02-06 14:16 1st Sub. (Buff) H.B. 295
Paul A. Cutler proposes the following substitute bill:
1
Municipal Services Fees and Political Subdivision Lien Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Paul A. Cutler
Senate Sponsor: Wayne A. Harper
2
3
LONG TITLE
4
General Description:
5
This bill authorizes municipalities to place a political subdivision lien on property for
6
certain past due services.
7
Highlighted Provisions:
8
This bill:
9
▸ defines terms and modifies definitions;
10
▸ authorizes a municipality that sets a fee schedule by ordinance or resolution for water,
11
sewer, or utility-related services provided by the municipality, or a third-party
12
contracted by the municipality, to bill a customer receiving the water, sewer, or
13
utility-related services, directly or through a third-party contracted by the municipality;
14
▸ authorizes a municipality to hold a political subdivision lien on a property for past due
15
water, sewer, or utility-related service fees;
16
▸ modifies the process for a special district to charge interest and costs on a past due fee;
17
and
18
▸ makes technical and conforming changes.
19
Money Appropriated in this Bill:
20
None
21
Other Special Clauses:
22
None
23
Utah Code Sections Affected:
24
AMENDS:
25
10-6-106, as last amended by Laws of Utah 2019, Chapter 136
26
10-8-22, as last amended by Laws of Utah 2019, Chapter 99
27
17B-1-902.1, as last amended by Laws of Utah 2023, Chapter 15
28
ENACTS:
1st Sub. H.B. 295 1st Sub. (Buff) H.B. 295 02-06 14:16
29
10-6-161, Utah Code Annotated 1953
30
10-6-162, Utah Code Annotated 1953
31
32
Be it enacted by the Legislature of the state of Utah:
33
Section 1. Section 10-6-106 is amended to read:
34
10-6-106 . Definitions.
35
As used in this chapter:
36
(1) "Account group" is defined by generally accepted accounting principles as reflected in
37
the Uniform Accounting Manual for Utah Cities.
38
(2) "Appropriation" means an allocation of money by the governing body for a specific
39
purpose.
40
(3)(a) "Budget" means a plan of financial operations for a fiscal period which embodies
41
estimates of proposed expenditures for given purposes and the proposed means of
42
financing them.
43
(b) "Budget" may refer to the budget of a particular fund for which a budget is required
44
by law or it may refer collectively to the budgets for all such funds.
45
(4) "Budget officer" means:
46
(a) the city auditor in a city of the first and second class[,] ;
47
(b) the mayor or some person appointed by the mayor with the approval of the city
48
council in a city of the third, fourth, or fifth class[,] ;
49
(c) the mayor in the council-mayor optional form of government[,] ; or
50
(d) the person designated by the charter in a charter city.
51
(5) "Budget period" means the fiscal period for which a budget is prepared.
52
(6) "Budgetary fund" means a fund for which a budget is required.
53
(7) "Check" means an order in a specific amount drawn upon a depository by an authorized
54
officer of a city.
55
(8) "City general fund" means the general fund used by a city.
56
(9) "Current period" means the fiscal period in which a budget is prepared and adopted, i.e.,
57
the fiscal period next preceding the budget period.
58
(10) "Department" means any functional unit within a fund that carries on a specific
59
activity, such as a fire or police department within a city general fund.
60
(11)(a) "Encumbrance system" means a method of budgetary control in which part of an
61
appropriation is reserved to cover a specific expenditure by charging obligations,
62
such as purchase orders, contracts, or salary commitments to an appropriation
- 2 - 02-06 14:16 1st Sub. (Buff) H.B. 295
63
account at their time of origin.[ Such obligations cease]
64
(b) An obligation described in Subsection (11)(a) ceases to be [encumbrances] an
65
encumbrance when paid or when the actual liability is entered on the city's books of
66
account.
67
(12) "Enterprise fund" means a fund as defined by the Governmental Accounting Standards
68
Board that is used by a municipality to report an activity for which a fee is charged to
69
users for goods or services.
