HB2214 - 562R

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

Section 1. Section 9-514, Arizona Revised Statutes, is amended to read:

START_STATUTE9-514. Authority to engage in utility business

A. Except as provided in section 9-571, Before construction, purchase, acquisition or lease by a municipal corporation, as authorized in sections 9-511, 9-511.01, 9-511.02, 9-512 and 9-513, of any plant or property or portion of plant or property devoted to the business of or services rendered by a public utility shall be undertaken, the construction, purchase, acquisition or lease shall be authorized by the affirmative vote of a majority of the qualified electors who are taxpayers of the municipal corporation voting at a general or special municipal election duly called and held for the purpose of voting on the question.

B. This section does not apply to the construction, purchase, acquisition or lease of water or sewage system utilities by a city or town incorporated pursuant to section 9-101.02. END_STATUTE

Sec. 2. Section 9-571, Arizona Revised Statutes, is amended to read:

START_STATUTE9-571. Wastewater treatment and drinking water treatment facilities and nonpoint source projects; financial assistance loan repayment agreements; definitions

A. Notwithstanding any other law, a city or town may construct, acquire from a willing seller or improve a wastewater treatment facility, drinking water facility or nonpoint source project with monies borrowed from or financial assistance, including forgivable principal, provided by the water infrastructure finance authority of Arizona.

B. To repay financial assistance from the water infrastructure finance authority of Arizona, a city or town may enter into a financial assistance loan repayment agreement with the authority. A financial assistance loan repayment agreement is payable from any revenues otherwise authorized by law to be used to repay long-term obligations. If revenue from a property tax assessment is the designated source of repayment under the agreement, the property tax assessed and levied is a secondary property tax levy for purposes of article IX, Constitution of Arizona.

C. For any city or town, the following apply:

1. For a city or town with a population of more than one hundred fifty thousand persons, the governing body of the city or town shall submit the question of entering and performing a financial assistance loan repayment agreement to the qualified electors voting at a regular or special election in the city or town, except that if revenue from a secondary property tax levy is the designated source of repayment or if the project is constructed with an improvement district, the question shall be submitted to the qualified electors at an election held on the first Tuesday following the first Monday in November.

2. For a city or town with a population of one hundred fifty thousand persons or less, the revenues of the city's or town's utility system or systems may be pledged to the payment of the 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 of the city or town.

3. An election is not required if voter approval has previously been obtained for substantially the same project with another funding source.

4. If a majority of the qualified electors voting on the question:

(a) Approves, the governing body may execute, deliver and perform the financial assistance loan repayment agreement.

(b) Disapproves, the governing body shall not execute a financial assistance loan repayment agreement.

D. c. Payments made pursuant to a financial assistance loan repayment agreement are not subject to section 42-17106.

E. d. A financial assistance loan repayment agreement entered into pursuant to this section shall contain the covenants and conditions pertaining to constructing, acquiring or improving a wastewater treatment or drinking water facility or nonpoint source project and repaying the loan as the water infrastructure finance authority of Arizona deems proper. Financial assistance loan repayment agreements may provide for paying interest on the unpaid principal balance of such agreement at the rates established in the agreement. The agreement may also provide for paying the city's or town's proportionate share of the expenses of administering the clean water and drinking water revolving funds established by sections 49-1221 and 49-1241 and may provide that the city or town pay financing and loan administration fees approved by the water infrastructure finance authority of Arizona. These costs may be included in the levy or assessment amounts pledged to repay the financial assistance. Cities and towns are bound by and shall fully perform the loan repayment agreements, and the agreements are incontestable after the loan is funded by the water infrastructure finance authority of Arizona. The city or town shall also agree to pay the authority's costs in issuing bonds or otherwise borrowing to fund a loan.

F. e. A financial assistance loan repayment agreement under this section does not create a debt of the city or town, and the authority shall not require that payment of a financial assistance loan repayment agreement be made from other than those sources allowed in subsection B of this section and as prescribed by sections 49-1225 and 49-1245.

G. f. A city or town may employ attorneys, accountants, financial consultants and such other experts in their field as deemed necessary to perform services with respect to the financial assistance loan repayment agreement.

H. g. This section is supplemental and alternative to any other law under which a city or town may borrow money or issue bonds. This section is not the exclusive authorization to enter into loan agreements with the authority.

I. A city or town may borrow additional monies or enter into additional financial assistance loan repayment agreements with the water infrastructure finance authority in an amount up to the amount approved by the voters pursuant to subsection C of this section less the amount that the city or town is already obligated to repay to the water infrastructure finance authority pursuant to a financial assistance loan repayment agreement.

J. H. The water infrastructure finance authority of arizona may not provide funds monies to a city or town to either:

1. Condemn or acquire through eminent domain any assets of a public service corporation that is regulated by the corporation commission without a written statement from the public service corporation certifying that it is a willing seller and consenting to the provision of funding.

