FOR AN ACT ENTITLED, An Act to  revise and supplement certain powers of the Board of Water and Natural Resources and the South Dakota Conservancy District, to provide for the establishment of a corporation by the South Dakota Conservancy District for the purpose of acquiring, owning, leasing, subleasing and disposing of certain land, improvements and capital equipment comprising all or a portion of a system or part of a system of waterworks, sewage or waste disposal, and to establish or confirm the powers of municipalities and other public entities in connection therewith.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
     Section  1.  Terms used in this Act, unless the context otherwise clearly requires, mean:

             (1)    "Board," the Board of Water and Natural Resources, created by §  1-40-5;

             (2)    "Corporation," the special purpose body corporate and politic established by the board by resolution as provided in section 3 of this Act;

             (3)    "District," the South Dakota Conservancy District, a governmental agency, body politic and corporate organized and existing pursuant to chapter 46A-2;

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             (4)    "Lease," when used with respect to utility property, any lease, sublease, lease- purchase agreement, installment agreement, lease-back agreement or other contract, agreement, instrument or arrangement pursuant to which any rights or property with respect to utility property are transferred to or from one party to another party;

             (5)    "Permitted investments," any investment authorized by § §  4-5-23 and 4-5-26 together with (a) noncollateralized direct obligations or any other payment undertaking or agreement of any bank or savings institution, insurance company or bank or insurance holding company, whether organized under the laws of the United States of America, any state or territory thereof, or the laws of any foreign nation, if such institution or holding company is rated in the highest four classifications by at least one standard domestic rating service and (b) any bonds, notes or other obligations of any state or any agency, authority or other instrumentality of any state or political subdivision thereof provided that such bond, notes or other obligations are rated in the four highest classifications established by at least one standard domestic rating service;

             (6)    "Person," has the meaning given thereto in §  46A-2-4 and, for the purposes of this Act, also expressly includes any grantor trust, business trust or other form of trust or association;

             (7)    "Public entity," has the meaning given thereto in §  46A-2-4 and expressly includes the district, the corporation and the state for purposes of this Act;

             (8)    "State," the State of South Dakota acting by and through the Department of Environment and Natural Resources;

             (9)    "Support and operating agreement," any contract, agreement or other arrangement pursuant to which a party agrees with another party to make certain utility property, or rights with respect thereto or in connection therewith, available to such other party;

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             (10)    "Utility," any system or part of a system of waterworks, or sewage and waste disposal described in §  9-40-1; and

             (11)    "Utility property," any land, improvements or capital equipment comprising a utility, including any extensions, additions, improvements or appurtenances to any such utility or combination of systems and any interest in any of the foregoing.
     Section  2.  The state may acquire from any public entity or other person by purchase, lease or any other form of contract, agreement, instrument or conveyance all or any portion of utility property and may own, operate, use or otherwise contract with any public entity or other person to own, operate, use or contract for use or operation of utility property, and the state may dispose of all or any portion of utility property by sale, lease or any other form of contract, instrument or conveyance to any public entity or other person, subject only to any applicable terms and conditions set forth in section 2 to 7, inclusive, of this Act.

     Any sale, acquisition, disposition, lease or other form, contract, instrument or conveyance by the state authorized by this section shall be evidenced by an instrument or agreement in writing signed on behalf of the state by the secretary of the Department of Environment and Natural Resources. The secretary of the Department of Environment and Natural Resources shall file a certified copy of any such instrument or agreement with the Legislature promptly upon execution and delivery thereof. Upon the filing of a certified copy of any such instrument or agreement by the secretary of the Department of Environment and Natural Resources, such sale, acquisition, disposition or other contract shall, for all purposes, be valid, binding and enforceable in accordance with the terms thereof and all deeds, bills of sale, leases and other instruments, contracts and agreements related thereto, including any pledge, grant of security interest or other encumbrance made by the state, the board, the corporation, the district or any public entity are not subject to disavowal, disaffirmance, cancellation or avoidance by reason of insolvency of any

party, lack of consideration or any other fact, occurrence or rule of law.
     Section  3.  That chapter 46A-2 be amended by adding thereto a NEW SECTION to read as follows:

     The district shall have the power and authority to establish by resolution of the board a special purpose corporation which shall be body corporate and politic and instrumentality of, but separate and apart from, the State of South Dakota, the district and the board. Such corporation shall be established for the express limited public purposes set forth in this Act and no part of the net earnings of any such corporation shall inure to any private individual.

