Bill Summary – FastDemocracy

BILL AS INTRODUCED                                                       H.755
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                                      H.755
 Introduced by Representatives Masland of Thetford, Sibilia of Dover, and
                 Sims of Craftsbury
 Referred to Committee on
 Date:
 Subject: Communications; communications union districts; mergers;
           governance; business practices
 Statement of purpose of bill as introduced: This bill proposes to amend
 Vermont law as it pertains to communications union districts, particularly with
 regard to mergers, governance, and business practices.
    An act relating to mergers and governance of communications union
    districts
 It is hereby enacted by the General Assembly of the State of Vermont:
 Sec. 1. FINDINGS; PURPOSE
    (a) The General Assembly finds:
         (1) For nearly a decade, the General Assembly has consistently found
 that commercial carriers have failed to provide broadband service to many
 rural areas of Vermont, leaving over 80,000 locations currently without access
 to modern internet service. See, e.g., 2015 Acts and Resolves No. 41,
 2019 Acts and Resolves No. 79, and 2021 Acts and Resolves No. 71.
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       (2) An attempt to provide universal access to reliable, high-quality
 broadband service through the construction of 200 cellular towers providing
 4G LTE data, or “fixed wireless access,” was unsuccessful due to challenges
 presented by dense woodlands, hilly terrain, and the failure of equipment to
 meet manufacturer performance claims.
       (3) Recognizing that neither the market nor modern wireless technology
 would come to Vermont’s rescue, the General Assembly in 2015 enabled the
 creation of special-purpose municipalities called communications union
 districts (CUDs). A CUD is a regional entity empowered to construct and
 operate a broadband network. As a municipality, a CUD can issue revenue
 bonds to help construct its network. However, a CUD is prohibited by law
 from taxing or otherwise imposing costs on residents of the district.
       (4) The CUD concept was initially enacted in Vermont at the request of
 ECFiber, a municipal internet service provider operating pursuant to a 23-town
 interlocal contract. ECFiber began issuing revenue bonds in 2016, as
 Vermont’s first CUD.
       (5) The success ECFiber has enjoyed with bringing world-class, fiber-
 optic broadband service to all locations within its member towns led to
 legislative efforts to promote and accelerate the creation of additional CUDs
 throughout Vermont. See, e.g., 2019 Acts and Resolves No. 79.
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       (6) Since 2019, nine additional CUDs have been formed. Over 200
 towns send more than 400 volunteer delegates to the governing boards of these
 districts, a level of citizen involvement across large geographic areas greatly
 facilitated by virtual meetings.
       (7) All 10 CUDS are in the process of partnering with private companies
 to build and operate resilient fiber-optic networks. All are committed to
 universal service and digital equity.
       (8) Recent federal funding available to CUDs through grant programs
 administered by the Vermont Community Broadband Board has enabled
 several CUDs to complete planning and start network construction.
       (9) For example, ECFiber has constructed high-speed fiber-optic service
 to over 25,000 locations and will complete service to another 8,000 locations
 in its expanded 31-town district by 2025. Approximately 20,000 of those
 locations would otherwise be classified as unserved or underserved.
       (10) Although CUDs are municipalities, they are unusual in that they
 operate in a larger competitive environment and therefore sometimes compete
 for customers with well-funded commercial providers. This distinguishes
 them from typical municipal enterprises, such as water districts and electric
 departments, which often operate as regulated monopolies in their respective
 service territories. As a result, a CUD needs to protect its business data in a
 manner that other municipal enterprises do not. Such protection will ensure a VT LEG #372939 v.1
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 CUD is not competitively disadvantaged and unfairly prevented from
 accomplishing its public mission.
       (11) Despite the influx of recent and anticipated federal funding for
 broadband deployment, the General Assembly has recognized that public funds
 are not sufficient to support CUDs on an ongoing basis. Accordingly, existing
 Vermont law requires that any broadband project financed through a grant
 from the Vermont Community Broadband Board must demonstrate an
 economically sustainable business model that ultimately will be eligible for
 financing in the private or municipal bond market. In other words, a CUD
 must show it is a going business concern able to stand on its own, without
 having to rely on public funding.
