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HomeMy WebLinkAbout184100 i ORDINANCE NO. _18,410 AN ORDINANCE AUTHORIZING THE CITY OF LITTLE ROCK, ARKANSAS TO ENTER INTO AN INTERLOCAL AGREEMENT WITH THE CITY OF NORTH LITTLE ROCK, ARKANSAS PROVIDING FOR THE CONSOLIDATION OF THEIR WATER SYSTEMS AND CREATING A PUBLIC BODY CORPORATE AND POLITIC TO OWN AND OPERATE THE CONSOLIDATED WATER SYSTEM; DECLARING AN EMERGENCY; AND FOR OTHER PURPOSES. BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY OF LITTLE ROCK, ARKANSAS THAT: Section 1. Approval of Consolidation Agreement. The interlocal agreement styled "Consolidation Agreement," by and among the City of Little Rock, Arkansas, the City of North Little Rock, Arkansas, the Board of Commissioners of the Little Rock Municipal Water Works, and the Board of Commissioners of the North Little Rock Water Department (the "Consolidation Agreement "), pertaining to the consolidation of the water systems of the Cities of Little Rock and North Little Rock and authorizing the creation of a public body corporate and politic (the "Consolidated Entity ") to own and operate such consolidated system, is hereby approved in substantially the form attached as Exhibit A to this Ordinance. The Mayor is hereby authorized and directed to execute, acknowledge, and deliver the Consolidation Agreement in substantially the form attached as Exhibit A, with such changes or corrections as do not materially alter the substance thereof, and the City Clerk is hereby authorized and directed to attest the same and to affix the seal of the City thereto. Such changes or corrections to the Consolidation Agreement may be approved by the officials of the City executing such document, their execution and delivery to constitute conclusive evidence of such approval. Section 2. Identification of Water System Assets. The City hereby requests that the Interim Board, as contemplated by Section 2.02 of the Consolidation Agreement, prepare and submit to the City's Board of Directors for its consideration and appropriate action a list identifying the City's assets that should become a part of the consolidated water system and proposed procedures for transferring such assets to the Consolidated Entity. Section 3. Compliance with Covenants. Without limiting the right of the City to terminate the Consolidation Agreement in accordance with its terms, the City covenants and agrees that it shall, until the Closing contemplated by the Consolidation Agreement or earlier termination of the Consolidation. Agreement, keep and observe the affirmative and negative covenants set forth in Sections 2.04 and 2.05 of the Consolidation Agreement. Section 4. Authorization of Officials and Officers. The City hereby authorizes and directs the Mayor, City Manager, and City Clerk to execute and deliver such documents and instruments, and to take such actions, as shall in the opinion of the official or officer so acting be necessary or desirable in carrying out the City's obligations under the Consolidation Agreement. • • Section 5. Severability. The provisions of this Ordinance are hereby declared to be separable and, if any provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the remainder of the Ordinance. Section 6. Repealer. All ordinances and parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict. Section 8. Emergency Clause. It is hereby ascertained and declared that the consolidation of the water systems of the Cities of Little Rock and North Little Rock must be accomplished as soon as possible in order to make the water system adequate for the needs of the City and its inhabitants, without which the life, health, safety and welfare thereof are jeopardized, and that the taking of the actions authorized by this Ordinance are necessary for the accomplishment thereof. It is, therefore, declared that an emergency exists and this Ordinance being necessary for the immediate preservation of the public peace, health and safety shall take effect and be in force from and after its passage. PASSED: January 8, 2001 ATTEST: APPROVED GU 1 Na cy D. ood, City Clerk Jim iley, Mayor APPROVED AS TO LEGAL FORM: AA Thomas M. Carpenter, Cit Attorney 2 CONSOLIDATION AGREEMENT This Consolidation Agreement ( "Agreement ") is entered into as of the _ day of , 2001, by and among the City of Little Rock, Arkansas ( "Little Rock "), the City of North Little Rock, Arkansas ( "North Little Rock "), the Board of Commissioners of the Little Rock Municipal Water Works (the "LR Commission "), and the Board of Commissioners of the North Little Rock Water Department (the "NLR Commission "), as an interlocal agreement authorized under the Interlocal Cooperation Act, Ark. Code Ann. § 25 -20 -101 et seq. (the "Act "). Recitals Little Rock and North Little Rock are duly created and existing incorporated cities of the first class under the Constitution and laws of the State of Arkansas (the "State "), and are authorized by the Act to enter into agreements for joint cooperative action. The LR Commission operates and manages the Little Rock Municipal Water Works (the "LR Water Works ") under authority granted by the Little Rock Board of Directors under Ark. Code Ann. § 14- 234 -302. The NLR Commission operates and manages the North Little Rock Water Department (the "NLR Water Department ") under authority granted by the North Little Rock City Council under Ark. Code Ann. § 14- 234 -302. Little Rock and North Little Rock (collectively, the "City Parties ") and the LR Commission and the NLR Commission (collectively, the "Commission Parties" and, together with the City Parties, the "Parties ") desire to consolidate the assets and operations of the LR Water Works and the NLR Water Department and to create a new entity to own and operate the consolidated water system. It is the intention of the Parties that the newly created entity will serve customers located within the corporate limits of the City Parties efficiently and economically, avoiding any vestige of discrimination or inequality in rates or infrastructure based upon geographic location, and will strive to achieve equality of rates among similarly situated classes of customers without regard to residence, as well as assure that funds expended for the betterment and improvement of the utility's infrastructure are distributed solely on the basis of needs and betterment of the consolidated system as a whole and not on geographic location. The Commission Parties, acting in concert, have been directed by the City Parties to employ a firm, mutually agreed upon by both Commission Parties and with costs home fifty percent (50 %) by the LR Water Works and fifty percent (50 %) by the NLR Water Department, to conduct a rate study (the "Rate Study"), using cost -of- service methodology, aimed at equalizing water rates throughout Little Rock and North Little Rock over a reasonable period of time not to exceed ten (10) years, and, as part of the study to establish a reasonable basis for achieving equalized water rates, to employ an appropriate engineering firm, mutually agreed upon by both Commission Parties and with costs borne fifty percent (50 %) by the LR Water Works and fifty percent (50 %) by the NLR Water Department, to assess the conditions of the current distribution systems of Little Rock and North Little Rock to determine any improvements needed to meet accepted standards (the "Improvement Agendas "), with the city in which the costs of 01/09/01 1 a 0 improvements are higher agreeing to pay rates that are sufficiently higher to cover the net difference in the two (2) hnprovement Agendas during the period for equalizing rates. The Parties desire to set the stage to join in a regional effort to secure a new source of water supply for central Arkansas, with a regional authority that can grow in number of members and in scope of responsibility. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Parties agree as follows: ARTICLE I PURPOSES AND TERM Section 1.01 Purposes. This Agreement is entered into to set forth the matters required by the Act, to specify other matters relating to the proposed consolidation of the LR Water Works and the NLR Water Department into a newly created public entity (the "Consolidation ") and the operation of the consolidated water system thereby created (the "Consolidated System "), and to set out the respective rights and responsibilities of the Parties. Section 1.02 Effective Date. The effective date of this Agreement shall be the earlier of (i) the date the Attorney General of the State shall have approved this Agreement as being in proper form and compatible with the laws of the State and (ii) sixty (60) days from the date of submission of this Agreement to the Attorney General of the State without the Attorney General having disapproved this Agreement. Section 1.03 Term of Agreement. This Agreement shall continue from its effective date until terminated. Termination shall occur at midnight on June 30, 2001 in the event that, prior to such time, the Authorizing Legislation (as defined in Section 2.01) has not been enacted into law and taken effect, or may be effected at any time by the City Parties in the manner described in Section 7.01. Section 1.04 Authority. The purposes of this Agreement are declared by each of. the Parties to be an appropriate exercise of governmental authority granted to each Party by the Constitution and laws of the State, and the actions of the Parties hereunder are intended to promote a more efficient use of the Parties' powers in accordance with the public purposes of the Act. ARTICLE II OBLIGATIONS PRIOR TO CONSOLIDATION Section 2.01 Authorizing Legislation. The Parties will propose and seek the enactment of legislation by the General Assembly of the State, substantially in the form attached as Exhibit A hereto, authorizing the consolidation of two (2) or more municipal water works systems into a single public entity that shall own and operate the consolidated system. In the event that such legislation or other legislation permitting the Consolidation to be completed on the terms set forth in this Agreement ( "Authorizing Legislation ") has not been enacted into law and taken effect on or prior to midnight on June 30, 2001, this Agreement shall thereupon terminate. 