Colorado § 31-35-402 - Powers.

§ 31-35-402. Powers.

(1) In addition to the powers which it may now have, any municipality, without any election of the qualified electors thereof, has power under this part 4:

(a) To acquire by gift, purchase, lease, or exercise of the right of eminent domain, to construct, to reconstruct, to improve, to better, and to extend water facilities or sewerage facilities or both, wholly within or wholly without the municipality or partially within and partially without the municipality, and to acquire by gift, purchase, or the exercise of the right of eminent domain lands, easements, and rights in land in connection therewith;

(b) To operate and maintain water facilities or sewerage facilities or both for its own use and for the use of public and private consumers and users within and without the territorial boundaries of the municipality, but no water service or sewerage service or combination of them shall be furnished in any other municipality unless the approval of such other municipality is obtained as to the territory in which the service is to be rendered;

(c) To accept loans or grants or both from the United States under any federal law in force to aid in financing the cost of engineering, architectural, or economic investigations or studies, surveys, designs, plans, working drawings, specifications, procedures, or other action preliminary to the construction of water facilities or sewerage facilities or both;

(d) To accept loans or grants or both from the United States under any federal law in force for the construction of necessary water facilities or sewerage facilities or both;

(e) To enter into joint operating agreements, contracts, or arrangements with consumers concerning water facilities or sewerage facilities or both, whether acquired or constructed by the municipality or consumer, and to accept grants and contributions from consumers for the construction of water facilities or sewerage facilities or both. When determined by its governing body to be in the public interest and necessary for the protection of the public health, any municipality is authorized to enter into and perform contracts, whether long-term or short-term but in no event exceeding fifty years, with any consumer for the provision and operation by the municipality of sewerage facilities to abate or reduce the pollution of waters caused by discharges of wastes by a consumer and the payment periodically by the consumer to the municipality of amounts at least sufficient, in the determination of such governing body, to compensate the municipality for the cost of providing, including payment of principal and interest charges, if any, and of operating and maintaining the sewerage facilities serving such consumer.

(f) To prescribe, revise, and collect in advance or otherwise, from any consumer or any owner or occupant of any real property connected therewith or receiving service therefrom, rates, fees, tolls, and charges or any combination thereof for the services furnished by, or the direct or indirect connection with, or the use of, or any commodity from such water facilities or sewerage facilities or both, including, without limiting the generality of the foregoing, minimum charges, charges for the availability of service, tap fees, disconnection fees, reconnection fees, and reasonable penalties for any delinquencies, including but not necessarily limited to interest on delinquencies from any date due at a rate of not exceeding one percent per month or fraction thereof, reasonable attorneys' fees, and other costs of collection without any modification, supervision, or regulation of any such rates, fees, tolls, or charges by any board, agency, bureau, commission, or official other than the governing body collecting them; and in anticipation of the collection of the revenues of such water facilities or sewerage facilities, or joint system, to issue revenue bonds to finance in whole or in part the cost of acquisition, construction, reconstruction, improvement, betterment, or extension of the water facilities or sewerage facilities, or both; and to issue temporary bonds until permanent bonds and any coupons appertaining thereto have been printed and exchanged for the temporary bonds;

(g) To pledge to the punctual payment of said bonds and interest thereon all or any part of the revenues of the water facilities or sewerage facilities or both, including the revenues of improvements, betterments, or extensions thereto thereafter constructed or acquired, as well as the revenues of existing water facilities or sewerage facilities or both;

