CHAPTER 4. DEPARTMENT OF WATERWORKS IN CERTAIN MUNICIPALITIES
IC 8-1.5-4
Chapter 4. Department of Waterworks in Certain Municipalities
IC 8-1.5-4-1
Application of chapter
Sec. 1. This chapter applies to all municipalities that:
(1) own or operate waterworks; and
(2) adopt the provisions of this chapter by ordinance.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-1.5
Certain municipalities operating a waterworks through adepartment before January 1, 1982
Sec. 1.5. (a) A municipality having and operating a waterworksthrough a department of waterworks before January 1, 1982, underIC 19-3-15 (before its repeal on January 1, 1983) or under IC 19-3-27(before its repeal on January 1, 1983) shall be deemed to haveestablished a department of waterworks, as authorized by section 2of this chapter, having the same number of board members as theboard operating before January 1, 1982, and having the same powers,obligations, and duties as would be the case if the legislative body ofthe municipality had adopted an ordinance doing so before January1, 1983, in accordance with Acts 1982, P.L.74, SECTION 5(b).
(b) Except as provided in subsection (c), the board of directors ofthe department of waterworks shall operate as both the board and themunicipal legislative body for the purposes of IC 8-1.5-3-4 andIC 8-1.5-3-8.
(c) This subsection applies to water utilities that have beenremoved from the jurisdiction of the Indiana utility regulatorycommission under IC 8-1.5-3-9.1 after June 30, 1991. The board ofdirectors of the department of waterworks shall operate as the boardfor the purposes of IC 8-1.5-3-4 and IC 8-1.5-3-8.
As added by P.L.105-1983, SEC.3. Amended by P.L.16-1984, SEC.7;P.L.3-1990, SEC.29; P.L.56-1992, SEC.1.
IC 8-1.5-4-2
Department of waterworks; establishment; board of directors
Sec. 2. (a) If the legislative body of a municipality, by ordinance,adopts the provisions of this chapter, there is established adepartment of waterworks to be controlled by a board of directors(referred to as "the board" in this chapter). The board consists ofeither three (3) or five (5) directors, as determined by ordinance, whoshall be appointed by the municipal executive.
(b) In case there are three (3) directors, not more than two (2) maybe of the same political party. In case there are five (5) directors, notmore than three (3) may be of the same political party.
(c) The terms of directors shall be prescribed by ordinance, butinitial terms must be prescribed so that the directors' terms will bestaggered. Each director shall give a bond, which shall be fixed bythe municipal fiscal officer and is subject to his approval. (d) The executive may remove a director at any time when, in hisjudgment, it is for the best interest of the department.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-3
Special taxing district
Sec. 3. The department of waterworks has jurisdiction over aspecial taxing district (referred to as "the waterworks district" in thischapter) that consists of:
(1) in the case of a second class city located in a county havinga population of more than one hundred seventy thousand(170,000) but less than one hundred eighty thousand (180,000),all the territory within that county; or
(2) in the case of any other municipality, all the territory withinthe corporate boundaries of the municipality, or the territoryserved by the waterworks if larger or smaller than the corporateboundaries.
As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.12-1992,SEC.59; P.L.170-2002, SEC.60.
IC 8-1.5-4-4
Board; powers and duties
Sec. 4. The board has the powers and duties prescribed byIC 8-1.5-3-4. In addition, the board:
(1) may hold hearings following public notice;
(2) may make findings and determinations;
(3) may design, order, contract for or construct pumping plantsor stations, filtration plants, reservoirs, water mains, hydrants,and other equipment, structures, and appurtenances and rebuild,equip, improve, extend, and repair plants, equipment, andstructures;
(4) may build or have built all roads, levees, walls, or otherstructures that may be necessary or desirable in connection withwaterworks;
(5) make all necessary or desirable improvements of thegrounds and premises under its control;
(6) may issue and sell bonds for the construction, alteration,addition, or extension to the waterworks, in the mannerprescribed by law, including the provisions of IC 8-1.5-2; and
(7) shall furnish an adequate supply of water to consumerswithin the waterworks district.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-5
Water filtration and service facilities; acquisition, construction,and operation; financing methods
Sec. 5. The acquisition, construction, installation, operation, andmaintenance of facilities and land for water filtration and waterservice may be financed through proceeds from tax levies, proceedsof special taxing district bonds of the waterworks district, service
rates, revenue bonds, or any other available funds.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-6
Authority to set aside revenues for operation and maintenance, adepreciation account, and payment of bonds
Sec. 6. The board may fix and set aside:
(1) the proportion of the revenues of the waterworks departmentnecessary for reasonable and proper operation and maintenance;
(2) the proportion of the revenues for a proper and adequatedepreciation account; and
(3) the fixed proportion of the revenues to be applied to thepayment of the principal and interest of the authorized bonds.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-7
Revenues set aside for operation and maintenance
Sec. 7. (a) In fixing the proportion of the revenues of thewaterworks department required for operation and maintenance, theboard shall consider the cost of the operation and maintenance of thewaterworks, and may not set aside into the special fund a greateramount of the revenues and proceeds than, in its judgment, isrequired for the operation and maintenance.
(b) If a surplus is accumulated in the operating and maintenancefund, and that surplus is equal to the cost of maintaining andoperating the waterworks system during the remainder of the currentcalendar, operating, or fiscal year and during the next calendar,operating, or fiscal year, any excess over that surplus may betransferred by the board to either the depreciation account, to be usedfor any improvements, extensions, or additions to the waterworks, orto the bond and interest redemption account.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-8
Revenues set aside for payment of bonds
Sec. 8. (a) The fixed proportion set aside for the payment of theprincipal and interest of the authorized bonds shall, from month tomonth, as accrued and received, be set apart and paid into a specialaccount identified as "the bond and interest redemption account".
(b) In fixing and determining the amount that is to be set aside forthe payment of the principal and interest of the authorized bonds, theboard may provide that the amount to be set aside and paid into thebond and interest redemption account for any year or years shouldnot exceed a fixed sum, which must be at least sufficient to providefor the payment of the interest and principal of the bonds maturingand becoming payable in each year, together with a surplus or marginof ten percent (10%) in excess.
(c) If a surplus created in the bond and interest redemptionaccount exceeds the interest and principal of any bonds becomingpayable during the current calendar, operating, or fiscal year and
during the next calendar, operating, and fiscal year, the board maytransfer any excess over the surplus to either the operation andmaintenance account, or the depreciation account, as the board maydesignate.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-9
Revenues set aside for depreciation account
Sec. 9. (a) The proportion set aside to the depreciation accountshall be expended in making good depreciation in the waterworks orin new construction, extensions, or additions to the property of thewaterworks.
(b) Any accumulations in the depreciation account may beinvested by the board, and if invested, the income from theinvestment shall be carried in the depreciation account. The boardmay invest the funds in accordance with IC 5-13-9.
As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.19-1987,SEC.21.
IC 8-1.5-4-10
Secured debt or charge
Sec. 10. (a) The board may authorize and set apart bonds equal tothe amount of any secured debt or charge subject to which awaterworks may be purchased or acquired in any proceeding, andshall set aside for interest and sinking fund from the income andrevenue of the waterworks a sum sufficient to comply with therequirements of the instrument creating the lien or securing thecharge.
(b) If the instrument does not make any provision, the board shallset aside into the secured-debt account from month to month forinterest on the secured debt or charge an amount sufficient to providefor the payment of the interest on the secured debt or charge, and atthe option of the board either an annual amount sufficient to retirethe secured debt or charge at maturity or bonds issued under thischapter equal to the secured debt or charge. Any surplus aftersatisfying the secured debt or charge may be transferred to the bondand interest redemption account.
(c) Waterworks bonds set aside for a debt may, from time to time,be issued in an amount sufficient with the amount then in the sinkingfund to pay and retire the debt or any part thereof. The bonds maynot be issued at less than par value in exchange for, or satisfaction of,the secured debt or charge, or may be sold in the manner provided bythis chapter, and the proceeds applied in payment of the same atmaturity or before maturity by agreement with the holder. Amunicipality acquiring a waterworks does not assume any liabilityfor the payment of a secured debt or charge, other than the obligationto apply the revenues in the manner prescribed in the ordinance.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-11 Bonds and interest issued against special redemption fund
Sec. 11. (a) The bonds and the interest issued against the specialredemption fund:
(1) are a valid claim of the holders only against that fund andthe fixed proportion or amount of the revenues pledged to thatfund; and
(2) are exempt from taxation in Indiana as provided by IC 6-8-5.
