A.R.S. tit. 9 ch. 5 — Arizona Revised Statutes Title 9 Chapter 5 — Public Utilities

9-501. Grant of franchise A. A municipal corporation shall not grant a franchise for a public utility to be operated by the grantee unless authorized by a majority vote of the qualified voters of the municipal corporation at a regular election or at a special election duly and regularly called by the governing body of the municipal corporation for that purpose. B. A telecommunications corporation may apply for either a license or a franchise from a municipal corporation under section 9-583, and the municipal corporation shall not require a franchise for a public utility for its provision of telecommunications services as defined in section 9-581. 9-502. Petition for franchise; publication; estimate; election; term; expenditures A. A person desiring to obtain a franchise to operate a public utility from a municipal corporation shall present the franchise desired to the governing body of the municipal corporation, and it shall be filed among its records. B. If the governing body deems the granting of the franchise beneficial to the municipal corporation, it shall pass a resolution, to be spread on its record, stating that fact, and shall submit the question to the qualified electors as to whether or not the franchise shall be granted at the following regular election held in the municipal corporation or at a special election called for that purpose. C. The proposed franchise shall be published in full in some newspaper of general circulation published in the municipal corporation for at least thirty consecutive days before the election. D. The ballot shall include an estimate of any proposed fees or taxes that are not related to franchise work or franchise fees. E. If a majority of the votes cast is in favor of granting the franchise, the governing body shall grant the franchise only in the form filed and published. F. A franchise shall not be granted for a longer term than twenty-five years. G. An election held pursuant to this section shall be held on a date prescribed by section 16-204. H. A public utility that spends only its own monies or resources in support of its proposed franchise from a municipal corporation to operate a public utility is exempt from the requirements of title 16, chapter 6. 9-505. Definitions In this article, unless the context otherwise requires: 1. "Area of jurisdiction" means that part of a city or town, or that part of the unincorporated area of a county, or both when applied to a cable television system within parts of more than one jurisdiction, for which a license is issued. 2. "Cable operator" means a person that is issued a license by the licensing authority to construct, operate and maintain a cable television system in public streets, roads and alleys. 3. "Cable service" means the transmission to subscribers of video programming or other programming service and subscriber interaction, if any, that is required for the selection or use of the video programming or other programming service. 4. "Cable television system" means any facility consisting of a set of closed transmission paths and associated signal generation, reception and control equipment that is designed to provide cable service that includes video programming and that is provided to multiple subscribers within a community. Cable television system does not include: (a) A facility that serves fewer than fifty subscribers. (b) A facility that serves subscribers without using any public street, road or alley. (c) A facility that serves only to retransmit the television signals of one or more television broadcast stations. (d) A facility of a common carrier that is subject, in whole or in part, to 47 United States Code sections 201 through 276, except that the facility is considered a cable television system, other than for purposes of 47 United States Code section 541(c), to the extent the facility is used in the transmission of video programming directly to subscribers, unless the extent of the use is solely to provide interactive on-demand services. (e) An open video system that complies with 47 United States Code section 573. (f) A facility of an electric utility that is used solely for operating its electric utility system. 5. "Existing cable television system" means a cable television system in operation on April 1, 1974, a cable television system under construction on April 1, 1974 or a cable television system which had received authorization for construction as of April 1, 1974. 6. "Gross revenues" means all cash, credits, property of any kind or nature, or other consideration, less related bad debt not to exceed one and one-half per cent annually, that is received directly or indirectly by the cable operator, its affiliates, subsidiaries or parent or any person, firm or corporation in which the cable operator has a financial interest or that has a financial interest in the cable operator and that is derived from the cable operator’s operation of its cable system to provide cable service in the area of jurisdiction. Gross revenues include all revenue from charges for cable service to subscribers and all charges for installation, removal, connection or reinstatement of equipment necessary for a subscriber to receive cable service, and any other receipts from subscribers derived from operating the cable system to provide cable service, including receipts from forfeited deposits, sale or rental of equipment to provide cable service, late charges, interest and sale of program guides. Gross revenues also include all income the cable operator receives from the lease of its facilities located in the public streets, roads and alleys, unless services that the lessee provides over the leased facilities are subject to a transaction privilege tax of the licensing authority. Gross revenues do not include revenues from commercial advertising on the cable system, the use or lease of studio facilities of the cable system, the use or lease of leased access channels or bandwidth, the production of video programming by the cable operator, the sale, exchange, use or cablecast of any programming by the cable operator in the area of jurisdiction, sales to the cable operator’s subscribers by programmers of home shopping services, reimbursements paid by programmers for launch fees or marketing expense, license fees, taxes or other fees or charges that the cable operator collects and pays to any governmental authority, any increase in the value of any stock, security or asset, or any dividends or other distributions made in respect of any stock or securities. 