Opinion ID: 2455113
Heading Depth: 1
Heading Rank: 9

Heading: Whether the District's proposed general obligation bond issue for the purpose of improving and expanding the District's existing water system violates the District's statutory indebtedness limitation?

Text: [¶ 45] This issue arises out of the wording of § 41-10-127, with the emphasized language shown below being the focal point of the controversy: The aggregate amount of bonds or other evidences of indebtedness shall not exceed six percent (6%) of the assessed value of the taxable property within the district as shown by the last preceding general assessment; provided, however, that in determining the amount of indebtedness, there shall not be included within the computation, bonds or other evidences of indebtedness outstanding or authorized to be issued for supplying water to the district, short-term notes, special assessment securities, or securities payable solely from the net revenues of an income-producing system or other project. (Emphasis added.) [¶ 46] Mountain Cement takes the position that the proposed general obligation bond issue should not be excluded from the indebtedness computation under this statute because the underlying project will not supply water to the district, but will make improvements to the District's existing system. Mountain Cement relies heavily in its argument upon the wording of Wyo. Stat. Ann. § 15-7-109 (LexisNexis 2009), which provides an indebtedness limitation for cities and towns: No debt in excess of the taxes for the current year may be created by any city or town, except local improvements as provided by law, unless the proposition to create the debt is approved by a vote of the people. No city or town may create any indebtedness exceeding four percent (4%) of the assessed valuation of the taxable property except an additional indebtedness not exceeding four percent (4%) of the assessed valuation of the property may be created to build and construct sewerage systems. This limitation does not apply to the construction, establishing, extending and maintaining of water works and supplying water for the use of the city or town and its inhabitants. (Emphasis added.) Mountain Cement argues that the legislature clearly distinguishes between constructing, establishing, extending and maintaining water systems and supplying water, and that, therefore, use only of the phrase supplying water in § 41-10-127 evidences legislative intent not to exempt from the indebtedness limitation for water and sewer districts indebtedness for projects that simply improve or extend an existing system. [¶ 47] The District counters Mountain Cement's contentions with three arguments. First, the District points out that, in regard to cities and towns, article 16, section 5 of the Wyoming Constitution provides only that [i]ndebtedness created for supplying water to cities or towns is excepted from the limitation herein. (Emphasis added.) Given that wording, the wording of § 15-7-109, construction, establishing, extending and maintaining of water works and supplying water can only be interpreted as being the equivalent; in other words, it means supplying water. Second, the District points out that in Diefenderfer v. State ex rel. First National Bank of Chicago, 13 Wyo. 387, 80 P. 667, 669 (1905), this Court cited the above constitutional limitation in a case involving bonds that had been issued for constructing, purchasing, and regulating a system of waterworks for the town, meaning that the term supplying water encompassed the broader concept. Third, the District calls the Court's attention to Wyo. Stat. Ann. § 41-10-149 (LexisNexis 2009), which expressly directs how the Water and Sewer District Law is meant to be construed in relation to the issuance of bonds: This act [§§ 41-10-101 through XX-XX-XXX], without reference to other statutes of the state, except as herein specifically provided, shall constitute full authority for the authorization and issuance of bonds hereunder. No other act or law with regard to the authorization or issuance of bonds that provides for an election, requires an approval, or in any way impedes or restricts the carrying out of the acts herein authorized to be done shall be construed as applying to any proceedings taken hereunder or acts done pursuant hereto, it being intended that this act shall provide a separate method of accomplishing its objectives, and not an exclusive one, and this act shall not be construed as repealing, amending or changing any such other act or law. (Emphasis added.) [¶ 48] In a fairly brief decision letter issued on July 8, 2010, the district court sided with the District in concluding that the District's proposed general obligation bond issue was exempt from the debt limitation found in § 41-10-127. First, the district court concluded that Mountain Cement's reliance upon the phraseology of § 15-7-109 was misplaced, given the legislature's directive in § 41-10-149 that the Water and Sewer District Act be construed without reference to other statutes of the state[.] In addition, the district court pointed out that, even if it were to consider § 15-7-109, the distinction supposedly made in that section between the construction, establishing, extending and maintaining of water works and supplying water is really not all that clear, given the language in Wyo. Stat. Ann. § 15-7-101(a)(ii) (LexisNexis 2009) empowering cities and towns to issue bonds whose purpose is to [e]stablish, construct, purchase, extend, maintain and regulate a system of water works, for the purpose of supplying water.... The district court's final analysis was as follows: The Court agrees with The District as to the plain meaning of Wyoming Statute § 41-10-127 and as to The District's analysis of Wyoming Statute § 15-7-109. Even more so, the Court finds it virtually impossible to interpret the phrase supplying water to the district in such [a] way as to exclude establish, construct, purchase, extend, maintain and regulate a system of water works, as Mountain Cement would have this Court do. The very purpose of a water district is to supply water to its district and removing its financial ability to establish, construct, purchase, extend, maintain or regulate a system of water works would effectively destroy the district's ability to fulfill its stated purpose. Despite Mountain Cement's concerns, all water and sewer districts are held accountable through elections and public hearings that serve the purpose of regulating the districts' actions and providing checks and balances in relation to the statutory powers bestowed upon the districts. The Court sees no reason to deliberately and awkwardly interpret the phrase supplying water to the district so as to prohibit The District from improving, bettering or extending its water supply. Such an approach is repugnant to the rules of statutory construction and, this Court believes, in violation of the Wyoming Legislature's intent. [¶ 49] Our de novo review of this question of law leads us to conclude that the district court should be affirmed. We do not find § 41-10-127 to be ambiguous. By including in the exception both bonds issued for supplying water and bonds issued for income-producing systems or other projects, the legislature clearly intended for the exception to be broad, so as to allow districts to fulfill their statutory purpose. Further, reading the statute in pari materia as part of the Water and Sewer District Law, we can see no logical reason for exempting from the debt limitation part, but not all, of the process of obtaining and providing water to a district. The supposed distinction between supplying water and establishing, constructing, purchasing, extending, maintaining and regulating a system of water works is artificial. One need look no further than the definitional section of the Water and Sewer District Law to reach this conclusion. In Wyo. Stat. Ann. § 41-10-101(a) (LexisNexis 2009), we find the following definitions: . . . . (ii) Water district shall mean any district organized to acquire any water project for the purpose of supplying water for domestic purposes by any available means, the treatment of such water, and its distribution, for which purposes the district shall have power to acquire water rights, treatment facilities and lines for a water system, and appurtenant facilities, within and without its corporate limits; . . . . (x) Project shall mean any structure, facility, undertaking or system which a district is authorized to acquire, improve, equip, maintain or operate .... (Emphasis added.) We conclude that, within the Water and Sewer District Law, the legislature did not intend to distinguish between the act of creating a system for the purpose of supplying water and the act of supplying water.