     The corporation shall be governed by a board of trustees consisting of the members of the board and two additional persons appointed by the Governor, which two additional members shall be independent from the state. The resolution establishing the corporation shall serve as the charter of the corporation and may be amended from time to time by resolution of the board, but such resolution shall at all times provide that the power and the authority of the corporation shall be subject to the terms, conditions and limitations of this Act and any applicable covenants or agreements of the corporation in any lease, indenture or other instrument, contract or agreement then in effect. The district and corporation shall each possess the power to enter into contracts regarding any matter connected with any corporate purpose within the objects and purposes of this Act.

     The district and corporation may delegate by resolution to one or more officers or employees of the Department of Environment and Natural Resources, the district or the corporation such powers and duties as the district or corporation may deem proper.

     The corporation shall have the power and authority to enter into leases of utility property, support and operating agreements, and any and all contracts, agreements or other instruments which the board of trustees of the corporation determines to be related or ancillary thereto, and

to secure payment or performance of obligations in connection therewith with any property, funds or rights of the corporation.

     The corporation may pledge as security for any arrangement entered into with respect to utility property (i) any rights under any lease, support and operating agreement or other contract, agreement or instrument involving or relating to utility property, (ii) any rights with respect to investment of moneys, including contracts related or ancillary thereto, (iii) moneys or other funds deposited with, payable to or held by or on behalf of the corporation and (iv) the proceeds of the foregoing. Any such pledge made by the corporation shall be valid and binding from the time such pledge is made. The property, revenues, moneys, other funds and rights so pledged and thereafter held or received by or on behalf of the corporation shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act; and, subject only to the provisions of prior pledges or agreements of the corporation, the lien of such pledge shall be valid and binding as against the state and all parties having claims of any kind in tort, contract or otherwise against the corporation irrespective of whether such parties have notice thereof. No ordinance, resolution, trust agreement or other instrument by which such pledge is created need be filed or recorded except in the records of the corporation.

     In connection with any lease or other contract or arrangement relating to utility property, the corporation may enter into one or more support and operating agreements or other arrangements to provide additional security or liquidity. Such arrangements may include, without limitation, bond insurance, letters of credit and lines of credit. The corporation may enter into contracts and may agree to pay fees to persons providing such arrangements.

     In connection with any sale, lease or other contract, agreement, instrument or arrangement relating to utility property or the investment of funds of the corporation in connection therewith, the corporation may enter into contracts that it determines necessary or appropriate to permit

it to manage payment or interest rate risk. These contracts may include, but are not limited to, interest rate exchange agreements; contracts providing for payment or receipt of funds based on levels of or changes in interest rates; contracts to exchange cash flows or series of payments; and contracts incorporating interest rate caps, collars, floors, or locks.

     The corporation shall not have the authority to file a voluntary petition under or be or become a debtor or bankrupt under the federal bankruptcy code or any other federal or state bankruptcy, insolvency or moratorium law or statute as may, from time to time, be in effect and neither any public officer nor any organization, entity or other person shall authorize the corporation to be or become a debtor or bankrupt under the federal bankruptcy code or any other federal or state bankruptcy, insolvency or moratorium law or statute, as may, from time to time be in effect.

     The corporation shall not have the authority to guarantee the debts of another.

     The corporation shall not be required to file any reports with the state other than those required to be filed with the Legislature by authorities which issue bonds.

     Except for debts incurred directly by the corporation, no lease or other contract, agreement, instrument or obligation, issued, incurred or created by the State of South Dakota or any state agency or instrumentality may be or become a lien, charge or liability against the corporation or the property or funds of the corporation.
     Section  4.  That chapter 46A-2 be amended by adding thereto a NEW SECTION to read as follows:

     The purposes of the corporation established by the board pursuant to this Act are:

             (1)    To purchase, acquire, own, operate, contract with other parties to operate, pledge, lease, sublease, encumber, sell, mortgage or otherwise transfer all right, title and interest in and to utility property;

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             (2)    To raise funds through the sale, lease, transfer, pledge, encumbrance, mortgage or other conveyance of the rights or contract described above in clause (1) of this section;

             (3)    To serve the Legislature by making reports concerning the foregoing;

             (4)    To sue and be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties;

             (5)    To have and to use a corporate seal and to alter the same at pleasure;

             (6)    To maintain an office at such place or places as the board of trustees of the corporation by resolution may designate;

             (7)    To receive and invest funds transferred to it by the district, the board, the state, any public entity or other person;

             (8)    To invest any of its funds in permitted investments; and

             (9)    To do all things necessary and convenient to carry out the purposes of this chapter.

