CHAPTER 102*
MUNICIPAL WATERWORKS SYSTEMS

      *Cited. 171 C. 74.

Table of Contents

Sec. 7-234. Operation of system, when. Payment of expenses. Waiver of acquisition rights.
Sec. 7-235. Revenue bonds.
Sec. 7-236. Issuance of bonds.
Sec. 7-237. Sinking fund.
Sec. 7-238. Trust indenture.
Sec. 7-239. Rates for use.
Sec. 7-240. Separate accounts.
Sec. 7-241. Additional bonds.
Sec. 7-242. Issuance of refunding bonds.
Sec. 7-243. Receiver.
Sec. 7-244. Sales at less than par. Tax exemption.
Sec. 7-244a. Temporary notes. Methods of payment.

      Sec. 7-234. Operation of system, when. Payment of expenses. Waiver of acquisition rights. Any town, city or borough or district organized for municipal purposes may acquire, construct and operate a municipal water supply system where (1) there is no existing private waterworks system, (2) the owner or owners of a private waterworks system are willing to sell or transfer all or part of such system to the municipality, or (3) a public regional waterworks system within said town, city or borough or district is willing to sell or transfer all or part of the system to the municipality. The franchise jurisdiction of the municipal water supply system shall be enlarged, by special act, if applicable to include the system or portion thereof sold or transferred and the franchise jurisdiction of the acquired waterworks system shall be reduced, by special act, if applicable to exclude the system or portion thereof sold or transferred. Any such municipality may pay for the acquisition, construction, extension, enlargement and maintenance of any such system by the issuance of general obligation bonds as provided in chapter 109 or by the issuance of revenue bonds as hereinafter provided. Any municipality having the right to acquire all or any part of an existing private waterworks system pursuant to any municipal charter, special act or contract may relinquish such rights by action of its legislative body.

      (1949 Rev., S. 753; 1967, P.A. 780; P.A. 84-420, S. 1, 2; P.A. 93-349, S. 1.)

      History: 1967 act allowed purchase of private waterworks system by municipality or construction of system through issuance of general obligation bonds as well as revenue bonds; P.A. 84-420 added provision re waiver of acquisition rights; P.A. 93-349 added provisions re transfer of all or part of a private system, sale or transfer of a public regional system and re enlargement or reduction of resulting franchise jurisdiction by special act.

      Cited. 171 C. 74.

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      Sec. 7-235. Revenue bonds. The legislative body of any municipality described in section 7-234, which municipality has voted to construct, enlarge or maintain a waterworks system, shall cause an estimate to be made of the cost of such construction and may issue, in the name of such municipality, revenue bonds in an amount sufficient to meet such estimated cost and interest thereon until the date of maturity. Such municipality shall not be obligated to pay such bonds except from funds derived from the net revenue of such waterworks system, and it shall be stated on the face of each bond that it has been issued under the provisions of this chapter and that it does not constitute a general indebtedness of such municipality within any statutory limitation.

      (1949 Rev., S. 754.)

      Section solely governs municipal water utility financing and cannot be construed to diminish municipality's public health or environmental protection responsibilities. 262 C. 758.

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      Sec. 7-236. Issuance of bonds. The legislative body shall determine the form of such bonds, whether registered or coupon, the rate and the dates of payment of interest thereon and the time or times, not more than thirty years from their date, at which they shall mature, the manner in which they shall be issued and by whom they shall be executed and sold.

      (1949 Rev., S. 755; 1969, P.A. 424, S. 4.)

      History: 1969 act removed provision limiting interest rate to 6% per year.

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      Sec. 7-237. Sinking fund. The legislative body shall provide for the establishment, from the net revenues of such waterworks system, of a sinking fund for the payment of the bonds and interest thereon and any charges connected therewith, plus ten per cent of the amount required for such payment, as a safety margin. Any surplus from the bond proceeds over the cost of establishing the system shall be paid into said sinking fund.

      (1949 Rev., S. 756.)

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      Sec. 7-238. Trust indenture. In the discretion of the legislative body, such bonds may be secured by a trust indenture between the municipality and a corporate trustee, which may be any trust company or bank having the powers of a trust company in the state, but no such trust indenture shall convey or mortgage the system or any part thereof. Such indenture may contain reasonable and adequate provisions for protecting and enforcing the rights and remedies of the bondholders and may restrict their individual rights of action as is customary in trust indentures securing bonds and debentures of corporations.

      (1949 Rev., S. 757.)

