Tennessee § 7-35-414 - Rates and charges — Minimum base rate charge considered a local tax.

§ 7-35-414. Rates and charges — Minimum base rate charge considered a local tax.

The governing body of any city or town acquiring and operating a waterworks or sewerage system under this part has the power, and it is the governing body's duty, by ordinance, to establish and maintain just and equitable rates and charges for the use of and the service rendered by the waterworks or sewerage system, to be paid by the beneficiary of the service. The rates and charges shall be adjusted so as to provide funds sufficient to pay all reasonable expenses of operation, repair, and maintenance, provide for a sinking fund for payment of principal and interest of bonds when due, and maintain an adequate depreciation account, and the rates and charges may be readjusted as necessary from time to time by amendment to the ordinance establishing the rates then in force. Any upward adjustment of rates and charges for sewage services shall not be granted solely on the basis of increases of rates and charges for water services, but shall be made only after a finding by the governing body that such an adjustment is reasonable and justified; provided, that this restriction on any upward adjustment of rates and charges for water services shall not apply to counties with a metropolitan form of government. A copy of the schedule of the rates and charges so established shall be kept on file in the office of the board having charge of the operation of such works, and also in the office of the city or town clerk, and shall be open to inspection by all interested parties. If any municipality in Tennessee adopts a sewer fee ordinance which includes a minimum base rate charge payable by all sewer users, it is declared the public policy of the state that such minimum base rate charge shall be considered to be a local tax upon sewer users in the same manner that local property taxes are so considered. However, user fees paid in excess of the minimum base rate charge that are related to the volume or strength of sewage discharged shall be considered as user fees in the same manner in which electrical, gas, or water consumption is related to actual use. Acts 1933, ch. 68, § 11; C. Supp. 1950, § 3695.11; Acts 1977, ch. 63, § 1; 1979, ch. 245, §§ 1, 3; T.C.A. (orig. ed.), § 6-1421. Attorney General Opinions. Discount utility rates to charitable organizations, OAG 97-127, 1997 Tenn. AG LEXIS 160 (9/08/97). Payment of costs of water and sewer line relocation, OAG 97-161, 1997 Tenn. AG LEXIS 188 (12/11/97). Municipal authority to charge residents never connected to water system, OAG 98-0152, 1998 Tenn. AG LEXIS 152 (8/12/98). Requirements for utility rates, OAG 05-165 (10/25/05), 2005 Tenn. AG LEXIS 167. Authority of city utility system to repair privately owned lines, OAG 06-030 (2/13/06). Domestic nonprofit water cooperative merging with or transferring assets to municipality, OAG 06-176, 2006 Tenn. AG LEXIS 196 (12/19/06), 2006 Tenn. AG LEXIS 196. The fact that a city imposes a water and sewage rate on customers outside its corporate limits that is twice the rate charged to customers within its corporate limits does not by itself establish that the higher rate is invalid. The rate is presumptively valid, and a party seeking to challenge it bears the heavy burden of proving that the rate is not just and equitable. OAG 14-46, 2014 Tenn. AG LEXIS 49 (4/14/14). Textbooks. Tennessee Jurisprudence, 25 Tenn. Juris., Water Companies and Waterworks, § 6.