SB-0195,As Passed House,Mar 12, 2003

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 195

                                                                             A bill to provide for the approval of certain contracts and                       

rates involving the operation of certain water and sewer systems;           

to require certain policies and procedures in the awarding of               

contracts and approving of rates; to provide for the powers and             

duties of certain governmental officials and entities; and to               

provide for remedies.                                                       

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 1.  As used in this act:                                               

2       (a) "Authority" means an authority created under this act.                  

3       (b) "Local unit of government" means a city, village, or                    

4   township.  A local unit of government does not include a                    

5   qualified city.                                                             

6       (c) "Qualified city" means a city with a population of                      

7   750,000 or more that is a member of an authority created under              

8   this act.                                                                   

1       (d) "Qualified county" means a county with a population of                  

2   400,000 or more that is a member of an authority created under              

3   this act.                                                                   

4       (e) "Water or sewer system" or "system" means a water supply                

5   facility or sewerage services facility, or both, that provides              

6   water or sewerage service to more than 20% of the population of             

7   this state.                                                                 

8       Sec. 2.  Pursuant to section 27 of article VII of the state                 

9   constitution of 1963 and any other applicable law, an authority             

10  created under this act is an agency and instrumentality of the              

11  state that has all of the powers of a public corporation in the             

12  exercising of its duties under this act.                                    

13      Sec. 3.  (1) An authority is established for each water or                  

14  sewer system operating in this state to provide review and                  

15  oversight of the contract process of and the rates charged by the           

16  system.                                                                     

17      (2) The members of the authority shall be all qualified                     

18  counties and qualified cities that are served by the water or               

19  sewer system.  Each member of the authority is subject to the               

20  requirements of this act and the policies and procedures                    

21  established by the authority.                                               

22      (3) Not more than 30 days after the effective date of this                  

23  act, each qualified county and qualified city that is a member of           

24  an authority shall make appointments to the authority as provided           

25  under this section.                                                         

26      (4) One person shall be appointed to represent each qualified               

27  county that does not have a qualified city located within the               

1   county.  The appointment under this subsection shall be made by             

2   the county board of commissioners.                                          

3       (5) One person shall be appointed to represent each qualified               

4   city.  The appointment under this subsection shall be made by the           

5   mayor of the city, with the advice and consent of the city's                

6   governing body.                                                             

7       (6) If a qualified county has a qualified city within the                   

8   county, 1 person who does not live or work within the qualified             

9   city shall be appointed to represent the county.  The appointment           

10  under this subsection shall be made by the majority vote of the             

11  chief elected officials of the 5 largest local units of                     

12  government within the county.                                               

13      (7) A person appointed under this section shall serve for a                 

14  term of 4 years, or until a successor is appointed, whichever is            

15  later.  A successor to a member shall be appointed in the same              

16  manner and shall serve for a term of 4 years, or until a                    

17  successor is appointed, whichever is later.  A person may be                

18  reappointed to the authority.  A person appointed to the                    

19  authority may be replaced by the appointing member at any time.             

20      Sec. 4.  (1) A majority of the persons appointed to the                     

21  authority constitute a quorum for the transaction of business.              

22      (2) The person appointed to the authority shall have 1 vote.                

23      (3) The first meeting of the authority shall be held not more               

24  than 45 days after the effective date of this act.                          

25      (4) The authority shall elect a chairperson and other                       

26  officers as the authority considers necessary.  The authority               

27  shall adopt bylaws and rules to govern the operation of the                 

1   authority.                                                                  

2       (5) After its first meeting, the authority shall meet not                   

3   less than quarterly and at such other times as determined by the            

4   authority.                                                                  

5       Sec. 5.  An authority created under this act is subject to                  

6   the freedom of information act, 1976 PA 442, MCL 15.231 to                  

7   15.246, and the open meetings act, 1976 PA 267, MCL 15.261 to               

8   15.275.                                                                     

9       Sec. 6.  (1) Persons appointed to the authority are public                  

10  servants under 1968 PA 317, MCL 15.321 to 15.330, and are subject           

11  to any other applicable law with respect to conflicts of                    

12  interest.                                                                   

13      (2) An authority shall establish policies and procedures                    

14  requiring periodic disclosure by persons appointed to the                   

15  authority of relationships which may give rise to conflicts of              

16  interest.                                                                   

17      Sec. 7.  (1) An authority shall establish an ethics manual                  

18  governing the conducting of system business and the conduct of              

19  employees of the system.                                                    

20      (2) An authority shall establish policies under this section                

21  that are no less stringent than those provided for public                   

22  officers and employees by 1973 PA 196, MCL 15.341 to 15.348.  The           

23  policies established under this section shall include compliance            

24  by each person appointed to the authority and employees of the              

25  system who regularly exercise significant discretion over the               

26  award and management of authority procurements with policies                

27  governing all of the following:                                             