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      Sec. 7-239. Rates for use. (a) The legislative body shall establish just and equitable rates or charges for the use of the waterworks system authorized herein, to be paid by the owner of each lot or building which is connected with and uses such system, and may change such rates or charges from time to time. Such rates or charges shall be sufficient in each year for the payment of the expense of operation, repair, replacements and maintenance of such system and for the payment of the sums herein required to be paid into the sinking fund. No such rate or charge shall be established until after a public hearing at which all the users of the waterworks system and the owners of property served or to be served and others interested shall have an opportunity to be heard concerning such proposed rate or charge. Notice of such hearing shall be given, at least ten days before the date set therefor, in a newspaper having a circulation in such municipality. Such notice shall set forth a schedule of rates or charges, and a copy of the schedule of rates or charges established shall be kept on file in the office of the legislative body and in the office of the clerk of the municipality, and shall be open to inspection by the public. The rates or charges so established for any class of users or property served shall be extended to cover any additional premises thereafter served which are within the same class, without the necessity of a hearing thereon. Any change in such rates or charges may be made in the same manner in which they were established, provided, if any change is made substantially pro rata as to all classes of service, no hearing shall be required. The provisions of this section shall not apply to the sale of bottled water.

      (b) If any rates or charges established pursuant to this section are not paid within thirty days after the due date, demand for such rates or charges may be made on the owner of the premises served in the manner provided in subsection (a) of section 12-155, and thereafter an alias tax warrant may be issued in the manner provided in sections 12-135 and 12-162. The rates or charges established pursuant to this section, if not paid when due, shall constitute a lien upon the premises served and a charge against the owner thereof, which lien and charge shall bear interest at the same rate as would unpaid taxes. Such a lien not released of record prior to October 1, 1993, shall not continue for more than two years unless the superintendent of the waterworks system has filed a certificate of continuation of the lien in the manner provided under section 12-174 for the continuance of tax liens, and when so continued shall be valid for fifteen years. A lien described in this section shall take precedence over all other liens or encumbrances except taxes and may be foreclosed against the lot or building served in the same manner as a lien for taxes.

      (c) Any municipality, by resolution of its legislative body, may assign, for consideration, any and all liens filed by the superintendent of the waterworks system or tax collector to secure unpaid water charges as provided under the provisions of this chapter. The consideration received by the municipality shall be negotiated between the municipality and the assignee. The assignee or assignees of such liens shall have and possess the same powers and rights at law or in equity as such municipality and municipality's tax collector would have had if the lien had not been assigned with regard to the precedence and priority of such lien, the accrual of interest and the fees and expenses of collection. The assignee shall have the same rights to enforce such liens as any private party holding a lien on real property, including, but not limited to, foreclosure and a suit on the debt. Costs and reasonable attorneys' fees incurred by the assignee as a result of any foreclosure action or other legal proceeding brought pursuant to this section and directly related to the proceeding shall be taxed in any such proceeding against each person having title to any property subject to the proceedings. Such costs and fees may be collected by the assignee at any time after demand for payment has been made by the assignee.

      (d) The amount of any such rate or charge which remains due and unpaid for thirty days may, with reasonable attorneys' fees, be recovered by the legislative body in a civil action in the name of the municipality against such owners. The municipality shall be subject to the same rates or charges under the same conditions as other users of such waterworks system.

      (1949 Rev., S. 758; P.A. 93-349, S. 2; P.A. 95-353, S. 2, 7; P.A. 99-188, S. 2; 99-283, S. 1, 10; P.A. 07-95, S. 1; P.A. 08-43, S. 1.)

      History: P.A. 93-349 added provisions regarding certificate of continuance and continued lien being valid for 15 years; P.A. 95-353 divided section into Subsecs., amended Subsec. (b) to specify that liens not released before October 1, 1993, shall not continue for more than 1 year and made technical changes, effective July 13, 1995; P.A. 99-188 amended Subsec. (a) by exempting sales of bottled water from provisions of the section; P.A. 99-283 added new Subsec. (c) providing for assignment of liens and relettered existing Subsec. (c) as (d), effective July 1, 1999; P.A. 07-95 amended Subsec. (b) by adding provisions re demand for unpaid rates or charges and issuance of an alias tax warrant and by making a technical change, effective July 1, 2007; P.A. 08-43 amended Subsec. (b) to increase time of the lien from 1 to 2 years.

      Liens for water charges had priority over mortgages, judgment lien and tax liens of the United States. 139 C. 363. Public utility rate should not be set aside unless it is proved that rate is excessive and action setting it was illegal and arbitrary. 151 C. 53. Statutory provision for public hearing on rates applies only to waterworks financed by revenue bonds and failure to allege such financing was fatal to plea. Id. Cited. 171 C. 74.

      Liens for water rates attach when due. 19 CS 340.


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      Sec. 7-240. Separate accounts. A separate account shall be kept by the municipality of the funds derived from such waterworks system and of their disposition, which account shall be audited annually by a competent auditor, and a report of such audit shall be open to public inspection. The treasurer of the municipality shall be the custodian of such funds and shall give bond to the satisfaction of the legislative body for the faithful discharge of his duties. Such funds shall be kept separate from other funds of such municipality and shall be used for such waterworks system and for no other purpose.

      (1949 Rev., S. 759.)

