S-3725.1          _______________________________________________


                                 SENATE BILL 6454



State of Washington              52nd Legislature             1992 Regular Session


By Senators Madsen and Gaspard


Read first time 01/31/92.  Referred to Committee on Energy & Utilities.Providing a formula for valuation of a public water system.

     AN ACT Relating to public water systems in receivership; and amending RCW 43.70.195.




     Sec. 1.  RCW 43.70.195 and 1990 c 133 s 4 are each amended to read as follows:

     (1) In any action brought by the secretary of health or by a local health officer pursuant to chapter 7.60 RCW to place a public water system in receivership, the petition shall include the names of one or more suitable candidates for receiver who have consented to assume operation of the water system.  The department shall maintain a list of interested and qualified individuals, municipal entities, special purpose districts, and investor-owned water companies with experience in the provision of water service and a history of satisfactory operation of a water system.  If there is no other person willing and able to be named as receiver, the court shall appoint the county in which the water system is located as receiver.  The county may designate a county agency to operate the system, or it may contract with another individual or public water system to provide management for the system.  If the county is appointed as receiver, the secretary of health and the county health officer shall provide regulatory oversight for the agency or other person responsible for managing the water system.

     (2)(a) In any petition for receivership under subsection (1) of this section, the department shall recommend that the court grant to the receiver full authority to act in the best interests of the customers served by the public water system.  The receiver shall assess the capability, in conjunction with the department and local government, for the system to operate in compliance with health and safety standards, and shall report to the court its recommendations for the system's future operation, including the formation of a water district or other public entity, or ownership by another existing water system capable of providing service.

     (b) In a valuation of the public water system made for a change of ownership, either to a public or private entity, the court shall deduct the value of improvement made during the receivership.  The court shall also deduct from the valuation the value of any plant or real property contributed by the customers.  The value of the customer-contributed assets for the purposes of a change of ownership is the total appraised value, minus receivership improvements, multiplied by the ratio of the cost of customer-contributed assets to the cost of all assets.  The court shall also deduct from the valuation the cost of improvements required to be made to bring the public water system in compliance with health and safety standards.

     (3) If a petition for receivership and verifying affidavit executed by an appropriate departmental official allege an immediate and serious danger to residents constituting an emergency, the court shall set the matter for hearing within three days and may appoint a temporary receiver ex parte upon the strength of such petition and affidavit pending a full evidentiary hearing, which shall be held within fourteen days after receipt of the petition.

     (4) A bond, if any is imposed upon a receiver, shall be minimal and shall reasonably relate to the level of operating revenue generated by the system.  Any receiver appointed pursuant to this section shall not be held personally liable for any good faith, reasonable effort to assume possession of, and to operate, the system in compliance with the court's orders.

     (5) The court shall authorize the receiver to impose reasonable assessments on a water system's customers to recover expenditures for improvements necessary for the public health and safety.