CO Code § 31-15-707 (2021)
2021 Colorado Code|Title 31 - Government - Municipal|Article 15 - Exercise of Municipal Powers|Part 7 - Public Property and Improvements|§ 31-15-707. Municipal Utilities

  The governing body of each municipality has the power:     To acquire waterworks, gasworks, and gas distribution systems for the distribution of gas of any kind or electric light and power works and distribution systems, or heating and cooling works and distribution systems for the distribution of heat and cooling obtained from geothermal resources, solar or wind energy, hydroelectric or renewable biomass resources, including waste and cogenerated heat, and all appurtenances necessary to any of said works or systems or to authorize the erection, ownership, operation, and maintenance of such works and systems by others. No such works or systems, except waterworks, shall be acquired or erected by a municipality until the question of acquiring or erecting the same is submitted at a regular or special election and approved in the manner provided for authorization of bonded indebtedness by section 31-15-302 (1)(d) and in accordance with the requirements of law, including requirements of law relating to the acquisition and financing of public utilities by municipalities. The question of acquiring or erecting a waterworks need not be so submitted and approved at an election. (a) (I) To acquire waterworks, gasworks, and gas distribution systems for the distribution of gas of any kind or electric light and power works and distribution systems, or heating and cooling works and distribution systems for the distribution of heat and cooling obtained from geothermal resources, solar or wind energy, hydroelectric or renewable biomass resources, including waste and cogenerated heat, and all appurtenances necessary to any of said works or systems or to authorize the erection, ownership, operation, and maintenance of such works and systems by others. No such works or systems, except waterworks, shall be acquired or erected by a municipality until the question of acquiring or erecting the same is submitted at a regular or special election and approved in the manner provided for authorization of bonded indebtedness by section 31-15-302 (1)(d) and in accordance with the requirements of law, including requirements of law relating to the acquisition and financing of public utilities by municipalities. The question of acquiring or erecting a waterworks need not be so submitted and approved at an election.    All such works or systems authorized by any municipality to be erected by others or the franchise of which is extended or renewed shall be authorized, extended, or renewed upon the express condition that such municipality has the right and power to purchase or condemn any such works or systems at their fair market value at the time of purchasing or condemning such works or systems, excluding all value of the franchise or right-of-way through the streets and also excluding any value by virtue of any contract for hydrant or private rental or otherwise entered into with the municipality in excess of the fair market value of the works or systems. If, after an election conducted in the manner prescribed in section 31-15-302 (1)(d), the municipality is authorized to acquire any of said works or systems after granting a franchise therefor to any person, the municipality shall purchase or condemn such works or systems within the municipal limits then utilized in serving the inhabitants of such municipality at their fair market value. Nothing in this subparagraph (II) shall require such municipality to purchase or condemn all or any part of such works or systems which is obsolete or which has outworn its usefulness.    If the municipality elects to purchase such works or systems and if the parties in interest cannot agree on the purchase price, they shall enter into a written agreement to arbitrate the matter and to abide by the award of the arbitrators, in which event each party shall choose an arbitrator to determine their fair market value. If the two arbitrators cannot agree on the fair market value, they shall choose a third disinterested arbitrator, and the award of any two arbitrators shall be final and binding upon the parties.    Nothing in this paragraph (a) shall authorize the condemnation or purchase of any such works or systems within twenty years after the granting of any franchise therefor, except at periods of ten or fifteen years thereafter, without the consent of the owner of the franchise.       To construct or authorize the construction of such waterworks without their limits and, for the purpose of maintaining and protecting the same from injury and the water from pollution, their jurisdiction shall extend over the territory occupied by such works and all reservoirs, streams, trenches, pipes, and drains used in and necessary for the construction, maintenance, and operation of the same and over the stream or source from which the water is taken for five miles above the point from which it is taken and to enact all ordinances and regulations necessary to carry the power conferred in this paragraph (b) into effect;    To make such grant to inure for a term of not more than twenty-five years when the right to build and operate such water, gas, heating and cooling, or electric light works is granted to a person by said municipality and to authorize such person to charge and collect from each person supplied by them with water, gas, heat, cooling, or electric light such water, gas, heat, cooling, or electric light rent as may be agreed upon between the person building said works and said municipality; and to enter into a contract with the person constructing said works to supply said municipality with water for fire purposes and for such other purposes as may be necessary for the health and safety thereof and also with gas, heat, cooling, and electric light and to pay therefor such sums as may be agreed upon between said contracting parties;    To assess from time to time, when constructing such water, gas, heating and cooling, or electric light works and in such manner as it deems equitable, upon each tenement or other place supplied with water, gas, heat, cooling, or