70
(13) "Estimated revenue" means the amount of revenue estimated to be received from all
71
sources during the budget period in each fund for which a budget is being prepared.
72
(14) "Financial officer" means the mayor in the council-mayor optional form of government
73
or the city official as authorized by Section 10-6-158.
74
(15) "Fiscal period" means the annual or biennial period for accounting for fiscal operations
75
in each city.
76
(16) "Fund" is as defined by generally accepted accounting principles as reflected in the
77
Uniform Accounting Manual for Utah Cities.
78
(17) "Fund balance," "retained earnings," and "deficit" have the meanings commonly
79
accorded such terms under generally accepted accounting principles as reflected in the
80
Uniform Accounting Manual for Utah Cities.
81
(18) "General fund" is as defined by the Governmental Accounting Standards Board as
82
reflected in the Uniform Accounting Manual for All Local Governments prepared by the
83
Office of the Utah State Auditor.
84
(19) "Governing body" means a city council, or city commission, as the case may be, but
85
the authority to make any appointment to any position created by this chapter is vested
86
in the mayor in the council-mayor optional form of government.
87
(20) "Interfund loan" means a loan of cash from one fund to another, subject to future
88
repayment.
89
(21) "Last completed fiscal period" means the fiscal period next preceding the current
90
period.
91
(22)(a) "Public funds" means any money or payment collected or received by an officer
92
or employee of the city acting in an official capacity and includes money or payment
93
to the officer or employee for services or goods provided by the city, or the officer or
94
employee while acting within the scope of employment or duty.
95
(b) "Public funds" does not include money or payments collected or received by an
96
officer or employee of a city for charitable purposes if the mayor or city council has
- 3 - 1st Sub. (Buff) H.B. 295 02-06 14:16
97
consented to the officer's or employee's participation in soliciting contributions for a
98
charity.
99
(23) "Municipality" means a city or a town.
100
(24) "Special fund" means any fund other than the city general fund.
101
[(24)] (25) "Utility" means a utility owned by a city, in whole or in part, that provides
102
electricity, gas, water, or sewer, or any combination of [them] electricity, gas, water, or
103
sewer.
104
(26) "Utility-adjacent service" means the maintenance, construction, and improvement of:
105
(a) storm water infrastructure performed by a city; or
106
(b) transportation systems performed by a city.
107
[(25)] (27) "Warrant" means an order drawn upon the city treasurer, in the absence of
108
sufficient money in the city's depository, by an authorized officer of a city for the
109
purpose of paying a specified amount out of the city treasury to the person named or to
110
the bearer as money becomes available.
111
Section 2. Section 10-6-161 is enacted to read:
112
10-6-161 . Establishment of service fees -- Political subdivision lien for past due
113
service fees.
114
(1) As used in this section, "service" means a water, sewer, or a utility-adjacent service
115
provided by a municipality, either directly or through a contracted third-party, to a
116
customer in the municipality.
117
(2)(a) If a governing body of a municipality establishes by ordinance or resolution a fee
118
schedule for a service, the municipality may charge a fee to a customer according to
119
the fee schedule.
120
(b) If a municipality contracts with a third-party to provide a service, the municipality
121
may agree to:
122
(i) pay the third-party directly for the contracted service; and
123
(ii) collect the fees for the service from a customer either directly or through a
124
third-party billing program.
125
(3)(a) A municipality, directly or through a contracted third-party, shall provide billing
126
notices to a customer detailing:
127
(i) the fees due for a service provided by the municipality or a third-party contracted
128
by the municipality; and
129
(ii) the due date for payment of the fees.
130
(b) A municipality or third-party billing service may combine a service billing notice
- 4 - 02-06 14:16 1st Sub. (Buff) H.B. 295
131
with another billing notice provided directly by the municipality or through a
132
contracted third-party.