01/09/01 Section 2.02 Interim Board. The Parties hereby create a seven (7) member interim board (the "Interim Board "), the purpose of which shall be to assist the Parties in seeking enactment of the Authorizing Legislation and in addressing issues of mutual concern, planning for the Consolidation and the operation of the Consolidated System, and participating in the Rate Study and Improvement Agendas. The duties of the Interim Board shall include, without limitation, identifying the assets of the Parties that are to become part of the Consolidated System and proposing procedures for transferring assets and employees at the Closing (as defined in Section 4,01). The Interim Board shall consist of four (4) members appointed by the LR Commission (of which two (2) shall currently be members of the LR Commission and two (2) shall be Little Rock residents who have not served on the LR Commission) and three (3) members appointed by the NLR Commission (of which two (2) shall currently be members of the NLR Commission and one (1) shall be a North Little Rock resident who has not served on the NLR Commission). All members of the hrterim Board are subject to confirmation by the Little Rock Board of Directors and the North Little Rock City Council. Any expenses of the Interim Board shall be bome fifty percent (50 %) by the LR Water Works and fifty percent (50 %) by the NLR Water Department. The Interim Board shall serve until the earlier of the creation of the Consolidated Commission under Section 3.01 or the termination of this Agreement. Section 2.03 Creation of Consolidated Entity. Subject to the Authorizing Legislation being enacted into law and upon its taking effect, the City Parties shall create, on or before June 30, 2001, a public body corporate and politic (the "Consolidated Entity ") under the Authorizing Legislation for the purpose of owning and operating the Consolidated System upon completion of the Consolidation. The Consolidated Entity shall be known as Regional Water Authority of Central Arkansas. Section 2.04 Affirmative Covenants. Until the Closing, or earlier termination of this Agreement: (i) each Party covenants and agrees that it will take every action reasonably required of it to ensure the consummation of the Consolidation substantially as contemplated hereby; (ii) each City Party covenants and agrees to enact substantively identical ordinances providing for the creation of the Consolidated Entity as set forth in Section 2.03 and, in contemplation of the Closing, to enact an appropriate ordinance for the conveyance of its assets as set forth in Section 4.02; (iii) each Commission Party covenants and agrees that it shall conduct its business according to the ordinary and usual course of business consistent with past practice; and (iv) the LR Commission covenants and agrees that it shall cause the LR Water Works to continue to provide water to the NLR Water Department at such rates as were in effect on December 31, 2000 or, if in the reasonable judgment of the LR Commission increases are necessitated, at rates that have been applied in equal percentage increments to all classes of customers. 01/09/01 C L Section 2.05 Negative Covenants. Until the Closing, or earlier termination of this Agreement: (i) each Commission Party agrees that it will not, without the consent of both City Parties, issue any bonded indebtedness or otherwise create, incur, or assume any long -term or short-term indebtedness for money borrowed; (ii) each City Party agrees that it will not, without the consent of the other City Party, sell, lease, mortgage, encumber, or otherwise dispose of or grant any interest in any of its assets or properties integrally related to the operations of the LR Water Works or the NLR Water Department, as appropriate, except for sales, encumbrances, and other dispositions or grants in the ordinary course of business and consistent with past practice; (iii) each Commission Party agrees that it will not, without the consent of both City Parties, enter into, amend, or terminate any material contract, agreement, commitment, or understanding; and (iv) each City Party agrees that it will not, without the consent of the other City Party, intrude into any material contract, agreement, commitment, or understanding integrally related to the operations of the LR Water Works or the NLR Water Department, as appropriate. ARTICLE III CONSOLIDATED BOARD OF WATER COMMISSIONERS Section 3.01 Governing Board. The governing board of the Consolidated Entity shall be known as the Board of Commissioners of Regional Water Authority of Central Arkansas (the "Consolidated Commission "). The Consolidated Commission shall be composed of seven (7) members, of which four (4) shall be residents of Little Rock and three (3) shall be residents of North Little Rock. Members (other than the initial members) shall serve terms of seven (7) years each, which terms shall begin on July 1 and end on June 30 and shall be staggered to create a vacancy on the Consolidated Commission each year. Section 3.02 Appointment and Removal of Members. Upon creation of the Consolidated Entity, the members then serving on the Interim Board shall automatically become the initial members of the Consolidated Commission and, as determined by lot, shall be assigned staggered terms of one (1), two (2), three (3), four (4), five (5), six (6), and seven (7) years. The members from Little Rock shall be assigned terms of an odd number of years and the members from North Little Rock shall be assigned terms of an even number of years. Vacancies thereafter occurring on the Consolidated Commission shall be filled by a vote of the remaining members, subject to confirmation by the Little Rock Board of Directors and the North Little Rock City Council. Each member shall serve until his or her successor is elected and qualified. A member of the Consolidated Commission may be removed at any time, for cause, (i) by action of the Consolidated Commission or (ii) by the mayors of Little Rock and North Little Rock acting in concert. Section 3.03 Quorum; Voting. A majority of the entire Consolidated Commission shall constitute a quorum for the transaction of business and the act of a majority of the entire 01109 /01 0 0 Consolidated Commission shall be the act of the Consolidated Commission. Each member of the Consolidated Commission shall have one vote. Section 3.04 Chair. The Consolidated Commission shall select a Chair from its membership, to serve a term of one (1) year. The Chair shall be selected from among the members from Little Rock and the members from North Little Rock in alternate years. Section 3.05 Powers of Consolidated Commission. The Consolidated Commission shall act as a board of directors of the Consolidated Entity and shall have and may exercise such powers as are set forth in the Authorizing Legislation, or any amendment thereof, subject to the specific limitations contained in this Agreement or otherwise set forth in applicable law. The Consolidated Commission may make and adopt bylaws, elect officers of the Consolidated Commission, and do such other things not inconsistent with this Agreement for the purpose of owning, operating, managing, financing, and otherwise dealing with the Consolidated Entity. Section 3.06 Water Rates. The Consolidated Commission shall have authority to set water rates for customers of the Consolidated Entity, subject to the following requirements, guidelines, and procedures: (i) The Consolidated Commission shall propose an equalizing schedule of water rates, to take effect beginning January 1, 2002 or as soon thereafter as practicable, which (A) shall be based on the Rate Study, (B) shall equalize water rates among similarly situated classes of customers throughout Little Rock and North Little Rock over a reasonable period of time not to exceed ten (10) years, and (C) shall provide sufficient funds for the accomplishment of the Improvement Agendas, with the customers in the city in which the costs of improvements are higher paying rates that are sufficiently higher to cover the net difference in the two (2) Improvement Agendas during the period for equalizing rates. (ii) Following implementation of the equalizing schedule of water rates required by paragraph (i) above, the Consolidated Commission shall have full discretion to propose changes in water rates, but shall maintain water rates that are equalized among similarly situated classes of customers throughout Little Rock and North Little Rock. (iii) No provision of this Agreement shall (A) require equalized water rates with respect to any customers or classes of customers located outside of Little Rock and North Little Rock; (B) preclude differentials in water rates and/or surcharges, applied to Little Rock or North Little Rock customers as appropriate, for the purpose of recovering the costs of correcting any defects in, or satisfying any liabilities associated with, the assets and liabilities contributed by Little Rock and the LR Water Works or North Little Rock and the NLR Water Department, respectively, in the creation of the Consolidated Entity, provided that such defects or liabilities (1) arose prior to or relate directly to events occurring prior to the Effective Time (whether or not known at the Effective Time) and (2) have not otherwise been addressed by the Improvement Agendas; or (C) preclude differentials in water rates and/or surcharges calculated to recover from any customers or classes of customers the capital and other costs of extending service to such customers. 01/09/01 • (iv) Before a change in rates may take effect, the Consolidated Commission must give a minimum of three (3) months' notice to the City Parties and must hold at least one (1) public hearing on the proposed change in rates. (v) A change in rates may not be implemented by the Consolidated Commission if both the Little Rock Board of Directors and the North Little Rock City Council vote disapproval of it. In the absence of disapproval by both bodies prior to the stated effective date, a change in rates may be implemented as proposed by the Consolidated Commission. Section 3.07 Revenue Bonds. The Consolidated Commission shall have authority to issue revenue bonds on behalf of the Consolidated Entity, subject to the requirements of the Authorizing Legislation and other applicable Arkansas and federal law, and further subject to the following limitations: (i) Before bonds may be issued, the Consolidated Commission must give a minimum of three (3) months' notice to the City Parties and must hold at least one (1) public hearing on the proposed bond issue. (ii) Bonds may not be issued by the Consolidated Commission if both the Little Rock Board of Directors and the North Little Rock City Council vote disapproval of the bonds. In the absence of disapproval by both bodies prior to the stated date for issuance of the bonds, bonds may be issued as proposed by the Consolidated Commission. Any bonds issued, in whole or in part, to provide funds for accomplishment of the Improvement Agendas may be payable over such term as the Consolidated Commission deems appropriate, which term may extend beyond the period of equalizing water rates throughout Little Rock and North Little Rock. Section 3.08 Sales to New Out -of -Area Customers. The Consolidated Commission shall have authority to sell water to new customers located outside of Little Rock and North Little Rock. ARTICLE IV CONSOLIDATION OF ASSETS AND OPERATIONS Section 4.01 Closing. Subject to the Authorizing Legislation being enacted into law and taking effect on or prior to June 30, 2001, the transactions effecting the Consolidation (the "Closing ") shall take place at the offices of Wright, Lindsey & Jennings LLP, 200 West Capitol Avenue, Suite 2200, Little Rock, Arkansas, or at such other place as the Parties may agree upon, at 10:00 A.M. on June 29, 2001 (the "Closing Date ") and shall be deemed effective as of midnight on June 30, 2001 (the "Effective Time "). Section 4.02 Conveyance of Assets. On the Closing Date, but effective as of the Effective Time: (i) the LR Commission shall grant, convey, assign, transfer, and deliver to the Consolidated Entity all assets and liabilities of the LR Water Works except such of its real 01/09 /01 6 0 0 properties and improvements that it grants, conveys, assigns, transfers, and delivers to Little Rock; (ii) the NLR Commission shall grant, convey, assign, transfer, and deliver to the Consolidated Entity all assets and liabilities of the NLR Water Department except such of its real properties and improvements that it grants, conveys, assigns, transfers, and delivers to North Little Rock; (iii) Little Rock shall "Lease" (as defined below) to the Consolidated Entity any of Little Rock's real properties and improvements that are integrally related to the operations of the LR Water Works (including any received by it from the LR Commission under clause (i) above) and as to which Little Rock desires to retain title (the "LR Retained Properties "); (iv) Little Rock shall grant, convey, assign, transfer, and deliver to the Consolidated Entity the assets of Little Rock (other than the LR Retained Properties) that are integrally related to the operations of the LR Water Works; (v) North Little Rock shall "Lease" (as defined below) to the Consolidated Entity any of North Little Rock's real properties and improvements that are integrally related to the operations of the NLR Water Department (including any received by it from the NLR Commission under clause (ii) above) and as to which North Little Rock desires to retain title (the "NLR Retained Properties "); and (vi) North Little Rock shall grant, convey, assign, transfer, and deliver to the Consolidated Entity the assets of North Little Rock (other than the NLR Retained Properties) that are integrally related to the operations of the NLR Water Department; provided, however, that none of the Parties shall be required, at the Closing, to grant, convey, assign, transfer, or deliver to the Consolidated Entity any reserve funds that are held in trust pursuant to Ark. Code Ann. § 14 -73 -101 et seq. For purposes of clauses (iii) and (v) above, a "Lease" of the LR Retained Properties or the NLR Retained Properties shall mean a lease, license, or other agreement with a renewable term of not less than 99 years under which the Consolidated Entity is granted an exclusive right to use the properties, subject to any uses and any contracts described in the paragraph immediately following. Each Lease shall: (A) include a schedule of all uses and contracts existing at the Effective Time providing for non -water system- related uses of the leased properties (e.g., recreational uses, contracts for the placement of communications equipment on water towers, leases of marinas), (B) provide that all revenues from such leases of marinas shall be allocated one hundred percent (100 %) to the Consolidated Entity and all revenues from all other scheduled uses and contracts shall be allocated eighty -five percent (85 %) to the relevant City Party and fifteen percent (15 %) to the Consolidated Entity, and 01/09/01 7 0 0 (C) provide that none of the scheduled contracts shall be amended, nor new non -water system- related uses commenced or contracts entered into, nor property sold after the Effective Time except as mutually agreed by the relevant City Party and the Consolidated Entity. Conveyances of assets and liabilities under this Section shall be in consideration exclusively of the mutual covenants and promises contained in this Agreement, there being no monetary consideration required except as expressly provided in this Agreement, and shall be made by Leases, quitclaim deeds, bills of sale, assignments, and other instruments as shall have been recommended by the Interim Board and as are reasonably acceptable to the Parties. (D) provide (1) that the proceeds of sale of any property used in connection with administration, source, or treatment functions of the Consolidated Entity be paid to and utilized by the Consolidated Entity for capital expenditures consisting of administration, source, or treatment facilities and (2) that the proceeds of sale of any property used in connection with distribution functions of the Consolidated Entity be paid to and utilized by the Consolidated Entity for capital expenditures consisting of distribution facilities in the same city in which the distribution facilities being sold are located. Section 4.03 Employees. On the Closing Date, but effective as of the Effective Time, the Consolidated Entity shall offer employment to all employees of the Commission Parties, on such terms and conditions as the Consolidated Commission shall have approved upon recommendation of the Interim Board in consultation with the Parties. It is the intent of the Parties that the Consolidation shall not result in the layoff or termination of any person who is employed by the Commission Parties as of the Effective Time. The Parties agree that for a period of not to exceed 12 months following the Effective Time, such employees may not be discharged involuntarily except for "just cause'; provided, however, that nothing contained herein shall be construed to prevent the Consolidated Entity from offering incentives to such employees to encourage early retirement. All persons employed by the Consolidated Entity after the Effective Time will be considered at -will employees and will not be affected by the terms of this Section. Section 4.04 Termination of LR and NLR Commissions. Each of the LR Commission and the NLR Commission shall cease to exist as of the Effective Time, unless it holds reserve funds in trust pursuant to Ark. Code Ann. § 14 -73 -101 et seq, in which event it shall continue thereafter solely for the purpose of disbursing funds to the Consolidated Entity pursuant to the terms of the applicable trust and, having fully disbursed such funds, shall terminate. Each City Party shall take any actions necessary to effect termination of its related Commission Party at the time specified by the preceding sentence. The Consolidated Commission shall have access as necessary to each Commission Party's books and records, and upon termination of a Commission Party, its