January 23, 2008, Introduced by Senators SANBORN, PAPPAGEORGE, PATTERSON, RICHARDVILLE, JANSEN, CASSIS, STAMAS, McMANUS and GILBERT and referred to the Committee on Economic Development and Regulatory Reform.
A bill to allow for the review, oversight, and providing of
recommendations regarding the operation of certain water and sewer
systems within this state; to create the water accountability
advisory board; and to provide for the powers and duties of certain
governmental officials and entities.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Board" means the water accountability advisory board
created under this act.
(b) "City" means a city chartered under the home rule city
act, 1909 PA 279, MCL 117.1 to 117.38.
(c) "Local unit of government" means a city, village, or
township.
(d) "Qualified city" means a city that owns or operates a
water or sewer system.
(e) "Qualified county" means a county with a population of
400,000 or more that is served by the water or sewer system.
(f) "Township" means a township chartered under the charter
township act, 1947 PA 359, MCL 42.1 to 42.34.
(g) "Village" means a village incorporated under the home rule
village act, 1909 PA 278, MCL 78.1 to 78.28.
(h) "Water or sewer system" or "system" means a water supply
facility or sewerage services facility, or both, that provides
water or sewerage service to more than 20% of the population of
this state.
Sec. 2. (1) A city that owns or operates a water or sewer
system shall establish a water accountability advisory board to
provide review and oversight of the system and to make
recommendations to the system as provided under this act. The
board's review and oversight shall involve the system's contract
process and administration, rates and rate setting processes,
budget, finance, and operations.
(2) Not more than 30 days after the effective date of this act
or not more than 30 days after the date a county or city becomes a
qualified county or qualified city, whichever is later, each
qualified county and qualified city shall make appointments to the
board as provided under this section.
(3) One person shall be appointed to represent each qualified
county that does not have the qualified city located within the
county. The appointment under this subsection shall be made by the
county board of commissioners. For the initial appointments to the
board, if there is more than 1 qualified county, the county with
the largest population will appoint a person to a 1-year term, the
next largest county in population to a 2-year term, and all other
counties to a 4-year term.
(4) Three persons shall be appointed to represent the
qualified city. The appointment under this subsection shall be made
by the mayor of the city, with the advice and consent of the city's
governing body. For the initial appointments to the board, 1 person
shall be appointed to a 1-year term, 1 to a 2-year term, and 1 to a
3-year term.
(5) If a qualified county has the qualified city within the
county, 1 person who does not live or work within the qualified
city shall be appointed to represent the county. The appointment
under this subsection shall be made by the majority vote of the
chief elected officials of the 5 largest local units of government,
excluding the qualified city, within the county. For the initial
appointment to the board, the person shall be appointed to a 4-year
term.
(6) After the initial appointments to the board, a person
appointed under this section shall serve for a term of 4 years. A
successor to a member shall be appointed in the same manner and
shall serve for a term of 4 years. A person may be reappointed to
the board. If a vacancy occurs before the end of a term, the person
appointed to fill the vacancy shall be appointed in the same manner
for the balance of the term. A person appointed to the board may be
replaced by the appointing entity at any time.
Sec. 3. (1) A majority of the persons appointed to the board
constitute a quorum for the transaction of business.
(2) Each person appointed to the board shall have 1 vote.
(3) The first meeting of the board shall be held not more than
45 days after the effective date of this act, or not more than 45
days after the date a city becomes a qualified city, whichever is
later.
(4) The board shall elect a chairperson and other officers as
the board considers necessary. The board shall adopt bylaws and
rules to govern the operation of the board.
(5) After its first meeting, the board shall meet not less
than quarterly and at such other times as determined by the board.
(6) The board shall establish and maintain a website to
provide to the general public the information required under this
act.
(7) Each member of the board shall receive a per diem, at the
same rate established by the qualified city for its employees, for
each meeting the member attends and shall be reimbursed for all
reasonable and necessary expenses incurred in performing the
member's duties required under this act.
(8) The board shall appoint an executive director and such
other staff as the board considers necessary to carry out its
responsibilities under this act. The reasonable and necessary
expenses of the board shall be paid by the system. The state shall
reimburse the system through the appropriations process for any
reasonable and necessary expenses of the board paid under this act.
Sec. 4. (1) Persons appointed to the board, or the executive
director and any staff of the board, are subject to the same
requirement as provided under section 2 of 1968 PA 317, MCL 15.322,
and are subject to any other applicable law with respect to
conflicts of interest.
(2) The board shall establish policies and procedures
requiring periodic disclosure by persons appointed to the board, or
the executive director and any staff of the board, of relationships
which may give rise to conflicts of interest.
Sec. 5. (1) The board shall make recommendations regarding the
establishment of an ethics manual governing the conducting of
system business and the conduct of employees of the system.