(h) To enter into and perform contracts and agreements with other municipalities for or concerning the planning, construction, lease, or other acquisition and the financing of water facilities or sewerage facilities or both and the maintenance and operation thereof. Pursuant to any such contracts or agreements, such municipalities may obligate themselves to make payments in amounts which shall be sufficient to enable any municipality which finances such water facilities or sewerage facilities or both to meet its expenses, the interest and principal payments for its bonds, its reasonable reserves for debt service, operation and maintenance, and renewals and replacements, and the requirements of any rate covenant with respect to debt service coverage contained in any resolution, ordinance, or other security instrument. Such contracts or agreements may contain such other terms and conditions as the municipalities may determine, including but not limited to provisions whereby a municipality is obligated to pay for the output, capacity, or use of any project irrespective of whether such output, capacity, or use is produced or delivered to the municipality or whether any project contemplated by any such agreement is completed, operable, or operating, and notwithstanding suspension, interruption, interference, reduction, or curtailment of the output, use, or service of such project. Subject to local charter and state constitutional limitations, such contracts or agreements may also provide that if one or more of the municipalities default in the payment of its obligations under any such contract or agreement, the remaining municipalities which also have such agreements shall be required to accept and pay for, and shall be entitled proportionately to use or otherwise dispose of, the output, capacity, or use of the project contracted for by the defaulting municipalities. The obligations of a municipality under such contracts or agreements shall either constitute special obligations of the municipality, payable solely from the revenues and other moneys derived by the municipality from its water facilities, sewerage facilities, or both, and shall be treated as expenses of operating such facilities or, in the discretion of such municipality and subject to satisfaction of any requirements of law governing or limiting the incurrence of debt by such municipality, shall constitute a general obligation of such municipality. Notwithstanding the provisions of section 6 (3) of article XI of the state constitution, where such contract or agreement is to constitute a general obligation of such municipality and where such contract or agreement provides that the municipality shall be required to accept and pay for the output, capacity, or use of the project contracted for by a defaulting municipality, such contract or agreement shall not be entered into unless the question of incurring a general obligation for such project has been submitted to and approved at an election conducted by such municipality in accordance with the election laws applicable to such municipality. Any such municipalities so contracting may also provide in any contract or agreement for a board, commission, or such other body as they deem proper for the supervision and general management of the water facilities or sewerage facilities or both and for the operation thereof and may prescribe its powers and duties, including the power to issue revenue bonds pursuant to this part 4, and fix the compensation of the members thereof. For the purposes of this paragraph (h), "municipality" means a municipality as defined in part 1 of article 1 of this title and any other political subdivision of this state, including any entity formed pursuant to intergovernmental contract or agreement, authorized by any law of this state to acquire, operate, and maintain the facilities which are the subject of such contract or agreement.

(i) To make all contracts, execute all instruments, and do all things necessary or convenient in the exercise of the powers granted in this section, or in the performance of its covenants or duties, or in order to secure the payment of its bonds if no encumbrance, mortgage, or other pledge of property, excluding any pledged revenues, of the municipality is created thereby, and if no property, other than money, of the municipality is liable to be forfeited or taken in payment of said bonds, and if no debt on the credit of the municipality is thereby incurred in any manner for any purpose; and

(j) To issue water or sewer or joint water and sewer refunding revenue bonds to refund, pay, or discharge all or any part of its outstanding water or sewer or joint water and sewer revenue bonds issued under this part 4 or under any other law, including any interest thereon in arrears or about to become due, or for the purpose of reducing interest costs, effecting a change in any particular year or years in the principal and interest payable thereon or in the related utility rates to be charged, effecting other economies, or modifying or eliminating restrictive contractual limitations appertaining to the issuance of additional bonds or to any municipal water facilities or sewerage facilities, or both, as provided in section 31-35-412.

Source: L. 75: Entire title R&RE, p. 1251, § 1, effective July 1. L. 83: (1)(j) amended, p. 508, § 3, effective April 22. L. 86: (1)(h) amended, p. 1064, § 1, effective April 29.

Editor's note: This section is similar to former § 31-35-402 as it existed prior to 1975.

ANNOTATION

Law reviews. For article, "One Year Review of Real Property", see 36 Dicta 57 (1959). For comment, "Municipal Utilities in Colorado — Can They Charge Their Nonresident Customers More Than They Charge Their Resident Customers Just Because the Nonresident Lives on the Wrong Side of the Boundary?", see 60 U. Colo. L. Rev. 357 (1989).

A non-reciprocal provision for awarding attorneys' fees to the district is not a violation of equal protection. Crested Butte S. Metro. Dist. v. Hoffman, 790 P.2d 327 (Colo. 1990).