books and records shall transfer to and become the property of the Consolidated Commission. ARTICLE V OPERATION OF CONSOLIDATED SYSTEM Section 5.01 Financing of Operations. All operating expenditures, capital expenditures, and other costs and obligations of owning and operating the Consolidated System shall be financed from the Consolidated Entity's operating and other revenues, or proceeds of borrowings under Ol/09/0) 8 9 • which the Consolidated Entity is the obligor. Neither Little Rock nor North Little Rock shall have any obligation to contribute financial support or services to the Consolidated Entity following the Consolidation. The Consolidated Entity shall have no authority to, and shall not, pledge the full faith and credit of Little Rock or North Little Rock to the payment of any of its obligations. Section 5.02 Franchise Fee. Each City Party may determine the terms and conditions, including a reasonable franchise fee, upon which the Consolidated Entity may be permitted to occupy the streets, highways, or other public places within that city, provided that no franchise fee shall exceed ten percent (10 %) of the Consolidated Entity's operating revenues that are attributable to gross income from water sales within that city. The Consolidated Entity shall have the authority to collect from its customers residing in Little Rock or North Little Rock, as appropriate, an amount which equals the franchise fee assessed by the corresponding City Party on the Consolidated Entity. Section 5.03 Economic Cooperation. The Consolidated Commission and the Consolidated Entity may cooperate as reasonably requested by the Little Rock Board of Directors and/or the North Little Rock City Council in public projects that are intended to promote the economic or cultural growth of the metropolitan Little Rock/North Little Rock area. Section 5.04 Donations to Charitable Organizations and Chambers of Commerce. In addition to the franchise fee in Section 5.02 and the economic cooperation set forth in Section 5.03, the Consolidated Commission may contribute an amount not to exceed one percent (1 %) annually of the Consolidated Entity's revenues to the entities and for the purposes set forth in Ark. Code Ann. § 14- 234- 307(b) and (c). Section 5.05 Reporting. Not less often than annually the Consolidated Commission shall make a report of the operations of the Consolidated Entity, including an audit prepared by an independent certified public accountant, to the Little Rock Board of Directors and the North Little Rock City Council. Section 5.06 Quality of Operations. The Consolidated Commission shall use its best efforts to operate and maintain the Consolidated System in such a manner as to (i) preserve an excellent quality of drinking water, (ii) maintain good working relationships with the Environmental Protection Agency, the Arkansas Department of Health, and other governmental agencies deemed appropriate by the Consolidated Commission, and (iii) allow the City Parties to maintain fire ratings of "Class IP' or better under the Insurance Services Offices fire - rating system. Section 5.07 Extensions of Service. At the request of the Little Rock Board of Directors or the North Little Rock City Council, as appropriate, and subject to their granting to the Consolidated Entity any necessary easements, franchises, permits, and licenses, the Consolidated Commission may as soon as prudent make water service available to residents of newly - annexed or unserved areas of Little Rock and North Little Rock, respectively. Section 5.08 Payments in Lieu of Taxes. The Consolidated Entity shall pay to each City Party annually an amount that is equal to the ad valorem taxes that would have been payable to such City Party in respect of the Consolidated Entity's real property and improvements (including any real property and improvements subject to a Lease as defined in Section 4.02) located within 01/09/01 9 's 0 the corporate limits of such City Party, had such real property and improvements been subject to ad valorem taxation. For purposes of this Section the Consolidated Entity's real property and improvements shall be deemed to have an assessed value equal to twenty percent (20 %) of book value. Payments to the City Parties under this Section shall be made at such time or times as ad valorem taxes are generally due. ARTICLE VI REGIONALIZATION Section 6.01 Regionalization. The Consolidated Commission shall immediately announce its intention to begin planning for a third source of water, acknowledge that it recognizes that other municipalities and other governmental and not - for - profit entities also will have interest in a new source, and express its desire to proceed in a broad -based process to arrive at a regional decision. ARTICLE VII TERMINATION Section 7.01 Termination. This Agreement may be terminated at any time by the City Parties, acting through the Little Rock Board of Directors and the North Little Rock City Council, provided that both bodies, by two- thirds majorities and within sixty (60) days of each other, enact substantively identical ordinances providing for the termination of this Agreement, and further provided that such ordinances provide fully for the payment of any outstanding bonds or other indebtedness of the Consolidated Entity. Section 7.02 Disposition of Property Upon Termination. If this Agreement shall be terminated, except as the Parties may otherwise agree, all assets and liabilities of the Consolidated Entity shall be distributed to the City Parties as follows: (i) any unique property that was conveyed by Little Rock or the LR Commission to the Consolidated Entity, and any improvements to such properties made by the Consolidated Entity, shall be conveyed, together with any directly associated liabilities and obligations, to Little Rock ( "LR Contributed Assets "); (ii) any unique property that was conveyed by North Little Rock or the. NLR Commission to the Consolidated Entity, and any improvements to such properties made y the Consolidated Entity, shall be conveyed, together with any directly associated liabilities and obligations, to North Little Rock ( "NLR Contributed Assets "); and (iii) (A) any property purchased by the Consolidated Entity from revenues of the Consolidated System and not readily identifiable as LR Contributed Assets or NLR Contributed Assets, (B) any monies or investments of the Consolidated Entity, or rights to payment, and (C) any other assets, liabilities, or obligations that are not readily classified as or associated with LR Contributed Assets or NLR Contributed Assets shall be conveyed, pro rata to Little Rock and North Little Rock, based upon the relative percentage of revenues that the Consolidated Entity 01/09/01 10 0 received in the most recently completed calendar year from customers located in Little Rock and North Little Rock, respectively. ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.01 Amendment. This Agreement may be amended, from time to time, by mutual agreement of the City Parties, acting in good faith through the Little Rock Board of Directors and the North Little Rock City Council, provided that both bodies, within sixty (60) days of each other, enact substantively identical ordinances providing for the amendment of this Agreement; provided, however, that (i) following the Effective Time, any amendment of this Agreement shall require a two- thirds majority of the Little Rock Board of Directors and the North Little Rock City Council, (ii) following the Effective Time, any amendment of this Agreement shall not require the agreement of the Commission Parties, (iii) no amendment of this Agreement shall impair the security or payment of any bonds issued by the Consolidated Commission that are then outstanding, nor shall any such amendment violate the trust indenture or any other instrument under which such bonds are issued, and (iv) any amendment of this Agreement shall be submitted to the Attorney General of the State as required by the Act, and such amendment shall not be effective until approved by the Attorney General or such time has expired as would constitute the approval by the Attorney General under the Act. Section 8.02 Governing Law. This Agreement shall be construed in accordance with the provision of the Act and the laws of the State. Section 8.03 Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof, if, as a result of such determination, the remainder of this Agreement is in compliance with the Act. Section 8.04 Execution of Counterparts. This Agreement may be executed in counterparts, each of which shall be an original and all of which shall be one and the same instrument. Section 8.05 Captions. The captions or headings of this Agreement and the articles and sections thereof are for convenience only, and in no way define, limit, or describe the scope or intent of any provision of this Agreement. Section 8.06 Notices. All notices, certificates, requests, or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 01109/01 11 0 If intended for Little Rock: City of Little Rock, Arkansas City Hall 500 West Markham Street Little Rock, Arkansas 72201 Attention: Mayor If intended for North Little Rock: City of North Little Rock, Arkansas P.O. Box 5757 North Little Rock, Arkansas 72119 Attention: Mayor If intended for the LR Commission: Little Rock Municipal Water Commission 221 East Capitol Avenue Little Rock, Arkansas 72201 Attention: Chief Executive Officer If intended for the NLR Commission: North Little Rock Water Commission 1500 West Maryland Street North Little Rock, Arkansas 72120 Attention: Manager 0 Any Party may, by notice given hereunder to the others, designate any further or different addresses to which subsequent notices, certificates, requests, or other communications shall be sent hereunder. Following the creation of the Consolidated Commission, copies of all notices, certificates, requests, or other communications hereunder shall be given to the Consolidated Commission at such address as it shall designate to the Parties. Section 8.07 Limitation of Rights. This Agreement and all of the covenants, conditions, and provisions hereof are intended to be and are for the sole and exclusive benefit of the Parties, and nothing expressed or mentioned in or to be implied from this Agreement is intended or shall be construed to give to any person other than the Parties any legal or equitable right, remedy, or claim under or in respect to this Agreement. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written. 01/09/0) 12 • CITY OF LITTLE ROCK, ARKANSAS 0 Jim Dailey, Mayor CITY OF NORTH LITTLE ROCK, ARKANSAS in Patrick Henry Hays, Mayor BOARD OF COMMISSIONERS OF LITTLE ROCK MUNICIPAL WATER WORKS ME M. Jane Dickey, Chair BOARD OF COMMISSIONERS OF NORTH LITTLE ROCK WATER DEPARTMENT EIR CONSENTED TO BY: ATTORNEY GENERAL OF THE STATE OF ARKANSAS 01/09/01 13 Francille Turbyfill, Chair 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 EXHIBIT A . Form of Proposed Authorizing Legislation Stricken language would be deleted from and underlined language would be added to law as it existed prior to the 83rd General Assembly. State of Arkansas 83rd General Assembly A Bill Regular Session, 2001 [Senate][House] Bill 0 For An Act To Be Entitled "AN ACT TO AMEND THE INTERLOCAL COOPERATION ACT TO AUTHORIZE PUBLIC AGENCIES TO CREATE CONSOLIDATED WATERWORKS SYSTEMS; TO AMEND ARK. CODE ANN. § 25 -20- 104; AND FOR OTHER PURPOSES." Subtitle "AN ACT TO AUTHORIZE PUBLIC AGENCIES TO CREATE CONSOLIDATED WATERWORKS SYSTEMS." BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: SECTION 1. Title 25, Chapter 20 of the Arkansas Code Annotated is 20 hereby amended by inserting a new subchapter 3 to read as follows: 21 "SUBCHAPTER 3 22 CONSOLIDATED WATERWORKS SYSTEMS 23 25 -20 -301. Title. 24 This subchapter may be referred to and cited as the "Consolidated 25 Waterworks Authorization Act." 26 25 -20 -302. Creation. 27 (a) Any two (2) or more public agencies entering into an interlocal 28 agreement under Ark. Code Ann. 4 25 -20 -101 et seq. for the purpose of 29 consolidating their waterworks systems are hereby authorized to create a 01/09/01 A -1 0 0 1 public body corporate and politic as a separate legal entity for the purpose 2 of constructing, owning, managing, operating, financing, improving, 3 extending, acquiring, reconstructing, equipping, selling, leasing, 4 contracting concerning, dealing in, disposing of, and maintaining such 5 consolidated waterworks system. 6 (b) The governing body of each public agency wishing to create a 7 public body under this subchapter shall, by ordinance or resolution, or 8 otherwise pursuant to law, approve the filing of an application with the 9 Secretary of State to create a public body under this subchapter, and approve 10 an interlocal agreement specifying the matters set forth in Ark. Code Ann. 11 25 -20 -104. The interlocal agreement shall, additionally: 12 (1) Specify any limitations on the exercise of the public body's 13 powers, including such matters, if any, as to which the participating public 14 agencies reserve rights to approve, disapprove, or otherwise participate in 15 any exercise of the public body's powers; 16 (2) Provide for such reasonable franchise fees, payments in lieu of 17 taxes, or other payments by the public body to the participating public is agencies as the public agencies may deem appropriate; 19 (3) Specify the number of commissioners of the public body, the terms 20 of office of such commissioners, the manner of appointing or electing such 21 commissioners, the residency requirements, if any, applicable to 22 commissioners in addition to those set forth in this subchapter, and the 23 voting rights of each commissioner, which voting rights may vary by 24 commissioner; and 25 (4) Set forth such other matters, not inconsistent with this 26 subchapter, with respect to the creation and operation of the public body as 27 the participating public agencies may deem necessary or appropriate. 28 (c)(1) An application to create a public body under this 29 subchapter shall then be prepared, setting forth: 01 /09/01 A-Z 0 0 1 (A) A request that a public body corporate and politic be 2 created under this subchapter; 3 (B) The proposed name for the public body; 4 (C) The names of the participating public agencies; 5 (D) The number of commissioners of the public body; 6 (E) The manner in which commissioners of the public body will 7 be appointed or elected and the residency requirements, if any, applicable to 8 commissioners in addition to those set forth in this subchapter; 9 (F) The voting rights of each commissioner; 10 (G) Special procedures for amending the certificate of 11 incorporation, if any; and 12 (H) Such other matters, not inconsistent with this subchapter, 13 with respect to the creation and operation of the public body as the 14 participating public agencies may deem necessary or appropriate. 15 (2) The application shall be signed on behalf of each participating 16 public agency by an authorized official of such public agency. 17 (d)(1) The Secretary of State shall examine the application and, 18 if the Secretary of State finds that the name proposed for the public body is 19 not identical with that of any other corporation, agency, or instrumentality 20 of this state, so nearly similar as to lead to confusion and uncertainty, or 21 otherwise deceptively misleading, the Secretary of State shall: 22 (A) Receive and file the application; 23 (B) Record it in an appropriate book of record in his or her 24 office; 25 (C) Make and issue a certificate of incorporation under the 26 seal of the state setting forth the name of the public body and the names of 27 the participating public agencies; and 28 (D) Record the certificate in an appropriate book of record in 29 his or her office. 01 109 /0I A-3 1 (2) A copy of the certificate of incorporation, certified by the 2 Secretary of State, shall be admissible in evidence in any suit, action, or 3 proceeding involving the validity or enforcement of, or relating to, any 4 contract of the public body and shall be conclusive proof of the filing and 5 contents of the certificate and the effective creation of the public body 6 under this subchapter, absent fraud in the premises being established. 7 (e)(1) Any certificate of incorporation issued by the Secretary of 8 State pursuant to the provisions of this subchapter may be amended from time 9 to time in the manner provided in the certificate of incorporation then 10 existing or, if the certificate of incorporation does not specify a procedure 11 for its amendment, with the consent of a majority of the commissioners of the 12 public body who are entitled to vote. 13 (2) The amendment shall be signed by an officer or other authorized 14 person of the public body, who shall certify that the certificate of 15 incorporation has been duly amended in accordance with the procedures of this 16 subchapter and, as applicable, in the manner prescribed in the then existing 17 certificate of incorporation. Upon filing of the amendment with the Secretary 18 of State in the manner provided in this section, the Secretary of State shall 19 make and issue an amendment to the certificate of incorporation. 20 25-20 -303. Contributions of public agency properties. 21 Participating public agencies are authorized to contribute to a public 22 body created under this subchapter such real and personal property of the 23 participating public agencies as the participating public agencies shall deem 24 necessary or appropriate to the ownership and operation of a consolidated 25 waterworks system by the public body, provided, however, that any 26 contributions of reserve funds held in trust under Ark. Code Ann. 5 14 -73 -101 27 et seq. shall be made on the condition that such funds may be used only for 28 the purposes described in the trust agreement and until so used shall remain 29 in a trust fund complying with the requirements of Ark. Code Ann. § 14 -73 -101 01/09/01 A -4 • • 1 et seq. Contributions of properties under this section shall be upon such 2 terms and conditions and for such consideration as the participating public 3 agencies may determine to be just and proper, it being within the 4 participating public agencies' discretion to contribute property with or 5 without monetary consideration. Participating public agencies shall have 6 power to execute any and all contracts, leases, deeds, bills of sale, 7 easements, assignments, and other instruments of conveyance as may be 8 required or convenient to exercise the powers granted in this section. 9 25 -20 -304. Board of commissioners. 10 (a)(1) Each public body created under this subchapter shall have a 11 board of commissioners consisting of at least three (3) commissioners, with 12 each commissioner residing within the jurisdiction of one of the 13 participating public agencies and otherwise meeting any residency 14 requirements set forth in the public body's certificate of incorporation. 