§ 33-36-1315 — Resolution to become public service district; notice; petition; vote.

(A) Corporations not-for-profit incorporated for the purposes of providing water service which, pursuant to the provisions of this chapter, serve a population of at least twenty thousand persons as shown in the most recent sanitary survey of the South Carolina Department of Health and Environmental Control, and provide water service in two or more counties within the State, may determine, by resolution adopted by the board of directors of the corporation and subject to the additional conditions provided in this section, to become a public service district, a public body politic and corporate. The resolution shall make findings as to: (1) whether the corporation owns assets, including, but not limited to, reserves, that are not reasonably required to continue its operations following its conversion to a public service district and, if so, the amount of the assets; and (2) whether the assets of the corporation have appreciated in value over their original cost and, if so, the amount of the value appreciation. The procedures provided in this section are valid, complete, and sufficient to effect the conversion notwithstanding any contrary provisions of law or the corporation's organizational documents or bylaws. (B) Notice of the meeting of the board of directors at which the resolution to become a public service district is to be considered must be given by regular mail to each member of the corporation, addressed to the last known address of the member, and mailed not less than ten days before the meeting. Notice is effective upon mailing. The secretary of the corporation shall certify the date of mailing as to each member. The notice shall state the purpose, time, and place of the meeting. At the meeting, the board of directors shall afford any members in attendance an opportunity to speak and be heard in support of or in opposition to the conversion of the corporation to a public service district. (C) Promptly after adoption by the board of directors of a resolution to become a public service district, the board of directors shall cause notice of the adoption to be mailed by regular mail to each member of the corporation, addressed to the last known address of the member. In addition, the board of directors, not earlier than the mailing required above, also shall cause the notice of adoption to be published at least once in one or more newspapers of general circulation in the counties in which the corporation provides service. The mailed and published notices shall include the name of the corporation, a statement that the board of directors has determined by resolution that the corporation shall be converted to a public service district, the date of the adoption of the resolution, and a statement that the resolution shall become effective and not subject to further review unless a petition signed by not less than fifteen percent of the membership of the corporation is filed as provided in this section. Within sixty days after the publication of the last notice required by this subsection, a petition signed by the members of the corporation equal in number to at least fifteen percent of the total membership may be filed with the clerk of court for the counties in which the corporation provides service calling for a vote of the membership on the question of whether the corporation shall become a public service district. (D) Except for a petition being duly and timely filed in accordance with subsection (C), no action whatsoever may be commenced to challenge on any grounds the conversion of the corporation to a public service district more than ninety days after the date of the last publication required by subsection (C). (E) If a petition is duly and timely filed in accordance with subsection (C), then the board of directors shall call a meeting of the members of the corporation to submit the question of whether the corporation shall become a public service district. Notice of this meeting must be given by regular mail to each member of the corporation, addressed to the last known address of the member, and mailed not less than ten days before the meeting. Notice is effective upon mailing. The secretary of the corporation shall certify the date of mailing as to each member. The notice shall state the purpose, time, and place of the meeting. The question shall be determined upon a majority vote of the members present in person at the meeting and voting. Action taken at the meeting is effective only if a quorum of the members of the corporation is present in person. For purposes of this subsection, a quorum consists of at least fifteen percent of the members of the corporation upon admission to the meeting. (F) If the membership vote results in a determination to become a public service district, then the corporation promptly shall cause notice of the result to be mailed by regular mail to each member, addressed to the last known address of each member. In addition, the corporation, not earlier than the date of the mailing required above, also shall cause notice of the result to be published once in a newspaper or newspapers of general circulation in each county in which the corporation provides service. The mailed and published notices shall include the name of the corporation, a statement that the corporation has determined by membership vote to become a public service district, and a statement that no action may be commenced on account of the meeting or the conversion of the corporation to a public service district more than twenty days after the date of the final publication. No action whatsoever may be commenced to challenge on any grounds the conversion of the corporation to a public service district more than twenty days after the date of the final publication as provided in this subsection. (G) If any member of the corporation that becomes a public service district pursuant to this section has received or been credited in a specified amount any capital stock, revolving fund certificate, retain certificate, certificate of indebtedness, letter of advice, or other written notice from the corporation and the specified amount has been realized as gross income to such member for federal income tax purposes with respect to any period prior to the date of conversion to a public service district, but the corresponding amount of money has not been distributed to the member, then the member is considered to have contributed such amount to the public service district. The resolution of the board of directors provided for in subsection (B) must specify this information, if applicable. If the board of directors has specified in the resolution provided for in subsection (B) that the corporation owns assets in excess of that reasonably required to continue its operations following conversion to a public service district or that there has been appreciation in the value of the assets of the corporation over their original cost, then, prior to conversion to a public service district, the corporation shall cause the amount thereof, as reasonably determined by the board of directors, to be distributed to the members of the corporation on a cooperative basis. (H) Upon a final, favorable determination, either by vote of the board of directors or by vote of the membership, in the event a petition has been duly and timely filed in accordance with subsection (C), to become a public service district, and upon the expiration of the limitation periods provided by this section, the chief executive officer of the corporation shall petition the Secretary of State to issue a new charter to convert and constitute the nonprofit corporation a public service district, a public body politic and corporate.

Legislative History

HISTORY: 2012 Act No. 168, SECTION 1, eff May 14, 2012.