures and
             58      rules[,] as the board would consider or apply to [any other] another project within its statutory

             59      authority.
             60          (b) If funds controlled by the board [of Water Resources] are to be used for the flood
             61      control project, the planning [by the Conservation Commission] of the project is subject to the
             62      review of the board.
             63          (c) If the flood control project is authorized for construction, the plans, specifications,
             64      and construction supervision shall be undertaken as prescribed by the board.
             65          [(3)] (4) The board [of Water Resources] may enter into an agreement for the
             66      construction or financing of [any] a project financed with monies from the Water Resources
             67      [Construction] Conservation and Development Fund with another state, the federal
             68      government, a political subdivision of the state, an Indian tribe, or a private corporation.
             69          [(4) (a) (i) Title to all projects, including water rights,]
             70          (5) (a) (i) Except as provided by Subsections (5)(a)(ii) and (b), title to a project,
             71      including a water right, constructed or acquired with monies from the Water Resources
             72      [Construction] Conservation and Development Fund is vested in the state.
             73          [(ii) If an incorporated municipality, metropolitan water district, water conservancy
             74      district, improvement district, special improvement district, special service district, or any other
             75      political subdivision of the state sponsors a project, the Board of Water Resources may take
             76      revenue bonds, general obligation bonds, special assessment bonds, or other bonds or
             77      obligations]
             78          (ii) The board may take a bond legally issued by the project sponsor in lieu of or in
             79      addition to taking title to the project and water [rights] right.
             80          (b) If an Indian tribe sponsors a project, the board [of Water Resources] may take
             81      [revenue bonds, general obligation bonds, or other bonds or obligations] a bond legally issued
             82      by the tribe, to the extent that federal law allows the tribe to issue [bonds] a bond, in lieu of
             83      taking title to the project and water [rights] right, if the tribe:
             84          (i) waives the defense of sovereign immunity regarding the bond issue in [any] an
             85      action arising out of the issuance or default under the bond; and
             86          (ii) agrees in writing that it will not challenge state court jurisdiction over any litigation
             87      resulting from default on its [obligations] obligation in the transaction.
             88          (c) Before entering into [any] an agreement with or purchasing [any bonds or
             89      obligations] a bond from a tribe, the board [of Water Resources] shall:

             90          (i) require that the tribe obtain the written approval of the Secretary of the United
             91      States Department of the Interior or the secretary's designee to all aspects of the agreement[,
             92      bonds, or obligations] or bond;
             93          (ii) obtain a legal opinion from a recognized bond counsel certifying:
             94          (A) that the tribe has legal authority to:
             95          (I) enter into the agreement; or
             96          (II) issue the [bonds or obligations] bond;
             97          (B) that the pledge of [any assets or revenues] an asset or revenue by the tribe as
             98      security for the payments under the agreement[, bonds, or obligations] or bond is a valid and
             99      legally enforceable pledge; and
             100          (C) that the agreement[, bonds, or obligations] or bond may be enforced in [any] a
             101      court of general jurisdiction in the state; and
             102          (iii) determine whether it has sufficient legal recourse against the tribe and against
             103      [any] a security pledged by the tribe in the event of default.
             104          [(5)] (6) (a) The board [of Water Resources] may own and operate [water conservation
             105      and development works and projects and flood control projects,] a project if:
             106          (i) the [works and projects are] project is consistent with [plans] the plan adopted by
             107      the board; and
             108          (ii) in the opinion of the board the ownership and operation of the [projects] project by
             109      the board is in the best interest of the state.
             110          (b) In the ownership and operation of [the projects] a project referred to in Subsection
             111      [(5)] (6)(a), the board shall use a water [rights] right held in its name under authority of Section
             112      73-10-19 .
             113          (c) (i) The board may enter into [contracts] a contract with another state, the federal
             114      government, a political subdivision of the state, an Indian tribe, or a private corporation for
             115      operation, maintenance, and administration of the project.
             116          (ii) The board may pay the contracting agency a reasonable sum for operation,
             117      maintenance, and administration of the project.
             118          [(6)] (7) (a) The board may also:
             119          (i) enter into [agreements] an agreement in which title to [projects may be] a project is
             120      conveyed to a cooperating [sponsors] project sponsor after charges assessed against the project

