02-20 15:24 3rd Sub. (Cherry) H.B. 295
Paul A. Cutler proposes the following substitute bill:
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Municipal Services Fees and Political Subdivision Lien Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Paul A. Cutler
Senate Sponsor: Wayne A. Harper
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LONG TITLE
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General Description:
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This bill authorizes municipalities to place a political subdivision lien on property for
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certain past due services.
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Highlighted Provisions:
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This bill:
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▸ defines terms and modifies definitions;
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▸ authorizes a municipality that sets a fee schedule by ordinance or resolution for water,
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sewer, or utility-related services provided by the municipality, or a third-party
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contracted by the municipality, to bill a customer receiving the water, sewer, or
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utility-related services, directly or through a third-party contracted by the municipality;
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▸ authorizes a municipality to hold a political subdivision lien on a property for past due
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water, sewer, or utility-related service fees;
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▸ authorizes a municipality or special district to:
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● charge interest on a past due fee; and
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● charge and collect a one-time penalty on a past due fee; and
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▸ makes technical and conforming changes.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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10-6-106, as last amended by Laws of Utah 2019, Chapter 136
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10-8-22, as last amended by Laws of Utah 2019, Chapter 99
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17B-1-902.1, as last amended by Laws of Utah 2023, Chapter 15
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ENACTS:
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10-6-161, Utah Code Annotated 1953
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10-6-162, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1. Section 10-6-106 is amended to read:
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10-6-106 . Definitions.
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As used in this chapter:
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(1) "Account group" is defined by generally accepted accounting principles as reflected in
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the Uniform Accounting Manual for Utah Cities.
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(2) "Appropriation" means an allocation of money by the governing body for a specific
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purpose.
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(3)(a) "Budget" means a plan of financial operations for a fiscal period which embodies
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estimates of proposed expenditures for given purposes and the proposed means of
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financing them.
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(b) "Budget" may refer to the budget of a particular fund for which a budget is required
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by law or it may refer collectively to the budgets for all such funds.
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(4) "Budget officer" means:
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(a) the city auditor in a city of the first and second class[,] ;
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(b) the mayor or some person appointed by the mayor with the approval of the city
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council in a city of the third, fourth, or fifth class[,] ;
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(c) the mayor in the council-mayor optional form of government[,] ; or
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(d) the person designated by the charter in a charter city.
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(5) "Budget period" means the fiscal period for which a budget is prepared.
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(6) "Budgetary fund" means a fund for which a budget is required.
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(7) "Check" means an order in a specific amount drawn upon a depository by an authorized
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officer of a city.
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(8) "City general fund" means the general fund used by a city.
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(9) "Current period" means the fiscal period in which a budget is prepared and adopted, i.e.,
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the fiscal period next preceding the budget period.
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(10) "Department" means any functional unit within a fund that carries on a specific
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activity, such as a fire or police department within a city general fund.
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(11)(a) "Encumbrance system" means a method of budgetary control in which part of an
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appropriation is reserved to cover a specific expenditure by charging obligations,
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such as purchase orders, contracts, or salary commitments to an appropriation
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account at their time of origin.
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(b) [ Such obligations cease] An obligation described in Subsection (11)(a) ceases to be [
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encumbrances] an encumbrance when paid or when the actual liability is entered on
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the city's books of account.
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(12) "Enterprise fund" means a fund as defined by the Governmental Accounting Standards
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Board that is used by a municipality to report an activity for which a fee is charged to
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users for goods or services.
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(13) "Estimated revenue" means the amount of revenue estimated to be received from all
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sources during the budget period in each fund for which a budget is being prepared.
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(14) "Financial officer" means the mayor in the council-mayor optional form of government
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or the city official as authorized by Section 10-6-158.
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(15) "Fiscal period" means the annual or biennial period for accounting for fiscal operations
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in each city.
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(16) "Fund" is as defined by generally accepted accounting principles as reflected in the
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Uniform Accounting Manual for Utah Cities.
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(17) "Fund balance," "retained earnings," and "deficit" have the meanings commonly
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accorded such terms under generally accepted accounting principles as reflected in the
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Uniform Accounting Manual for Utah Cities.
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(18) "General fund" is as defined by the Governmental Accounting Standards Board as
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reflected in the Uniform Accounting Manual for All Local Governments prepared by the
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Office of the Utah State Auditor.
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(19) "Governing body" means a city council, or city commission, as the case may be, but
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the authority to make any appointment to any position created by this chapter is vested
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in the mayor in the council-mayor optional form of government.
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(20) "Interfund loan" means a loan of cash from one fund to another, subject to future
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repayment.
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(21) "Last completed fiscal period" means the fiscal period next preceding the current
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period.
