Request By:
Mr. Larry L. Wingate
Big Sandy Area Development
District, Inc.
Municipal Building - 2nd Floor
Prestonsburg, Kentucky 41653
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising questions concerning the City of Martin and its Board of Water Commissioners. Your primary question concerns the powers of the mayor and the city council to reorganize the administration of the city's water and sewer services.
Water and sewer services for the city are presently administered by a Board of Water Commissioners, created by the city in 1949. That same ordinance provided for the issuance of bonds to finance improvements in the waterworks system. It also authorized the appointment of three commissioners with subsequent appointments to be made by the chairman of the commissioners with the consent and approval of the Board of Water Commissioners.
In 1952 the city made an attempt to reorganize the administration of water and sewer services. This ordinance, which you state has not been followed, vests administrative control of water and sewer services in a waterworks committee, the members of which were to be appointed (both initial and subsequent appointments) by the city council. The Board of Water Commissioners has, however, continued to administer the city's water and sewer services and to fill vacancies on the Board.
In connection with organizing and eliminating a board created by a city to administer municipal utility services, you cite
Keathley v. Town of Martin, Ky., 246 S.W.2d 152 (1951) and
City of Elizabethtown v. Cralle, Ky., 317 S.W.2d 184 (1958). You state that the water system improvement bonds issued in 1949 matured in October of 1979. Additional revenue for the water and sewer system was generated through bonds issued in May of 1965 and April of 1960. You ask whether the issuance of these bonds, apparently still outstanding, precludes the city from reorganizing the Board of Water Commissioners.
Martin is a city of the fourth class and KRS 96.350 authorizes such cities to operate a waterworks or a waterworks and sewer system jointly. While there is no specific provision authorizing a city to create a governing board for these municipal utility services, a city has legal authority to set up an administrative board to operate such utility services. In
Keathley v. Town of Martin, Ky., 246 S.W.2d 152 (1951), the Court said in part:
". . . 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. . . ."
In the case at bar, the ordinance which created the extension to the waterworks system of the city of Martin authorized the issue and sale of Waterworks Revenue Improvement and Refunding Bonds and, under this ordinance, bonds were sold to a bonding company under a bid that set out the manner in which the commissioners should be appointed. In the absence of a statute prohibiting such a procedure in cases where a city is acting within its proprietary capacity, we believe that it has full right to set up a board and when bonds are sold under such an ordinance the city is bound. . . ."
However, a water board created by a city to administer its water and sewer utility system pursuant to the authority set forth in the case mentioned above is not a separate corporate body, independent of the city, but an agency of the city. See OAG 81-324, copy enclosed, at page two.
In
City of Elizabethtown v. Cralle, Ky., 317 S.W.2d 184 (1958), the Court said in part in connection with abolishing a municipal utilities commission:
"While an office created by a city ordinance may be abolished by a subsequent ordinance, an exception has been recognized in those cases in which the creating ordinance is a contract that is protected against impairment.
Keathley v. Town of Martin, Ky., 253 S.W.2d 3. Accordingly, the City of Elizabethtown 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. "
In OAG 77-716, copy enclosed, in dealing with a city utility commission, we said the general rule is that a municipality may, unless restricted by statute, abolish by ordinance an office or commission created by ordinance. If a city plans to substantially alter or abolish its utility commission, it should act in good faith and it should be certain that the commission's activities and existence were not made part of the contract between the city and the bondholders. The city must adhere to the terms and provisions of any contract which might still be in existence. See also OAG 78-172, copy enclosed, at page two.
It appears from your letter that the Board of Water Commissioners is not only filling vacancies on the Board but is reappointing board members to serve additional terms. The city ordinance of 1949 provides in part that all appointments shall be for a term of six years but all appointments shall be until their successors shall have qualified.
There is a general principle of law, expressed in 63 Am.Jur.2d, Public Officers and Employees, § 96, to the effect that it is contrary to public policy to permit an officer having an appointing power to use such power as a means of conferring an office upon himself, or to permit an appointing body to appoint one of its own members. See also McQuillin, Mun. Corp. (3rd Ed.), Vol. 3, § 12.75;
State v. McDaniel, 52 Del. 304, 157 A.2d 463 (1960);
Meglemery v. Weissinger, 140 Ky. 353, 131 S.W. 40 (1910);
Lemon v. Fiscal Court of Casey County, Ky., 291 S.W.2d 572 (1956).
Thus, in conclusion, in connection with the city's right to substantially alter or abolish a municipal water commission or a board of water commissioners, the following principles are applicable:
If the organization and existence of the municipal water commission or board, established pursuant to a city ordinance, is part of the contract between the city and the bondholders, such commission or board cannot be substantially altered or abolished while the contract is in existence and while any of the bonds are outstanding. The water commission or board could be substantially altered or abolished if the contract between the city and the bondholders has expired or if the creation and existence of the board or commission was not made a part of the contract between the city and the bondholders.