(b) The bonds may be issued either as registered bonds or ascoupon bonds payable to bearer. Coupons and bearer bonds may beregistered as to principal in the holder's name on the books of themunicipality, registration being noted on the bond by the municipalclerk or other designated officer, after which no transfer is validunless made on the books of the municipality by the registered holderand similarly noted on the bonds. Any bond so registered as toprincipal may be discharged from registration by being transferredto bearer, after which it is transferable by delivery but may be againregistered as to principal as before. The registration of the bonds asto the principal does not restrain the negotiability of the coupons bydelivery, but the coupons may be surrendered and the interest madepayable only to the registered holder of the bonds. If the coupons aresurrendered, the surrender and cancellation shall be noted on thebond, and interest on the bond is then payable to the registeredholder on order in cash or at his option by check or draft payable atthe place or one (1) of the places where the coupons were payable.
(c) Bonds shall be sold in accordance with IC 5-1-11.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-12
Bonds; additional issue or issues for extension, addition, orimprovement
Sec. 12. A board acquiring waterworks and paying for them andfor extensions and betterments authorized at the time of acquisitionmay provide for the extension, addition, or improvement of thewaterworks by an additional issue or issues of bonds. A board mayissue new bonds in the manner provided in this chapter and securedin the same manner, to provide funds for the payment of the principaland interest of any bonds then outstanding.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-13
Bonds; application of proceeds; default
Sec. 13. (a) All money received from bonds issued under thischapter shall be applied solely to the acquisition of the waterworksand the cost of the issuance of the bonds.
(b) Any holder of the bonds or of any of the coupons attached tothem may, by action or other proceeding, compel performance of allduties required by this chapter of the board issuing the bonds or ofany officer of the board, including the making and collecting ofreasonable and sufficient rates lawfully established for servicerendered by the waterworks, the segregation of the income and
revenues of the utility, and the application of the respective fundscreated under this chapter.
(c) If there is any default in the payment of the principal orinterest of any of the bonds, a court having jurisdiction of the actionmay:
(1) appoint an administrator or receiver to administer thewaterworks on behalf of the municipality and the bondholders,with power to:
(A) charge and collect rates lawfully established sufficientto provide for the payment of the operating expenses andalso to pay any bonds or obligations outstanding against thewaterworks; and
(B) apply the income and revenues in conformity with thischapter and the ordinance; or
(2) declare the whole amount of the bonds due and payable anddirect the sale of the waterworks.
Under a sale ordered as provided by subdivision (2), the purchaseris vested with an indeterminate permit as defined in IC 8-1-2-1 tomaintain and operate the waterworks to supply water to themunicipality and its citizens.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-14
Services rendered to municipality; payment
Sec. 14. (a) This subsection applies to a municipality that is notsubject to IC 8-1-2-103(c) or has not adopted an ordinance to becomesubject to IC 8-1-2-103(d). The reasonable cost and value of anyservice rendered to the municipality by the waterworks by furnishingwater for public purposes or by maintaining hydrants and otherfacilities for fire protection shall be:
(1) charged against the municipality; and
(2) paid for in monthly installments as the service accrues outof the current revenues of the municipality, collected or inprocess of collection, and the tax levy of the municipality madeby it to raise money to meet its necessary current expenses.
(b) This subsection applies to a municipality that is subject toIC 8-1-2-103(c), that has adopted an ordinance to become subject toIC 8-1-2-103(d), or that has adopted a plan described inIC 8-1-2-103(d) as prescribed in IC 8-1-2-103(e). The reasonablecost and value of any service rendered to the municipality by thewaterworks by furnishing water for public purposes shall be:
(1) charged against the municipality; and
(2) paid for in monthly installments as the service accrues outof the current revenues of the municipality, collected or inprocess of collection, and the tax levy of the municipality madeby it to raise money to meet its necessary current expenses.
Except as provided in subsection (d), the cost and value ofmaintaining hydrants and other facilities for fire protection shall beexcluded from the charges against the municipality and shall berecovered from the other customers of the waterworks beginning on
January 1, 1994, in a municipality subject to IC 8-1-2-103(c) andbeginning on a date provided in the ordinance for a municipality thatadopts an ordinance under IC 8-1-2-103(d). The change in therecovery of current revenue authorized by this section shall bereflected in a schedule of new rates to be filed with the commissionat least thirty (30) days before the time the schedule of new rates isto take effect.
(c) The compensation for the service provided to the municipalityshall, in the manner prescribed by this chapter, be paid into theseparate and special fund created by setting aside the income andrevenues of the waterworks and is subject to apportionment to theoperating, maintenance, depreciation, and bond and interestredemption accounts.
