SB1390 - 561R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 45-105, Arizona Revised Statutes, is amended to read:

START_STATUTE45-105. Powers and duties of director

A. The director may:

1. Formulate plans and develop programs for the practical and economical development, management, conservation and use of surface water, groundwater and the watersheds in this state, including the management of water quantity and quality.

2. Investigate works, plans or proposals pertaining to surface water and groundwater, including management of watersheds, and acquire, preserve, publish and disseminate related information the director deems advisable.

3. Collect and investigate information on and prepare and devise means and plans for the development, conservation and use of all waterways, watersheds, surface water, groundwater and groundwater basins in this state and of all related matters and subjects, including irrigation, drainage, water quality maintenance, regulation of flow, diversion of running streams adapted for development in cooperating with the United States or by this state independently, flood control, use of water power, prevention of soil waste and storage, conservation and development of water for every useful purpose.

4. Measure, survey and investigate the water resources of this state and their potential development and cooperate and contract with agencies of the United States for such purposes.

5. Acquire, hold and dispose of property, including land, rights-of-way, water and water rights, as necessary or convenient for the performance of the groundwater and water quality management functions of the department.

6. Acquire, other than by condemnation, construct, improve, maintain and operate early warning systems for flood control purposes and works for the recovery, storage, treatment and delivery of water.

7. Accept grants, gifts or donations of money or other property from any source, which may be used for any purpose consistent with this title. All property acquired by the director is public property and is subject to the same tax exemptions, rights and privileges granted to municipalities, public agencies and other public entities.

8. Enter into an interagency contract or agreement with any public agency pursuant to title 11, chapter 7, article 3 and contract, act jointly or cooperate with any person to carry out the purposes of this title.

9. Prosecute and defend all rights, claims and privileges of this state respecting interstate streams.

10. Initiate and participate in conferences, conventions or hearings, including congressional hearings, court hearings or hearings of other competent judicial or quasi-judicial departments, agencies or organizations, and negotiate and cooperate with agencies of the United States or of any state or government and represent this state concerning matters within the department's jurisdiction.

11. Apply for and hold permits and licenses from the United States or any agency of the United States for reservoirs, dam sites and rights-of-way.

12. Receive and review all reports, proposed contracts and agreements from and with the United States or any agencies, other states or governments or their representatives and recommend to the governor and the legislature action to be taken on such reports, proposed contracts and agreements. The director shall take action on such reports, if authorized by law, and review and coordinate the preparation of formal comments of this state on both the preliminary and final reports relating to water resource development of the United States army corps of engineers, the United States secretary of the interior and the United States secretary of agriculture, as provided for in the flood control act of 1944 (58 Stat. 887; 33 United States Code section 701-1).

13. Contract with any person for imported water or for the acquisition of water rights or rights to withdraw, divert or use surface water or groundwater as necessary for the performance of the groundwater management functions of the director prescribed by chapter 2 of this title. If water becomes available under any contract executed under this paragraph, the director may contract with any person for its delivery or exchange for any other water available.

14. Recommend to the administrative heads of agencies, boards and commissions of this state, and political subdivisions of this state, rules to promote and protect the rights and interests of this state and its inhabitants in any matter relating to the surface water and groundwater in this state.

15. Conduct feasibility studies and remedial investigations relating to groundwater quality and enter into contracts and cooperative agreements under section 104 of the comprehensive environmental response, compensation, and liability act of 1980 (P.L. 96-510) to conduct such studies and investigations.

16. Dispose informally by stipulation, agreed settlement, consent order or alternative means of dispute resolution, including arbitration, if the parties and director agree, or by default of any case in which a hearing before the director is required or allowed by law.

17. Cooperate and coordinate with the appropriate governmental entities in Mexico regarding water planning in areas near the border between Mexico and Arizona and for the exchange of relevant hydrological information.

B. The director shall:

1. Exercise and perform all powers and duties vested in or imposed on the department and adopt and issue rules necessary to carry out the purposes of this title.

2. Administer all laws relating to groundwater, as provided in this title.

3. Be responsible for the supervision and control of reservoirs and dams of this state and, when deemed necessary, conduct investigations to determine whether the existing or anticipated condition of any dam or reservoir in this state is or may become a menace to life and property.