133
(4) A municipality may hold a political subdivision lien, as that term is defined in Section
134
11-60-102, on a customer's property for a past due service fee authorized under this
135
section by:
136
(a) notifying the customer of the past due service fee;
137
(b) if the past due service fee remains unpaid, no earlier than 30 days after the day on
138
which the customer is notified of the past due service fee, notifying the customer that
139
the municipality intends to file a political subdivision lien on the customer's property
140
to which the utility or utility-related service was provided; and
141
(c) if the past due service fee remains unpaid, no earlier than 10 days after the day on
142
which the customer is notified that the municipality intends to file a political
143
subdivision lien on the customer's property:
144
(i) certifying to the county treasurer of the county in which the customer's property is
145
located the amount of:
146
(A) past due service fees; and
147
(B) if applicable, subject to Section 10-6-162, interest and administrative costs;
148
and
149
(ii) recording the political subdivision lien with the county recorder of the county in
150
which the customer's property is located.
151
(5) Upon certification and recording under Subsection (4)(c), the past due service fees, and
152
interest and administrative costs if applicable, become a political subdivision lien on the
153
customer's property, in accordance with Title 11, Chapter 60, Political Subdivision Lien
154
Authority.
155
(6) Upon payment of the full amount owed under a political subdivision lien authorized by
156
this section, the municipality shall file a release of the lien with the county recorder's
157
office.
158
Section 3. Section 10-6-162 is enacted to read:
159
10-6-162 . Interest -- Collection of administrative costs.
160
(1)(a) A municipality may charge interest on a past due service fee authorized under
161
Section 10-6-161.
162
(b) If a municipality charges interest as described in Subsection (1)(a), the municipality
163
shall calculate the interest rate in the same manner as a property tax lien, described in
164
Section 59-2-1331.
- 5 - 1st Sub. (Buff) H.B. 295 02-06 14:16
165
(2)(a) In pursuing payment on a past due service fee, in addition to interest authorized
166
under Subsection (1), a municipality may also charge and collect only one of the
167
following:
168
(i) a one-time penalty, not to exceed 8% for a past due service fee; or
169
(ii) an administrative cost for some or all of the following:
170
(A) the collection cost of a past due service fee; and
171
(B) reasonable attorney fees actually incurred for collection and foreclosure costs,
172
if applicable.
173
(b) A municipality may not charge interest on a one-time penalty or an administrative
174
cost.
175
Section 4. Section 10-8-22 is amended to read:
176
10-8-22 . Water rates.
177
(1) As used in this section:
178
(a) "Designated water service area" means the area defined by a municipality in
179
accordance with the Utah Constitution, Article XI, Section 6, Subsection (1)(c).
180
(b) "Large municipal drinking water system" means a municipally owned and operated
181
drinking water system serving a population of 10,000 or more.
182
(c) "Retail customer" means an end user:
183
(i) who receives culinary water directly from a municipality's waterworks system; and
184
(ii) whom the municipality described in Subsection (1)(c)(i) bills for water service.
185
(2) A municipality shall fix the rates to be paid for the use of water furnished by the
186
municipality.
187
(3) The setting of municipal water rates is a legislative act.
188
(4) Within the municipality's designated water service area, a municipality shall:
189
(a) establish, by ordinance or resolution, reasonable rates for the services provided to the
190
municipality's retail customers;
191
(b) use the same method of providing notice to all retail customers of proposed rate
192
changes; and
193
(c) allow all retail customers the same opportunity to appear and participate in a public
194
meeting addressing water rates.
195
(5)(a) A municipality may establish different rates for different classifications of retail
196
customers within the municipality's designated water service area, if the rates and
197
classifications have a reasonable basis.
198
(b) A reasonable basis for charging different rates for different classifications may
- 6 - 02-06 14:16 1st Sub. (Buff) H.B. 295
199
include, among other things, a situation in which:
200
(i) there is a difference in the cost of providing service to a particular classification;
201
(ii) one classification bears more risk in relation to a system operation or obligation;
202
(iii) retail customers in one classification invested or contributed to acquire a water
203
source or supply or build or maintain a system differently than retail customers in
204
another classification;
205
(iv) the needs or conditions of one classification:
206
(A) are distinguishable from the needs or conditions of another classification; and
207
(B) based on economic, public policy, or other identifiable elements, support a
208
different rate; or
209
(v) there is a differential between the classifications based on a cost of service
210
standard or a generally accepted rate setting method, including a standard or
211
method the American Water Works Association establishes.