             121      have been paid to the state in accordance with the terms of the construction [agreements or
             122      amendments to those agreements] agreement or amendment to the agreement;
             123          (ii) make the water and power available [for the use of] to the state's citizens who are,
             124      in [its] the board's opinion, best able to [utilize it, all] use the water and power:
             125          (A) that is conserved by [any of the projects] the project; and
             126          (B) to which the state [may have] has title;
             127          (iii) enter into [contracts] a contract for the use of [that] the water and power with
             128      [individuals or with organizations] an individual or an organization composed of the state's
             129      citizens; and
             130          (iv) assess a reasonable fee against [any] a person using water and power from a
             131      project.
             132          (b) [Any] The amount collected over the amount to be returned to the state for payment
             133      of the principal, interest, and maintenance of the project shall [become part of] be deposited in
             134      the Water Resources Conservation and Development Fund as established by Section 73-10-24 .
             135          [(7)] (8) The board [of Water Resources] shall retain ownership of a water [rights]
             136      right used for [projects] a project owned and operated by the board unless:
             137          (a) the water [rights] right originally held by a cooperating [sponsors are] project
             138      sponsor is conveyed to the project sponsor upon payment to the state of charges assessed
             139      against the project in accordance with the terms of the construction [agreements or
             140      amendments to those agreements] agreement or an amendment to the agreement; or
             141          (b) the board transfers [any] an unperfected water right held by [it] the board that is not
             142      being [utilized] used in a state-owned project to a political subdivision of the state, [any] an
             143      agency of the federal government, or a nonprofit water company.
             144          [(8) Any] (9) A transfer of the board's water [rights] right shall be made to the entity
             145      that is best able to use the water [rights] right for the benefit of the state's citizens.
             146          Section 2. Section 73-10-27 is amended to read:
             147           73-10-27. Project priorities -- Considerations -- Determinations of feasibility --
             148      Bids and contracts -- Definitions -- Retainage.
             149          (1) As used in this section:
             150          (a) "Board" means the Board of Water Resources created in Section 73-10-1.5 .
             151          (b) "Estimated cost" means the cost of the labor, material, and equipment necessary for

             152      construction of the contemplated project.
             153          (c) "Lowest responsible bidder" means a licensed contractor:
             154          (i) who:
             155          (A) submits the lowest bid; and
             156          (B) furnishes a payment bond and a performance bond under Sections 14-1-18 and
             157      63-56-504 ; and
             158          (ii) whose bid:
             159          (A) is in compliance with the invitation for a bid; and
             160          (B) meets the plans and specifications.
             161          [(1)] (2) In considering the [priorities for projects] priority for a project to be built or
             162      financed with funds made available under Section 73-10-24 , the board shall give preference to
             163      [those projects which] a project that:
             164          (a) [are] is sponsored by, or for the benefit of, the state or a political subdivision of the
             165      state;
             166          (b) [meet] meets a critical local need;
             167          (c) [have] has greater economic feasibility;
             168          (d) will yield revenue to the state within a reasonable time or will return a reasonable
             169      rate of interest, based on financial feasibility; and
             170          (e) [meet] meets other considerations deemed necessary by the board, including[, but
             171      not limited to,] wildlife management and recreational needs.
             172          [(2)] (3) (a) In determining the economic feasibility, the board shall establish a
             173      benefit-to-cost ratio for each project, using a uniform standard of procedure for all projects.
             174          (b) In considering whether a project should be built, the benefit-to-cost ratio for each
             175      project shall be weighted based on the relative cost of the project.
             176          (c) A project, when considered in total with all other projects constructed under this
             177      chapter and still the subject of a repayment contract, may not cause the accumulative
             178      benefit-to-cost ratio of the projects to be less than one to one.
             179          [(3) Under no circumstances may a project be built that is not]
             180          (4) A project may not be built if the project is not:
             181          (a) in the public interest, as determined by the board [of Water Resources, and no
             182      project may be built which is not]; or

