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NCRWA.COM|
Winter 2015
feature
3. The Local Government Commission (LGC) is assisting the
government utility operating the public water system. The new law
does not define the circumstances under which the LGC would be
deemed to be assisting the government utility. Arguably, all local
governments and public authorities are assisted to some extent
by the LGC. The LGC monitors the fiscal health of each unit by
reviewing its annual audit. To read assisting this broadly would
cause the exception to swallow the rule, though. It is likely that the
legislature intended the term assisting to mean something more.
It is possible that assisting for purposes of this statute means that the
LGC has issued debt on behalf of the government utility. When a
local government or public authority borrows money through general
obligation bonds, revenue bonds, special obligation bonds, or project
development bonds, it is the LGC that actually issues the bonds. Even
this interpretation of assisting seems broader than what the legislature
likely intended, though.
In an extreme case, the LGC has the authority to impound the books
and records associated with a government utility, assume full control
of all its affairs, or take any other actions deemed necessary by the
Commission to deal with a government utility that is in financial
trouble. See G.S. 159-181(c). This statute is triggered when for three
consecutive fiscal years, the audited financial statements of the unit or
public authority demonstrate that the unit or public authority meets any
one of the following three criteria: (i) the enterprise system experienced
negative working capital; (ii) the enterprise system experienced a quick
ratio of less than 1.0; or (iii) the unit or public authority experienced
a net loss of revenue from operations in the enterprise system using
the modified accrual budgetary basis of accounting. Before the
Commission assumes full control of an enterprise system as described
in this subsection, it must find that the impact of items (i) through (iii)
threatens the financial stability of the unit or public authority, and that
the unit or public authority has failed to make corrective changes in
its operation of the enterprise system after having received notice and
warning from the Commission. The notice and warning may occur prior
to the expiration of the three-year period.
The term
assisting
could refer only to situations when the LGC takes
action under this statute, or when it compels a government utility to
make its debt service payments, pursuant to G.S. 159-36. That seems
too restrictive of an interpretation, though. If the legislature intended
this result, it could simply have stated that the exception applies only
when the LGC takes action under G.S. 159-181 or G.S. 159-36. By
instead using the word assisting it appears that the legislature intended
for the exception to apply to a broader set of circumstances.
In fact, viewing the exception in the context of the whole statute, it
is likely that the legislature intended it to apply when a government
utility is in financial trouble, or on the verge of financial trouble, such
that prohibiting the utility from mandating connections might affect the
utility’s continued viability. Thus, I think the most likely interpretation
of assisting is that the LGC has issued at least one warning letter within
the past year to the government utility indicating some concern about
the utility’s financial condition, stability, or viability.
4. The government utility operating the public water system
is in the process of expanding or repairing the public water
system and is actively making progress to having the water
lines installed directly available to provide water service
to the property within 24 months of the date the property
owner applies for the private drinking water well permit. This
exception allows the unit to compel the property owner to
connect his/her property to the public water system when it
is available. The exception expires on July 1, 2017, though.
After that date, a government utility will be prohibited from
mandating connection to its water system once it has issued
a private drinking well permit, even if the system is available
for connection within the 24-month period (unless, of course,
another exception applies).
Availability Fees
Current Authority
Under current law, a government utility has authority to charge an
availability fee to certain property owners whose properties are not
connected to the unit’s water or sewer system. The availability fee may
not exceed the minimum periodic charge that is assessed on properties
that are connected. The circumstances in which a government utility
may charge an availability fee vary by government entity.