212
(c) An adjustment based solely on the fact that a particular classification of retail
213
customers is located either inside or outside of the municipality's corporate boundary
214
is not a reasonable basis.
215
(6)(a) If more than 10% of the retail customers within a large municipal drinking water
216
system's designated water service area are located outside of the municipality's
217
corporate boundary, the municipality shall:
218
(i) post on the municipality's website the rates assessed to retail customers within the
219
designated water service area; and
220
(ii) establish an advisory board to make recommendations to the municipal legislative
221
body regarding water rates, capital projects, and other water service standards.
222
(b) In establishing an advisory board described in Subsection (6)(a)(ii), a municipality
223
shall:
224
(i) if more than 10% but no more than 30% of the municipality's retail customers
225
receive service outside the municipality's municipal boundary, ensure that at least
226
20% of the advisory board's members represent the municipality's retail customers
227
receiving service outside the municipality's municipal boundary;
228
(ii) if more than 30% of the municipality's retail customers receive service outside of
229
the municipality's municipal boundary, ensure that at least 40% of the advisory
230
board's members represent the municipality's retail customers receiving service
231
outside of the municipality's municipal boundary; and
232
(iii) in appointing board members who represent retail customers receiving service
- 7 - 1st Sub. (Buff) H.B. 295 02-06 14:16
233
outside of the municipality's municipal boundary, as required in Subsections
234
(6)(b)(i) and (ii), solicit recommendations from each municipality and county
235
outside of the municipality's municipal boundary whose residents are retail
236
customers within the municipality's designated water service area.
237
(7) A municipality that supplies water outside of the municipality's designated water service
238
area shall supply the water only by contract and shall include in the contract the terms
239
and conditions under which the contract can be terminated.
240
(8) A municipality shall:
241
(a) notify the director of the Division of Drinking Water of a contract the municipality
242
enters into with a person outside of the municipality's designated water service area,
243
including the name and contact information of the person named in each contract; and
244
(b) each year, provide any supplementing or new information regarding a contract
245
described in Subsection (8)(a), including whether there is no new information to
246
provide at that time.
247
Section 5. Section 17B-1-902.1 is amended to read:
248
17B-1-902.1 . Interest -- Collection of administrative costs.
249
(1)(a) A special district may charge interest on a past due fee or past due charge.
250
(b) If a special district charges interest as described in Subsection [(1)(b)] (1)(a), the
251
special district shall calculate the interest rate [for a calendar year:] in the same
252
manner as a property tax lien, described in Section 59-2-1331.
253
[(i) based on the federal short-term rate determined by the secretary of the treasury
254
under Section 6621, Internal Revenue Code, in effect for the preceding fourth
255
calendar quarter; and]
256
[(ii) as simple interest at the rate of eighteen percentage points above the federal
257
short-term rate.]
258
[(c) If a special district charges interest on a past due fee collected by the special district,
259
regardless of whether the fee is certified, the special district may charge the interest
260
monthly but may not compound the interest more frequently than annually.]
261
(2)(a) [A ] In pursuing payment on a past due fee or past due charge, in addition to
262
interest authorized under Subsection (1)(a), a special district may also charge and
263
collect only one of the following:
264
(i) a one-time penalty[ charge] , not to exceed 8% for a [past-due] past due fee; or
265
(ii) an administrative cost for some or all of the following:
266
(A) the collection cost of a past due fee or past due charge; and
- 8 - 02-06 14:16 1st Sub. (Buff) H.B. 295
267
(B) reasonable attorney fees actually incurred for collection and foreclosure costs,
268
if applicable[; and] .
269
[(C) any other cost.]
270
(b) A special district may not charge interest on a one-time penalty or an administrative
271
cost.
272
Section 6. Effective Date.
273
This bill takes effect on May 7, 2025.
- 9 -