CHAPTER 24. LEASING OF SEWAGE DISPOSAL FACILITIES
IC 36-9-24
Chapter 24. Leasing of Sewage Disposal Facilities
IC 36-9-24-1
Application of chapter
Sec. 1. This chapter applies to all municipalities that own and
operate sewage works under IC 36-9-23.
As added by Acts 1981, P.L.309, SEC.97.
IC 36-9-24-2
"Sewage disposal facilities" defined
Sec. 2. As used in this chapter, "sewage disposal facilities" means
all or part of the facilities of a sewage disposal company furnishing
service within the corporate boundaries of a municipality, or within
one (1) mile outside those boundaries, including:
(1) certificates of territorial authority;
(2) indeterminate permits;
(3) franchises;
(4) rights-of-way; and
(5) easements;
but does not include the company's corporate stock, going-concern
value, or good will.
As added by Acts 1981, P.L.309, SEC.97.
IC 36-9-24-3
Authorization
Sec. 3. (a) A municipality may lease sewage disposal facilities
from a sewage disposal company that:
(1) holds a certificate of territorial authority under IC 8-1-2-89;
and
(2) is a corporation organized under Indiana law for the purpose
of acquiring, constructing, and leasing sewage disposal facilities
to a municipality.
(b) In addition to the authority described in subsection (a), a
municipality may lease from any person facilities to provide for
treatment or disposal of sludge generated by the municipality's
sewage works. The lessor under this subsection may be an individual,
partnership, corporation, or other entity organized to lease sewage
works to a municipality. Notwithstanding any other law, a lessor may
acquire, construct, and lease facilities described in this subsection to
a municipality without the approval of the utility regulatory
commission.
(c) The municipality may operate the leased facilities in
conjunction with the operation of the municipally owned sewage
works.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.5-1988,
SEC.222; P.L.186-1988, SEC.2.
IC 36-9-24-4
Maximum duration; options to renew
Sec. 4. The term of a lease under this chapter may not exceed fifty
(50) years. However, the lease must provide that the municipality has
an option to renew the lease for a further term on similar conditions.
As added by Acts 1981, P.L.309, SEC.97.
IC 36-9-24-5
Options to purchase; authorization of bonds to finance purchase;
disposition of property when option not exercised
Sec. 5. (a) A lease under this chapter must provide that the
municipality has an option to purchase the property covered by the
lease, under the terms and conditions specified in the lease.
(b) If the municipality exercises the option to purchase, it may
obtain money to pay the purchase price by issuing and selling
revenue bonds under the statutes governing the issuance and sale of
sewage works revenue bonds for additions and extensions to the
municipally owned sewage works.
(c) If the municipality does not exercise the option to purchase,
the property covered by the lease becomes the absolute property of
the municipality when:
(1) the lease has expired; and
(2) the municipality has discharged and performed all its
obligations under the lease.
The lessor shall then execute proper instruments conveying good and
merchantable title to the property to the municipality.
As added by Acts 1981, P.L.309, SEC.97.
IC 36-9-24-6
Optional provisions of leases; payment of taxes, assessments,
insurance, and maintenance expenses
Sec. 6. (a) A lease under this chapter may provide that:
(1) as part of the lease rental for the facilities, the municipality
shall agree to:
(A) pay all property taxes and assessments levied against or
on account of the facilities; and
(B) maintain insurance on the facilities for the benefit of the
lessor; and
(2) the municipality shall assume all responsibilities for the
operation, maintenance, repair, alteration, and extension of the
facilities.
(b) However, the lease rental and the expenses incurred under this
chapter are payable solely from the revenues derived from sewage
and sewer fees to be collected by the municipality from property and
users in the area served by the facilities.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.186-1988,
SEC.3.
IC 36-9-24-7
Proposed leases; notice and hearing
Sec. 7. (a) When a municipality and a lessor agree on the terms
and conditions of a lease proposed to be entered into under this
chapter, notice of a hearing to be held before the municipal
legislative body shall be given to all interested persons by
publication in accordance with IC 5-3-1. The notice must name the
date, place, and hour of the hearing, and set forth a summary of the
principal terms of the lease agreed upon, including the name of the
lessor, the character of the property to be leased, the lease rental to
be paid, and the number of years the lease is to be in effect.
(b) The date of the hearing may not be less than twenty (20) days
after publication of the notice.
(c) The proposed lease shall be kept available for inspection by
the public before and at the hearing.
(d) At the hearing, all interested persons are entitled to be heard
as to the necessity for the execution of the lease and whether the
rental to be paid to the proposed lessor under the lease is a fair and
reasonable rental for the facilities. The hearing may be adjourned to
a later date or dates.
(e) After the hearing, the municipal legislative body may
authorize the execution of the lease as originally agreed on, or may,
with the consent of the proposed lessor, modify the lease. However,
the lease rental as set out in the published notice may not be
increased without a new notice and hearing.
As added by Acts 1981, P.L.309, SEC.97. Amended by Acts 1981,
P.L.45, SEC.63; P.L.186-1988, SEC.4.
