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The creation of a Governmental Utility Authority or GUA is an innovative home rule mechanism available to a county or municipality to join together with other counties or municipalities to acquire, finance, own and operate a water or wastewater utility. Recent changes in Florida law have empowered counties and municipalities to create a separate legal entity Governmental Utility Authority or GUA to own, operate, and separately finance the purchase and operation of utility systems. See 163.01(7)(g)1, Fla. Stat. (Appendix A). Such changes allow counties and municipalities by interlocal agreement to create the charter to, own and jointly control a separate utility authority.
Although a GUA is not legally a special district, it is akin to an independent multi-county special district in that it is a separate legal entity with the limited public purpose to own and operate a public utility system. As with an independent special district, the GUA is governed by a board, composed of representatives appointed by the participating local governments or any other method of appointment agreed to in the interlocal agreement. Accordingly, the participating local governments exercise de facto control over the GUA pursuant to the terms of the interlocal agreement; however, the participating local governments do not incur any liability for GUA debt or operations.
Once created, Florida law provides that a Governmental Utility Authority can be contractually granted pursuant to an interlocal agreement all powers possessed by the member local governments except the power to tax or the power of eminent domain. For example, a Governmental Utility Authority can be granted by the member governments the power to set utility rates, levy special assessments and issue debt to finance and manage utility systems. Additionally, the member governments can also retain certain privileges in the interlocal agreement. For example, member governments can be granted the option of acquiring previously private utility systems from the GUA which option they can "warehouse" for an indefinite period of time. As a further example, the GUA charter can require local government approval of all capital improvements and consistency with local government comprehensive plans. Thus, the GUA ultimately becomes a multi-jurisdictional utility operation and management vehicle for the participating local governments.
A GUA may provide a transition mechanism to place a private utility under public ownership until such time as the local government wishes to assume direct ownership.
The local government may not be prepared to immediately assume direct ownership of the private utility for a variety of public policy reasons. For example, the rates of the private utility may be substantially higher or lower than the comparable rates of the host local government. As another example, substantial improvements may be required for the private utility prior to consolidation with the utility system owned by the host local government. As a further example, the host local government may not have the management or operational staff capacity to assume the additional operation and management responsibilities presented by immediate ownership.
While the water and wastewater utility is warehoused with the GUA, the member local governments have direct control over utility operations, rates and capital improvements by appointing its governing board and through oversight assurances incorporated into the GUA charter. The member local governments may also be granted a future option to acquire the previously private utility facilities within their jurisdiction at a fixed purchase price that will not escalate because of customer growth.
While the water and wastewater utility is warehoused with the GUA, the member local governments have direct control over utility operations, rates and capital improvements by appointing its governing board and through oversight assurances incorporated into the GUA charter. The member local governments may also be granted a future option to acquire the previously private utility facilities within their jurisdiction at a fixed purchase price that will not escalate because of customer growth.
A GUA may enable several local governments to acquire a private utility that each local government could not or does not wish to acquire on its own.
The reasons that any individual local government may be unable or unwilling to separately acquire a public utility on its own will vary. For example, the private utility may be located in several local government jurisdictions and thus a direct purchase by one local government may not be practicable. Additionally, the owner of the private utility may own separate systems located within several local government jurisdictions and refuse to sell one without selling all. The GUA concept enables several local governments to band together to finance the acquisition, own and operate a private utility system.
A GUA also represents an available home rule solution to a local government that desires to sell its utility system at a purchase price supported by existing rates. The cash received, after payment of outstanding debt, can be applied by the local government: to stabilize utility rates or avoid an anticipated rate increase; to complete required capital improvements without the necessity of a utility rate increase; to credit the cash equity received to a reduction of future utility customer charges; or to fund other essential services or improvements within the jurisdiction of the local government.
In a sale of a public utility to the GUA, the motivations of each member local government may differ. However, the collective mechanism of the GUA represents a home rule alternative to address the differing local government motivations.
Under the circumstances of a sale of a public utility owned by a local government to the GUA, federal tax regulations relating to the issuance of tax exempt debt requires that any future option to acquire by the local government that was the previous owner be for fair market value negotiated as an arms length transaction.
A GUA also represents a home rule vehicle for one or more local governments to combine public utility ownership and achieve operational and capacity efficiencies resulting from regional utility consolidation or to cooperate in the unified implementation of water supply, wastewater disposal or reuse distribution projects.
The GUA provides a cooperative vehicle to acquire both small and large, private utilities, and offers the economic "bargaining power" and clout of a large-scale purchaser.
The GUA provides a public ownership alternative in the event a local government desires to transfer ownership of its existing utility facilities for any reason including consolidation or rate stabilization or as a means to raise funds for required capital improvements.
The GUA concept establishes a local system acquisition price structure for a private utility at the outset, thus avoiding unexpected future price increases when the local government's acquisition decision is advantageous.
The cooperative GUA acquisition strategy does not encumber the financial resources of local government.
Unless and until any option to acquire is exercised, the assets and debt associated with the utility remain solely the responsibility of the GUA, not local government.
Future system improvements can be financed on a tax-exempt basis, thus minimizing the impact upon system users.
As an independent special purpose local government, the GUA can be vested with the power to impose special assessments by its charter, thus eliminating the financial restraint that plagues privately operated systems.
The GUA maintains and capitalizes upon economies of scale resulting from centralized management, operations, and planning.
The GUA concept eliminates the constant threat of litigation between private utility operators and the local government.
A shared legal agenda by all government members of the GUA diminishes costly redundancy in litigation and counsel.
Elimination of Florida Public Service Commission regulation substantially reduces the expensive requirement of legal counsel and other consultants for regulatory proceedings.
Reliability, efficiency and responsiveness in accounting, billing and customer service are promoted by centralized GUA management.
Efficient, centralized construction management and planning offers broad-based water and wastewater expertise in required renovation, expansion and new construction projects.
Centralized GUA management reduces confusion and a costly "learning curve" by using professional private management and operations contractors.
Utility-related labor issues and personnel costs for local governments are eliminated because GUA supplies all personnel through contract with expert private providers.
Notwithstanding any other provisions of this section, any separate legal entity created under this section, the membership of which is limited to municipalities and counties of the state, may acquire, own, construct, improve, operate, and manage public facilities relating to a governmental function or purpose, including, but not limited to, wastewater facilities, water or alternative water supply facilities, and water reuse facilities, which may serve populations within or outside of the members of the entity. Notwithstanding s. 367.171(7), any separate legal entity created under this paragraph is not subject to commission jurisdiction and may not provide utility services within the service area of an existing utility system unless it has received the consent of the utility. The entity may finance or refinance the acquisition, construction, expansion, and improvement of the public facility through the issuance of its bonds, notes, or other obligations under this section. The entity has all the powers provided by the interlocal agreement under which it is created or which are necessary to own, operate, or manage the public facility, including, without limitation, the power to establish rates, charges, and fees for products or services provided by it, the power to levy special assessments, the power to sell all or a portion of its facility, and the power to contract with a public or private entity to manage and operate its facilities or to provide or receive services or products. Except as may be limited by the interlocal agreement under which the entity is created, all of the privileges, benefits, powers, and terms of s. 125.01, relating to counties, and s. 166.021, relating to municipalities, are fully applicable to the entity. However, neither the entity nor any of its members on behalf of the entity may exercise the power of eminent domain over the facilities or property of any existing water or wastewater plant utility system, nor may the entity acquire title to any water or wastewater plant utility facilities or property which was acquired by the use of eminent domain after the effective date of this act. Bonds, notes, and other obligations issued by the entity are issued on behalf of the public agencies that are members of the entity.