    (b) The purpose of this act is to further support the efforts of CUDs to
 provide high-quality, reliable broadband service in unserved and underserved
 communities by enabling CUDs to become more responsive to economies of
 scale as those opportunities arise and take full advantage of emerging
 organizational structures. To that end, the provisions of this act simplify the
 process by which two or more CUDs can merge and provide additional
 flexibility related to CUD governance and business practices.
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     BILL AS INTRODUCED                                                           H.755
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 Sec. 2. 30 V.S.A. § 3082a is added to read:
 § 3082a. MERGER
    (a) Authority. Notwithstanding 24 V.S.A. chapter 49, a district may merge
 with one or more other districts as provided in this section. Such merger shall
 include all member municipalities of each of the merging districts.
 Section 3053 of this chapter applies to a new combined district formed
 pursuant to this section.
    (b) Preliminary merger plan.
       (1) The merging districts shall prepare a preliminary merger plan. The
 plan shall include provisions relating to structure, organization, functions,
 operation, finance, assets, rights, liabilities, contracts, consents required by
 law, or regulation, including adequate provisions for the satisfaction or
 assumption of all obligations of the district members concerned. More
 specifically, the plan shall include provisions clearly stating that, upon the
 effective date of the merger:
          (A) all assets of whatever kind, owned, claimed, or held by each
 district shall become vested in and become assets owned by the combined
 district without any further act, deed, or instrument being necessary; and
          (B) the combined district shall assume and be obligated to pay or
 otherwise perform each and every lawful obligation, debt, claim, bonded VT LEG #372939 v.1
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 indebtedness, and other liability of each district without any further act, deed,
 or instrument being necessary.
       (2) Upon approval of the preliminary merger plan by three-quarters vote
 of a quorum of the board of each of the merging districts, the notice and
 hearing requirements of subsection (c) of this section shall be implemented.
    (c) Notice and hearing.
       (1) Not less than 45 days prior to the public hearing required by
 subdivision (2) of this subsection, copies of the preliminary merger plan shall
 be distributed to the legislative bodies of the member municipalities of the
 merging districts.
       (2) A public hearing on the plan shall be held in each merging district
 not less than 30 days prior to the vote referenced in subsection (d) of this
 section. Notice of each hearing shall be distributed by member municipalities
 by local posting and electronic communications. In addition, each district shall
 publish notice in newspapers and other paid media relevant to its service
 territory. The last notice shall appear not later than three days before the final
 public hearing required by this subdivision.
       (3) Not less than 30 days prior to the vote referenced in subsection (d) of
 this section, notice of the proposed merger shall be distributed to each known
 creditor of the merging districts and such other entities as may be required by
 law, regulation, or contract.
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    (d) Vote of approval. Subsequent to the public hearings required by
 subsection (c) of this section, a joint committee shall prepare a final merger
 plan for presentation to the boards of the merging districts. The plan shall take
 effect upon approval by two-thirds vote of a quorum of the board of each of the
 merging districts.
    (e) Organizational meeting. The combined district’s initial organizational
 meeting shall be held within 90 days following the final vote to merge required
 under subsection (d) of this section.
    (f) Notice to Secretary of State. The district’s governing board shall notify
 the Secretary of State of the merger as provided in subsection 3053(a) of this
 chapter and shall provide notice to such other entities as may be required by
 law.
 Sec. 3. 30 V.S.A. § 3060 is amended to read:
 § 3060. ORGANIZATIONAL MEETING; REMOTE MEETINGS
    (a) Annually, on the second Tuesday in May following the appointments
 contemplated in section 3059 of this chapter or on a date specified in the
 district’s bylaws, the board shall hold its organizational meeting. At such
 meeting, the board shall elect from among its appointed representatives a chair
 and a vice chair, each of whom shall hold office for one year and until his or
 her a successor is duly elected. The board’s initial organizational meeting shall VT LEG #372939 v.1
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 be held within 90 days following the vote to form a district under
 subsection 3051(b) of this title.
    (b)(1) Notwithstanding any provision of law to the contrary, and upon
 approval of the board or as specified in the district’s bylaws:
          (A) A quorum or more of the board may attend a meeting by
 electronic or other means without designating a physical meeting location
 where the public may attend.