IC 36-9-24-8
Notice of signing of lease contract; petitions, notice, and hearing
concerning objections to lease rental
Sec. 8. (a) When a municipal legislative body authorizes the
execution of a lease under section 7 of this chapter, notice of the
signing of the contract shall be given by publication in the manner
prescribed by section 7 of this chapter. Within thirty (30) days after
publication of the notice, fifty (50) or more of the:
(1) users in the municipality served by the municipally owned
sewage works; or
(2) users served by the facilities to be leased;
may file with the utility regulatory commission (if the lessor is
leasing facilities under section 3(a) of this chapter), or with the
circuit or superior court of the county where the facility is located (if
the lessor is leasing facilities under section 3(b) of this chapter), a
petition setting forth their objections to the lease rental, including
facts showing that the lease rental is not fair and reasonable.
(b) On receipt of the petition, the commission or the court shall
fix a time and place for a hearing on whether the lease rental is fair
and reasonable. The hearing may not be less than twenty (20) nor
more than sixty (60) days after the commission's or the court's receipt
of the petition. At least ten (10) days before the date of the hearing,
the commission or the court shall mail notice of the hearing to:
(1) the municipal executive;
(2) the municipality; and
(3) the first ten (10) petitioners listed on the petition, at their
usual place of residence.
(c) The decision of the commission or the court as to whether the
lease rental is fair and reasonable is final.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.23-1988,
SEC.126; P.L.186-1988, SEC.5.
IC 36-9-24-9
Limitations on actions to contest leases
Sec. 9. An action to contest the validity of a lease under this
chapter, or to enjoin the performance of any of the terms and
conditions of such a lease, may not be instituted later than:
(1) thirty (30) days after publication of notice under section 8(a)
of this chapter; or
(2) if a petition has been filed with the utility regulatory
commission or the court twenty (20) days after the decision of
the commission or the court.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.23-1988,
SEC.127; P.L.186-1988, SEC.6.
IC 36-9-24-10
Determination of sufficiency by department of environmental
management
Sec. 10. A lease under this chapter does not become effective until
its provisions for sewage treatment have been found sufficient by the
department of environmental management according to rules adopted
by the state water pollution control board.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.143-1985,
SEC.201.
IC 36-9-24-11
Fees; establishment; procedure
Sec. 11. (a) A municipality that leases facilities under this chapter
may, by ordinance, establish, bill, and collect fees from the property
and users in the area served by the leased facilities. The fees must be
sufficient to pay the costs of operation, maintenance, repair,
alterations, depreciation, additions, and extensions of the leased
facilities, and to pay the lease rental as it becomes due.
(b) The municipal legislative body may use one (1) or more of the
following factors to establish the fees:
(1) A flat charge for each sewer connection.
(2) The amount of water used on or in the property.
(3) The number and size of water outlets on the property.
(4) The amount, strength, or character of the sewage discharged
into the sewers.
(5) The size of sewer connections.
(6) Any other factors the legislative body considers necessary.
(c) After introduction of the ordinance establishing the fees, but
before it is finally adopted, the municipal legislative body shall hold
a public hearing at which all of the users of the leased facilities and
owners of property served or to be served by the facilities may be
heard concerning the proposed fees. Notice of the hearing, setting
forth the proposed schedule of fees, shall be published in accordance
with IC 5-3-1. The hearing may be adjourned from time to time.
(d) After the hearing, the municipal legislative body shall adopt
the ordinance establishing the fees, either as originally introduced or
as modified.
(e) The fees established for any class of users shall be extended
to cover any additional property that is subsequently served and falls
within the same class, without any hearing or notice.
(f) The municipal legislative body may change or readjust the fees
in the same manner by which they were established.
(g) The fees established and collected by the municipality are not
subject to the jurisdiction of the utility regulatory commission.
(h) The municipality may collect delinquent fees in the manner
provided by IC 36-9-23-31 through IC 36-9-23-34.
As added by Acts 1981, P.L.309, SEC.97. Amended by Acts 1981,
P.L.45, SEC.64; P.L.23-1988, SEC.128; P.L.186-1988, SEC.7.
IC 36-9-24-12
Tax liability and exemptions
Sec. 12. Facilities leased to a municipality under this chapter are
exempt from all state, county, and other taxes. However, the rental
paid to a lessor under the terms of such a lease is subject to all
applicable taxes.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.186-1988,
SEC.8.
IC 36-9-24-13
Exception from compliance with certain statutes
Sec. 13. Except as specifically required in this chapter, a
municipality acting under this chapter need not comply with other
statutes concerning the lease and acquisition of facilities by
municipalities.
As added by Acts 1981, P.L.309, SEC.97. Amended by P.L.186-1988,
SEC.9.
IC 36-9-24-14
Operation and lease of facilities within one mile of boundaries
considered furnishing of sewage and sewer service
Sec. 14. A municipality that leases and operates sewage disposal
facilities in an area within one (1) mile outside its corporate
boundaries is considered to be furnishing sewage and sewer service
in that area for purposes of IC 36-4-3-13.
As added by Acts 1981, P.L.309, SEC.97.