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(22)(a) "Public funds" means any money or payment collected or received by an officer
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or employee of the city acting in an official capacity and includes money or payment
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to the officer or employee for services or goods provided by the city, or the officer or
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employee while acting within the scope of employment or duty.
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(b) "Public funds" does not include money or payments collected or received by an
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officer or employee of a city for charitable purposes if the mayor or city council has
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consented to the officer's or employee's participation in soliciting contributions for a
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charity.
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(23) "Municipality" means a city or a town.
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(24) "Special fund" means any fund other than the city general fund.
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[(24)] (25) "Utility" means a utility owned by a city, in whole or in part, that provides
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electricity, gas, water, or sewer, or any combination of [them] electricity, gas, water, or
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sewer.
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(26) "Utility-adjacent service" means the maintenance, construction, and improvement of
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storm water infrastructure performed by a city.
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[(25)] (27) "Warrant" means an order drawn upon the city treasurer, in the absence of
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sufficient money in the city's depository, by an authorized officer of a city for the
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purpose of paying a specified amount out of the city treasury to the person named or to
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the bearer as money becomes available.
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Section 2. Section 10-6-161 is enacted to read:
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10-6-161 . Establishment of service fees -- Political subdivision lien for past due
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service fees.
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(1) As used in this section, "service" means a water utility service, sewer utility service, or a
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utility-adjacent service provided by a municipality, either directly or through a
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contracted third-party, to a customer in the municipality.
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(2)(a) If a governing body of a municipality establishes by ordinance or resolution a fee
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schedule for a service, the municipality may charge a fee to a customer according to
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the fee schedule.
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(b) If a municipality contracts with a third-party to provide a service, the municipality
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may agree to:
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(i) pay the third-party directly for the contracted service; and
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(ii) collect the fees for the service from a customer either directly or through a
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third-party billing program.
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(3)(a) A municipality, directly or through a contracted third-party, shall provide billing
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notices to a customer detailing:
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(i) the fees due for a service provided by the municipality or a third-party contracted
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by the municipality; and
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(ii) the due date for payment of the fees.
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(b) A municipality or third-party billing service may combine a service billing notice
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with another billing notice provided directly by the municipality or through a
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contracted third-party.
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(4) A municipality may hold a political subdivision lien, as that term is defined in Section
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11-60-102, on a customer's property for a past due service fee authorized under this
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section by:
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(a) notifying the customer of the past due service fee;
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(b) if the past due service fee remains unpaid, no earlier than 60 days after the day on
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which the customer is notified of the past due service fee, notifying the customer that
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the municipality intends to file a political subdivision lien on the customer's property
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to which the utility or utility-related service was provided; and
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(c) if the past due service fee remains unpaid, no earlier than 10 days after the day on
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which the customer is notified that the municipality intends to file a political
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subdivision lien on the customer's property:
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(i) certifying to the county treasurer of the county in which the customer's property is
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located the amount of:
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(A) past due service fees; and
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(B) if applicable, subject to Section 10-6-162, interest and administrative costs;
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and
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(ii) recording the political subdivision lien with the county recorder of the county in
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which the customer's property is located.
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(5) Upon certification and recording under Subsection (4)(c), the past due service fees, and
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interest and administrative costs if applicable, become a political subdivision lien on the
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customer's property, in accordance with Title 11, Chapter 60, Political Subdivision Lien
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Authority.
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(6) Upon payment of the full amount owed under a political subdivision lien authorized by
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this section, the municipality shall file a release of the lien with the county recorder's
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office.
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Section 3. Section 10-6-162 is enacted to read:
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10-6-162 . Interest -- Collection of administrative costs.
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(1)(a) A municipality may charge interest on a past due service fee authorized under
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Section 10-6-161.
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(b) If a municipality charges interest as described in Subsection (1)(a), the municipality
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shall calculate the interest rate in the same manner as a property tax lien, described in
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Section 59-2-1331.
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(2)(a) In pursuing payment on a past due service fee, in addition to interest authorized
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under Subsection (1), a municipality may also charge and collect a one-time penalty,
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not to exceed 8% for a past due service fee.
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(b) A municipality may not charge interest on the penalty described in Subsection (2)(a).
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Section 4. Section 10-8-22 is amended to read:
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10-8-22 . Water rates.
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(1) As used in this section:
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(a) "Designated water service area" means the area defined by a municipality in
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accordance with the Utah Constitution, Article XI, Section 6, Subsection (1)(c).
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(b) "Large municipal drinking water system" means a municipally owned and operated
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drinking water system serving a population of 10,000 or more.
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(c) "Retail customer" means an end user:
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(i) who receives culinary water directly from a municipality's waterworks system; and
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(ii) whom the municipality described in Subsection (1)(c)(i) bills for water service.
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(2) A municipality shall fix the rates to be paid for the use of water furnished by the
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municipality.