4. Coordinate and confer with and may contract with:

(a) The Arizona power authority, the game and fish commission, the state land department, the Arizona outdoor recreation coordinating commission, the Arizona commerce authority, the department of health services, active management area water authorities or districts and political subdivisions of this state with respect to matters within their jurisdiction relating to surface water and groundwater and the development of state water plans.

(b) The department of environmental quality with respect to title 49, chapter 2 for its assistance in the development of state water plans.

(c) The department of environmental quality regarding water plans, water resource planning, water management, wells, water rights and permits, and other appropriate provisions of this title pertaining to remedial investigations, feasibility studies, site prioritization, selection of remedies and implementation of the water quality assurance revolving fund program pursuant to title 49, chapter 2, article 5.

(d) The department of environmental quality regarding coordination of databases that are necessary for activities conducted pursuant to title 49, chapter 2, article 5.

5. Cooperate with the Arizona power authority in the performance of the duties and functions of the authority.

6. Maintain a permanent public depository for existing and future records of stream flow, groundwater levels and water quality and other data relating to surface water and groundwater.

7. Maintain a public docket of all matters before the department that may be subject to judicial review pursuant to this title.

8. Investigate and take appropriate action on any complaints alleging withdrawals, diversions, impoundments or uses of surface water or groundwater that may violate this title or the rules adopted pursuant to this title.

9. Adopt an official seal for the authentication of records, orders, rules and other official documents and actions.

10. Provide staff support to the Arizona water protection fund commission established pursuant to by chapter 12 of this title.

11. Exercise and perform all powers and duties invested in the chairperson of the Arizona water banking authority commission as prescribed by chapter 14 of this title.

12. Provide staff support to the Arizona water banking authority established pursuant to by chapter 14 of this title.

13. In the year following each regular general election, present information to the committees with jurisdiction over water issues in the house of representatives and the senate. A written report is not required but the presentation shall include information concerning the following:

(a) The current status of the water supply in this state and any likely changes in that status.

(b) Issues of regional and local drought effects, short-term and long-term drought management efforts and the adequacy of drought preparation throughout the state.

(d) The current state of each active management area and the level of progress toward management goals in each active management area.

(e) Issues affecting management of the Colorado river and the reliability of this state's two million eight hundred thousand acre-foot allocation of Colorado river water, including the status of water supplies in and issues related to the Colorado river basin states and Mexico.

(f) The status of any pending or likely litigation regarding surface water adjudications or other water-related litigation and the potential impacts on this state's water supplies.

(g) The status of Indian water rights settlements and related negotiations that affect this state.

(h) Other matters related to the reliability of this state's water supplies, the responsibilities of the department and the adequacy of the department's and other entities' resources to meet this state's water management needs.

14. Not later than December 1, 2023 and on or before December 1 of each year thereafter, prepare and issue a water supply and demand assessment for at least six of the forty-six fifty-one groundwater basins established pursuant to section 45-403. The director shall ensure that a water supply and demand assessment is completed for all groundwater basins and initial active management areas at least once every five years. The director may contract with outside entities to perform some or all of the assessments and those outside entities shall be identified in the assessment. END_STATUTE

Sec. 2. Section 49-1203, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1203. Powers and duties of authority; definition

A. The authority is a corporate and politic body and shall have an official seal that shall be judicially noticed. The authority may sue and be sued, contract and acquire, hold, operate and dispose of property. Notwithstanding any other law and unless expressly waived by the authority, the authority is not subject to any statutory requirement to pay another party's attorney fees or costs in any administrative or judicial proceeding. The authority is not a public service corporation subject to regulation by the corporation commission.

B. The authority, through its board, may:

1. Issue negotiable water quality bonds pursuant to section 49-1261 for the following purposes:

(a) To generate the state match required by the clean water act for the clean water revolving fund and to generate the match required by the safe drinking water act for the drinking water revolving fund.

(b) To provide financial assistance to political subdivisions, Indian tribes and eligible drinking water facilities for constructing, acquiring or improving wastewater treatment facilities, drinking water facilities, nonpoint source projects and other related water quality facilities and projects.

2. Issue water supply development bonds for the purpose of providing financial assistance to eligible entities for water supply development purposes pursuant to sections 49-1274 and 49-1275.

3. Provide financial assistance to political subdivisions and Indian tribes from monies in the clean water revolving fund to finance wastewater treatment projects.

4. Provide financial assistance to drinking water facilities from monies in the drinking water revolving fund to finance these facilities.