15 (2) Each commissioner shall be appointed or elected in the manner set 16 forth in the public body's certificate of incorporation and shall serve a 17 term of office as specified in the interlocal agreement. 18 (b) The commissioners shall receive no compensation for their 19 services, but they shall be entitled to reimbursement of expenses incurred in 20 the performance of their duties. 21 (c) Before entering upon their duties, the commissioners shall take 22 and file with the Secretary of State an oath of office swearing to discharge 23 faithfully their duties in the manner provided by law. 24 (d)(1) The board of commissioners shall meet and organize by 25 electing one of their number as chairman, one as vice - chairman, one as 26 secretary, and one as treasurer and such officers shall be elected annually 27 thereafter in like manner. 28 (2) The duties of secretary and treasurer may be performed by the 29 same commissioner. o vo9Jo t A -5 0 • 1 (3) The secretary may cause copies to be made of all minutes and 2 other records and documents of the public body. The secretary may give 3 certificates under the official seal of the public body to the effect that 4 the copies are true copies, and all persons dealing with the public body may 5 rely upon the certificates. 6 25 -20 -305. Powers and duties of board of commissioners. 7 All powers of any public body created under this subchapter shall be 8 exercised by or under the authority of, and the business and affairs of the 9 public body managed under the direction of, its board of commissioners, 10 subject to any limitation set forth in the public body's certificate of 11 incorporation or interlocal agreement. The duties of the board of 12 commissioners shall include, but not be limited to: 13 (a) Appointing a chief executive officer, who shall not be a member 14 of the board of commissioners, and shall set compensation and other terms of 15 employment for such officer; 16 (b) Approving all budgets of the public entity; 17 (c) Adopting such rules, regulations, and by -laws as the board of is commissioners may deem necessary and expedient for the proper ownership and 19 operation of the consolidated waterworks system, and altering, changing, or 20 amending the rules, regulations, and by -laws at its discretion; and 21 (d) Performing such other duties as shall be set forth in the 22 interlocal agreement. 23 25-20 -306. General powers of public body. 24 (a) In addition to exercising the powers set forth elsewhere in this 25 subchapter, and unless its certificate of incorporation or interlocal 26 agreement provides otherwise, each public body created under this subchapter 27 shall have the power to: 28 (1) Have perpetual succession as a body politic and corporate; 29 (2) Maintain such offices as it may deem appropriate; 01/0WO1 A-6 0 0 1 (3) Execute and perform contracts; 2 (4) Sue and be sued; 3 (5) Apply for and receive permits, licenses, certificates, and 4 approvals as may be necessary and own and operate facilities in accordance 5 therewith; 6 (6) Employ the services of all personnel necessary to its operations 7 and, in connection therewith, adopt and implement such healthcare, 8 disability, bonus, retirement, and other employee benefit plans as the board 9 of commissioners shall deem appropriate; 10 (7) Employ the services of professionals; 11 (B) Purchase insurance, maintain reserves for self- insurance, and 12 become self- insured for the payment of compensation under the workers' 13 compensation law by compliance with the requirements of Ark. Code Ann. § 11- 14 9- 404(a)(2), provided that deposit of an indemnity bond, letter of credit, or 15 securities shall not be required; 16 (9) Purchase, receive, own, hold, improve, use, lease, sell, convey, 17 exchange, transfer, assign, mortgage, pledge, and otherwise acquire, dispose 18 of, and deal with real and personal property and any legal or equitable 19 interest therein in its own name; 20 (10) Apply for, receive, and use loans, grants, taxes, donations, and 21 contributions from any public agency or other lawful source, including any 22 proceeds from the sale of bonds; 23 (11) Borrow money on a secured or unsecured basis, and in connection 24 therewith issue bonds, promissory notes, or other evidence of indebtedness, 25 and make and deliver indentures, mortgages, pledges, security agreements, 26 financing statements, and other instruments encumbering assets of the public 27 body; 01/09/01 A-7 1 (12) Pay reasonable franchise fees, make payments in lieu of taxes, or 2 otherwise make payments to the participating public agencies in such amounts 3 as may be required or permitted by the participating public agencies; 4 (13) Exercise such other powers, privileges, and authorities as the 5 participating public agencies shall have delegated to the public body by 6 their interlocal agreement, subject to any restrictions imposed thereon by 7 the interlocal agreement or applicable law; 8 (14) Have such other and further powers relating to the ownership and 9 operation of waterworks systems as are now by law given to the governing body 10 of any participating public agency and do any and all other acts and things 11 necessary, convenient, or desirable to carry out the purposes of, and to 12 exercise the powers granted to the public body by, this subchapter. 13 (b) A public body created under this subchapter shall constitute a 14 separate legal entity, but, to the extent provided by state law or set forth 15 in the certificate of incorporation of the public body or the interlocal 16 agreement of the participating public agencies, shall be subject to the 17 further supervision or regulation, or require the further approval or is consent, of any participating public agency. 19 25 -20 -307. Operation of consolidated waterworks system. 20 (a) "Consolidated waterworks system" means and includes a waterworks 21 and distribution system in its entirety, or any integral part thereof, 22 including land, mains, pipelines, hydrants, meters, valves, standpipes, 23 storage tanks, storage basins, pumping tanks, intakes, wells, clear water 24 wells, impounding reservoirs, lakes, watercourses, pumps, purification plants 25 and units thereof, filtration plants and units thereof, as well as all other 26 real and personal property, buildings, structures or other improvements or 27 facilities as may be necessary or advisable for the proper and efficient 28 operation of the public body's facilities. 01/09/01 A-8 I (b) Unless the interlocal agreement provides otherwise, a public body 2 created under this subchapter shall have full authority to construct, own, 3 manage, operate, finance, improve, extend, acquire, reconstruct, equip, sell, 4 lease, contract concerning, deal in, dispose of, and maintain a consolidated 5 waterworks system. The assets of the public body may be located inside and 6 outside the jurisdictions of the public body's participating public agencies. 7 (c) Unless the interlocal agreement provides otherwise, a public body 8 created under this subchapter shall have full authority to fix, charge, and 9 collect and from time to time change the rates for water and other goods and 10 services provided by the public body. A public body shall have a reasonable 11 time after its creation, or after its expansion by the addition of a new 12 participating public agency, to equalize any differentials in water rates 13 among similarly situated classes of customers. It shall be a complete defense 14 to any suit or claim based on the charging of differential rates for 15 similarly situated classes of customers that: 16 (1) Within one (1) year of the creation or expansion of the public 17 body, an independent expert completes a study of rates charged customers that is shows a differential in rates among similarly situated classes of customers 19 located within the jurisdictions of the participating public agencies, and 20 the public body equalizes rates among similarly situated classes of customers 21 within ten (10) years of the date of the rate study; or 22 (2) Within one (1) year of the creation or expansion of the public 23 body, an independent expert completes an engineering study of the water 24 system infrastructure located within the jurisdictions of the participating 25 public agencies that identifies improvements needed to create a uniform 26 infrastructure quality throughout the jurisdictions, rate differentials among 27 otherwise similarly situated classes of customers are reasonably calculated 28 to recover from customers located in the jurisdiction(s) in which the 29 improvements are made the costs incurred in making the improvements, and the 01109101 A -9 0 0 1 public body equalizes rates among similarly situated classes of customers 2 within ten (10) years of the date of the engineering study. 3 The inability of a public body to rely upon either "safe harbor" defense set 4 out in clauses (1) and (2) above shall not create any implication that the S public body has failed to equalize any differentials in water rates among 6 similarly situated classes of customers within a reasonable period of time 7 after its creation or expansion. 8 25 -20 -308. Out -of -area sales and services. 9 (a) Any public body created under this subchapter may; 10 (1) Extend its distribution system, and provide water and 11 services, to any consumer located outside the jurisdictions of the public 12 body's participating public agencies; and 13 (2) Sell surplus water to any municipality, improvement 14 district, or other person engaged in the business of selling and distributing 15 water to consumers, whether such municipality, improvement district, or other 16 person is located within or outside the jurisdictions of the public body's 17 participating agencies. 