      Section solely governs municipal water utility financing and cannot be construed to diminish municipality's public health or environmental protection responsibilities. 262 C. 758.

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      Sec. 7-241. Additional bonds. Additional bonds may be issued in the discretion of the legislative body, to provide for the amount of any deficit found in the proceeds of the bonds herein authorized, which additional bonds shall be subject to the same conditions as, and shall be entitled to payment without preference or priority of, the bonds first issued.

      (1949 Rev., S. 760.)

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      Sec. 7-242. Issuance of refunding bonds. Refunding revenue bonds may be issued in the same manner as the bonds which they are to refund, in the discretion of the legislative body, upon written request of all the holders of unpaid certificates of a particular issue payable from the revenues of the waterworks system as herein provided. The amount of such refunding bonds shall not exceed and may be less than the amount of the certificates to be surrendered and shall not exceed and may be less than the determined value of so much of the system as was paid for by such issue of certificates, less the amount of the certificates paid.

      (1949 Rev., S. 761.)

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      Sec. 7-243. Receiver. If there is a default in the payment of the principal or interest upon any of such bonds, any court having jurisdiction may, upon application and for cause shown, appoint a receiver to administer such waterworks system on behalf of the municipality.

      (1949 Rev., S. 762.)

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      Sec. 7-244. Sales at less than par. Tax exemption. Such bonds may be sold at not less than ninety per cent of their par value and shall be exempt from taxation.

      (1949 Rev., S. 763.)

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      Sec. 7-244a. Temporary notes. Methods of payment. (a) In addition to its other powers described under this chapter, any municipality operating a waterworks system may issue temporary notes for purposes of financing any capital project related to such system, and such municipality may renew such notes for not more than fifteen years, provided in the first year immediately following completion of such project, or if more than one project is financed by any issue of such notes, in the first year immediately following completion of the last of such projects, or in the sixth year following the date of issue of such notes, whichever is sooner, and in each year thereafter, not less than one-fifteenth of the total of the notes so issued shall be retired using funds derived from the sources of payment set forth below. Payment of principal and interest on such notes may be secured by a pledge of (1) the full faith and credit of the municipality, (2) revenues to be derived from waterworks system use charges, (3) revenues to be derived from waterworks system connection charges, (4) revenues to be derived from waterworks system benefit assessments, (5) any other revenues which are collected by the municipal waterworks department or the municipal authority which is authorized to set rates and other charges or (6) any combination of the aforementioned sources of payment. Any temporary notes which are secured by a pledge of the full faith and credit of the municipality shall be obligatory upon the municipality and the inhabitants and property thereof according to the tenor and purport of such pledge, whether or not such notes are also secured by one or more additional sources of payment as herein provided. In each year during which such notes secured by a pledge of the full faith and credit of the municipality are outstanding, the municipality shall appropriate and there shall be available on or before the date when any principal, interest or mandatory annual retirement payment on such notes is required to be paid, an amount of money which, together with all revenues from other sources available for such purpose, shall be sufficient to pay such principal, interest or mandatory annual retirement payment on such payment date. There shall be included in the tax levy for each such year an amount which, together with other revenues available for such purpose, shall be sufficient to provide for such appropriations.

      (b) The legislative body of any municipality issuing temporary notes as provided in this section shall determine the maximum authorized amount of such notes to be issued and may determine or may authorize an officer or officers of such municipality to determine the form of such notes, their date, the dates of principal and interest payments on such notes, provisions for protecting and enforcing the rights and remedies of the holders of such notes and all other terms, conditions and particular matters regarding the issuing and securing of and the payment of debt service on such notes. Such legislative body may determine the rate or rates of interest for each issue of such notes or may provide that such rate or rates of interest shall be determined subsequently by an officer or officers of such municipality, which determination may be based upon the receipt of bids to purchase such notes. Each note issued in accordance with this section shall be exempt, both as to principal and interest, from taxation.

      (c) Any powers granted under this section shall be in addition to, and not in derogation of, any powers granted to any municipality under the provisions of its municipal charter or of any general statute or special act.

      (d) Notwithstanding the provisions of subsection (c) of this section, to the extent payment of principal and interest on such notes is not secured in whole or in part by a pledge of the full faith and credit of the municipality, any limitations on the powers granted to any municipality under the provisions of its municipal charter or of any general statute or special act regarding renewal of such notes or the total amount of such notes outstanding shall not be applicable to any notes issued pursuant to this section.

      (P.A. 83-513, S. 7; P.A. 84-483, S. 1, 2; P.A. 86-309, S. 1.)

      History: P.A. 84-483 amended section to permit municipality to use tax resources to pay debt service on notes and to permit all revenue from water systems use charges or taxes and the full faith and credit of the municipality to be used to secure the notes; P.A. 86-309 provided that renewal of notes need not be annual and added Subsec. (d) re inapplicability of limitations on municipal powers to renew certain notes.

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