Knowledgebase-Legality of City Contracting with Utility District Water System to Collect City's Sewer Charges


Information Product

Title:Legality of City Contracting with Utility District Water System to Collect City's Sewer Charges
Summary:MTAS was asked whether the city and the utility district can contract for the utility
district to cut off the water of the city's delinquent sewer customers without the
contract also providing for the utility district to handle the city's sewer service billing.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:12/20/90
Last Reviewed on::06/27/2017
Subject:Contracts; Sewers; Utilities--Contracts and agreements; Utilities--Rates and charges; Water--Rates and charges
Type:Legal Opinion
Legal Opinion:

Reference Documents:

Text of Document: December 20, 1990

The city owns a sewer system; a utility district owns the water system. Your question is whether the city and the utility district can contract for the utility district to cut off the water of the city's delinquent sewer customers without the contract also providing for the utility district to handle the city's sewer service billing.

The answer to your question depends on whether items (ii) through (iv) under Tennessee Code Annotated, section 7-35-201(5)(A) are independent of item (i). Tennessee Code Annotated, section 7-35-201(5)(A) authorizes municipalities and utility districts, among other things:

(5)(A) To enter into contracts for the collection of such sewer charges with any public or private corporation or municipal utilities board or commission operating a water system therein and any public corporation or municipal utilities board of commission is authorized and empowered to make contacts with any other city, town or utility district:
(i) To meter, bill and collect sewer service charges as an added designated item on its water service bills, or otherwise; [Emphasis is mine]
(ii) To discontinue water service to sewer users who fail or refuse to pay sewer service charges;
(iii) Not to accept payment of water service charges from any customer without receiving at the same time payment of any sewer service charges owed by such customer; and
(iv) Not to reestablish water service for any customer until such time as all past due sewer service charges owed by such customer have been paid.

The key language is "or otherwise" under (i). That language appears to suggest that the parties can contract to do any one of items (ii) through (iv), separately in some manner suitable to the parties, without entering into a contract to do item (i).

Tennessee Code Annotated, section 68-221-208, contains the same contractual authority in almost identical language, and applies to municipalities receiving sewer system grants under Tennessee Code Annotated, sections 68-221-208 through 68-221-214. The language is only almost identical because it does not contain the "or otherwise" clause.

However, my impression is that both Tennessee Code Annotated, section 7-35-201(a)(5) and Tennessee Code Annotated, section 68-221-208 are both broad enough to permit the contracting parties to enter into sewer service bill collection arrangement that permits the billing system to be a function of either the city or the utility district.

But the utility district is within its authority to refuse to enter into a contract to collect sewer service charges, or to enter into a contract to collect sewer service charges unless the contract provides for the utility district to bill for the sewer service charges. In fact, the utility district has a good argument that from its administrative standpoint, a unified billing is the simplest system.

If I can help you further in this or any other matter, please let me know.

Sincerely,

Sidney D. Hemsley
Senior Law Consultant
SDH/

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.