SENATE BILL REPORT

SB 5436

BYSenators McCaslin, DeJarnatt, Nelson, Owen, McMullen, Bender and Sutherland

Amending language regarding a district's power regarding water and sewer charges.

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 7, 1989

Senate Staff:Sam Thompson (786-7754); Eugene Green (786-7405)

AS OF FEBRUARY 6, 1989

BACKGROUND:

Sewer districts are authorized to operate sewer systems and water supply systems.

A sewer district has the authority to impose charges for connection to the district's sewer system.  These charges, set by a district's board of commissioners, may include actual costs of connection and an equitable share of the cost of the entire system.  This latter charge is required to be "reasonable."  It is suggested that standards for determination of reasonable connection charges be specified.

A sewer district has the option to contract with property owners to provide sewer and water facilities, and to provide for a period of up to 15 years for the reimbursement of these owners by other property owners who did not contribute to the original construction costs.  Reimbursement payments consist of a pro rata share of the cost of construction.  The contract must be recorded with the county auditor to be binding on owners who are not a party to the contract.  It is suggested that reimbursement contracts be made mandatory in certain circumstances, and that property owners who paid for the original construction costs be relieved of any further charges if they connect other property to the facilities.

In certain circumstances, local governments must prepare a capital improvement plan indicating construction plans for provision of various services to citizens.  Sewer districts are currently not required to prepare such plans.

SUMMARY:

Connection Charges.  A sewer district board of commissioners must consider specified factors when setting charges for connection to the district sewer system.  These factors include differences in cost of service and location of various customers, operating costs of various parts of the system, different character of service furnished various customers, quantity and quality of service delivery and capital contributions made to the system.  Any other factors which present a reasonable difference as a ground for distinction in setting charges may also be considered.  A district must permit payment of the charge in installments over a period of up to 15 years.

The equitable share of a connection charge may include interest charges for construction costs associated with the system.  These charges may not represent more than ten years' accrual of interest, nor may they represent an interest rate of over 10 percent.  The aggregate of the interest component of the charge may not exceed the equitable share of the cost of the system allocated to the property owner.

Contracts For Sewer And Water Projects.  A district must establish reimbursement contracts with property owners who elect to install sewer and water projects that are required for property development.  The contract will provide for reimbursement to property owners from equitable share charges paid by other property owners who did not contribute to the original cost of the project if they connect to the new system within fifteen years.  Sewer districts may be similarly reimbursed if they finance the cost of construction.

Capital Improvement Plan.  Following annexation of territory, a district that prepares or updates a general comprehensive plan of water supply must also prepare a capital improvement plan.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested