B-147834, JAN. 18, 1962

B-147834, JAN. 18, 1962

TO MAJOR W. B. GATRELL:

YOUR LETTER OF OCTOBER 23, 1961, REQUESTS A DECISION WHETHER PAYMENT IS AUTHORIZED ON A VOUCHER FOR $421.95, IN FAVOR OF SECURITY WATER AND SANITATION DISTRICTS FOR WATER AND SEWER SERVICE FROM JULY 1, 1961, TO OCTOBER 1, 1961, FURNISHED 25 HOUSES IN THE COLORADO SPRINGS AREA LEASED FOR FAMILY HOUSING.

THE ITEMIZED BILL ATTACHED TO THE VOUCHER SHOWS THAT EACH OF THE LEASED HOUSES WAS BILLED $17.25 FOR THE INVOLVED PERIOD EXCEPT THE HOUSE AT 426 CYPRESS WHICH WAS BILLED FOR $7.95 BECAUSE THE LEASE FOR THAT HOUSE WAS TERMINATED AUGUST 17, 1961. THE CHARGE OF $7.95 FOR THE LATTER HOUSE REPRESENTS ITEMS OF $5.15 FOR WATER, $1.80 FOR SEWER, $1 FOR SPECIAL ASSESSMENT, AND THE CHARGE OF $17.25 FOR EACH OF THE OTHER HOUSES REPRESENTS ITEMS OF $10.50 FOR WATER, $3.75 FOR SEWER AND $3 FOR SPECIAL ASSESSMENT.

YOU STATE THAT ALL OF THE SERVICES ARE CHARGED FOR ON A DISTRICT WIDE BASIS, RATHER THAN ON A BASIS OF WATER CONSUMED AND SEWAGE DISPOSED OF AND THAT NEITHER THE WATER CONSUMED NOR THE SEWAGE DISPOSED OF IS METERED OR MEASURED IN THE LEASED PREMISES. IN THE CIRCUMSTANCES, YOU STATE THAT YOU HAVE DOUBTS AS TO THE VALIDITY OF THE PROPOSED PAYMENT BECAUSE YOU ARE UNABLE TO DETERMINE IF THE CHARGES REPRESENT MERELY REASONABLE FEES FOR SERVICES RENDERED OR IF THEY REPRESENT A TAX FROM WHICH THE UNITED STATES IS IMMUNE. AS TO THE TAX THEORY YOU STATE THAT THE SECURITY AND WATER AND SEWAGE DISTRICTS ARE ORGANIZED UNDER THE PROVISIONS OF ARTICLE 5, CHAPTER 89, COLORADO REVISED STATUTES, 1953, AND YOU INVITE ATTENTION TO THE FACT THAT UNDER PROVISIONS THEREOF (SEC. 89-5-14) THE DIRECTORS OF A DISTRICT-- - DEFINED AS THE BOARD--- HAVE THE POWER TO LEVY TAXES IN ADDITION TO OTHER MEANS OF PROVIDING REVENUE FOR A DISTRICT.

IN THE UNDATED LETTER FROM THE DISTRICT REFERRED TO IN YOUR LETTER EXPLAINING THE PRACTICES OF THE DISTRICTS WITH RESPECT TO CHARGES FOR SERVICES IT IS STATED THAT ALL CHARGES ARE AGAINST THE PROPERTY ITSELF; THAT THIS MAKES THE OWNER RESPONSIBLE FOR ARRANGEMENTS FOR PAYMENT FOR SUCH CHARGES; THAT IN ORDER TO MAINTAIN ACCURATE RECORDS IT IS IMPORTANT THAT EACH NEW OCCUPANT SIGN FOR THE SERVICE; AND THAT WHEN TRANSFER OR SERVICE IS MADE, BECAUSE OF SALE OR RENTAL, IT IS IMPORTANT FOR THE SELLER AND BUYER OR LANDLORD AND TENANT AT THE TIME OF THE SALE OR RENTAL TRANSACTION TO PRO-RATE BETWEEN THEMSELVES ANY CHARGES ALREADY MADE OR ANY UNPAID CHARGES. IT IS FURTHER STATED THAT THE CHARGES FOR SERVICE EFFECTIVE JANUARY 1, 1961, WOULD BE, AS FOLLOWS:

CHART

WATER: 3 MONTHS AT $3.50 PER MONTH MAKES QUARTERLY BILLING OF $10.50

SEWER: 3 MONTHS AT $1.25 PER MONTH MAKES QUARTERLY BILLING OF $3.75

TOTAL QUARTERLY BILLINGS FOR COMBINED SERVICES $14.25

FOLLOWING ISSUANCE OF THE FOREGOING RATE SCHEDULE, HOWEVER, THE SECURITY WATER DISTRICT RESIDENTS WERE NOTIFIED THAT AT THE BOARD'S MEETING ON JUNE 12, 1961, THE FOLLOWING MOTION WAS CARRIED:

"THAT SPECIAL ASSESSMENTS BE LEVIED ON CUSTOMERS OF THE SECURITY WATER DISTRICT IN THE AMOUNTS OF $3.00 PAYABLE JULY 1, 1961, AND $3.00 PAYABLE OCTOBER 1, 1961, FOR THE PURPOSE OF ASSURING ADEQUATE REVENUES TO THE DISTRICT TO PAY $49,800 FOR WATER PURCHASED DURING THE PREVIOUS FISCAL YEARS, AS NEGOTIATED AT THE BEGINNING OF THE YEAR WITH SPROULS. SUCH ASSESSMENTS SHALL BE IN ADDITION TO THE REGULAR QUARTERLY ASSESSMENTS FOR WATER USAGE PAYABLE ON JULY 1, 1961, AND OCTOBER 1, 1961.'

IN JUSTIFICATION OF THE "SPECIAL ASSESSMENTS" IT WAS STATED THAT IN PREVIOUS YEARS DEFICITS AROSE, CAUSE BY WATER USAGE EXCEEDING THE AMOUNT OF THE ESTABLISHED RATES; THAT AT THE BEGINNING OF THE FISCAL YEAR 1961 (DECEMBER 1) THE DISTRICT HAD ACCUMULATED AN INDEBTEDNESS OF $49,800 WHICH THE BOARD FELT SHOULD BE ELIMINATED IN ORDER TO PLACE THE DISTRICT ON A SOUND FINANCIAL BASIS, TO PROTECT THE DISTRICT'S CONTRACT INTERESTS, AND TO ASSURE REASONABLE WATER COSTS; THAT FAVORABLE ECONOMY MEASURES AND CONDITIONS DURING THE FIRST HALF OF 1961 HAVE INDICATED AN ADDITIONAL REVENUE OF $14,400 WOULD FINISH PAYMENT OF THESE ARREARS AND START 1962 WITH A CLEAN SLATE; THAT AFTER PAYMENT OF THE DEFICIT THE BOARD FELT THAT THE CURRENT RATES WOULD BE ADEQUATE DEPENDING, HOWEVER, ON COSTS TO CORRECT PRESSURE AND RECOVERY PROBLEMS AS WELL AS MAINTENANCE; AND THAT BY A TOTAL ASSESSMENT OF $6 FROM EACH OF THE DISTRICT'S 2,400 MEMBERS THE DISTRICT COULD PAY THE PAST DUE OBLIGATION.

SINCE THE RECORD INDICATES THAT MOST OF THE HOUSES UNDER LEASE TO THE GOVERNMENT WERE LEASED IN 1958, PERSONNEL AT FORT CARSON PROTESTED THE QUARTERLY "SPECIAL ASSESSMENT" OF $3 PAYABLE ON JULY 1 AND OCTOBER 1, 1961, FOR DEFICITS ACCRUING PRIOR TO THE GOVERNMENT'S OCCUPANCY. LETTER DATED SEPTEMBER 19, 1961, FROM THE ATTORNEY FOR THE DISTRICTS IN REPLY TO SUCH PROTEST IT IS SPECIFICALLY STATED THAT CONTRARY TO ANY ERRONEOUS IMPRESSION THAT MIGHT HAVE ARISEN CONCERNING THE USE OF THE "SPECIAL ASSESSMENTS" TO PAY FOR DEFICITS ACCRUING IN FISCAL YEARS AS FAR BACK AS 1956, THE ADDITIONAL CHARGES WERE BEING MADE TO PAY FOR WATER USED WITHIN THE LAST YEAR; THAT IT WAS UNFORTUNATE THAT THE BOARD CHOSE TO CALL THE ADDITIONAL CHARGES "SPECIAL ASSESSMENTS" INSTEAD OF AN INCREASE IN RATES; AND THAT THE TERM "SPECIAL ASSESSMENTS" WAS USED TO MAKE IT CLEAR TO ALL USERS THAT THE INCREASE WAS ONLY TEMPORARY RATHER THAN PERMANENT. THE ATTORNEY EXPLAINED THAT WHILE THE WATER IS METERED TO THE DISTRICT BY ITS CONTRACTOR AT THE RATE OF $40 PER ACRE FOOT AND BILLED TO THE DISTRICT AT THE END OF EACH MONTH, THE DISTRICT CHARGES EACH USER A FLAT FEE EACH QUARTER, AND THAT FOR SEVERAL YEARS THE DISTRICT HAS BEEN UNABLE TO MEET ITS CURRENT WATER BILLS DURING THE SUMMER MONTHS BECAUSE OF THE INCREASED USE OF WATER DURING SUCH MONTHS. THIS, IT IS EXPLAINED, RESULTS IN A LARGE DEFICIT IN THE SUMMER MONTHS AND SINCE THE INCOME FROM THE QUARTERLY CHARGE TO THE USERS DURING THE WINTER MONTHS EXCEEDS THE USAGE DURING THE WINTER MONTHS AND SINCE TAX REVENUES ARE AVAILABLE TO THE DISTRICT IN THE SPRING OF EACH YEAR THE DISTRICT HAS BEEN ABLE TO BECOME CURRENT IN THE PAYMENT OF ITS WATER BILLS, OR NEARLY SO.

AS TO THE "SPECIAL ASSESSMENTS" ON THE INVOLVED VOUCHER THE ATTORNEY STATED THAT WHILE BECAUSE OF THE EXTREMELY HIGH WATER USAGE DURING THE SUMMER OF 1960, THE DISTRICT'S DEFICIT AS OF DECEMBER 1, 1960, WAS AT ITS HIGHEST POINT, THE RECORD SHOWS THAT THE $49,800 DEFICIT ACCRUED ENTIRELY FROM MAY 15, 1960; THAT ABOUT DECEMBER 1, 1960, A CONFERENCE WAS HELD BETWEEN THE BOARD AND ITS WATER CONTRACTOR CONCERNING THE THEN EXISTING DEFICIT OF $49,810.80; THAT THE MEETING RESULTED IN AN AGREEMENT PROVIDING THAT BEGINNING AS OF JANUARY 1, 1961, ALL WATER BILLS WOULD BE PAID AS RECEIVED; THAT CURRENT INCOME WOULD BE USED FOR CURRENT BILLS; THAT THE DISTRICT AGREED THAT THE DEFICIT OF $49,810.80 WOULD BE PAID DURING THE FISCAL YEAR 1961 FROM OTHER SOURCES; AND THAT IT WAS THE INTENTION OF THE BOARD AT THAT TIME TO PAY PART OF SUCH DEFICIT FROM TAX REVENUES AND THE BALANCE FROM ADDITIONAL WATER CHARGES. THE ATTORNEY FURTHER STATED THAT BEGINNING ON JANUARY 1, 1961, THE DISTRICT PAID CURRENT WATER BILLS FROM CURRENT INCOME; THAT BECAUSE OF THE WET SEASON IN 1961 SUCH PAYMENTS HAVE BEEN MADE CURRENTLY FROM THE REGULAR QUARTERLY CHARGES; THAT IN MAY 1961, THROUGH THE USE OF TAX REVENUES AVAILABLE TO THE DISTRICT, ALL BUT $18,310.80 OF THE DECEMBER 1961 DEFICIT OF $49,810.80 WAS PAID; AND THAT AT THE JUNE MEETING THE BOARD DETERMINED THAT AN ADDITIONAL CHARGE OF $3 TO THE USERS FOR THE LAST TWO QUARTERS OF 1961 WOULD WIPE OUT THE REMAINING DEFICIT OF $18,310.80. FOR THE FOREGOING REASONS THE ATTORNEY CONCLUDED THAT THE ADDITIONAL $3 CHARGE FOR THE LAST TWO QUARTERS OF 1961, WHILE REFERRED TO BY THE BOARD AS ,SPECIAL ASSESSMENTS" LEVIED ON CUSTOMERS, MERELY REPRESENTED A TEMPORARY INCREASE IN THE WATER RATES AND NOT A TAX.