18 (b) Sales of water and extensions of services authorized under this 19 section may be made at such rates and on such other terms as the board of 20 commissioners may deem just and reasonable, and the rates need not be the 21 same as the rates charged customers within the jurisdictions of the public 22 body's participating public agencies. 23 25 -20 -309. Eminent domain. 24 Any public body created under this subchapter may acquire by the 25 exercise of the power of eminent domain any real property that it may deem 26 necessary for its purposes, in the manner prescribed in Ark. Code Ann. § 18- 27 15 -301 et seq. or Ark. Code Ann. § 18 -15 -401 et seq., or in the manner 28 provided by any other statutory provisions under which one of the public 29 body's participating public agencies may exercise a power of eminent domain. 01109/01 A -10 0 0 1 In exercising such power of eminent domain, the public body shall have the 2 right by its agents or employees to peacefully enter upon any lands, 3 structures, or rights -of -way to make surveys, tests, and measurements 4 thereon, but is liable for any damage that may result by reason of its acts. 5 25 -20 -310. Improvements - Financing with bonds. 6 (a) whenever any public body created under this subchapter shall own 7 or operate a consolidated waterworks system and shall desire to construct 8 improvements, betterments, and extensions thereto, it may issue revenue bonds 9 under the provisions of this section to pay for them. The procedure for 10 issuance of bonds shall be as provided in this section. 11 (b) Bonds issued in accordance herewith shall be authorized by 12 resolution of the board of commissioners. The bonds may be issued as 13 registered bonds and may be exchangeable for bonds of another denomination or 14 in another form. The bonds may be in such form and denominations, may have 15 such date or dates, may be stated to mature at such time or times, may bear 16 interest payable at such times and at such rate or rates, may be payable at 17 such places within or without the state, may be subject to such terms of 18 redemption in advance of maturity at such prices, and may contain such terms 19 and conditions, all as the board of commissioners shall determine. The bonds 20 shall have all the qualities of and shall be deemed to be negotiable 21 instruments under the laws of the State of Arkansas, subject to provisions as 22 to registration as set forth above. The authorizing resolution may contain 23 any other terms, covenants, and conditions that the board of commissioners 24 deems reasonable and desirable, including, without limitation, those 25 pertaining to the maintenance of various funds and reserves, the nature and 26 extent of any security for payment of the bonds, the custody and application 27 of the proceeds of the bonds, the collection and disposition of revenues, the 28 investing for authorized purposes, and the rights, duties, and obligations of 29 the public body and the holders and registered owners of the bonds. 01/09/01 A -1 1 0 0 1 (c) The authorizing resolution may provide for the execution of a 2 trust indenture between the public body and any financial institution within 3 or without the State of Arkansas. The trust indenture may contain any terms, 4 covenants, and conditions that are deemed desirable by the board of 5 commissioners including, without limitation, those pertaining to the 6 maintenance of various funds and reserves, the nature and extent of any 7 security for the payment of the bonds, the custody and application of the 8 proceeds of the bonds, the collection and disposition of revenues, the 9 investing and reinvesting of any moneys during periods not needed for 10 authorized purposes, and the rights, duties, and obligations of the public 11 body and the holders and registered owners of the bonds. 12 (d) Any authorizing resolution and trust indenture relating to the 13 issuance and security of the bonds shall constitute a contract between the 14 public body and holders and registered owners of the bonds, which contract, 15 and all covenants, agreements, and obligations therein, shall be promptly 16 performed in strict compliance with the terms and provisions of such 17 contract, and the covenants, agreements, and obligations of the public body is may be enforced by mandamus or other appropriate proceeding at law or in 19 equity. 20 (e)(1) The resolution shall fix the minimum rate or rates for 21 water to be collected prior to the payment of all of the bonds, with 22 exceptions as may be provided in the resolution, and shall pledge the 23 revenues derived from the consolidated waterworks system or any specified 24 portion of the consolidated waterworks system for the purpose of paying the 25 bonds and interest thereon. 26 (2) The rates to be charged for the services of the consolidated 27 waterworks system, or the specified portion of the consolidated waterworks 28 system with revenues pledged to the payment of the bonds, shall be sufficient 29 to provide for the payment of all principal of and interest on all bonds as 01/09/01 A -12 0 0 1 and when due, to provide for the operation and maintenance of the 2 consolidated waterworks system or the specified portion of the consolidated 3 waterworks system with revenues pledged to the payment of the bonds, and to 4 provide an adequate depreciation account for the consolidated waterworks 5 system or the specified portion of the consolidated waterworks system with 6 revenues pledged to the payment of the bonds. 7 (f)(1) The proceeds derived from the sale of the bonds shall be 8 used solely for the purpose of making betterments, improvements, and 9 extensions to the consolidated waterworks system owned and operated by the 10 public body, paying interest on the bonds during the period of construction 11 of the betterments, improvements, and extensions, establishing any necessary 12 reserves for the bonds, paying the costs of issuing the bonds, and paying any 13 other costs and expenditures of whatever nature incidental to the 14 accomplishment of the betterments, improvements, and extensions. 15 (2) The terms "betterments," "improvements," and "extensions" include 16 land, mains, pipelines, hydrants, meters, valves, standpipes, storage tanks, 17 storage basins, pumping tanks, intakes, wells, clear water wells, impounding is reservoirs, lakes, watercourses, pumps, purification plants and units 19 thereof, filtration plants and units thereof, as well as all other real and 20 personal property, buildings, structures or other improvements or facilities 21 as may be necessary or advisable for the proper and efficient operation of 22 the public body's consolidated waterworks system. 23 (g)(1) Bonds issued under the provisions of this section shall be 24 payable solely from revenues derived from such consolidated waterworks system 25 or any specified portion of the consolidated waterworks system. 26 (2) The bonds shall not in any event constitute an indebtedness of, 21 nor pledge the faith and credit of, the State of Arkansas or the 28 participating public agencies within the meaning of any constitutional 29 provisions or limitations. 01109/01 A -13 1 (3) It shall be plainly stated on the face of each bond that it is 2 issued under the provisions of this subchapter and that it does not 3 constitute an indebtedness of the State of Arkansas or the participating 4 public agencies within any constitutional provisions or limitations, and that 5 it is not backed by the full faith and credit of the State of Arkansas or the 6 participating public agencies. 7 (4) The bonds and the interest thereon shall be exempt from all 8 taxation, state, county, and municipal. This exemption includes income 9 taxation and inheritance taxation. 10 (h)(1) The bonds may be sold in such manner, either at public or 11 private sale, and upon 'such terms as the board of commissioners shall 12 determine to be reasonable and expedient for effectuating the purposes of the 13 public body. 14 (2) The bonds may be sold at a price the board of commissioners may 15 accept, including sale at discount. 16 (i)(1) The bonds shall be executed by manual or facsimile 17 signature of the chairman of the board of commissioners and the manual or 18 facsimile signature of the secretary of the board of commissioners or any 19 other officer of the public body authorized to do so by resolution of the 20 board of commissioners. 21 (2) In case any of the officers whose signatures appear on the bonds 22 shall cease to be such officers before delivery of the bonds, their 23 signatures shall, nevertheless, be valid and sufficient for all purposes. 24 (3) Each bond shall be impressed or imprinted with the seal of the 25 public body. 26 25 -20 -311. Lien in favor of bondholders. 27 (a) The payment of the principal of bonds issued under this 28 subchapter and the interest thereon may be secured by a lien on and security 01/09/01 A -14 0 0 1 interest in the consolidated waterworks system or any specified portion of 2 the consolidated waterworks system. 3 (b) It shall not be necessary to the perfection of the lien and 4 pledge for such purposes that the trustee in connection with such bond issue 5 or the holders of the bonds take possession of the collateral security. 