5. Provide financial assistance from monies in the water supply development revolving fund to finance water supply development as prescribed by this article.

6. Guarantee debt obligations of, and provide linked deposit guarantees through third-party lenders to:

(a) Political subdivisions that are issued to finance wastewater treatment projects.

(b) Drinking water facilities that are issued to finance these facilities.

7. Provide linked deposit guarantees through third-party lenders to political subdivisions and drinking water facilities.

8. Apply for, accept and administer grants and other financial assistance from the United States government and from other public and private sources.

9. Enter into capitalization grant agreements with the United States environmental protection agency.

10. Adopt rules pursuant to title 41, chapter 6 governing the application for and awarding of wastewater treatment facility, drinking water facility and nonpoint source project financial assistance under this chapter, administering the clean water revolving fund and the drinking water revolving fund and issuing water quality bonds.

11. Hire a director who serves at the pleasure of the board and who shall hire staff for the authority. The board may prescribe the terms and conditions of the director's and staff's employment as necessary to carry out the purposes of the authority. The board shall adopt written policies, procedures and guidelines, similar to those adopted by the department of administration, regarding officer and employee compensation, observed holidays, leave and reimbursement of travel expenses. The officers and employees of the authority may participate in the state retirement system prescribed by title 38, chapter 5, article 2, and the board, consistent with section 38-656, subsection A, may provide that the authority's officers and employees participate in the state employee health, disability and accident insurance PRESCRIBED by title 38, chapter 4, article 4. The officers and employees of the authority are exempt from any laws regulating state employment, including the following:

(a) Title 41, chapter 4, article 4, relating to the state personnel system.

(b) Title 41, chapter 4, articles 5 and 6, relating to state service.

12. Contract for or employ the services of outside advisors, attorneys, engineers, financial and other consultants and aides reasonably necessary or desirable to allow the authority to adequately perform its duties.

13. Contract and incur obligations as reasonably necessary or desirable within the general scope of authority activities and operations to allow the authority to adequately perform its duties.

14. Assess financial assistance origination fees and annual fees to cover the reasonable costs of administering the authority and the monies administered by the authority. Any fees collected pursuant to this paragraph constitute governmental revenue and may be used for any purpose consistent with the mission and objectives of the authority.

15. Perform any function of a fund manager under the CERCLA Brownfields cleanup revolving loan fund program as requested by the department. The board shall perform any action authorized under this article on behalf of the Brownfields cleanup revolving loan fund program established pursuant to chapter 2, article 1.1 of this title at the request of the department. In order to perform these functions, the board shall enter into a written agreement with the department.

16. Provide grants, staff assistance or technical assistance in the form of loan repayment agreements and other professional assistance to political subdivisions, any county with a population of less than five hundred thousand persons, Indian tribes and community water systems in connection with developing or financing wastewater, drinking water, water reclamation or related water infrastructure. Assistance provided under a technical assistance loan repayment agreement shall be in a form and under terms determined by the authority and shall be repaid not more than three years after the date that the monies are advanced to the applicant. Technical assistance provided by the authority does not create any liability for the authority or this state regarding designing, constructing or operating any infrastructure project.

17. Provide grants, staff assistance or technical assistance in the form of loan repayment agreements and other professional assistance in accordance with section 49-1273. Assistance provided under a technical assistance loan repayment agreement shall be repaid not more than three years after the date that the monies are advanced to the applicant. Technical assistance provided by the authority does not create any liability for the authority or this state regarding designing, constructing or operating any water supply development project.

C. The authority may adopt rules pursuant to title 41, chapter 6 governing the application for and awarding of assistance under this chapter and the administration of the funds established by this chapter.

D. The board shall deposit, pursuant to sections 35-146 and 35-147, any monies received pursuant to subsection B, paragraph 8 of this section in the appropriate fund as prescribed by the grant or other financial assistance agreement.

E. The water infrastructure finance authority of Arizona is not subject to title 41, chapter 23. In coordination with the department of administration, the authority shall establish procurement procedures by rule to administer the long-term water augmentation fund.

F. For the purposes of the safe drinking water act and the clean water act, the department is the state agency with primary responsibility for administering this state's public water system supervision program and water pollution control program and, in consultation with other appropriate state agencies as appropriate, is the lead agency in establishing assistance priorities as prescribed by section 49-1224, subsection B, paragraph 3, section 49-1243, subsection A, paragraph 6 and section 49-1244, subsection B, paragraph 3.