     The corporation shall also be vested with the same power and authority, and shall be subject to the same limitations and conditions, as are applicable to the district pursuant to the district and the board pursuant to § §  46A-2-6, 46A-2-7, 46A-2-8, 46A-2-9, 46A-2-10, 46A-2-12, 46A-2-13 and 46A-2-15, except (a) such power and authority shall be exercised with respect to and shall be limited to the purposes of the corporation set forth in section 4 of this Act, (b) no lease or any other contract or agreement created hereunder shall have a term in excess of one hundred years, (c) the corporation shall not be authorized to engage in any unrelated activities, (d) such power and authority shall be deemed to extend to all utility property as defined in this Act and (e) the other limitations and conditions on the power and authority of the district and the board as contained in chapter 46A-2, or incorporated therein or referred thereby, shall not be applicable to the corporation.

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     Section  5.  That chapter 46A-2 be amended by adding thereto a NEW SECTION to read as follows:

     No lease, support and operating agreement or other contract or agreement of the corporation created under this Act may be or become a lien, charge or liability against the State of South Dakota, the board or the district, nor against the property or funds of the State of South Dakota, the board or the district within the meaning of the Constitution or statutes of South Dakota.
     Section  6.  That chapter 46A-2 be amended by adding thereto a NEW SECTION to read as follows:

     The State of South Dakota pledges to and agrees with any party to any sale, lease, or other contract, agreement, instrument or other arrangement created under this Act that the state will not limit or alter the rights and powers vested in the corporation, board, the district or other public entity by this Act so as to impair the terms of any such contract made by the corporation, board, the district or other public entity with such party or in any way impair the rights and remedies of such party until such contract is satisfied. The corporation, board, district and any public entity is each authorized to include their pledges and agreements of the state in any such contract created under this Act.

     Neither the State of South Dakota nor the district nor the board shall be liable on any instrument of conveyance, lease or other contract or other agreement relating to utility property created under this Act. None of such contracts shall be a debt of the state, the district or the board, and this Act shall not be construed as a guarantee by the state, the district or the board of the obligations of the corporation.
     Section  7.  That chapter 46A-2 be amended by adding thereto a NEW SECTION to read as follows:

     The corporation is hereby declared to be performing a public function on behalf of the state

and to be a public instrumentality of the state. The income of the district and the corporation, and all utility property and any other property at any time owned by the district or the corporation, shall be exempt from all taxation in the State of South Dakota. In addition, the corporation shall be exempt from all filing, reporting and similar requirements otherwise applicable to nonprofit and other corporations.
     Section  8.  That chapter 46A-2 be amended by adding thereto a NEW SECTION to read as follows:

     The corporation shall have the power, together with all powers incidental thereto or necessary for the performance thereof, to employ attorneys, accountants, consultants and financial experts, managers and such other employees and agents as may be necessary in its judgment and to fix their compensation.
     Section  9.  That chapter 9-40 be amended by adding thereto a NEW SECTION to read as follows:

     The power and authority conferred by the provisions of § §  9-40-37, 9-40-38, 9-40-39 and 9-40-40 are hereby expressly extended to and made applicable to any acquisition, sale or lease by any public entity with respect to any utility property to, from or with the state, the district, the corporation or any other person except, for the purposes of this section, (1) any sale price shall not be required to exceed the fair market value of the utility property being sold or otherwise transferred, (2) only the net proceeds remaining with the public entity after any deposit, payment or prepayment required pursuant to any lease, contract, agreement or other arrangement entered into contemporaneously therewith and relating to or concerning such utility property shall be subject to §  6-13-8, (3) all such utility property so sold, transferred and/or subject to one or more leases, support and operating agreements, or other contract, agreement or arrangement shall be deemed described in and to benefit by the provisions of §  9-40-39, (4)

no lease or other contract or agreement entered into by a public entity as provided herein shall have a term in excess of one hundred years, and (5) to the extent that a public entity sells, transfers or otherwise conveys utility property to the state, district or the corporation as provided hereunder and enters into a lease, support and operating agreement or other contract, agreement or other arrangement as described in §  9-40-38, as modified hereby, such public entity and such sale, transfer, conveyance, lease, contract, agreement and other arrangement shall not be subject to any restriction, condition or limitation or procedural requirement prescribed by any other law or charter applicable to such public entity.
     Section  10.  The powers conferred by this Act are in addition to all other powers conferred upon the board, the district, the corporation and any other public entity, and their exercise shall be subject only to such restrictions as may be provided by the South Dakota Constitution and are not subject to any restriction or procedural requirements prescribed by any other law or charter.
     Section  11.  If any clause or other portion of this Act shall be held invalid, that decision shall not affect the validity of the remaining portions of this Act. It is hereby declared that all such remaining portions of this Act are severable, and that the Legislature would have enacted such remaining portions if the portions that may be so held to be invalid had not been included in this chapter.