The general assembly has empowered municipalities to operate and maintain water facilities for the benefit of users within and without their territorial boundaries. Colo. Open Space Council, Inc. v. City & County of Denver, 190 Colo. 122, 543 P.2d 1258 (1975).

Municipal utilities are not subject to PUC regulation for the provision of water service to users inside and outside municipalities. Bd. of County Comm'rs v. Denver Bd. of Water Comm'rs, 718 P.2d 235 (Colo. 1986).

However, a quasi-municipality is not obligated to furnish services to persons outside its district boundaries, but it may do so by contracts. Brownbriar Enters., Inc. v. City & County of Denver, 177 Colo. 198, 493 P.2d 352 (1972).

And municipalities are authorized to construct, operate, and maintain a sewerage system and to prescribe reasonable rates for the use of such facility. City of Aurora v. Bogue, 176 Colo. 198, 489 P.2d 1295 (1971).

As well as sell water. The general assembly has specifically defined selling water by a municipality both within and without its territorial boundaries to be a proper exercise of its powers. Colo. Open Space Council, Inc. v. City & County of Denver, 190 Colo. 122, 543 P.2d 1258 (1975).

Express statutory authority permits a quasi-municipality to collect in advance charges for the direct or indirect connection with its facilities. Brownbriar Enters., Inc. v. City & County of Denver, 177 Colo. 198, 493 P.2d 352 (1972); Durango W. Metro. D. 1 v. HKS J. Venture, 793 P.2d 661 (Colo. App. 1990).

For services furnished. The power to impose fees under this statute presupposes the construction and operation of a sewerage facility, as the fees are for "services furnished". City of Aurora v. Bogue, 176 Colo. 198, 489 P.2d 1295 (1971).

Municipalities are not limited to the use of revenue bonds to finance future acquisitions and construction relating to their water systems, but may accumulate funds for future development through the imposition of connection fees. City of Arvada v. City & County of Denver, 663 P.2d 611 (Colo. 1983); Durango W. Metro. D. 1 v. HKS J. Venture, 793 P.2d 661 (Colo. App. 1990).

One-time development fee permitted. The charging of a one-time development fee on all persons connecting into a municipality's water system is within the general authorization of subsection (1)(f). City of Arvada v. City & County of Denver, 663 P.2d 611 (Colo. 1983).

The charging of a one-time sewer charge when they were connected to city's sanitary sewer system permissible even though fee charged for multiple dwelling units was more than a single family residence. Loup-Miller Const. Co. v. City & County of Denver, 676 P.2d 1170 (Colo. 1984).

Rates must not be per se unreasonable or excessive. A city operating its water system in its proprietary capacity may establish rates or charges not per se excessive or unreasonable for service within the municipality, including the expense of connections to its trunk lines. W. Heights Land Corp. v. City of Ft. Collins, 146 Colo. 464, 362 P.2d 155 (1961).

Rate charges cannot be considered taxes. The rates adopted by city ordinance with reference to its water and sewer service cannot be considered as taxes even though imposed and collected by the city, such ordinance not being a revenue measure, but designed to defray expense of operating a utility directed against those using the services. W. Heights Land Corp. v. City of Ft. Collins, 146 Colo. 464, 362 P.2d 155 (1961).

Municipal fee for flood control was not a "special assessment" but instead was a service fee reasonably related and essential to the provision of flood control services benefiting all property within the municipal flood control district, including school lands. Therefore, imposition of the fee against the State Land Board did not contravene constitutional limitations on the board's authority to expend state funds. City of Littleton v. State, 855 P.2d 448 (Colo. 1993).

Subsection (1)(f) expressly authorizes collection of service fees from the State Community Colleges Board. City of Littleton v. State, 855 P.2d 448 (Colo. 1993).

List of enumerated charges in subsection (1)(f) is not exclusive. Some charges, while not specifically authorized, may nonetheless be within the general contemplation of the statute. City of Arvada v. City & County of Denver, 663 P.2d 611 (Colo. 1983); City of Littleton v. State, 855 P.2d 448 (Colo. 1993).

