01-22 09:36 H.B. 295
1
Municipal Services Fees and Political Subdivision Lien Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Paul A. Cutler
2
3
LONG TITLE
4
General Description:
5
This bill authorizes municipalities to place a political subdivision lien on property for past
6
due service fees.
7
Highlighted Provisions:
8
This bill:
9
▸ defines terms and modifies definitions;
10
▸ authorizes a municipality to set a fee schedule by ordinance or resolution for certain
11
services provided by the municipality or a third-party contracted by the municipality;
12
▸ authorizes a municipality to bill a customer, directly or through a third-party billing
13
service, for services provided by the municipality or a third-party contracted by the
14
municipality;
15
▸ authorizes a municipality to hold a political subdivision lien on a property for past due
16
service fees;
17
▸ modifies the process for a special district to charge interest and costs on a past due fee;
18
and
19
▸ makes technical and conforming changes.
20
Money Appropriated in this Bill:
21
None
22
Other Special Clauses:
23
None
24
Utah Code Sections Affected:
25
AMENDS:
26
10-6-106, as last amended by Laws of Utah 2019, Chapter 136
27
10-8-22, as last amended by Laws of Utah 2019, Chapter 99
28
17B-1-902.1, as last amended by Laws of Utah 2023, Chapter 15
29
ENACTS:
30
10-6-161, Utah Code Annotated 1953
31
10-6-162, Utah Code Annotated 1953 H.B. 295 01-22 09:36
32
33
Be it enacted by the Legislature of the state of Utah:
34
Section 1. Section 10-6-106 is amended to read:
35
10-6-106 . Definitions.
36
As used in this chapter:
37
(1) "Account group" is defined by generally accepted accounting principles as reflected in
38
the Uniform Accounting Manual for Utah Cities.
39
(2) "Appropriation" means an allocation of money by the governing body for a specific
40
purpose.
41
(3)(a) "Budget" means a plan of financial operations for a fiscal period which embodies
42
estimates of proposed expenditures for given purposes and the proposed means of
43
financing them.
44
(b) "Budget" may refer to the budget of a particular fund for which a budget is required
45
by law or it may refer collectively to the budgets for all such funds.
46
(4) "Budget officer" means:
47
(a) the city auditor in a city of the first and second class[,] ;
48
(b) the mayor or some person appointed by the mayor with the approval of the city
49
council in a city of the third, fourth, or fifth class[,] ;
50
(c) the mayor in the council-mayor optional form of government[,] ; or
51
(d) the person designated by the charter in a charter city.
52
(5) "Budget period" means the fiscal period for which a budget is prepared.
53
(6) "Budgetary fund" means a fund for which a budget is required.
54
(7) "Check" means an order in a specific amount drawn upon a depository by an authorized
55
officer of a city.
56
(8) "City general fund" means the general fund used by a city.
57
(9) "Current period" means the fiscal period in which a budget is prepared and adopted, i.e.,
58
the fiscal period next preceding the budget period.
59
(10) "Department" means any functional unit within a fund that carries on a specific
60
activity, such as a fire or police department within a city general fund.
61
(11)(a) "Encumbrance system" means a method of budgetary control in which part of an
62
appropriation is reserved to cover a specific expenditure by charging obligations,
63
such as purchase orders, contracts, or salary commitments to an appropriation
64
account at their time of origin.[ Such obligations cease]
65
(b) An obligation described in Subsection (11)(a) ceases to be [encumbrances] an
- 2 - 01-22 09:36 H.B. 295
66
encumbrance when paid or when the actual liability is entered on the city's books of
67
account.
68
(12) "Enterprise fund" means a fund as defined by the Governmental Accounting Standards
69
Board that is used by a municipality to report an activity for which a fee is charged to
70
users for goods or services.
71
(13) "Estimated revenue" means the amount of revenue estimated to be received from all
72
sources during the budget period in each fund for which a budget is being prepared.
73
(14) "Financial officer" means the mayor in the council-mayor optional form of government
74
or the city official as authorized by Section 10-6-158.
75
(15) "Fiscal period" means the annual or biennial period for accounting for fiscal operations
76
in each city.
77
(16) "Fund" is as defined by generally accepted accounting principles as reflected in the
78
Uniform Accounting Manual for Utah Cities.
79
(17) "Fund balance," "retained earnings," and "deficit" have the meanings commonly
80
accorded such terms under generally accepted accounting principles as reflected in the
81
Uniform Accounting Manual for Utah Cities.
82
(18) "General fund" is as defined by the Governmental Accounting Standards Board as
83
reflected in the Uniform Accounting Manual for All Local Governments prepared by the
84
Office of the Utah State Auditor.
85
(19) "Governing body" means a city council, or city commission, as the case may be, but
86
the authority to make any appointment to any position created by this chapter is vested
87
in the mayor in the council-mayor optional form of government.
88
(20) "Interfund loan" means a loan of cash from one fund to another, subject to future
89
repayment.
90
(21) "Last completed fiscal period" means the fiscal period next preceding the current
91
period.
