(a) For purposes of this section, “security” has the same meaning as defined in Section 25019 of the Corporations Code.

(b) The Sacramento Municipal Utility District is authorized to operate a pilot project to allow the board of directors of the district to hold nonstock security in a corporation or other private entity if acquired as part of a procurement of goods or services from that entity, provided that no separate funding is expended solely for the nonstock security. The board of directors of the district may sell or otherwise dispose of the nonstock security when, in its judgment, it is in the best interests of the district to do so.

(c) Before exercising the authority described in subdivision (b), the district’s board of directors shall do all of the following:

(1) Make the following findings:

(A) The acquisition furthers the purposes of the district, pursuant to the Municipal Utility District Act.

(B) The acquisition is in the interest of the district’s ratepayers and the public.

(2) Establish a policy governing acquisitions that shall include, but not be limited to, the following:

(A) Procedures for preventing conflicts of interest and violations of Article 4 (commencing with Section 1090) of Chapter 1 of Division 4 of Title 1 of the Government Code.

(B) Procedures for determining how much of an acquisition to accept in lieu of, or in addition to, other forms of remuneration, in order to ensure the district secures a reasonable return on any intellectual property or other resources it provides the private entity.

(C) Procedures governing the approval process for accepting any acquisitions.

(D) Procedures that ensure acquisition of a nonstock security does not unduly influence the amount paid for the associated goods and services.

(3) Post the policy described in paragraph (2) on the district’s internet website.

(4) Adopt a resolution at a regular meeting of the board stating the intent of the board to exercise the authority described in subdivision (b).

(d) The authority described in subdivision (b) shall be limited to a total of three acquisitions. Any profit or other gain earned by these acquisitions shall be used to benefit the district’s ratepayers.

(e) The value, at the time of acquisition, of any single nonstock security acquired pursuant to the authority described in subdivision (b) shall be limited to no more that 3 percent of the district’s annual revenue in the fiscal year the district makes the acquisition.

(f) This section shall remain in effect only until January 1, 2025, and as of that date is repealed.

(Added by Stats. 2019, Ch. 230, Sec. 1. (AB 689) Effective January 1, 2020. Repealed as of January 1, 2025, by its own provisions.)