ON THE BASIS OF THE FACTS REPORTED IT IS CLEAR AS BETWEEN THE OWNERS OF THE LEASEHOLDS AND THE GOVERNMENT THAT THE OWNERS ARE UNDER NO OBLIGATION TO FURNISH WATER OR SEWER SERVICES.

IT IS WELL SETTLED THAT A CHARGE BY A STATE OR POLITICAL SUBDIVISION THERE OF FOR SERVICES RENDERED OR FURNISHED TO THE FEDERAL GOVERNMENT IS IN NO SENSE A TAX. 20 COMP. GEN. 748; 29 ID. 120. AS INDICATED IN YOUR LETTER, IT HAS BEEN HELD, HOWEVER, THAT A MUNICIPALITY MAY NOT BE PAID A WATER CHARGE WHICH IS CLAIMED NOT ON THE BASIS OF WATER CONSUMPTION AS ESTABLISHED BY METER MEASUREMENT BUT ON THE BASIS OF A FLAT CHARGE IN THE NATURE OF A TAX. 20 COMP. GEN. 206; 31 ID. 405, 408. WHILE IN THE PRESENT INSTANCE NEITHER THE WATER CONSUMED NOR THE SEWAGE DISPOSED OF ARE MEASURED THE RELATIONSHIP OF THE PARTIES IS ESSENTIALLY CONTRACTUAL FOR SERVICES TO BE FURNISHED SINCE THE PRACTICES OF THE DISTRICT REQUIRED SIGNING FOR SUCH SERVICES FOR EACH NEW OCCUPANCY. TAX REVIEW BOARD V. ABRAHAM WEINER, 140 A.2D 372; OPINION OF JUSTICES, 39 A.2D 767; CITY OF STANFIELD V. BURNETT, 353 P.2D 242; SCHMIDT V. VILLAGE OF KIMBERLY, 256 P.2D 515. IN SUCH CIRCUMSTANCES, THE GOVERNMENT BECAME BOUND BY THE POWERS OF THE BOARD TO FIX AND FROM TIME TO TIME INCREASE OR DECREASE THE WATER AND SEWER RATES OR CHARGES FOR THE SERVICES FURNISHED AND IN THE ABSENCE OF ANY INDICATION OF UNREASONABLENESS IN THE RATES FIXED, INCLUDING THE ADDITIONAL CHARGE OF $3 PAYABLE FOR THE LAST TWO QUARTERS OF 1961, SUCH RATES MAY BE CONSIDERED AS A PROPER MEASURE OF THE GOVERNMENT'S LIABILITY.

ACCORDINGLY, IF OTHERWISE CORRECT, PAYMENT IS AUTHORIZED ON THE VOUCHER, WHICH IS RETURNED.