City Repeals 1980 DUD Water Rate Ordinance

March 12, 2014
Dwayne Page

Although it will apparently not factor into the outcome of the DUD's current lawsuit against the City of Smithville, the aldermen last week voted to abolish a 34 year old ordinance which Chancellor Ronald Thurman referenced on February 28 in ruling for DUD's petition seeking a temporary injunction against the city over its water rate.

The 1980 ordinance, which set the rate to the DUD at that time, also provided that a 30 day notice would be given the DUD if the city were to modify the rate. It also established a cut off provision if the DUD did not pay its water bill within seven days of billing.

During the hearing last month, Chancellor Thurman found that the city violated Section 18-502 of the Smithville City Code, which requires the City of Smithville to give the DeKalb Utility District 30 days' notice in advance of a rate change. The city gave the DUD only 16 days' actual notice in advance of the rate change, effective January 1st. The Chancellor also found that the city had not given proper justification for arriving at the $5.00 rate. In granting DUD's motion for a temporary injunction, Chancellor Thurman barred the city from continuing to impose its $5.00 rate until the city gives proper notice to DUD and justification for raising the rate above $2.67 per thousand gallons.

From 2004 to 2013, the DUD had a water contract with the city to purchase water starting at $1.60 per thousand gallons the first year. The rate increased by five cents per thousand gallons each year through the end of the ten year agreement. The rate in 2013, the last year of the contract, was $2.05 per thousand. City officials contended that no 30 day notice of a rate change was necessary since it was known that a new rate would be implemented once the contract expired on December 31, 2013.

Even though the city had a water contract with the DUD for ten years which apparently took precedence, the mayor and aldermen had never repealed the 1980 ordinance.

Without a new water contract having been entered into between the city and DUD, the aldermen voted on December 12, 2013 to set the DUD rate at $5.00 per thousand gallons, effective January 1, 2014. While the new rate was imposed January 1, city officials say they have not yet sent the DUD a bill for the higher charges, pending the outcome of the lawsuit.

The DUD filed a Chancery Court lawsuit last month seeking relief from what it called an "unreasonable water rate" and asked the court to put down a temporary injunction to keep the city from charging the $5.00 rate and to keep the city from cutting off service to the DUD pending the outcome of the litigation. In the lawsuit, DUD claimed that the city had violated its own ordinance by not giving the utility the proper 30 day notice of a rate change. The Chancellor agreed.

To keep this issue from possibly arising again in the future, the aldermen at their March 3 meeting, voted to repeal the ordinance to get it off the books. "This should have been taken off our books years ago. On the advice of our city attorney (Vester Parsley, Jr.), the board needs to repeal this ordinance and make it null and void," said City Administrator Hunter Hendrixson.

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