Opinion No. ( 1993 )

The Honorable Paul Bosson Prosecuting Attorney 18th Judicial District 501 Ouachita Avenue Hot Springs, AR 71901

Dear Mr. Bosson:

This is in response to your request for an opinion on two questions regarding the water and sewer departments of Hot Springs. You state that Hot Springs has recently changed from the mayor council form of government to the city manager form of government, and that under the old form of government the municipal water and sewer departments were operated by separate and independent commissions, with the funds of each kept separate from the other and from general city revenues. You state that the city manager and board of directors have elected to abolish the independent commissions and bring the two departments under the control of the city manager. In light of this change, you have asked the following two questions:

(1) Under the City Manager form of government does ASA 14-230-101 et seq. apply to the Municipal Water and Sewer Departments?

(2) May revenue from a water or sewer department be used for purchasing assets not necessary to the Municipal Water or Sewer Systems?

In response to your first question, A.C.A. §§ 14-230-101 through -109 (1987 and Supp. 1991) provide a method of financing water, sewer, and solid waste management systems, primarily for cities, towns, counties, or other eligible applicants with high percentages of elderly, low income, or unemployed persons. Cities may apply for funding under these provisions, apparently without regard to their form of government. See A.C.A. §§ 14-230-102 and 14-230-106(a) (Supp. 1991). Thus, it is my opinion that a city operating under the city manager form of government would certainly be eligible to apply for funds under these provisions to assist with the operation of its water and/or sewer management system.

With regard to your second question, it seems clear that funds awarded pursuant to A.C.A. §§ 14-230-101 et seq. must be used for the purposes established therein, i.e., water, sewer, or solid waste management. The Arkansas Soil and Water Conservation Commission is charged with administering this loan and grant program and is authorized to take action to ensure that the funds awarded thereunder are used for the established purposes and in accordance with state and federal laws. See A.C.A. § 14-230-103 (Supp. 1991). Regarding whether, as a general matter, the revenue of a municipal water or sewer department may be used to purchase assets not necessary to the water or sewer system, I must state that while I have found no broad or general prohibition against this practice, any special restrictions placed on the use of any portion of such revenue by various laws relating to revenue bonds, taxes, etc. must be considered and complied with.

The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Catherine Templeton.

Sincerely,

WINSTON BRYANT Attorney General

WB:cyh