Chapter 102 - Municipal Waterworks Systems

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.

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.

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.)

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.)

Sec. 7-239. Rates for use. Liens. Assignment of liens. Powers and rights of assignee. Contract to memorialize assignment required. Notice of assignment. Notice prior to commencing an action to foreclose lien. (a) The legislative body shall establish just and equitable rates or charges for the use of the waterworks system authorized in this subsection, 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 in this subsection required to be paid into the sinking fund. In establishing such rates or charges, the legislative body shall consider measures that promote water conservation and reduce the demand on the state's water and energy resources. Such rates or charges may include: (1) Demand projections that recognize the effects of conservation, (2) implementation of metering and measures to provide timely price signals to consumers, (3) multiyear rate plans, (4) measures to reduce system water losses, and (5) alternative rate designs that promote conservation. 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.

(d) 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, except that any such assignee (1) shall not be insulated from liability for its conduct by virtue of the provisions of section 42-110c, and (2) any such assignee shall be obligated to provide a payoff statement, as defined in section 49-8a, in the same manner as a mortgagee in accordance with the requirements of section 49-10a. 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.

(e) No such assignment executed on or after July 1, 2022, shall be valid or enforceable unless memorialized in a contract executed by the authority and the assignee that is in writing and provides: (1) The manner in which the assignee will provide to the owner of the real property that is the subject of the assignment one or more addresses and telephone numbers that may be used for correspondence with the assignee about the debt and payment thereof; (2) the earliest and latest dates by which the assignee shall commence any foreclosure or suit on the debt or the manner for determining such dates, except as may be impacted by any payment arrangement, bankruptcy petition or other circumstance, provided in no event shall the assignee commence a foreclosure suit before one year has elapsed since the assignee's purchase of the lien; (3) the structure and rates of attorney's fees that the assignee may claim against the owner or owners of such real property in any foreclosure, suit on the debt or otherwise, and a prohibition from using as foreclosure counsel any attorney or law office that is owned by, employs or contracts with any person having an interest in such assignee; (4) confirmation that the owner of the real property for which the lien has been filed shall be a third-party beneficiary entitled to enforce the covenants and responsibilities of the assignee as contained in the contract; (5) a prohibition on the assignee assigning the lien without the municipality's prior written consent; (6) the detail and frequency of reports provided to the municipality's tax collector regarding the status of the assigned liens; (7) confirmation that the assignee is not ineligible, pursuant to section 31-57b, to be assigned the lien because of occupational safety and health law violations; (8) disclosure of (A) all resolved and pending arbitrations and litigation matters in which the assignee or any of its principals have been involved within the last ten years, except foreclosure actions involving liens purchased from or assigned by governmental entities, (B) all criminal proceedings that the assignee or any of its principals has ever been the subject, (C) any interest in the subject property held by the assignee or any of its principals, officers or agents, and (D) each instance in which the assignee or any of its principals was found to have violated any state or local ethics law, regulation, ordinance, code, policy or standard, or to have committed any other offense arising out of the submission of proposals or bids or the performance of work on public contract; and (9) such additional terms to which the municipality and the assignee mutually agree consistent with applicable law.

(f) The assignee, or any subsequent assignee, shall provide written notice of an assignment, not later than sixty days after the date of such assignment, to the owner and any holder of a mortgage on the real property that is the subject of the assignment, provided such owner or holder is of record as of the date of such assignment. Such notice shall include information sufficient to identify (1) the property that is subject to the lien and in which the holder has an interest, (2) the name and addresses of the assignee, and (3) the amount of unpaid taxes, interest and fees being assigned relative to the subject property as of the date of the assignment.

(g) Not less than sixty days prior to commencing an action to foreclose a lien under this section, the assignee shall provide a written notice, by first-class mail, to the holders of all first or second security interests on the property subject to the lien that were recorded before the date the assessment of the lien sought to be enforced became delinquent. Such notice shall set forth: (1) The amount of unpaid debt owed to the assignee as of the date of the notice; (2) the amount of any attorney's fees and costs incurred by the assignee in the enforcement of the lien as of the date of the notice; (3) a statement of the assignee's intention to foreclose the lien if the amounts set forth pursuant to subdivisions (1) and (2) of this subsection are not paid to the assignee on or before sixty days after the date the notice is provided; (4) the assignee's contact information, including, but not limited to, the assignee's name, mailing address, telephone number and electronic mail address, if any; and (5) instructions concerning the acceptable means of making a payment on the amounts owed to the assignee as set forth pursuant to subdivisions (1) and (2) of this subsection. Any notice required under this subsection shall be effective upon the date such notice is provided.

(h) When providing the written notice required under subsection (g) of this section, the assignee may rely on the last recorded security interest of record in identifying the name and mailing address of the holder of such interest, unless the holder of such interest is the plaintiff in an action pending in Superior Court to enforce such interest, in which case the assignee shall provide the written notice to the attorney appearing on behalf of the plaintiff.

(i) Each aspect of a foreclosure, sale or other disposition under this section, including, but not limited to, the costs, attorney fees, method, advertising, time, date, place and terms, shall be commercially reasonable. 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.

(j) 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; P.A. 13-78, S. 4; P.A. 21-143, S. 4.)

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; P.A. 13-78 amended Subsec. (a) to add provision re in establishing rates or charges, legislative body shall consider measures that promote water conservation and reduce demand on state's water and energy resources, to add Subdivs. (1) to (5) re rates and charges and to make technical changes, effective June 5, 2013; P.A. 21-143 redesignated existing provisions in Subsec. (c) re the powers and rights of the assignee as new Subsec. (d) and amended the same by adding Subdiv. (1) re the assignee's inability to be insulated from liability under Sec. 42-110c and by adding Subdiv. (2) re assignee's obligation to provide a payoff statement in the same manner as a mortgagee, added Subsec. (e) requiring assignments executed on or after July 1, 2022, to be memorialized in a contract, added Subsec. (f) re written notice of assignment to the owner and any holder of a mortgage on the real property, added Subsecs. (g) and (h) re notice by the assignee of foreclosure of the lien, added Subsec. (i) requiring commercially reasonable foreclosure, sale or other disposition of the real property and redesignated therein existing provisions in Subsec. (c) re costs and fees incurred by the assignee as a result of a foreclosure action, and redesignated existing Subsec. (d) as Subsec. (j).

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; 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. 151 C. 53. Cited. 171 C. 74.

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

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.

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.)

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.)

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.)

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.)

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.