92
(22)(a) "Public funds" means any money or payment collected or received by an officer
93
or employee of the city acting in an official capacity and includes money or payment
94
to the officer or employee for services or goods provided by the city, or the officer or
95
employee while acting within the scope of employment or duty.
96
(b) "Public funds" does not include money or payments collected or received by an
97
officer or employee of a city for charitable purposes if the mayor or city council has
98
consented to the officer's or employee's participation in soliciting contributions for a
99
charity.
- 3 - H.B. 295 01-22 09:36
100
(23) "Special fund" means any fund other than the city general fund.
101
(24) "Utility" means a utility owned by a city, in whole or in part, that provides services
102
such as electricity, gas, water, or sewer, or any combination of [them] electricity, gas,
103
water, or sewer.
104
(25) "Warrant" means an order drawn upon the city treasurer, in the absence of sufficient
105
money in the city's depository, by an authorized officer of a city for the purpose of
106
paying a specified amount out of the city treasury to the person named or to the bearer as
107
money becomes available.
108
Section 2. Section 10-6-161 is enacted to read:
109
10-6-161 . Establishment of service fees -- Political subdivision lien for past due
110
service fees.
111
(1) As used in this section, "service" means a utility, commodity, facility, or other resource
112
provided by a municipality, either directly or through a contracted third-party, to a
113
customer in the municipality.
114
(2)(a) A governing body of a municipality may:
115
(i) establish by ordinance or resolution a fee schedule for services; and
116
(ii) charge a fee to a customer according to the fee schedule.
117
(b) If a municipality contracts with a third-party to provide a service, the municipality
118
may agree to:
119
(i) pay the third-party directly for the contracted service; and
120
(ii) collect the fees for the service from a customer either directly or through a
121
third-party billing service.
122
(3)(a) A municipality, directly or through a contracted third-party, shall provide billing
123
notices to a customer detailing:
124
(i) the fees due for a service provided by the municipality or a third-party contracted
125
by the municipality; and
126
(ii) the due date for payment of the fees described in Subsection (2)(a)(i).
127
(b) A municipality or third-party billing service may combine a service billing notice
128
with a billing notice for a utility provided directly by the municipality or through a
129
contracted third-party.
130
(4) A municipality may hold a political subdivision lien, as that term is defined in Section
131
11-60-102, on a customer's property for a past due fee by:
132
(a) notifying the customer of the past due fee;
133
(b) if the past due fee remains unpaid, no earlier than 30 days after the day on which the
- 4 - 01-22 09:36 H.B. 295
134
customer is notified of the past due fee, notifying the customer that the municipality
135
intends to file a political subdivision lien on the customer's property to which the
136
utility, commodity, facility, or other resource was provided; and
137
(c) if the past due fee remains unpaid, no earlier than 10 days after the day on which the
138
customer is notified that the municipality intends to file a political subdivision lien on
139
the customer's property:
140
(i) certifying to the county treasurer of the county in which the customer's property is
141
located the amount of past due fees, including, subject to Section 10-6-162,
142
applicable interest and administrative costs; and
143
(ii) recording the lien with the county recorder of the county in which the customer's
144
property is located.
145
(5) Upon certification and recording under Subsection (4)(c), the past due fees, and interest
146
and administrative costs if applicable, become a political subdivision lien on the
147
customer's property, in accordance with Title 11, Chapter 60, Political Subdivision Lien
148
Authority.
149
(6) Upon payment of the full amount owed under a political subdivision lien authorized by
150
this section, the municipality shall file a release of the lien with the county recorder's
151
office.
152
Section 3. Section 10-6-162 is enacted to read:
153
10-6-162 . Interest -- Collection of administrative costs.
154
(1)(a) A municipality may charge interest on a past due fee.
155
(b) If a municipality charges interest as described in Subsection (1)(a), the municipality
156
shall calculate the interest rate in the same manner as a property tax lien, described in
157
Section 59-2-1302.
158
(2)(a) In pursuing payment on a past due fee or charge, a municipality may also charge
159
and collect only one of the following:
160
(i) a one-time penalty, not to exceed 8% for a past-due fee; or
161
(ii) an administrative cost for some or all of the following:
162
(A) the collection cost of a past due fee; and
163
(B) reasonable attorney fees actually incurred for collection and foreclosure costs,
164
if applicable.
165
(b) A municipality may not charge interest on a one-time penalty or an administrative
166
cost.
167
Section 4. Section 10-8-22 is amended to read:
- 5 - H.B. 295 01-22 09:36
168
10-8-22 . Water rates.
169
(1) As used in this section:
170
(a) "Designated water service area" means the area defined by a municipality in
171
accordance with the Utah Constitution, Article XI, Section 6, Subsection (1)(c).
172
(b) "Large municipal drinking water system" means a municipally owned and operated
173
drinking water system serving a population of 10,000 or more.
174
(c) "Retail customer" means an end user:
175
(i) who receives culinary water directly from a municipality's waterworks system; and
176
(ii) whom the municipality described in Subsection (1)(c)(i) bills for water service.
177
(2) A municipality shall fix the rates to be paid for the use of water furnished by the
178
municipality.
