January 27, 2005, Introduced by Rep. Kahn and referred to the Committee on Government Operations.
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:
Sec. 1. As used in this act:
(a) "Authority" means an authority created under this act.
(b) "Local unit of government" means a city, village, or
township. A local unit of government does not include a qualified
city.
(c) "Qualified city" means a city with a population of 750,000
or more that is a member of an authority created under this act.
(d) "Qualified county" means a county with a population of
400,000 or more that is a member of an authority created under this
act.
(e) "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. Pursuant to section 27 of article VII of the state
constitution of 1963 and any other applicable law, an authority
created under this act is an agency and instrumentality of the
state that has all of the powers of a public corporation in the
exercising of its duties under this act.
Sec. 3. (1) An authority is established for each water or
sewer system operating in this state to provide review and
oversight of the contract process of and the rates charged by the
system.
(2) The members of the authority shall be all qualified
counties and qualified cities that are served by the water or sewer
system. Each member of the authority is subject to the requirements
of this act and the policies and procedures established by the
authority.
(3) Not more than 30 days after the effective date of this
act, each qualified county and qualified city that is a member of
an authority shall make appointments to the authority as provided
under this section.
(4) One person shall be appointed to represent each qualified
county that does not have a qualified city located within the
county. The appointment under this subsection shall be made by the
county board of commissioners.
(5) One person shall be appointed to represent each 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.
(6) If a qualified county has a 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
within the county.
(7) A person appointed under this section shall serve for a
term of 4 years, or until a successor is appointed, whichever is
later. A successor to a member shall be appointed in the same
manner and shall serve for a term of 4 years, or until a successor
is appointed, whichever is later. A person may be reappointed to
the authority. A person appointed to the authority may be replaced
by the appointing member at any time.
Sec. 4. (1) A majority of the persons appointed to the
authority constitute a quorum for the transaction of business.
(2) The person appointed to the authority shall have 1 vote.
(3) The first meeting of the authority shall be held not more
than 45 days after the effective date of this act.
(4) The authority shall elect a chairperson and other officers
as the authority considers necessary. The authority shall adopt
bylaws and rules to govern the operation of the authority.
(5) After its first meeting, the authority shall meet not less
than quarterly and at such other times as determined by the
authority.
Sec. 5. An authority 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. 6. (1) Persons appointed to the authority are public
servants under 1968 PA 317, MCL 15.321 to 15.330, and are subject
to any other applicable law with respect to conflicts of interest.
(2) An authority shall establish policies and procedures
requiring periodic disclosure by persons appointed to the authority
of relationships which may give rise to conflicts of interest.
Sec. 7. (1) An authority shall establish an ethics manual
governing the conducting of system business and the conduct of
employees of the system.
(2) An authority shall establish 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. The policies
established under this section shall include compliance by each
person appointed to the authority and employees of the system who
regularly exercise significant discretion over the award and
management of authority procurements with policies governing all of
the following:
(a) Immediate disclosure of the existence and nature of any
financial interest that would reasonably be expected to create a
conflict of interest.
(b) Withdrawal by the person appointed to the authority or
employee of the system from participation in, discussion of, or
evaluation of any recommendation or decision involving procurement
involving the water or sewer system that would reasonably be
expected to create a conflict of interest for that person or
employee.
Sec. 8. The authority is a public body for purposes of
reporting violations or suspected violations of a law or regulation
or rule promulgated under the law of this state, a political
subdivision of this state, or the United States. A person reporting
a violation or suspected violation under this section shall have
all the protections provided under the whistleblowers' protection
act, 1980 PA 469, MCL 15.361 to 15.369.
Sec. 9. On or before February 1 of each year, the chief
financial officer for a water or sewer system shall prepare and
submit to each member of the system's authority a proposed budget
for the next succeeding fiscal year covering its anticipated
revenues and expenses of administration, operation, maintenance,
and contract procurements.
Sec. 10. An authority shall establish policies and procedures
for the contracting of services for the system. The policies and
procedures shall provide for all of the following:
(a) The authority shall have the exclusive authority to review
and approve all contracts and contract renewals, extensions, and
charge orders or appropriations in an amount greater than
$50,000.00, and such contracts or appropriations are void and
unenforceable unless approved by the authority.
(b) The authority shall review and approve all contract
overruns from the original contract amount for contracts approved
under subdivision (a) and for contracts less than $50,000.00 if the
overrun causes the contract amount to exceed $50,000.00.
(c) Except as otherwise provided by this act, a contract shall
not be awarded by the system for the construction, repair,
remodeling, or demolition of a water or sewer facility unless the
contract is let pursuant to a procedure that requires competitive
bidding. This subdivision does not apply if the authority
determines that any of the following apply:
(i) The negotiated contract amount is less than $50,000.00 over
the lifetime of the contract and any contract renewals or
extensions.
(ii) The contract 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 subparagraph shall not be for a period
greater than 1 year.
(iii) The repair or construction is necessary to ensure safety
or to otherwise protect life or property. A contract under this
subparagraph shall not be for a period greater than 1 year.
(iv) That procurement by competitive bids is not practicable to
efficiently and effectively meet the water and sewer system needs,
or that another procurement method is in the public's best
interests.
(d) The policies and procedures for hiring of professional
service contractors.
Sec. 11. An authority shall establish policies and procedures
for the review and approval of the rates and charges imposed or
assessed by the water or sewer system.
Sec. 12. (1) A water or sewer system shall not charge a
customer more than that allowed under the contract to provide
services.
(2) A customer may file a complaint with the water or sewer
system to recover any amounts allowed under this section.
(3) A complaint under subsection (2) shall be filed no later
than 12 months from the date a payment was made as a result of a
violation of this section.
(4) If a water or sewer system is found to have charged an
amount in violation of this section, the system shall pay to or
credit the account of the customer an amount equal to 10 times the
overcharge or $100.00, whichever is greater.
Sec. 13. If a qualified county, qualified city, or a local
unit of government charges its customers a rate that generates an
amount greater than the amount that the county, city, or local unit
of government is required to pay under its contract with the water
or sewer system, the county, city, or local unit of government
shall annually itemize on the customer's bill the 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.