          (B) Board members and staff shall not be required to be physically
 present at a designated meeting location.
       (2) When the board meets electronically under subdivision (1) of this
 subsection, the board shall:
          (A) use technology that permits the attendance and participation of
 the public through electronic or other means;
          (B) allow the public to access the meeting by telephone; and
          (C) post information that enables the public to directly access and
 participate in meetings electronically and shall include this information in the
 published agenda for each meeting.
       (3) Unless unusual circumstances make it impossible for it to do so, the
 board shall record any meetings held pursuant to this subsection.
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     BILL AS INTRODUCED                                                         H.755
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 Sec. 4. 30 V.S.A. § 3069 is amended to read:
 § 3069. TREASURER
    The treasurer of the district shall be appointed by the board, and shall serve
 at its pleasure. The treasurer shall not be a member of the governing board.
 The treasurer shall have the exclusive charge and custody of the funds of the
 district and shall be the disbursing officer of the district. When authorized by
 the board, the treasurer may sign, make, or endorse in the name of the district
 all checks and orders for the payment of money and pay out and disburse the
 same and receipt therefor. The treasurer shall keep a record of every
 obligation issued and contract entered into by the district and of every payment
 thereon. The treasurer shall keep correct books of account of all the business
 and transactions of the district and such other books and accounts as the board
 may require. The treasurer shall render a statement of the condition of the
 finances of the district at each regular meeting of the board and at such other
 times as shall be required of the treasurer. The treasurer shall prepare the
 annual financial statement and the budget of the district for distribution, upon
 approval of the board, to the legislative bodies of district members. The
 treasurer shall do and perform all of the duties appertaining to the office of
 treasurer of a body politic and corporate. The treasurer may delegate any or all
 of the responsibilities described in this section, provided such delegation is
 approved by the board or authorized in the district’s bylaws. Upon removal or
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 the treasurer’s termination from office by virtue of removal or resignation, the
 treasurer shall immediately pay over to the successor all of the funds belonging
 to the district and at the same time deliver to the successor all official books
 and papers.
 Sec. 5. 30 V.S.A. § 3074 is amended to read:
 § 3074. FISCAL YEAR
    The fiscal year of the district shall commence on January 1 and end on
 December 31 of each year, unless otherwise specified in the district’s bylaws.
 Sec. 6. 30 V.S.A. § 3075 is amended to read:
 § 3075. BUDGET
    (a) Annually, on or before October 21 or on another date specified in the
 district’s bylaws, the board shall approve and cause to be distributed to the
 legislative body of each district member for review and comment an annual
 report of its activities, together with a financial statement, a proposed district
 budget for the next fiscal year, and a forecast presenting anticipated year-end
 results. The proposed budget shall include reasonably detailed estimates of:
       (1) deficits and surpluses from prior fiscal years;
       (2) anticipated expenditures for the administration of the district;
       (3) anticipated expenditures for the operation and maintenance of any
 district communications plant;
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       (4) payments due on obligations, long-term contracts, leases, and
 financing agreements;
       (5) payments due to any sinking funds for the retirement of district
 obligations;
       (6) payments due to any capital or financing reserve funds;
       (7) anticipated revenues from all sources; and
       (8) such other estimates as the board deems necessary to accomplish its
 purpose.
    (b) Coincident with a regular meeting thereof, the board shall hold a public
 hearing on or before November 15 of each year or on another date specified in
 the district’s bylaws to receive comments from the legislative bodies of district
 members and hear all other interested persons regarding the proposed budget.
 Notice of such hearing shall be given to the legislative bodies of district
 members at least 15 days prior to such hearing. The board shall give
 consideration to all comments received and make such changes to the proposed
 budget as it deems advisable.
    (c) Annually, on or before December 15 or on another date specified in the
 district’s bylaws, the board shall adopt the budget and appropriate the sums it
 deems necessary to meet its obligations and operate and carry out the district’s
 functions for the next ensuing fiscal year.
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    (d) Actions or resolutions of the board for the annual appropriations of any
 year shall not cease to be operative