Request By:
Mr. Claude K. Smith
Commissioner, City of Richmond
P.O. Box 250
Richmond, Kentucky 40475
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in answer to your letter of June 9 in which you raise the following questions:
"1. Can a third class city utility board be empowered under KRS 94.070 - 94.150 for Board of Public Works rather than under Chapter 96?
"2. Can a city manager government operate a public utility under KRS 94.070 - 94.150?
"3. If KRS 94.070 and 94.080 is applicable, how does that relate to KRS 61.080, Section 4 with respect to uncompatible offices?
"4. Is there any statutory requirement with respect to refunding or interest payment on service deposits? "
Our response to your initial question would be in the affirmative unless the utility commission is required to be established under KRS 96.530. You will note the provision under KRS 94.110 that, except as provided in KRS 96.530, the board of public works in cities of the third class shall have exclusive power and control over the construction, equipment, management and operation of any works that the city may own for supplying the city or its inhabitants with water, light, heat or power. On the other hand, if the city operates its utilities pursuant to KRS 96.520, it must appoint a city utility commission in accordance with the terms of KRS 96.530 which, of course, would operate the utility.
In answer to your second question, the fact that the city is operating under the city manager form of government rather than the councilmanic form would be of no significance in so far as the operation of the city utility in the manner prescribed in response to your initial question. You will note that boards of public works may be established by ordinance in cities of the third class operating under the councilmanic form under KRS 94.070; however, KRS 89.400 provides that all laws applicable and governing cities of the third class and not inconsistent of the city manager form of government shall continue to apply and govern each city that is organized under the city manager form of government unless otherwise provided by law. This latter statute would authorize the city of Richmond to establish a board of public works pursuant to Chapter 94 KRS.
Your third question is not clear with respect to incompatible offices. We will however assume that you may be referring to the fact that under KRS 94.070 the board of public works is to consist of the mayor who, by virtue of his office, would theoretically be holding two municipal offices by reason of his service on the board of public works. Such would not be the case as held in OAG 66-586 [copy attached] on the theory that where by statute an officer is made an ex-offico member of a board or commission, he does not, in effect, hold two municipal offices.
In response to your fourth question concerning any statutory requirement with respect to refunding payments made on service deposits by patrons of the utility, we refer you to the case of Commonwealth v. Kentucky Power and Light Company, 257 Ky. 66, 77 S.W.2d 395 (1934), in which the Court construed essentially the present provisions of KRS 278.460 as requiring the public utility company to refund the service deposit with interest. This statute, requiring the utility to pay interest on deposits required of patrons, is not applicable to municipally owned utilities under the terms of KRS 277.010 (3). Nevertheless the Court declared in construing the referred to statute the following:
". . . In arriving at what the Legislature intended by this act, we must remember that the deposit of the customer was subject at all times to a demand by the customer for its return. The customer, of course, would in that contigency have to cease to be a patron of the company or make other arrangements about securing his bill. . . ."
Though we find no specific statute requiring municipally owned utilities to refund service deposits, it would appear that such deposits must be refunded under the general principle cited above, provided it is not necessary to use the deposits to cover delinquent accounts at the time service is discontinued.