G. For the purposes of this section, "CERCLA" has the same meaning prescribed in section 49-201. END_STATUTE

Sec. 3. Section 49-1206, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1206. Water infrastructure finance authority board; membership; fingerprinting; conduct of office; definition

A. The water infrastructure finance authority board is established to evaluate and approve funding requests for monies from the clean water revolving fund, the safe drinking water revolving fund, the water supply development revolving fund, the long-term water augmentation fund and the water conservation grant fund and to perform other duties as prescribed in this chapter.

B. The board consists of the following members:

1. Four persons from a county with a population of four hundred thousand persons or more.

2. Four persons from a county with a population of less than four hundred thousand persons.

3. One person who specializes in finance or statewide water needs.

4. The following as advisory members without the power to vote but who may attend executive sessions of the board:

(a) The president of the senate or the president's designee.

(b) The speaker of the house of representatives or the speaker's designee.

(d) The minority leader of the house of representatives or the minority leader's designee.

(e) The director of water resources or the director's designee.

(f) The director of the department of environmental quality or the director's designee.

(g) The state land commissioner or the commissioner's designee.

(h) The director of the department of administration or the director's designee.

(i) The chief executive officer of the Arizona commerce authority or the chief executive officer's designee.

C. The following apply to the eight members appointed pursuant to subsection B, paragraphs 1 and 2 of this section:

1. No three appointed members of the board may be residents of the same county, and at least one appointed member of the board shall be a resident of each county with a population of four hundred thousand persons or more.

2. Members must have a substantial knowledge of and experience with water or finance, including public finance.

D. The following apply to all members appointed pursuant to subsection B, paragraphs 1 through 3 of this section:

1. The governor shall appoint two of the members from a county with a population of four hundred thousand persons or more, shall appoint two of the members from a county with a population of less than four hundred thousand persons and shall appoint the member who specializes in finance or statewide water needs from the joint list of at least five qualified applicants submitted by the president of the senate and the speaker of the house of representatives.

2. The president of the senate and minority leader of the senate shall appoint one of the members from a county with a population of four hundred thousand persons or more and one of the members from a county with a population of less than four hundred thousand persons. The president of the senate and minority leader of the senate shall alternate the terms in which these members are appointed.

3. The speaker of the house of representatives and minority leader of the house of representatives shall appoint one of the members from a county with a population of four hundred thousand persons or more and one of the members from a county with a population of less than four hundred thousand persons. The speaker of the house of representatives and minority leader of the house of representatives shall alternate the terms in which these members are appointed.

4. Appointed members serve five-year terms of office beginning and ending on the third Monday in January and are eligible for reappointment. A member may be removed only for cause by the person who then holds the same office as the person who appointed that member.

5. Members shall be residents of this state for at least two years.

6. The order in which the members are appointed pursuant to subsection B, paragraphs 1 and 2 is:

(a) For the initial term and every third term thereafter, the president of the senate and the minority leader of the senate shall appoint first, the governor shall appoint second and the speaker of the house of representatives and the minority leader of the house of representatives shall appoint third.

(b) For the second term and every third term thereafter, the governor shall appoint first, the speaker of the house of representatives and the minority leader of the house of representatives shall appoint second and the president of the senate and the minority leader of the senate shall appoint third.

(c) For the third term and every third term thereafter, the speaker of the house of representatives and the minority leader of the house of representatives shall appoint first, the president of the senate and the minority leader of the senate shall appoint second and the governor shall appoint third.

E. Before a member is appointed to the board pursuant to subsection C or D of this section, the prospective member shall submit a full set of fingerprints to the governor for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The governor shall submit the fingerprints to the department of public safety. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.

F. The board shall elect a chairperson of the board from among the voting members. The chairperson may appoint subcommittees as necessary.

G. The board may request assistance from representatives of other state agencies. The department of water resources shall provide technical assistance to the board.

H. Board members serve without compensation but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2. A board member who is otherwise employed as a public officer may not receive reimbursement pursuant to this subsection if it is otherwise prohibited by law.

I. A majority of the voting members constitutes a quorum for the purpose of an official meeting for conducting business. An affirmative vote of a majority of the voting members present at an official meeting is sufficient for the board to take any action, except that approval of funding or other financial assistance from the water conservation grant fund established by section 49-1331, the clean water revolving fund established by section 49-1221, the drinking water revolving fund established by section 49-1241, the water supply development revolving fund established by section 49-1271 or the long-term water augmentation fund requires the affirmative vote of at least six of the voting members present at an official meeting of the board.