             183          (b) adequately designed based on sound engineering and geologic considerations.
             184          [(4) The board in the preparation of]
             185          (5) In preparing a project [for construction] constructed by the board, the board shall
             186      [comply with the following]:
             187          [(a) All flood control projects involving cities and counties]
             188          (a) based on a competitive bid, award a contract for:
             189          (i) a flood control project:
             190          (A) involving a city or county; and
             191          (B) costing in excess of $35,000[, and all contracts for];
             192          (ii) the construction of a storage reservoir in excess of 100 acre-feet; or [for]
             193          (iii) the construction of a hydroelectric generating facility[, shall be awarded on the
             194      basis of competitive bid. Advertisement for competitive bids shall be published by the board];
             195          (b) publish an advertisement for a competitive bid:
             196          (i) at least once a week for three consecutive weeks in a newspaper with general
             197      circulation in the state[. The advertisement shall indicate that the board], with the last date of
             198      publication appearing at least five days before the schedule bid opening; and
             199          (ii) indicating that the board:
             200          (A) will award the contract to the lowest responsible bidder [but that it]; and
             201          (B) reserves [to itself] the right to reject any and all bids[. The date of last publication
             202      shall appear at least five days before the scheduled bid opening.];
             203          [(b) If all initial bids on the project are rejected, the board shall]
             204          (c) readvertise the project in the manner specified in Subsection [(4)(a). If no
             205      satisfactory bid is received by the board upon the readvertisement of the project, it may proceed
             206      to construct the project but only in accordance with the plans and specifications used to
             207      calculate the estimated cost of the project.] (5)(b) if the board rejects all of the initial bids on
             208      the project; and
             209          [(c) The board shall] (d) keep an accurate record of all facts and representations relied
             210      upon in preparing [its] the board's estimated cost for [any] a project [which] that is subject to
             211      the competitive bidding requirements of this section.
             212          [(d) For the purposes of this Subsection (4):]
             213          [(i) "Estimated cost" means the cost of all labor, material, and equipment necessary for

             214      construction of the contemplated project.]
             215          [(ii) "Lowest responsible bidder" means any licensed contractor who submits the
             216      lowest bid, whose bid is in compliance with the invitation for bids, whose bid meets the plans
             217      and specifications, and who furnishes bonds under Sections 14-1-18 and 63-56-504 .]
             218          (6) If no satisfactory bid is received by the board upon the readvertisement of the
             219      project in accordance with Subsection (5), the board may proceed to construct the project in
             220      accordance with the plan and specifications used to calculate the estimated cost of the project.
             221          [(5)] (7) If [any] a payment on a contract with a private contractor for construction of
             222      [projects] a project under this section is retained or withheld, it shall be retained or withheld
             223      and released as provided in Section 13-8-5 .
             224          Section 3. Section 73-10-28 is amended to read:
             225           73-10-28. Charges for use -- Interest.
             226          [Charges for use of water, power, or facilities shall be established on the basis of
             227      contractual agreements]
             228          (1) As used in this section, "board" means the Board of Water Resources created in
             229      Section 73-10-1.5 .
             230          (2) The board shall establish:
             231          (a) a charge for the use of water, power, or a facility based on:
             232          (i) a contractual agreement approved by the board [of Water Resources for projects] for
             233      a project owned by the state [based on]; and
             234          (ii) the ability of an individual project to return the investment to the state[. Where the
             235      board intends to enter into a contract to finance a project or portion of a project sponsored by a
             236      water conservancy district or other political subdivision of the state, the board shall establish a
             237      rate of interest to be charged based on]; and
             238          (b) an interest rate for the money the board lends to finance a project based on:
             239          (i) market conditions;
             240          (ii) the repayment ability of the project[.]; and
             241          (iii) other factors considered relevant by the board.

Legislative Review Note
    as of 1-23-08 5:36 PM

Office of Legislative Research and General Counsel

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