6 (c) Subject to whatever restrictions may be contained in the resolution 7 or indenture governing the bonds, any holder of bonds issued under the 8 provisions of this subchapter may, either at law or in equity, enforce the 9 mortgage lien and may, by proper suit, compel the performance of the duties 10 of the officers of the issuing public body set forth in this subchapter. 11 (d) If there be default in the payment of the principal of or interest 12 on any of the bonds, any court having jurisdiction in any proper action may 13 appoint a receiver to administer the consolidated waterworks system, or the 14 specified portion of the consolidated waterworks system pledged to the 15 payment of the bonds, on behalf of the public body with power to charge and 16 collect rates sufficient to provide for the payment of the bonds and interest 17 thereon and for the payment of the operating expenses, and to apply the 18 income and revenues in conformity with this subchapter and the resolution or 19 indenture providing for the issuance of the bonds. 20 25 -20 -312. Refunding bonds. 21 (a) Bonds may be issued for the purpose of refunding any obligations 22 issued under this subchapter or otherwise. Such refunding bonds may be 23 combined with bonds issued under the provisions of § 25 -20 -310 into a single 24 issue 25 (b) When bonds are issued under this section for refunding purposes, 26 the bonds may either be sold or delivered in exchange for the outstanding 27 obligations. If sold, the proceeds may be either applied to the payment of 28 the obligations refunded or deposited in escrow for the retirement thereof 29 either at maturity or upon any authorized redemption date. 01/09/01 A -15 • s 1 (c)(1) All bonds issued under this section shall in all respects 2 be authorized, issued, and secured in the manner provided for other bonds 3 issued under this subchapter and shall have all the attributes of such bonds. 4 (2) The resolution or indenture under which the refunding bonds are 5 issued may provide that any of the refunding bonds shall have the same 6 priority of lien on the revenues pledged for their payment as was enjoyed by 7 the obligations refunded thereby. s 25 -20 -313. Securing deposit of public funds. 9 Bonds issued under this subchapter shall be eligible to secure the 10 deposit of public funds. 11 25 -20 -314. No personal liability. 12 No commissioner or officer of the public body shall be liable 13 personally for any reason arising from the issuance of bonds under this 14 subchapter unless he or she shall have acted with a corrupt intent. 15 25 -20 -315. Recreational use of property. 16 Any public body created under this subchapter shall have the same 17 powers as a municipally owned waterworks system to use its properties for is recreational purposes, subject to any restrictions applying to a municipally 19 owned waterworks system, as set forth in Ark. Code Ann. 4 14- 234 -401 et seq. 20 Consequently, the board of commissioners of a public body created under this 21 subchapter shall be an "operating authority" as defined in Ark. Code Ann. 22 $ 14- 234 -401, and any summons issued under Ark. Code Ann. 4 14- 234 -401 et 23 seq. shall be returnable to the municipal court of any municipality that is a 24 participating public agency or is a municipality located within the 25 jurisdiction of any participating public agency. 26 25 -20 -316. Zoning exemption. 27 Any public body maintaining facilities in an area zoned subsequent to 29 the construction of the facilities may add to, alter, expand, or change the 29 facilities upon that land, or upon lands immediately adjacent thereto, 01/09/01 A -16 • • 1 without regard to the zoning regulation for the area if the board of 2 commissioners deems the action necessary for the proper operation of its 3 consolidated waterworks system. 4 25 -20 -317. Tax exempt status of property owned and income. 5 Each public body created under this subchapter will be performing 6 functions and will be a public instrumentality of the participating public 7 agencies. Accordingly, all properties at any time owned by the public body, 8 and the income therefrom, shall be exempt from all taxation in the state. 9 25-20 -318. Immunity. 10 This subchapter does not abrogate or in any other manner affect the 11 immunity of the participating public agencies. Such immunity shall extend 12 also to any public body created under this subchapter and to each 13 commissioner, officer, and employee thereof. 14 25 -20 -319. Franchise fees. is Any participating public agency that is an Arkansas municipality or 16 county, acting by ordinance or resolution of its governing body, may require 17 a public body created under this subchapter to pay a reasonable franchise 18 fee, upon which the public body may be permitted to occupy the streets, 19 highways, or other public places within the jurisdiction of such public 20 agency, and the ordinance or resolution shall be deemed prima facie 21 reasonable, provided that no franchise fee shall exceed ten percent (10%) of 22 the public body's operating revenues that are attributable to gross income 23 from water sales within such public agency's jurisdiction unless agreed to by 24 the public body or approved by the voters of the public agency. No public 25 body created under this subchapter shall be a "public utility" within the 26 meaning of Ark. Code Ann. § 4- 200 -101 et seq. or a "person, company, or 27 corporation which has secured a franchise from any municipality" within the 28 meaning of Ark. Code Ann. § 14- 200 -102. Any franchise fees charged under 01/09/01 A -17 • • 1 authority of this section shall be in addition to payments in lieu of taxes 2 permitted by this subchapter. 3 25 -20 -320. Payments in lieu of taxes. 4 A public body created under this subchapter shall make annual payments 5 to the general fund of each participating public agency that is an Arkansas 6 municipality or county, in lieu of taxes, in return for police, fire, and 7 health protection and in return for administrative and other services 8 furnished by the public agency. The payments shall be an operation and 9 maintenance expense of the public body. In each calendar year the payments 10 shall equal the amount the public agency would have received from the public 11 body as real property taxes for the preceding calendar year if the public 12 body's real property located in the public agency's jurisdiction, whether 13 owned or leased by the public body, had been privately owned and subject to 14 tax by the public agency. For purposes of this computation, the public body's 15 real property shall be deemed to have an assessed value equal to twenty 16 percent (20$) of book value as reflected by the public body's usual 17 accounting procedures. Payments in lieu of taxes made under authority of this is section shall be in addition to any franchise fees permitted by this 19 subchapter. 20 25 -20 -321. Annual Report and Audit. 21 (a) Within the first ninety (90) days of each calendar year, each 22 public body created under this subchapter shall make a written report to the 23 governing bodies of the participating public agencies concerning its 24 activities for the preceding calendar year. 25 (b) Each report shall set forth a complete operating and financial 26 statement covering its operation during the year, including without 27 limitation an audit of the public body's revenues and expenses performed by 28 an independent certified public accountant. 29 25 -20 -322. Provisions supplemental and controlling. 01109101 A -18 0 0 1 This subchapter shall be deemed to provide an additional and 2 alternative method for the doing of the things authorized hereby and shall be 3 regarded as supplemental and additional to powers conferred by other laws. 4 25 -20 -323. Construction. 5 This subchapter shall be liberally construed to accomplish its intent 6 and purposes and shall be the sole authority required for the accomplishment 7 of its purposes, to this end it shall not be necessary to comply with the 8 provisions of other laws relating to the issuance and sale of the bonds by 9 this subchapter authorized, and this subchapter shall be construed as an 10 additional and alternative method for the issuance and sale of bonds." 11 SECTION 2. Subsection (i) of Ark. Code Ann. 4 25 -20 -104 is hereby 12 amended to read as follows: 13 "(i) In addition to the legal or administrative entities which may 14 otherwise be legally created under Arkansas statutes, public agencies may 15 create a separate legal entity in the form of a public body corporate and 16 politic pursuant to Ark. Code Ann. 4 25 -20 -201 at seq. for the purpose of 17 constructing, operating, and maintaining a public library system, or pursuant 18 to this act for the purpose of constructing owning operating financing, 19 and maintaining a consolidated waterworks system." 20 SECTION 3. All provisions of this act of a general and permanent nature 21 are amendatory to the Arkansas Code of 1987 Annotated and the Arkansas Code 22 Revision Commission shall incorporate the same in the Code. 23 SECTION 4. If any provision of this act or the application thereof to 24 any person or circumstance is held invalid, such invalidity shall not affect 25 other provisions or applications of the act which can be given effect without 26 the invalid provision or application, and to this end the provisions of this 27 act are declared to be severable. 28 SECTION 5. All laws and parts of laws in conflict with this act are 29 hereby repealed. 01/09/01 A -19