1       (a) Immediate disclosure of the existence and nature of any                 

2   financial interest that would reasonably be expected to create a            

3   conflict of interest.                                                       

4       (b) Withdrawal by the person appointed to the authority or                  

5   employee of the system from participation in, discussion of, or             

6   evaluation of any recommendation or decision involving                      

7   procurement involving the water or sewer system that would                  

8   reasonably be expected to create a conflict of interest for that            

9   person or employee.                                                         

10      Sec. 8.  The authority is a public body for purposes of                     

11  reporting violations or suspected violations of a law or                    

12  regulation or rule promulgated under the law of this state, a               

13  political subdivision of this state, or the United States.  A               

14  person reporting a violation or suspected violation under this              

15  section shall have all the protections provided under the                   

16  whistleblowers' protection act, 1980 PA 469, MCL 15.361 to                  

17  15.369.                                                                     

18      Sec. 9.  On or before February 1 of each year, the chief                    

19  financial officer for a water or sewer system shall prepare and             

20  submit to each member of the system's authority a proposed budget           

21  for the next succeeding fiscal year covering its anticipated                

22  revenues and expenses of administration, operation, maintenance,            

23  and contract procurements.                                                  

24      Sec. 10.  An authority shall establish policies and                         

25  procedures for the contracting of services for the system.  The             

26  policies and procedures shall provide for all of the following:             

27      (a) The authority shall have the exclusive authority to                     

1   review and approve all contracts and contract renewals,                     

2   extensions, and charge orders or appropriations in an amount                

3   greater than $50,000.00, and such contracts or appropriations are           

4   void and unenforceable unless approved by the authority.                    

5       (b) The authority shall review and approve all contract                     

6   overruns from the original contract amount for contracts approved           

7   under subdivision (a) and for contracts less than $50,000.00 if             

8   the overrun causes the contract amount to exceed $50,000.00.                

9       (c) Except as otherwise provided by this act, a contract                    

10  shall not be awarded by the system for the construction, repair,            

11  remodeling, or demolition of a water or sewer facility unless the           

12  contract is let pursuant to a procedure that requires competitive           

13  bidding.  This subdivision does not apply if the authority                  

14  determines that any of the following apply:                                 

15                                                                               (i) The negotiated contract amount is less than $50,000.00                          

16  over the lifetime of the contract and any contract renewals or              

17  extensions.                                                                 

18      (ii) The contract is for emergency repair or construction                    

19  necessitated by a sudden, unforeseen occurrence or situation of a           

20  serious and urgent nature and is not for convenience or                     

21  expediency.  A contract under this subparagraph shall not be for            

22  a period greater than 1 year.                                               

23      (iii) The repair or construction is necessary to ensure                      

24  safety or to otherwise protect life or property.  A contract                

25  under this subparagraph shall not be for a period greater than 1            

26  year.                                                                       

27      (iv) That procurement by competitive bids is not practicable                 

Senate Bill 195 (H-2) as amended March 12, 2003

1   to efficiently and effectively meet the water and sewer system              

2   needs, or that another procurement method is in the public's best           

3   interests.                                                                  

4       (d) The policies and procedures for hiring of professional                  

5   service contractors.                                                        

6       Sec. 11.  An authority shall establish policies and                         

7   procedures for the review and approval of the rates and charges             

8   imposed or assessed by the water or sewer system.                           

9       Sec. 12.  (1) A water or sewer system shall not charge a                    

10  customer more than that allowed under the contract to provide               

11  services.                                                                   

12      (2) A customer may file a complaint with the water or sewer                 

13  system to recover any amounts allowed under this section.                   

14      (3) A complaint under subsection (2) shall be filed no later                

15  than 12 months from the date a payment was made as a result of a            

16  violation of this section.                                                  

17      (4) If a water or sewer system is found to have charged an                  

18  amount in violation of this section, the system shall pay to or             

19  credit the account of the customer an amount equal to 10 times              

20  the overcharge or $100.00, whichever is greater.                            

21      Sec. 13.  If a qualified county, qualified city, or a local                 

22  unit of government charges its customers a rate that generates an           

23  amount greater than the amount that the county, city, or local              

24  unit of government is required to pay under its contract with the           

25  water or sewer system, the county, city, or local unit of                   

26  government shall annually itemize on the customer's bill the                

27   average additional charges.

[Sec. 14.  A challenge to the validity of any provision of this act shall be filed with and decided by the court of appeals pursuant to section 10 of article VI of the state constitution of 1963.]