Request By:
Mr. Ed Burtner
City Administrator
City of Harlan
P.O. Box 783
Harlan, Kentucky 40831
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter stating that the city council of the City of Harlan, a city of the fourth class, would like to know what powers it has to order and enforce a reorganization of the city utilities.
You state that the city presently has a properly organized and constituted Waterworks Commission pursuant to KRS Chapter 96 and two specific bond ordinances. The commission's sole responsibility has been the water system. The city council has been responsible for the sewer system and the council is now exploring the possibility of reorganizing the city's utilities to have a combined Water and Sewer Commission. The council wants to know if the responsibility for the operation, maintenance, management and financial administration of the sewer system can be delegated to the Waterworks Commission.
Your specific questions are as follows:
"1. Does the Council have the power to bring about this reorganization?
2. What power does the Council have to enforce this reorganization? "
Harlan, of course, is a city of the fourth class and KRS 96.350 authorizes cities of the fourth class to acquire and operate waterworks and sewer systems jointly. See also KRS 94.160. KRS 96.190 authorizes the legislative body of any city of the fourth class to provide the city with utility services, either by contract or by works and facilities owned or leased by the city. While some cities of the third class, under certain fact situations, are now authorized by specific legislation to establish a waterworks and sewerage commission (Chapter 192, 1978 Acts, H.B. 657, KRS 96.351), there are no such specific statutory provisions authorizing the creation of a utility commission to operate such utilities in cities of the fourth class.
The Kentucky Court of Appeals, however, in the case of
Keathley v. Town of Martin, Ky., 246 S.W.2d 152 (1951), concluded that even though there is no statutory provision for the creation of a governing board for utility services, a city has legal authority to set up an administrative board in connection with their operation. At page 115 of its opinion the Court said:
". . . It is true that the Water System Act makes no provision as to the creation of a governing body for the utility, but we are of the opinion that in the acquisition and operation of a water plant, a municipality acts in a proprietary capacity and has full right to set up an administrative board in connection with its operation. . . ."
A city may not only create a utility commission but it may, at its discretion, abolish the commission it has created provided the commission's existence was not made a part of the contract between the city and the utility bond holders. In
City of Elizabethtown v. Cralle, Ky., 317 S.W.2d 184 (1958), the Court said that the city may not abolish the utilities commission if the creation and continued existence of that commission was made a part of the contract between the city and the bondholders. See also OAG's 77-716, 74-83 and 70-407, copies enclosed, all of which deal with the creation and abolishment of city utility commissions.
Therefore, as a general proposition, a city of the fourth class may create an administrative board or commission to administer its water and sewer services. Furthermore, a municipality may, unless restricted by statute, abolish by ordinance a commission created by ordinance. However, since you have stated that the present waterworks commission was organized in part pursuant to two specific bond issues, we suggest that all the facts and circumstances surrounding those bond issues be carefully investigated. Before the city enacts or amends an ordinance either abolishing the present commission and creating a new water and sewer commission, or in some fashion creating a sewer and water commission incorporating the functions and duties of the old waterworks commission within the new commission, it must be determined whether the existence of the present waterworks commission and the manner in which it functions was made part of the contract between the city and the city waterworks bondholders. The city must adhere to the terms and provisions of any contract which might still be in existence.