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(3) The setting of municipal water rates is a legislative act.
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(4) Within the municipality's designated water service area, a municipality shall:
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(a) establish, by ordinance or resolution, reasonable rates for the services provided to the
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municipality's retail customers;
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(b) use the same method of providing notice to all retail customers of proposed rate
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changes; and
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(c) allow all retail customers the same opportunity to appear and participate in a public
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meeting addressing water rates.
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(5)(a) A municipality may establish different rates for different classifications of retail
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customers within the municipality's designated water service area, if the rates and
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classifications have a reasonable basis.
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(b) A reasonable basis for charging different rates for different classifications may
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include, among other things, a situation in which:
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(i) there is a difference in the cost of providing service to a particular classification;
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(ii) one classification bears more risk in relation to a system operation or obligation;
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(iii) retail customers in one classification invested or contributed to acquire a water
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source or supply or build or maintain a system differently than retail customers in
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another classification;
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(iv) the needs or conditions of one classification:
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(A) are distinguishable from the needs or conditions of another classification; and
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(B) based on economic, public policy, or other identifiable elements, support a
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different rate; or
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(v) there is a differential between the classifications based on a cost of service
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standard or a generally accepted rate setting method, including a standard or
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method the American Water Works Association establishes.
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(c) An adjustment based solely on the fact that a particular classification of retail
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customers is located either inside or outside of the municipality's corporate boundary
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is not a reasonable basis.
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(6)(a) If more than 10% of the retail customers within a large municipal drinking water
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system's designated water service area are located outside of the municipality's
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corporate boundary, the municipality shall:
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(i) post on the municipality's website the rates assessed to retail customers within the
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designated water service area; and
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(ii) establish an advisory board to make recommendations to the municipal legislative
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body regarding water rates, capital projects, and other water service standards.
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(b) In establishing an advisory board described in Subsection (6)(a)(ii), a municipality
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shall:
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(i) if more than 10% but no more than 30% of the municipality's retail customers
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receive service outside the municipality's municipal boundary, ensure that at least
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20% of the advisory board's members represent the municipality's retail customers
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receiving service outside the municipality's municipal boundary;
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(ii) if more than 30% of the municipality's retail customers receive service outside of
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the municipality's municipal boundary, ensure that at least 40% of the advisory
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board's members represent the municipality's retail customers receiving service
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outside of the municipality's municipal boundary; and
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(iii) in appointing board members who represent retail customers receiving service
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outside of the municipality's municipal boundary, as required in Subsections
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(6)(b)(i) and (ii), solicit recommendations from each municipality and county
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outside of the municipality's municipal boundary whose residents are retail
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customers within the municipality's designated water service area.
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(7) A municipality that supplies water outside of the municipality's designated water service
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area shall supply the water only by contract and shall include in the contract the terms
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and conditions under which the contract can be terminated.
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(8) A municipality shall:
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(a) notify the director of the Division of Drinking Water of a contract the municipality
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enters into with a person outside of the municipality's designated water service area,
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including the name and contact information of the person named in each contract; and
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(b) each year, provide any supplementing or new information regarding a contract
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described in Subsection (8)(a), including whether there is no new information to
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provide at that time.
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Section 5. Section 17B-1-902.1 is amended to read:
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17B-1-902.1 . Interest -- Collection of administrative costs.
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(1)(a) A special district may charge interest on a past due fee or past due charge.
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(b) If a special district charges interest as described in Subsection [(1)(b)] (1)(a), the
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special district shall calculate the interest rate [for a calendar year:] in the same
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manner as a property tax lien, described in Section 59-2-1331.
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[(i) based on the federal short-term rate determined by the secretary of the treasury
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under Section 6621, Internal Revenue Code, in effect for the preceding fourth
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calendar quarter; and]
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[(ii) as simple interest at the rate of eighteen percentage points above the federal
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short-term rate.]
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[(c) If a special district charges interest on a past due fee collected by the special district,
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regardless of whether the fee is certified, the special district may charge the interest
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monthly but may not compound the interest more frequently than annually.]
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(2)(a) [A ] In pursuing payment on a past due fee or past due charge, in addition to
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interest authorized under Subsection (1), a special district may also charge and collect [
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only one of the following:]
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[(i)] a one-time penalty[ charge] , not to exceed 8% for a [past-due] past due fee[; or] .
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[(ii) an administrative cost for some or all of the following:]
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[(A) the collection cost of a past due fee or charge;]
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[(B) reasonable attorney fees actually incurred for collection and foreclosure costs,
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if applicable; and]
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[(C) any other cost.]
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(b) A special district may not charge interest on[ an administrative cost.] the one-time
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penalty described in Subsection (2)(a).
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Section 6. Effective Date.
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This bill takes effect on May 7, 2025.
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