179
(3) The setting of municipal water rates is a legislative act.
180
(4) Within the municipality's designated water service area, a municipality shall:
181
(a) establish, by ordinance or resolution, reasonable rates for the services provided to the
182
municipality's retail customers;
183
(b) use the same method of providing notice to all retail customers of proposed rate
184
changes; and
185
(c) allow all retail customers the same opportunity to appear and participate in a public
186
meeting addressing water rates.
187
(5)(a) A municipality may establish different rates for different classifications of retail
188
customers within the municipality's designated water service area, if the rates and
189
classifications have a reasonable basis.
190
(b) A reasonable basis for charging different rates for different classifications may
191
include, among other things, a situation in which:
192
(i) there is a difference in the cost of providing service to a particular classification;
193
(ii) one classification bears more risk in relation to a system operation or obligation;
194
(iii) retail customers in one classification invested or contributed to acquire a water
195
source or supply or build or maintain a system differently than retail customers in
196
another classification;
197
(iv) the needs or conditions of one classification:
198
(A) are distinguishable from the needs or conditions of another classification; and
199
(B) based on economic, public policy, or other identifiable elements, support a
200
different rate; or
201
(v) there is a differential between the classifications based on a cost of service
- 6 - 01-22 09:36 H.B. 295
202
standard or a generally accepted rate setting method, including a standard or
203
method the American Water Works Association establishes.
204
(c) An adjustment based solely on the fact that a particular classification of retail
205
customers is located either inside or outside of the municipality's corporate boundary
206
is not a reasonable basis.
207
(6)(a) If more than 10% of the retail customers within a large municipal drinking water
208
system's designated water service area are located outside of the municipality's
209
corporate boundary, the municipality shall:
210
(i) post on the municipality's website the rates assessed to retail customers within the
211
designated water service area; and
212
(ii) establish an advisory board to make recommendations to the municipal legislative
213
body regarding water rates, capital projects, and other water service standards.
214
(b) In establishing an advisory board described in Subsection (6)(a)(ii), a municipality
215
shall:
216
(i) if more than 10% but no more than 30% of the municipality's retail customers
217
receive service outside the municipality's municipal boundary, ensure that at least
218
20% of the advisory board's members represent the municipality's retail customers
219
receiving service outside the municipality's municipal boundary;
220
(ii) if more than 30% of the municipality's retail customers receive service outside of
221
the municipality's municipal boundary, ensure that at least 40% of the advisory
222
board's members represent the municipality's retail customers receiving service
223
outside of the municipality's municipal boundary; and
224
(iii) in appointing board members who represent retail customers receiving service
225
outside of the municipality's municipal boundary, as required in Subsections
226
(6)(b)(i) and (ii), solicit recommendations from each municipality and county
227
outside of the municipality's municipal boundary whose residents are retail
228
customers within the municipality's designated water service area.
229
(7) A municipality that supplies water outside of the municipality's designated water service
230
area shall supply the water only by contract and shall include in the contract the terms
231
and conditions under which the contract can be terminated.
232
(8) A municipality shall:
233
(a) notify the director of the Division of Drinking Water of a contract the municipality
234
enters into with a person outside of the municipality's designated water service area,
235
including the name and contact information of the person named in each contract; and
- 7 - H.B. 295 01-22 09:36
236
(b) each year, provide any supplementing or new information regarding a contract
237
described in Subsection (8)(a), including whether there is no new information to
238
provide at that time.
239
Section 5. Section 17B-1-902.1 is amended to read:
240
17B-1-902.1 . Interest -- Collection of administrative costs.
241
(1)[(a)] A special district may charge interest on a past due fee [or past due charge] as
242
described in Section 10-6-162, the same as if the special district were a municipality.
243
[(b) If a special district charges interest as described in Subsection (1)(b), the special district
244
shall calculate the interest rate for a calendar year:]
245
[(i) based on the federal short-term rate determined by the secretary of the treasury under
246
Section 6621, Internal Revenue Code, in effect for the preceding fourth calendar quarter;
247
and]
248
[(ii) as simple interest at the rate of eighteen percentage points above the federal short-term
249
rate.]
250
[(c) If a special district charges interest on a past due fee collected by the special district,
251
regardless of whether the fee is certified, the special district may charge the interest
252
monthly but may not compound the interest more frequently than annually.]
253
(2)(a) A special district may charge a one-time penalty or an administrative cost, as
254
described in Section 10-6-162, the same as if the special district were a municipality.
255
(b) A special district may not charge interest on a one-time penalty or an administrative
256
cost.
257
[(2)(a) A special district may charge and collect only one of the following:]
258
[(i) a one-time penalty charge not to exceed 8% for a past-due fee; or]
259
[(ii) an administrative cost for some or all of the following:]
260
[(A) the collection cost of a past due fee or charge;]
261
[(B) reasonable attorney fees actually incurred for collection and foreclosure costs, if
262
applicable; and]
263
[(C) any other cost.]
264
[(b) A special district may not charge interest on an administrative cost.]
265
Section 6. Effective Date.
266
This bill takes effect on May 7, 2025.
- 8 -