(d) This subsection applies to a city having a population of morethan forty-six thousand five hundred (46,500) but less than fiftythousand (50,000). The cost and value of maintaining hydrants andother facilities for fire protection may be recovered from customersof the waterworks residing:
(1) in a county having a population of more than two hundredthousand (200,000) but less than three hundred thousand(300,000); and
(2) in a township having a population of more than seventhousand five hundred (7,500) but less than nine thousand(9,000) located in a county having a population of more thanone hundred eighty-two thousand seven hundred ninety(182,790) but less than two hundred thousand (200,000);
beginning on a date determined by the city. The city shall file a newschedule of rates with the commission as set forth in subsection (b),but is not subject to commission approval of the rates.
As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.93-1993,SEC.2; P.L.80-1997, SEC.18; P.L.133-1998, SEC.1; P.L.170-2002,SEC.61.
IC 8-1.5-4-15
Construction, extension, or improvement; procedure
Sec. 15. (a) If, upon investigation, the board finds:
(1) that the waterworks, plant, system, or equipment isinsufficient to furnish the necessary supply of water to properlyprotect the public health and welfare and safeguard the propertywithin the waterworks district; or
(2) that it is necessary to rebuild, repair, extend, and improvethe waterworks, plant, systems, and equipment and to acquirelands, construct, erect, or acquire other plants, reservoirs,systems, and other structures and equipment appurtenant tothem;
the board shall prepare maps, plans, specifications, and drawingswith full details and descriptions for the proposed work, togetherwith an estimate of the cost. The board shall also prepare adescription of all property rights necessary to be acquired inconnection with the proposed work and the manner in which the
rights are to be acquired, whether by purchase or appropriation,along with a description of any other lands that may be injuriouslyaffected, together with the estimated cost.
(b) The board shall then adopt a resolution:
(1) declaring that it is necessary for the protection of the publichealth and welfare of the inhabitants of the waterworks districtand the safeguarding of the property within the district;
(2) declaring that it is of public utility and benefit;
(3) appropriating the property described in the resolution;
(4) stating the maximum proposed cost of any land to bepurchased; and
(5) adopting plans, maps, specifications, drawings, details,descriptions, and estimates.
(c) If the resolution is adopted, the board shall publish a notice inaccordance with IC 5-3-1 of the adoption, the resolution, and the factthat plans, specifications, and estimates have been prepared and canbe inspected. The notice must also name a date, not less than ten (10)days after the date of the last publication, when the board willreceive or hear remonstrances from the persons interested in, oraffected by, the resolution, and when it will determine their publicutility and benefit. Notice shall be mailed to the owners of all landsappropriated by the resolution. If a landowner is a nonresident andhis place of residence is known, a notice shall be mailed to thenonresident owner. If the nonresident owner's residence is unknownto the board, then he is considered notified of the pendency of theproceedings by the publication of notice.
(d) In the resolution and notice, separate descriptions of eachpiece or parcel of land are not required, but it is a sufficientdescription of the property purchased or to be purchased, or to beappropriated or damaged, to give a description of the entire tract,whether it is one (1) or more lots or parcels and whether it is ownedby one (1) or more persons.
(e) All persons affected by the proceedings, including alltaxpayers in the waterworks district, are considered to be notified ofthe proceedings and all subsequent acts, hearings, adjournments, andorders of the board by the original publication of notice.
(f) The board may, before adoption of the resolution, obtain fromthe owners of the land an option for its purchase or may enter into acontract for its purchase after an appraisal by two (2) qualified landsurveyors. Such an option or contract is subject to the final action ofthe board confirming, modifying, or rescinding the resolution.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-16
Lands, rights-of-way, or other property; ownership in name ofmunicipality; remonstrances
Sec. 16. (a) All lands, rights-of-way, or other property, whenacquired, either by purchase or appropriation, shall be taken and heldin the name of the municipality.
(b) At the time fixed for the hearing or before the hearing, the
following persons may file a written remonstrance with the board:
(1) The owner of land, rights-of-way, or other property to beappropriated under the resolution.
(2) A person injuriously affected by the appropriation.
(3) A person owning real or personal property within thewaterworks district.
(c) The board shall hear all persons interested in the proceedings,hear all the remonstrances that have been filed, and take final actionon the resolution. The final action shall be recorded.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-17
Appeals
Sec. 17. (a) A person who has remonstrated in writing and isaggrieved by the decision of the board may, within thirty (30) days,take an appeal to the circuit or superior court of the county in whichthe waterworks district is located.
(b) A remonstrator desiring to appeal from the action of the boardshall, within thirty (30) days after the final action of the board, filein the office of the clerk of the circuit or superior court a copy of theorder of the board and the remonstrance, together with a bondconditioned to pay the costs of the appeal, should the appeal bedetermined against him.
