Section 1230-S. Exemption from taxes, assessments and certain fees

1. It is
  hereby determined that the creation of the authority and the water board
  and  the  carrying  out of its corporate purposes is in all respects for
  the benefit of the people of  the  city  and  any  municipality  in  the
  service  area  and  is a public purpose, and the authority and the water
  board shall be regarded as  performing  governmental  functions  in  the
  exercise  of  the  powers  conferred  upon  each  by this title, and the
  authority and the water board shall not be required  to  pay  any  fees,
  taxes, special ad valorem levies or assessments, whether state or local,
  including  but  not limited to fees, taxes, special ad valorem levies or
  assessments on real property, franchise  taxes,  sales  taxes  or  other
  excise   taxes,   upon  any  property  owned  by  them  or  under  their
  jurisdiction, control or supervision, or upon the uses thereof, or  upon
  their  activities  in the operation and maintenance of its facilities or
  any fares, tolls, rentals,  rates,  charges,  fees,  revenues  or  other
  income  received  by the authority or the water board. The authority and
  the water board shall at all times be exempt from any  filing,  mortgage
  recording  or  transfer  fees or taxes in relation to instruments filed,
  recorded or transferred by it or on its behalf. The  construction,  use,
  occupation  or  possession of any property owned by the authority or the
  water board, including improvements thereon, by  any  person  or  public
  corporation  under  a  lease,  lease and sublease or any other agreement
  shall  not  operate  to  abrogate  or  limit  the  foregoing  exemption,
  notwithstanding  that the lessee, user, occupant or person in possession
  shall claim ownership for federal income tax purposes.
    2. Any bonds issued pursuant to this title together  with  the  income
  therefrom  as  well  as the property of the authority or the water board
  shall at all times be exempt from taxes, except for transfer and  estate
  taxes.  The  state  hereby  covenants  with  the purchasers and with all
  subsequent holders and transferees of  bonds  issued  by  the  authority
  pursuant  to  this  title,  in  consideration  of  the acceptance of and
  payment for the bonds, that the bonds of the authority  issued  pursuant
  to  this  title  and  the income therefrom and all revenues, monies, and
  other property pledged to secure the payment of such bonds shall at  all
  times be free from taxation, except for transfer and estate taxes.
    3. Notwithstanding the provisions of this section to the contrary, any
  real  property  of  the  authority  or  water  board located outside the
  boundaries of the city shall  be  exempt  from  the  payment  of  taxes,
  special  ad  valorem  levies  and special assessments only if and to the
  extent that such real property would have been exempt if  owned  by  the
  city.
    4.  Notwithstanding any provision in this section to the contrary, the
  water board may pay, or may enter into agreements with the city  or  any
  municipality to pay, a sum or sums, annually or otherwise, or to provide
  other  considerations to such city or municipality, with respect to real
  property of  the  water  board  located  within  such  municipality  and
  provided  that  any such payment or agreement to pay shall be subject to
  approval by the authority.
    5. The water board shall not be required to pay  any  taxes  or  other
  governmental  fees  or  charges,  whether  imposed  by  the state or any
  municipality, including,  without  limitation,  franchise  taxes,  sales
  taxes  or  other  excise  taxes,  or  any  other  tax or charge upon its
  property or activities or upon any of its revenues or other income.
    6. Notwithstanding any other provision of this section, any payment by
  the water board in lieu of tax payments described  in  this  subdivision
  shall  be  subordinate  to any other payments required to be made to the
  authority pursuant to this title,  including,  without  limitation,  the

  payment  of  sums  to  the  authority or to any trustee representing the
  holders of any bonds issued by the authority.