F-4 Water Rates L.O. E~ENGTE, ON
CITY ATTORNf;Y .
AREA CODE 913 823-2244
December 7, 1972
RON BARTA
ASST. CIT~( ATTOF(~,;%Y
Hon. BoaEG of Conunissioners
Saline, Kansas, 67401
As per your request I have re, viewed the provisions
relative to the separation of funds in the water and
sewage department of the City of Salina, Kansas, and
wish to submit the following repor{::
K.S.A. 12-856 to 12-868, inclusive, provide that
any city having a popu!~t~.on of under 80,000 may establish
a conO.~ined water and sewage system by ordinance. On June
27, 1961 the City of Saline, Kansas by Ordinance No.
6544 created a corc~ined water works and sewage system for
the City of Saline.
K.S.A. 12-858 also provides t'hat "upon' the establish-
ment of the water and ~ .... ~- the current
~,:..:,,'¥ ag_. sys t%-~I:l Op...,-'- ~.--.. =,e 'r= ~lng
funds of, or budgeted for, ~h.. two systems ~hall be trans-
ferred to a 'Water and Sewage Fund' and thereafter ali_
revenue collected for ~ucn water and sewage syste,'~s sh~ll
Pursuant to the authority contained in K.S.A. 12-1860
to 12-1866 the City of Saline, Kansas did by Ordinance No.
6546 dated July 11, 1961 issue $3,600,000.00 of combined
water and sewage system revenue bonds, Series of 1961[ the
last of which bonds will be due on August 1, 1986. Section
9 of the above mentioned bond ordinance provides in part
as follows:
"Section 9. There is hereby created and ordered
to be established a separate fund hereby designated
as the 'Water and Sewage Fund.' The City covenants
and agrees that so long as any of the Combined Water
and Sewage System Revenue Bonds, Series of 1961, of
the City herein authorized remain outstanding and
unpaid, all of the revenues derived by the City from
the operation of its combined water and sewage system
from and after the date of the delivery of any of the
bonds herein authorized, including all revenues from
Hon Board of
Dece:~tber 7, 1972
page two
improvements, extensions and enlargements in and
to said colmbined water and sewage system, hereafter
constructed or acquired by the City, will be paid
and deposited in said 'Water and Sewage Fund' and
that the moneys in said 'Water and Sewage Fund' will
be administered and used solely as hereinafter in
this ordinance provided.':
Section 17 of said bond ordinance provides that the
provJ, sions of the bonds authorized by the ordinance may
be modJ. fied or amended at any tira~:: by the city with the
written consent of the holders of not less than 75 percent
in aggregate principal amount of the bonds outstending at
the time. Section 19 of said ordinance also-provides that
the provisions of the ordinance~ including the cove~ants
and agreement~ contained therein, shall constitute a con-
tract between the city and the holders of the bonds.
In vic:w of thc above and foregoing, I am of
opinion that:
(t) That K $ A ].~°c8 requires that all water
sewage funds ba ~n-~q ' ~.,~n:,!,~ acco'ant as lo~lq as
the city ......... _ .
op~a~:o a combined de~artmen'h
(2). That the provisions of Ordinance. N.o. 6546 con-
stitutes a contract between the city and the bondho!dcrs
and that the city cannot by ordinance violate the condi-
tions of this contract by separating the water and £ewage
accounts unless the written conzent of 75 percent of the
outstanding bondholders is secured.
I am of the further opinion that in order to separate
the%~ter and £ewage revenues-, it would be necessary that
the present Water and Sewage System Revenue Bonds, Series
of 1961 be refunded, or that the city receive the written
consent of the holders of not less than 75 percent of the
outstanding bonds to such change. After either of these
has been accomplished, then Article I of Chapter 35 of
the Saline Code could be repealed and the con~)ined water
and sewage department could be made separate departments
by ordinance.
I trust that the above will answer your inquiry.
Very truly yours,
L. O. Bengtson
City Attorney
LOB:es