J. The board shall keep and maintain a complete and accurate record of all board proceedings.

K. The board, committees and any subcommittees are subject to title 38, chapter 3, article 3.1, relating to public meetings, except advisory nonvoting members of the board may attend executive sessions of the board.

L. The board, its subcommittees and the officers and any employees of the board are subject to title 38, chapter 3, article 8, relating to conflicts of interest. In addition to the conflict of interest provisions in title 38, chapter 3, article 8, and except for employees of this state or a political subdivision of this state, the following apply:

1. A person is not eligible for appointment to the board if the person or the person's spouse relative meets any of the following criteria:

(a) Is employed by or participates in the management of a business entity or other organization that receives monies from the authority.

(b) Owns, controls or has, directly or indirectly, more than a ten percent interest in a business entity or other organization that receives monies from the authority.

(d) Has a personal financial interest in the award or expenditure. The person or the person's spouse relative does not have a personal financial interest if the person or the person's spouse relative is a member of a class of persons and it reasonably appears that a majority of the total membership of that class is to be affected by the action.

2. A person may not be a voting member of the board or act as the general counsel to the board or authority if the person is required to register as a lobbyist.

3. A person may not be a member of the board or an employee of the authority if the person or the person's relative is an officer, employee or paid consultant for a water users' association or trade association.

M. An employee of a political subdivision of this state who serves on the board may not participate in the consideration of or a vote concerning any award or expenditure by the authority for projects that will directly benefit the political subdivision.

N. The board shall adopt written policies, procedures and guidelines for standards of conduct, including a gift policy, for members of the board and for officers and employees of the board.

O. The board is a public body that is subject to title 38, chapter 3, article 3. The board shall operate on the state fiscal year.

P. All state agencies shall cooperate with the board and make available data pertaining to the functions of the board as requested by the board.

Q. For the purposes of this section, "trade association" means any cooperative, association or business organization, whether or not incorporated under federal or state law, that is designed to assist its members, industry or profession in advocating for or promoting their common interest. END_STATUTE

Sec. 4. Section 49-1207, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1207. Federal water programs committee; membership; recommendations

A. The federal water programs committee is established to advise the board and consists of the following voting members who are appointed by the board:

1. One member who represents a public water system that serves five hundred or more connections.

2. One member who represents a public water system that serves less than five hundred connections.

3. One member who represents a domestic water improvement district or sanitary district in a county with a population of less than five hundred thousand persons.

4. One member who represents a domestic wastewater water improvement district or sanitary district in a county with a population of five hundred thousand or more persons.

5. One member who represents a city or town with a population of less than fifty thousand persons.

6. One member who represents a city or town with a population of fifty thousand or more persons.

7. One member who represents a county with a population of five hundred thousand or more persons.

8. The director of environmental quality or the director's designee.

9. The director of water resources or the director's designee.

10. The executive director of the corporation commission or the executive director's designee.

11. The chief executive officer of the Arizona commerce authority or the chief executive officer's designee.

B. The federal water programs committee shall review applications for financial or other assistance from the clean water revolving fund program, the safe drinking water revolving fund program and the hardship grant fund program and shall make recommendations to the board regarding those applications for assistance. END_STATUTE

Sec. 5. Section 49-1270, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1270. Definitions

In this article, unless the context otherwise requires:

1. "Eligible entity" means any of the following:

(a) A water provider that distributes or sells water outside of the boundaries of an initial active management area located in Maricopa, Pima or Pinal county in which part of the central Arizona project aqueduct is located.

(b) Any city, town, county, district, commission, authority or other public entity that is organized and that exists under the statutory law of this state or under a voter-approved charter or initiative of this state that is located outside of the boundaries of an initial active management area located in Maricopa, Pima or Pinal county in which part of the central Arizona project aqueduct is located.

2. "Loan" means leases, loans or other evidence of indebtedness for water supply development purposes issued from the water supply development revolving fund.

3. "Loan repayment agreement" means an agreement to repay a loan issued from the water supply development revolving fund entered into by an eligible entity.

