1523.10 Lien for payment of bonds.

The funds derived from the sale, use, or lease of the water impounded and conserved or the power generated by the improvements constructed pursuant to sections 1523.01 to 1523.13 of the Revised Code, or from the lease of the lands and improvements adjacent thereto are hereby expressly pledged for the purpose of maintaining and keeping the improvements in repair and for the payment of the interest on and principal of the bonds issued under section 1523.02 of the Revised Code, as the same fall due and mature. The owners of such bonds are hereby given a lien for the payment of the principal and interest of such bonds upon any dam, reservoir, storage basin, or other improvements, or any part thereof, with the appurtenances belonging thereto, constructed by the chief of the division of soil and water resources with the funds derived from the sale of such bonds.

If default is made in the payment of the interest on any of the bonds for three or more successive years, or if bonds, aggregating in par value not less than ten per cent of the total amount of such bonds then outstanding are not paid at maturity, then all of the bonds, both principal and interest, shall become due and payable, and the owners of any of the bonds, aggregating in par value not less than ten per cent of the total amount of such bonds then outstanding, may institute proceedings to foreclose such lien against the state in the court of common pleas of the county in which is located any of the improvements, constructed, altered, or enlarged out of the proceeds of the sale of such bonds.

The court shall have jurisdiction of such action with full power to foreclose such lien and to make an order to the sheriff of the county, acting as a master commissioner, directing the sheriff to make a sale of such improvements or part thereof at not less than two-thirds of the appraised value thereof, and upon such terms and in manner and form as provided for in the order, and to pay the proceeds of such sale to the clerk of the court of common pleas. Upon motion of the purchaser of such improvements at such sale, the court, if such sale is found to be regular in all respects and according to law, shall confirm the sale and order the sheriff to execute a deed to such purchaser and the purchaser's assigns, conveying to the purchaser and the purchaser's assigns all the right, title, and interest of the holders of the bonds in and to the improvements, and all the right, title, and interest of the state, for a period of not more than fifty years from the date of such conveyance, in the same, with full right and franchise, for the period of not to exceed fifty years, to operate the improvements and dispose of the water conserved or the power generated thereby, with the further right, for the period of fifty years, to flow, transport, and convey the water from the improvements, or to conduct and transmit power generated thereby through, over, and upon any of the lands of the state or channels or beds of any of its reservoirs, lakes, canals, races, aqueducts, or watercourses. In the exercise of such rights, such purchaser or the purchaser's assigns shall at all times during the term of the grant maintain the improvements so conveyed to them in a good state of repair and shall not interfere with the navigation of the canals of the state or with the control and maintenance thereof or with the sale of water by the state from its dams, reservoirs, and improvements other than those so constructed. The state does not incur any liability by reason of such sale and the rights granted thereunder to continue to maintain such canals, races, channels, or watercourses, or to continue the use thereof. Such conveyance or grant by the sheriff as such master commissioner shall contain a clause giving the chief such control of waste gates and wickets as to regulate the flow of water in the state reservoirs or canals, in such manner as to maintain the proper level therein and to prevent the flowing into such reservoirs and canals of such quantities of water as might impair any of the property of the state or its lessees, except as otherwise provided in section 1520.03 of the Revised Code.

Upon the foreclosure of the lien and the sale of the improvements, all contracts or leases for the sale, use, or lease of water, the lands and improvements adjacent thereto, or power rights then outstanding shall become void, and the rights of the state and the several lessees thereunder, shall cease.

Upon the making of an order by the court for the sale of such improvements, and before they are offered for sale by the sheriff, the court shall appoint three disinterested appraisers, one of whom shall be a water-works or hydraulic engineer with at least five years' experience in the practice of the engineer's profession, and two of whom shall be freeholders residing in the county in which any of such improvements are located. The appraisers shall appraise the improvements and shall, within the time fixed by the court, file such appraisal in writing with the clerk. If the lien given by this section as security for the payment of the bonds covers a part only of the improvements, the appraisers shall appraise the improvements as an entirety, and shall also appraise separately the part constructed from the proceeds of the sale of the bonds, the lien of which is being foreclosed in such proceeding.

In making such appraisal and fixing the value of the improvements or of such part thereof, the appraisers shall have access to all papers and documents on file in the office of the chief relating to such improvements, including the plans and specifications therefor, and the bids made and contracts entered into for the construction thereof, and all leases and contracts for the sale of water impounded therein and power generated thereby. The order of the court shall direct the sale only of such part of the improvements as have been constructed from the proceeds of the sale of the bonds. The purchaser at such sale, in the operation of such improvements during the term of the franchise granted to the purchaser by this section, shall draw from the dam or reservoir impounding such water only such portion thereof as the appraised value of that part of such improvements, constructed from the proceeds of the sale of such bonds and sold to the purchaser under the order of the court, bears to the entire appraised value of such improvements.

If at any time during the term of the franchise granted to the purchaser of such improvements at such foreclosure sale any controversy arises between the purchaser or the purchaser's assigns and the chief as to the operation of such improvements, or as to the amount of water which the purchaser is drawing or is entitled to draw therefrom, either the purchaser or the chief may file a petition in the court, setting forth the facts connected with such controversy.

Notice in writing of the filing of such petition shall be given to the opposite party to the controversy within thirty days from the date of the filing thereof, either by service of such notice personally upon such opposite party by the sheriff of such county or by service by mail by the clerk. Such notice shall be mailed to the name and address which the purchaser filed with the clerk at the time of the delivery to the purchaser by the sheriff of the deed. Within thirty days from the serving or mailing of such notice, the opposite party to the controversy shall file an answer in the court, and thereupon the court shall hear and determine the controversy and make such order in regard to it as is just and proper, which order shall be binding upon all the parties to the controversy.

At the termination of the period of not to exceed fifty years, all of the rights and privileges conveyed to the purchaser by the deed and grant of such sheriff as master commissioner shall cease and the improvements, with all the appurtenances belonging thereto, shall revert to and become the property of the state, free and clear of any claims whatever against them.

The clerk shall distribute and pay the money received by the clerk from the sheriff as such master commissioner from the sale of such improvements to the holders of the bonds pro rata, and upon such payment to any of the bondholders, they shall surrender to the the clerk their bonds, with all unpaid interest coupons thereon. The clerk shall thereupon cancel the same and deliver them, so canceled, to the treasurer of the water conservation improvement fund.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 7/17/2009.

Effective Date: 10-01-1953