7-82-704 - Financially distressed utility districts Consolidation.
7-82-704. Financially distressed utility districts Consolidation.
(a) As a means to restore financial stability to financially distressed utility districts and to ensure continued operations for the benefit of the public being served by such a utility district, the utility management review board may undertake to study the possible consolidation of a financially distressed utility district with another utility district or districts, municipal utility system or county utility system. In the event the board determines that such a consolidation is in the best interest of the public being served by a utility district, it may undertake negotiations with the affected parties, under the auspices of the chancery court as the case may be, to accomplish such a consolidation on such terms as may be agreed to by all of the parties.
(b) In order to mitigate any negative financial impact of such a consolidation on the utility district or districts, municipal utility system or county utility system agreeing to consolidate with a financially distressed utility district, the board is hereby authorized to develop a plan of mitigation payments to such consolidated utility system. Such mitigation payments shall be made from funds available in the utility district revitalization fund and shall include amounts to offset increased administrative costs relating to the consolidation, to the extent such costs cannot reasonably be recovered from customer revenues or other assets of the financially distressed utility district, amounts that may be necessary to cure a default on indebtedness of the financially distressed utility district to the extent such defaults can, in the opinion of the board, reasonably be cured, amounts that may be necessary to renovate and repair the facilities of the financially distressed utility district to the level necessary to enable the consolidated utility system to provide continued service to the public being served by the financially distressed utility district, and other such payments as may be necessary in the opinion of the board to accomplish such a consolidation and mitigate the financial impact of the consolidation.
(c) The board shall contract with a resulting consolidated utility system to provide for the repayment of any such mitigation payments over a period of time as may be agreed upon by the board and the consolidated utility system. Such repayments may be made from surcharges levied upon the customers in the service area of the financially distressed utility district being consolidated; provided, that such surcharges shall not result in user fees in the service area of the financially distressed utility district being in excess of the maximum level of users fees as may be determined by the board to be reasonable for the service area. Upon a determination by the board that repayment of the mitigation payments would be unduly burdensome and financially detrimental to the customers of such utility system, the board may waive repayments required pursuant to this section; provided, that any such waiver must be approved by the commissioner of finance and administration.
(d) Any repayments that may be received by the board pursuant to this section shall be deposited into and shall become part of the utility district revitalization fund.
[Acts 1987, ch. 422, § 10.]