(c) The court may hear the appeal only if the question is whetherthe board acted arbitrarily or capriciously in adopting the resolution.
(d) The cause shall be tried to the court without a jury.
(e) All remonstrances upon which appeals are taken may beconsolidated and heard as one (1) claim for relief by the court.
As added by Acts 1982, P.L.74, SEC.1.
IC 8-1.5-4-18
Special taxing district bonds of the waterworks district; issuance
Sec. 18. (a) To procure money to pay for the required propertyand the erection and construction of the proposed work, and inanticipation of the collection of the special benefit tax, the board mayissue, in the name of the municipality, the special taxing districtbonds of the waterworks district. The bonds may exceed the totalcost of the work and property to be acquired as provided for in theresolution, including:
(1) all expenses necessarily incurred for supervision andinspection during the period of construction; and
(2) expenses actually incurred preliminary to the acquiring ofthe necessary property and the construction of the work,including the cost of records, engineering expenses, publicationof notices, salaries, and other expenses incurred, before and inconnection with the acquiring of the property, the letting of thecontract, and the sale of bonds.
(b) After adopting a resolution authorizing the bonds, the boardshall certify a copy of the resolution to the municipal fiscal officer,who shall then prepare the bonds. The bonds shall be executed by the
municipal executive and attested by the fiscal officer. The bonds areexempt from taxation as provided by IC 6-8-5. All bonds issued bythe board shall be sold by the fiscal officer under IC 5-1-11.
(c) The board may not issue bonds of the waterworks district,payable by special taxation, when the total of the outstanding bondsof the district, including the bonds already issued and to be issued,exceeds eight percent (8%) of the total adjusted value of taxableproperty in the district as determined under IC 36-1-15.
(d) The bonds are not a corporate obligation or indebtedness ofthe municipality, but are an indebtedness of the waterworks district.The bonds and interest are payable out of a special benefit tax leviedupon all of the property of the waterworks district, or by any othermeans including revenues, cash on hand, and cash in depreciation orreserve accounts.
(e) The bonds must recite the terms upon their face, together withthe purpose for which they are issued. An action to question thevalidity of the bonds issued for the waterworks district or to preventtheir issuance may not be brought after the date fixed for the sale ofthe bonds.
As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.6-1997,SEC.131.
IC 8-1.5-4-19
Tax levy
Sec. 19. (a) To raise the necessary revenues to pay for the bondsissued, and interest on the bonds, the board:
(1) may levy a special benefit tax upon all the property of thewaterworks district in the amount necessary to meet and pay theprincipal of the bonds as they severally mature, together with allaccruing interest; and
(2) shall certify the tax levied each year to the fiscal officers ofthe municipality and of the county in which the waterworksdistrict is located, at the same time the levy of the municipalityis certified.
The tax levied and certified shall be estimated and entered upon thetax duplicate and shall be collected and enforced in the same manneras state and county taxes are estimated, entered, collected, andenforced.
(b) In fixing the amount of the necessary levy, the board:
(1) shall consider the amount of revenues derived by the boardfrom the operation of the waterworks plant and system under itsjurisdiction above the amount of revenues required to pay thecost of operation and maintenance of the waterworks plant andsystem; and
(2) may, in lieu of making the levy in this section, set aside, byresolution, a specific amount of the surplus revenues to becollected before maturity of the principal and interest of thebonds payable in the following calendar year.
(c) The special tax shall be accumulated and kept in a separatefund to be known as the "waterworks district bond fund", and applied
to the payment of the district bonds and interest as they severallymature and are payable. All accumulations in the fund before theiruse for the payment of bonds and interest shall be deposited atinterest with the depository of other public funds of the municipality,and all interest collected belongs to that fund.
(d) If the board adopts the resolution, the board may not use anypart of the amount set aside out of its net revenues for any purposeother than the monthly payment of the bonds and interest to thesinking fund. Any amount of net revenues derived from the operationof the waterworks plant and system under the jurisdiction of theboard, not required for the payment of the principal and interest onthe outstanding waterworks district bonds, shall be paid over to themunicipality and deposited in the sinking fund established for thepurpose of redeeming and retiring outstanding bonds that themunicipality may have issued for the benefit of its waterworks plant.This section does not relieve the municipality from the obligation topay outstanding bonds according to their terms and conditions.
As added by Acts 1982, P.L.74, SEC.1.