(2) The board shall make recommendations regarding the
establishment of policies under this section that are no less
stringent than those provided for public officers and employees by
1973 PA 196, MCL 15.341 to 15.348.
(3) The board shall review whether the system adopted the
recommendations made under this section and post its
recommendations and findings on the board's website.
Sec. 6. (1) The board shall review the system's rates and rate
making process and make recommendations to the system regarding the
setting of rates.
(2) As part of the board's review and oversight under this
section, the board shall issue an annual report which shall include
all of the following assessments:
(a) Whether the rates for water and sewer service were just
and reasonable.
(b) Whether customers were notified of a rate alteration
before the effective date of the rate alteration.
(c) Whether any notices regarding rate alterations contained
any of the following information:
(i) A statement that the customer's rate may change.
(ii) An estimate of the amount of the annual change for the
typical customer that would result by the rate change.
(iii) A statement that a customer may comment on or receive
complete details of the rate alteration by calling or writing the
system.
(d) Whether the system provided at no cost to the customer
complete details of the rate alteration.
(e) Whether the system had more than 1 rate increase during
any 12-month period.
(3) The board shall make recommendations to assist the system
in providing services to its customers.
(4) The annual report and recommendations required under this
section shall be posted on the board's website.
Sec. 7. (1) The board shall make recommendations regarding
policies and procedures for the contracting by the system.
(2) The board's recommendations shall include that a contract
shall not be awarded by the system unless the contract is issued
pursuant to a procedure that requires competitive bidding. The
recommendations shall provide that an exemption from competitive
bidding may be allowed for any of the following:
(a) A negotiated contract if the amount is less than
$50,000.00 over the lifetime of the contract, including any
contract renewals or extensions.
(b) A contract that is for emergency repair or construction
necessitated by a sudden, unforeseen occurrence or situation of a
serious and urgent nature and is not for convenience or expediency.
A contract under this subdivision shall not be for a period greater
than 1 year.
(c) A repair or construction contract that is necessary to
ensure the safety of or otherwise protect life or property. A
contract under this subdivision shall not be for a period greater
than 1 year.
(d) A contract where procurement by competitive bids is not
practicable to efficiently and effectively meet the water and sewer
system needs or where another procurement method is in the public's
best interests.
(3) The board shall review and make recommendations regarding
all contracts and contract renewals, extensions, and change orders
or appropriations in an amount greater than $50,000.00 that are
approved or issued by the system.
(4) For all contracts less than $50,000.00, the board shall
review and make recommendations if any renewals, extensions, or
overruns cause the total contract amount to exceed $50,000.00.
(5) The board shall review and make recommendations regarding
all contracts approved or issued by the system under circumstances
described in subsection (2)(b) through (d) that were not subject to
competitive bidding.
(6) The board shall recommend policies and procedures for
hiring of professional service contractors.
(7) All contracts awarded by the system and the board's review
of and recommendations concerning the contracts required under this
section shall be posted on the board's website.
Sec. 8. The board created under this act is subject to the
freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, and
the open meetings act, 1976 PA 267, MCL 15.261 to 15.275.
Sec. 9. (1) The board shall retain a certified public
accounting firm to conduct an annual financial audit of the system
and to conduct performance audits of the transactions and
operations of the system.
(2) The completed annual financial audit required under this
section shall be submitted to the board within 6 months from the
end of the system's fiscal year and posted on the board's website.
The performance audits conducted under this section shall be
submitted to the board upon completion and posted on the board's
website.
Sec. 10. (1) The chief financial officer of the water and
sewer system shall prepare and submit to the board for review and
recommendations a detailed operating and capital budget for each
fiscal year.
(2) The budget required under this section shall be submitted
at least 60 days before the beginning of each new fiscal year and
shall be posted on the board's website. The board shall complete
its review and issue its recommendations no later than 42 days from
the date the budget is received.
(3) The chief financial officer shall immediately notify the
board if actual expenditures exceed the budgeted amount submitted
under this section.
(4) The board shall also review and provide oversight of the
system's budget, budget administration, expenditures, finances, and
other financial matters and make recommendations regarding the
system's budget, budget administration, expenditures, finances, and
other financial matters. The chief financial officer of the system
shall provide the board with all budgetary and financial
information that the board considers necessary to carry out its
responsibilities under this act. The board's review and
recommendations and the information provided under this section
shall be posted on the board's website.
Sec. 11. (1) An employee of the water and sewer system who
becomes aware of or suspects that any actions by another employee
or entity of the system are prohibited by any law, rule,
regulation, or policy shall report the violation to the board and
to the system.
(2) A person who makes a report required under this section
shall have the same protections and rights as provided under the
whistleblowers' protection act, 1980 PA 469, MCL 15.361 to 15.369.
Sec. 12. This act does not limit or alter the powers and
rights to own and operate a water and sewer system granted to a
city under section 24 of article VII of the state constitution of
1963.
Sec. 13. A challenge to the validity of any provision of this
act shall be filed with and decided by the court of appeals under
section 10 of article VI of the state constitution of 1963.