4. "Water supply development revolving fund" or "fund" means the water supply development revolving fund established by section 49-1271. END_STATUTE

Sec. 6. Section 49-1307, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1307. Financial assistance from the long-term water augmentation fund; terms

A. The authority shall consider applications for financial assistance from the long-term water augmentation fund in accordance with section 49-1304 and shall consider the recommendations of the long-term water augmentation committee established by section 49-1208.

B. The authority may provide financial assistance from the long-term water augmentation fund for water supply development projects inside or outside this state. The financial assistance may include:

1. Loans as provided in this section.

2. Credit enhancements purchased for an eligible entity's bonds or other forms of indebtedness.

C. A loan shall be evidenced by a loan repayment agreement or lease purchase agreement or, to the extent an eligible entity is a political subdivision of this state and has bonding authority, bonds of the eligible entity that are delivered to and held by the authority.

D. A loan under this section:

1. Shall be repaid during a period approved by the authority.

2. Shall require that interest payments begin not later than the next date that either principal or interest must be paid by the authority to holders of any of the authority's long-term water augmentation bonds that provided funding for the loan. The authority may provide that loan interest accruing during construction of the eligible entity's water supply development project and up to one year after completion of the construction of the water supply development project be capitalized in the loan.

3. Shall clearly specify the amount of principal, interest and redemption premium, if any, that is due on any payment date.

4. Shall be conditioned on the identification of pledged revenues for repaying the loan. If the water supply development project financed or refinanced by the loan is part of a municipal utility and the city or town pledges revenues of the utility to repay the loan, the loan may be treated under section 9-530, subsection B as a lawful long-term obligation incurred for a specific purpose.

5. To the extent allowed by law, shall be secured by a debt service reserve account that is held in trust and that is in an amount, if any, as determined by the authority.

6. Shall contain the covenants and conditions pertaining to constructing, acquiring, improving or equipping water supply development projects and repaying the loan as the authority deems proper.

7. May provide for paying interest on the unpaid principal balance of the loan at the rates established in the loan repayment agreement.

8. May provide for paying the eligible entity's proportionate share of the expenses of administering the long-term water augmentation fund and may provide that the eligible entity pay financing and loan administration fees approved by the authority. The costs may be included in the levy, assessment, rates or charges of the pledged revenues pledged by the eligible entity to repay the loan.

E. The authority shall prescribe the rate or rates of interest on loans made under this section, but the rate or rates may not exceed the prevailing market rate for similar types of loans. An eligible entity that is a political subdivision of this state may negotiate the sale of its bonds to, or a loan repayment agreement with, the authority without complying with any public or accelerated bidding requirements imposed by any other law for the sale of its bonds.

F. The approval of a loan shall be conditioned on a written commitment by the eligible entity to complete all applicable reviews and approvals and to secure all required permits in a timely manner.

G. By resolution of the board, the authority may impose any additional requirements it considers necessary to ensure that the loan principal and interest are timely paid.

H. All monies received from eligible entities as loan repayments, interest and penalties shall be deposited, pursuant to sections 35-146 and 35-147, in the long-term water augmentation fund.

I. If requested by the authority, the attorney general shall take whatever actions are necessary to enforce the loan repayment agreement and achieve repayment of loans provided by the authority pursuant to this article.

J. For eligible entities that are political subdivisions of this state, the revenues of the eligible entities' utility system or systems may be pledged to the payment of a loan repayment agreement without an election, if the pledge of revenues does not violate any covenant pertaining to the utility system or systems or the revenues pledged to secure outstanding bonds or other obligations or indebtedness of the eligible entities.

K. For an eligible entity that is a political subdivision of this state, and notwithstanding sections 9-571 and 11-671, if the revenues from a secondary property tax levy constitute pledged revenues, the eligible entity is not required to submit to a vote the question of entering and performing a loan repayment agreement.

L. Payments made pursuant to a loan repayment agreement are not subject to section 42-17106.

M. For eligible entities that are political subdivisions of this state, a loan repayment agreement under this section does not create a debt of the eligible entities, and the authority may not require that payment of a loan repayment agreement be made from other than the pledged revenues pledged by the eligible entities.

N. An eligible entity may employ attorneys, accountants, financial consultants and other experts in their fields as deemed necessary to perform services with respect to a loan repayment agreement.

O. At the direction of the authority, the eligible entity shall pay, and is hereby authorized to pay, the authority's costs in issuing long-term water augmentation bonds or otherwise borrowing to fund a loan.