electric light, such water, gas, heat, cooling, or electric light rent as may be agreed upon by the governing body. Gas, heat, cooling, and electric light shall be charged for according to use. At the regular time for levying taxes in each year, said municipality is empowered to levy and cause to be collected, in addition to the other taxes authorized to be levied, a special tax on taxable property in said municipality. Such tax, with the water, gas, heat, cooling, or electric light rents hereby authorized, shall be sufficient to pay the expenses of running, repairing, and operating such works. If the right to build, maintain, and operate such works is granted to a person by a municipality and the municipality contracts with said person for the supplying of water, gas, heat, cooling, or electric light for any purpose, such municipality shall levy each year and cause to be collected a special tax, as provided for in this paragraph (d), sufficient to pay off such water, gas, heat, cooling, or electric light rents so agreed to be paid to said person constructing said works. The tax shall not exceed the sum of three mills on the dollar for any one year.    To condemn and appropriate so much private property as is necessary for the construction and operation of water, gas, heating and cooling, or electric light works in such manner as may be prescribed by law; and to condemn and appropriate any water, gas, heating and cooling, or electric light works not owned by such municipality in such manner as may be prescribed by law for the condemnation of real estate.         History. Source: L. 75: Entire title R&RE, p. 1115, § 1, effective July 1. L. 77: (1)(a)(I) amended, p. 1462, § 1, effective May 16. L. 81: (1)(a)(I) and (1)(c) to (1)(e) amended, p. 1455, § 3, effective May 27.    Editor's note:   This section is similar to former § 31-12-101 as it existed prior to 1975.   ANNOTATION   Analysis     I. GENERAL CONSIDERATION.    II. WATER, GAS, AND ELECTRIC WORKS.    III. FRANCHISES AND ASSESSMENTS.    IV. CONDEMNATION FOR UTILITIES.     I. GENERAL CONSIDERATION.   Law reviews. For article, “May Regulated Utilities Monopolize the Sun”, see 56 U. Denver L.J. 31 (1979). For article, “Utility Use of Renewable Resources: Legal and Economic Implications”, see 59 U. Den. L.J. 663 (1982). For article, “Quality Versus Quantity: The Continued Right to Appropriate -- Part I”, see 15 Colo. Law. 1035 (1986).   Annotator's note. Since § 31-15-707 is similar to former § 31-12-101 prior to the 1975 repeal and reenactment of this title, and laws antecedent thereto, relevant cases construing those provisions have been included in the annotations to this section.   Under subsection (1)(b), municipalities may either construct their own system of water works, or may grant a franchise therefor to a private company. Donahue v. Morgan, 24 Colo. 389 , 50 P. 1038 (1897).   Applied in Greene v. City of Loveland, 51 Colo. 593 , 119 P. 622 (1911); City of Colo. Springs v. Pikes Peak Hydro-Electric Co., 57 Colo. 169 , 140 P. 921 (1914); City of Thornton v. Pub. Utils. Comm'n, 157 Colo. 188 , 402 P.2d 194 (1965).   II. WATER, GAS, AND ELECTRIC WORKS.   Primary object of subsection (1)(a) is to permit the inhabitants of towns and cities to secure an adequate supply of pure water, a paramount necessity more important than all other public utilities and absolutely necessary for the sustenance of life, the preservation of health, and the protection of property. The general assembly desired to invest the people, who were themselves to bear the burdens of the expense, with every power necessary to supply this imperative want, but the general assembly itself could not determine and fix upon some one invariable mode or manner by which this supply was to be obtained, for the obvious reasons that too many conditions were to be considered; that what would be proper, necessary, and entirely satisfactory at one town would be entirely impracticable in another, and the inhabitants of one municipality might feel perfectly able to supply their own wants, while those of another might feel wholly unable to assume this burden. Thomas v. City of Grand Junction, 13 Colo. App. 80, 56 P. 665 (1899).   Scope of city council's powers. From subsections (1)(a) and (1)(b) and § 31-15-708 (1)(a) , it will be seen that the city council has had plenary authority to manage and control the water system and all the property of the city, and to distribute and apply its water not only to ordinary municipal uses, but to “irrigation and other purposes”. Pikes Peak Power Co. v. City of Colo. Springs, 105 F. 1 (8th Cir. 1900).   Discretionary power. Subsection (1)(a) was intended to vest, and does vest in the authorities of cities and towns, entire discretion as to the use of any and all of the means specified in the statute to supply the city or town with water, and the fact that a city or town has granted to a private party or corporation a franchise to construct waterworks to supply the city or town does not preclude the city or town from afterwards constructing waterworks of its own. Thomas v. City of Grand Junction, 13 Colo. App. 80, 56 P. 665 (1899).   Antitrust statute not violated. City ordinance requiring permit to construct or operate a natural gas pipeline within city was a foreseeable consequence of the power granted municipalities by this section to acquire gas distribution systems and was shielded from antitrust liability under the state action exemption. Sterling Beef Co. v. Ft. Morgan, 810 F.2d 961 (10th Cir. 1987).   The operation of an electric plant by a town is the performance of a municipal function specifically authorized by subsection (1)(a). Holyoke v. Smith, 75 Colo. 286 , 226 P. 158 (1924); Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926); Cook v. City of Delta, 100 Colo. 7 , 64 P.2d 1257 (1937).   Subsection (1)(a) expressly reserves the right of the city or town to condemn. Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926).   Although an ordinance granting the right to a private corporation to operate a lighting plant in the city by its terms fails to reserve the right to the city to purchase or condemn the plant, nevertheless, the provision of subsection (1)(a) to that effect will be read into and made a part of the ordinance. Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926).   Inapplicable to private plants. Subsection (1)(a) has no application to electric light plants erected by private parties for their own business purposes; it applies only to waterworks, gas works, and electric light works purchased or erected by cities, or build for cities, under contracts with them, by other parties. Pikes Peak Power Co. v. City of Colo. Springs, 105 F. 1 (8th Cir. 1910).   III. FRANCHISES AND ASSESSMENTS.   The words “as may be agreed upon” used in subsection (1)(d) refer to the authority contained in subsection (1)(c), which leaves the amounts to the unrestricted agreement of the parties, and the intention is to provide a method by which the city might discharge its obligation. Grand Junction Water Co. v. City of Grand Junction, 14 Colo. App. 424, 60 P. 196 (1900).   The power of a municipality to levy assessments depends on express provision of charter or statute and the extent to which the power may be exercised is to be determined by the proper construction of such provision. City of Delta v. Lamb, 55 Colo. 483 , 136 P. 77 (1913).   Reasonable exercise of power to limit compensation required. The general power of the legislative department to regulate the compensation of a corporation for performing public services, in the absence of a contract regulating it, is subject to the limitation that it must be reasonably exercised, and the reasonableness of the regulation is a proper subject of judicial inquiry; but where the corporation rendering the services and the municipality have mutually agreed upon a method for determining such compensation, and the latter has complied therewith, the former may not insist upon its constitutional rights and disregard the contract without showing the unreasonableness or nonenforceability thereof. Leadville Water Co. v. City of Leadville, 22 Colo. 297 , 45 P. 362 (1896).   Contract for higher fee valid. Under subsection (1)(c), authorizing cities and towns to contract with individuals or companies constructing waterworks, to supply said cities or towns with water and to pay therefor such sum as may be agreed upon between the contracting parties, and subsection (1)(d), providing that if such contract is made, such city or town shall levy each year and cause to be collected a special tax sufficient to pay off the amount agreed to be paid for such water supply, not to exceed three mills on the dollar for any one year, the amount that the city or town may contract to pay is not limited by the limit placed on the amount of special tax that may be levied and collected, and a city or town may contract to pay more than the three-mill levy will cover and pay the deficiency from its general revenue. The failure of a city or town to collect for any one or more years a sufficient sum to discharge its obligation for water rents could not extinguish its liability on the contract. Grand Junction Water Co. v. City of Grand Junction, 14 Colo. App. 424, 60 P. 196 (1900).   Amount of levy to pay back rents. Under subsection (1)(d), where a city is indebted to a water company for back rents and no levy has been made for several years to meet such rents, the city may levy a tax to pay such rents in excess of 3 mills provided the levy is not in excess of 3 mills for each year for which no levy was made. Bowen v. West, 10 Colo. App. 322, 50 P. 1085 (1897).   Statute of limitations. If an ordinance of a city whereby a water company was permitted to lay water mains on condition that the citizens of the city be permitted to make connections with the mains for domestic supply of water at the prevailing scheduled rates in another city created a perpetual term and was a municipal franchise agreement, the city was foreclosed by virtue of subsection (1)(c) from asserting its rights, more than 25 years after the passage of the ordinance, against the other city, successor to the properties of the water company. City of Englewood v. City & County of Denver, 123 Colo. 290 , 229 P.2d 667 (1951).   IV. CONDEMNATION FOR UTILITIES.   Subsection (1)(e) is not unconstitutional by reason of the title of the act being defective, and it applies to plants acquired before, as well as after, its passage. Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926).   It is the province of the town authorities to determine what property shall be taken and condemned upon which to construct a plant to operate a waterworks system belonging to the town. Lavelle v. Town of Julesburg, 49 Colo. 290 , 112 P. 774 (1910); Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926).   Discretionary power conclusive. Under subsection (1)(e) the exercise of discretionary power and judgment of municipal officers, when acting within the scope of their authority, is conclusive unless it clearly appears their action was fraudulent or unreasonable. Lavelle v. Town of Julesburg, 49 Colo. 290 , 112 P. 774 (1910); Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926).   A municipality may condemn for public use private property which lies outside of the city limits. Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926); Colo. Cent. Power Co. v. City of Englewood, 89 F.2d 233 (10th Cir. 1937).   Applicable to private property. There is no authority extended to the city, in either subsection (1)(d) or § 38-1-102 , to condemn property dedicated to public use. Both statutes relate to private property, and the authority given under subsection (1)(d) to cities and towns for condemnation for private property is regulated by the laws prescribed for the condemnation for real estate, which is clearly and unmistakably set out in § 38-1-102 . Beth Medrosh Hagodol v. City of Aurora, 126 Colo. 267 , 248 P.2d 732 (1952).   Take only necessities and reimburse. Where a city, for public purposes, condemns a lighting plant of a private corporation, it has to take only such portions of the system as its necessities required, reimbursing the corporation for damages to the residue. Pub. Serv. Co. v. City of Loveland, 79 Colo. 216 , 245 P. 493 (1926).   The compensation for land taken under subsection (1)(e) is to be paid by the town. Lavelle v. Town of Julesburg, 49 Colo. 290 , 112 P. 774 (1910).