The term "consumer" includes the state and its subdivisions for purposes of assessment of service fees under subsection (1)(f) of this section. City of Littleton v. State, 855 P.2d 448 (Colo. 1993).

The veto power of a municipality is limited to a reasonable exercise thereof consistent with the police power in the protection of the health, safety, and welfare of the inhabitants of the municipality. Town of Sheridan v. Valley San. Dist., 137 Colo. 315, 324 P.2d 1038 (1958); S. Fork Water v. Town of S. Fork, 252 P.3d 465 (Colo. 2011).

A municipality cannot unreasonably withhold its approval for water service in an overlapping territorial area when it is not capable of furnishing that service and the other municipality is. S. Fork Water v. Town of S. Fork, 252 P.3d 465 (Colo. 2011).

The veto power section addresses service in overlapping shared territory as well as extraterritorial service. Because water and sewerage infrastructure is expensive to build and requires routine maintenance, the general assembly designed subsection (1)(b) to avoid inefficient duplication of facilities and increased costs in overlapping territorial areas. S. Fork Water v. Town of S. Fork, 252 P.3d 465 (Colo. 2011).

Despite a change to the statutory language since the decision, the rationale in Town of Sheridan v. Valley San. Dist., 137 Colo. 315, 324 P.2d 1038 (1958), governs the contours of the municipality's approval authority over another municipality's provision of water or sewerage service in the overlapping territory. S. Fork Water v. Town of S. Fork, 252 P.3d 465 (Colo. 2011).

A municipality does not have the absolute veto power over a project of a bordering sanitation district. The general assembly did not intend to authorize sewer districts and provide for their management, operation, control, and financing on the one hand, and on the other give a municipality bordering on the district through which the facilities must of necessity be extended, either extensively or slightly, the absolute right of veto over a project. If such a right were vested in any municipality it could prevent the development of any area on the four sides of its boundaries. Town of Sheridan v. Valley San. Dist. 137 Colo. 315, 324 P.2d 1038 (1958).

This section cannot limit Denver's constitutional authority. The authority of the city and county of Denver being by constitutional grant, this section, if construed as limiting such power, would be of doubtful validity. Town of Glendale v. City & County of Denver, 137 Colo. 188, 322 P.2d 1053 (1958).

Thus under § 1 of art. XX, Colo. Const., the city and county of Denver is not required to obtain the consent of an incorporated town before acquiring title and possession of rights-of-way through such town by condemnation proceedings, but may be required to comply with reasonable construction standards lawfully established by such town. Town of Glendale v. City & County of Denver, 137 Colo. 188, 322 P.2d 1053 (1958).

However, Denver cannot, with impunity and without regard to local ordinances of a traversed municipality, construct its sewer lines in its streets irrespective of water lines, waterworks, sewers, or wells in line of or in the vicinity of the proposed construction. At the point where the public health and safety become involved, a municipality traversed can withhold its consent unless proper, safe, and healthful construction methods are followed. Denver may be bound and may be required to comply with reasonable construction standards lawfully established by a municipality traversed. Town of Glendale v. City & County of Denver, 137 Colo. 188, 322 P.2d 1053 (1958).

Judicial review of the reasonableness of extraterritorial water service charges imposed by a municipality constitutes a prohibited regulation of that service pursuant to subsection (1)(f). Southgate Water District v. City & County of Denver, 862 P.2d 949 (Colo. App. 1992). Bennett Bear Creek Water & San. v. Denver, 907 P.2d 648 (Colo. App. 1995), aff'd in part, rev'd in part on other grounds, 928 P.2d 1254 (Colo. 1996).

The general assembly has provided in subsection (1)(f) that utility rate-making is a legislative function. Bennett Bear Creek Water Dist. v. Denver, 928 P.2d 1254 (Colo. 1996).

Rates and charges rationally related to the governmental utility purpose are within the authority of subsection (1)(f). City of Arvada v. City & County of Denver, 663 P.2d 611 (Colo. 1983); Bennett Bear Creek Water Dist. v. Denver, 928 P.2d 1254 (Colo. 1996).