2. Refinance any loan, bond or other financing arrangement used by a the city or town to condemn or acquire through eminent domain any assets of a public service corporation that is regulated by the corporation commission without a written statement from the public service corporation certifying that it is a willing seller and consenting to the provision of funding.

K. I. For the purposes of this section:

1. "City" includes both cities formed pursuant to this title and charter cities.

2. "Nonpoint source project" has the same meaning prescribed in section 49-1201. END_STATUTE

Sec. 3. Section 11-671, Arizona Revised Statutes, is amended to read:

START_STATUTE11-671. Financing wastewater treatment facilities and nonpoint source projects; financial assistance loan repayment agreements; definition

A. Notwithstanding any other law, a county authorized to operate a sewage system pursuant to section 11-264 may construct or improve a wastewater treatment facility or nonpoint source project with monies borrowed from or financial assistance provided by the water infrastructure finance authority of Arizona.

B. To repay financial assistance from the water infrastructure finance authority of Arizona, a county may enter into a financial assistance loan repayment agreement with the authority. A financial assistance loan repayment agreement is payable from any revenues otherwise authorized by law to be used to pay long-term obligations. If revenue from a property tax assessment is the designated source of repayment under the agreement, the property tax assessed and levied is a secondary property tax levy for purposes of article IX, Constitution of Arizona.

C. The county board of supervisors shall submit the question of entering and performing a financial assistance loan repayment agreement to the qualified electors voting at a regular or special general election in the county, except that if revenue from a secondary property tax levy is the designated source of repayment or if the project is constructed with an improvement district, the question shall be submitted to the qualified electors at an election held on the first Tuesday following the first Monday in November. Otherwise, an election is not required if voter approval has previously been obtained for substantially the same project with another funding source. If a majority of the qualified electors voting on the question:

1. Approves, the board of supervisors may execute, deliver and perform the financial assistance loan repayment agreement.

2. Disapproves, the board of supervisors shall not execute a financial assistance loan repayment agreement.

D. c. Payments made pursuant to a financial assistance loan repayment agreement are not subject to section 42-17106.

E. d. A financial assistance loan repayment agreement entered into pursuant to this section shall contain the covenants and conditions pertaining to the construction of a wastewater treatment facility or nonpoint source project and repayment of the loan as the water infrastructure finance authority of Arizona deems proper. Financial assistance loan repayment agreements may provide for the payment of interest on the unpaid principal balance of such agreement at the rates established in the agreement. The agreement may also provide for payment of the county's proportionate share of the expenses of administering the clean water revolving fund established by section 49-1221 and may provide that the county pay financing and loan administration fees approved by the water infrastructure finance authority of Arizona. These costs may be included in the levy or assessment amounts pledged to repay the financial assistance. Counties are bound by and shall fully perform the loan repayment agreements, and the agreements are incontestable after the loan is funded by the water infrastructure finance authority of Arizona. The county shall also agree to pay the authority's costs in issuing bonds or otherwise borrowing to fund a loan.

F. e. A financial assistance loan repayment agreement under this section does not create a debt of the county, and the authority shall not require that payment of a financial assistance loan agreement be made from other than those sources permitted allowed in subsection B of this section.

G. f. A county may employ attorneys, accountants, financial consultants and such other experts in their field as deemed necessary to perform services with respect to the financial assistance loan repayment agreement.

H. g. This section is supplemental and alternative to any other law under which a county may borrow money or issue bonds. This section shall is not be construed as the exclusive authorization to enter into loan agreements with the authority.

I. A county may borrow additional monies or enter into additional financial assistance loan repayment agreements with the water infrastructure finance authority in an amount up to the amount approved by the voters pursuant to subsection C of this section less the amount that the county is already obligated to repay to the water infrastructure finance authority pursuant to a financial assistance loan repayment agreement.

J. H. For purposes of this section, "nonpoint source project" has the same meaning as prescribed in section 49-1201. END_STATUTE

Sec. 4. Section 49-1216, Arizona Revised Statutes, is amended to read:

START_STATUTE49-1216. Financial assistance; loan repayment agreements; political subdivisions

A. Notwithstanding sections 9-571, 11-671, 48-1019 and 48-2011.01, during fiscal years 2022-2023, 2023-2024, 2024-2025, 2025-2026 and 2026-2027, the political subdivisions described in subsection B of this section may enter into a financial assistance loan repayment agreement with the authority without submitting the question of entering and performing the financial assistance loan repayment agreement to the qualified electors of the political subdivision if the agreement is financed with funding made available to the authority under the infrastructure investment and jobs act, division J, title VI (P.L. 117-58) and the financial assistance loan repayment agreement is not payable from secondary property tax revenue.

B. The following political subdivisions may enter into a financial assistance loan repayment agreement described in subsection A of this section:

1. A city or town, without regard to the city or town's population.

2. A county, without regard to the county's population.

3. A sanitary district that contains a population of fewer than fifty thousand persons.

4. A domestic water improvement district or domestic wastewater improvement district, without regard to the population of that district. END_STATUTE

Sec. 5. 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 long-term water augmentation fund established by section 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