P. A loan made to an eligible entity that is a political subdivision of this state may be secured additionally by an irrevocable pledge of any shared state revenues due to the eligible entity for the duration of the loan as prescribed by the authority. As applicable to loans additionally secured with shared state revenues, the authority may enter into agreements to specify the allocation of shared state revenues in relation to individual borrowers from such authorities. If a pledge of shared state revenues as additional security for a loan is required and the eligible entity fails to make any payment due to the authority under its loan repayment agreement or the eligible entity's bonds, the authority shall certify to the state treasurer and notify the governing body of the defaulting eligible entity that the eligible entity has failed to make the required payment and shall direct a withholding of shared state revenues as prescribed in subsection Q of this section. The certificate of default shall be in the form determined by the authority, except that the certificate shall specify the amount required to satisfy the unpaid payment obligation of the eligible entity.

Q. On receipt of a certificate of default from the authority, the state treasurer, to the extent not expressly prohibited by law, shall withhold any monies due to the defaulting eligible entity from the next succeeding distribution of monies pursuant to section 42-5029. In the case of an eligible entity that is a city or town, the state treasurer shall also withhold from the monies due to the defaulting city or town from the next succeeding distribution of monies pursuant to section 43-206 the amount specified in the certificate of default and shall immediately deposit the monies in the water supply development revolving long-term water augmentation fund established by section 49-1271 49-1302. The state treasurer shall continue to withhold and deposit monies until the authority certifies to the state treasurer that the default has been cured. The state treasurer may not withhold any amount that is necessary to make any required deposits then due for the payment of principal and interest on bonds or indebtedness of the eligible entity if so certified by the defaulting eligible entity to the state treasurer and the authority. The defaulting eligible entity may not certify deposits as necessary for payment for bonds or indebtedness unless the bonds were issued or the indebtedness incurred before the date of the loan repayment agreement and the bonds or indebtedness was secured by a pledge of distribution made pursuant to sections 42-5029 and 43-206. END_STATUTE

Sec. 7. Section 49-1309, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1309. Long-term water augmentation bonds; requirements; authority; exemption from liability

A. The authority, through the board, may issue negotiable long-term water augmentation bonds in a principal amount that, in its opinion, is necessary to do all of the following:

1. Provide sufficient monies for water supply development projects and financial assistance for water supply development projects approved under this chapter.

2. Refund long-term water augmentation bonds, when the authority deems it expedient to do so.

3. Increase the capitalization of the long-term water augmentation fund.

4. Maintain sufficient reserves in the long-term water augmentation fund to secure the long-term water augmentation bonds.

5. Pay the necessary costs of issuing, selling and redeeming the long-term water augmentation bonds.

6. Pay other expenditures of the authority incidental to and necessary and convenient to carry out the purposes of this article.

B. The board shall authorize long-term water augmentation bonds by resolution. The resolution shall prescribe all of the following:

1. The rate or rates of interest and the denominations of the long-term water augmentation bonds.

2. The date or dates and maturity of the long-term water augmentation bonds.

3. The coupon or registered form of the long-term water augmentation bonds.

4. The manner of executing the long-term water augmentation bonds.

5. The medium and place of payment.

6. The terms of redemption.

C. The long-term water augmentation bonds shall be sold at public or private sale at the price and on the terms determined by the board. All proceeds from the issuance of long-term water augmentation bonds, except any amounts used to pay costs associated with the issuance and sale of the long-term water augmentation bonds, shall be deposited in the long-term water augmentation fund or a separately held account as specified in the resolution.

D. To secure any long-term water augmentation bonds authorized by this section, the board by resolution may:

1. Require that long-term water augmentation bonds issued under this section be secured by a lien on all or a part of the monies paid into the appropriate account or subaccount of the long-term water augmentation fund and provide the priority of the lien.

2. Pledge or assign to or in trust to be held by the state treasurer for the benefit of the holder or holders of the long-term water augmentation bonds any part of the appropriate account or subaccount of the long-term water augmentation fund monies as is necessary to pay the principal and interest of the long-term water augmentation bonds as the bonds come due.

3. Set aside, regulate and dispose of reserves and sinking funds.

4. Require that sufficient amounts of the proceeds from the sale of the long-term water augmentation bonds be used to fully or partly fund any reserves or sinking funds established by the board resolution authorizing the long-term water augmentation bonds.

5. Prescribe the procedure, if any, by which the terms of any contract with bondholders may be amended or abrogated, the amount of long-term water augmentation bonds the holders of which must consent to and the manner in which consent may be given.

6. Provide for payment from the proceeds of the sale of the long-term water augmentation bonds of all legal, financial and other expenses incurred by the authority in issuing, selling, delivering and paying the long-term water augmentation bonds.

7. Provide terms necessary to secure credit enhancement or other sources of payment or security.

8. Provide any other terms and conditions that in any way may affect the security and protection of the long-term water augmentation bonds.

E. The pledge of pledged revenues by an eligible entity, or the pledge of any other revenues by the authority or pursuant to a public-private partnership agreement, under this article is valid and binding from the time the pledge is made. The monies pledged and received by the state treasurer to be placed in the long-term water augmentation fund or in any account or subaccount in the long-term water augmentation fund are immediately subject to the lien of the pledge without any future physical delivery or further act, and any such lien of any pledge is valid or binding against all parties having claims of any kind in tort, contract or otherwise against the board or the authority regardless of whether the parties have notice of the lien. The official resolution or trust indenture or any instrument by which this pledge is created, when placed in the board's records, is notice to all concerned of the creation of the pledge, and those instruments need not be recorded in any other place.

F. A member of the board or any person executing the long-term water augmentation bonds is not personally liable for the payment of the long-term water augmentation bonds. The long-term water augmentation bonds are valid and binding obligations notwithstanding that before the delivery of the long-term water augmentation bonds any of the persons whose signatures appear on the long-term water augmentation bonds cease to be members of the board. From and after the sale and delivery of the long-term water augmentation bonds, the bonds are incontestable by the board.

G. The board, out of any available monies, may purchase long-term water augmentation bonds, which may then be canceled, at a price not exceeding either of the following:

1. If the long-term water augmentation bonds are then redeemable, the redemption price then applicable plus accrued interest to the date of redemption.

2. If the long-term water augmentation bonds are not then redeemable, the redemption price applicable on the first date after purchase by the authority on which the long-term water augmentation bonds become subject to redemption plus accrued interest to the date of redemption. END_STATUTE

Sec. 8. Section 49-1333, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1333. Water conservation grant fund; procedures

A. In compliance with any applicable requirements, a city, town, county, district, commission, authority or other public entity that is organized and that exists under the statutory law of this state or under a voter-approved charter or initiative of this state an eligible entity as defined in section 49-1301 may apply to the authority for and accept grants from the water conservation grant fund for a water conservation program or project that complies with the requirements of sections 49-1332 and 49-1334. A nongovernment organization that focuses on water conservation or environmental protection may apply to the authority for and accept grants from the water conservation grant fund for a water conservation program or project if it partners with a city, town, county, district, commission, authority or other public entity that is organized and that exists under the statutory law of this state or under a voter-approved charter or initiative of this state an eligible entity as defined in section 49-1301.

B. The authority shall:

1. Prescribe a simplified form and procedure to apply for and approve assistance.

2. Establish by rule criteria that is are consistent with this article by which assistance will be awarded.

3. Determine the order and priority of water conservation programs or projects assisted under this section based on the merits of the application with respect to the requirements of sections 49-1332 and 49-1334.

4. Provide that a single water conservation program grant may not exceed $3,000,000, a single water conservation project grant may not exceed $250,000 and at least a twenty-five percent match is required for each water conservation program or project. Monies from any other source may satisfy the match requirement. END_STATUTE

Sec. 9. Laws 2022, chapter 366, section 28 is amended to read:

Sec. 28. Initial terms of members of the water infrastructure finance authority board

A. Notwithstanding section 49-1206, Arizona Revised Statutes, as added by this act, the terms of initial appointees to the water infrastructure finance authority board are as follows:

1. The initial terms of the three four members from a county with a population of four hundred thousand persons or more end on January 31, 2026.

2. The initial terms of the three four members from a county with a population of less than four hundred thousand persons and the one member who specializes in finance or statewide water needs end on January 31, 2028.

B. For the initial term, the president of the senate and the minority leader of the senate shall appoint first, the governor shall appoint second and the speaker of the house of representatives and the minority leader of the house of representatives shall appoint third.

C. All subsequent appointments shall be for five-year terms as prescribed by statute.

(EMERGENCY NOT ENACTED)

Sec. 10. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.