7. "Intergovernmental contract" means the joint exercise of powers authorized by title 11, chapter 7, article 3. 8. "License" means that ordinance or resolution which contains the right, authority or grant, given by a licensing authority enabling a person to construct, operate and maintain a cable television system. 9. "Licensing authority" means the board of supervisors of a county or the governing body of an incorporated city, including a charter city, or town. 10. "Other programming service" means information that a cable operator makes available to all subscribers generally. 11. "Video programming" means programming that is provided by, or generally comparable to programming provided by, a broadcast television station. 9-506. Authority to issue license; limitations; permits for Wi-Fi radio equipment; definitions A. For the purpose of authorizing and regulating the construction, operation and maintenance of cable television systems, the licensing authority of a city, including a charter city, or town for an incorporated area, or the licensing authority of the county for unincorporated areas, either individually or jointly by intergovernmental contract, may issue a license to any person to use public streets, roads and alleys and shall impose conditions, restrictions and limitations on the use of public streets, roads and alleys and on the construction, operation and maintenance of cable television systems. B. Subject to the limitations of this section, a licensing authority may adopt resolutions or ordinances implementing and controlling the license or joint license, issue a license containing other terms and conditions and impose a license fee on gross revenues. In addition to the limitations of this section, the license is subject to the limits established by the communications act of 1934, as amended (47 United States Code sections 151 through 615b) and the federal communications commission. C. Other than the license fee on gross revenues authorized by this article and transaction privilege taxes as provided in this subsection, a licensing authority may not levy a tax, rent, fee or charge, however denominated, on a cable operator for the use of the public streets, roads or alleys to provide cable service or levy a tax, fee or charge on the privilege of engaging in the business of providing cable service in the area of jurisdiction. Taxes, rents, fees and charges include all: 1. Access channel support except for in-kind services or payments as provided in subsection D of this section. 2. Rental, application, construction, permit, inspection, inconvenience and other fees and charges related to a cable operator's use of the public streets, roads and alleys, including the use authorized by subsection I of this section. This subsection does not prohibit a licensing authority from levying fees and charges on a cable operator or its affiliates for microcell equipment pursuant to section 9-584 or for small wireless facilities pursuant to article 8 of this chapter or title 11, chapter 13, article 1 without an offset for license fees. In addition, the following apply: (a) Any transaction privilege taxes otherwise authorized by law to be levied on the business of providing cable service or in relation to use of the public streets, roads or alleys to provide cable service may be levied on a cable operator if the taxes are levied only on gross revenues and the rate of the taxes is subject to subdivision (c) of this paragraph. This subsection does not authorize the imposition of transaction privilege taxes on interstate telecommunications services. (b) The license fee and any transaction privilege taxes levied on gross revenues constitute a franchise fee within the meaning of 47 United States Code section 542(g)(1). (c) Under no circumstances may the total of the rates of the license fee and of any transaction privilege taxes on gross revenues levied or assessed by a licensing authority for the privilege of providing cable service and related use of the public streets, roads or alleys to provide cable service exceed a rate of five percent, except during the transition period for certain licenses as provided in subsection H of this section. (d) A cable operator shall pass on to subscribers any reduction in the amount of fees, taxes or other charges paid by a cable operator and itemized to subscribers that results from the implementation of the amendment to this section effective on September 21, 2006. D. A licensing authority may not require a cable operator to provide in-kind services, make in-kind payments or pay a fee in addition to the monetary license fee levied or assessed as provided in this section as part of or as a condition of issuing a license to provide cable service, except that: 1. A licensing authority may require a cable operator to provide channel capacity to transmit programming over which the cable operator exercises no editorial control except as authorized by 47 United States Code section 531(e). The channel capacity shall be limited to not more than two channels of public, educational or governmental access programming in the basic service tier of the cable television system and not more than two channels of noncommercial governmental programming, at least one of which may be programmed by the federal government, in the digital programming tier of the cable television system. If channel capacity is required, the programming shall be specified in the license and the cable operator may require that the channels regularly display an unobtrusive logo or other suitable identifier of the cable operator as set forth in the license. 2. A licensing authority may require a cable operator to incur costs and expenses to provide, maintain and operate facilities and equipment of the cable television system, including facilities and equipment for signal carriage, processing, reformatting and interconnection: (a) To connect the cable television system, as it may be relocated from time to time, to transmit programming to and from existing locations of public, educational or governmental access facilities and to allow monitoring of access programming at the facilities. (b) To transmit public, educational and governmental access channels to subscribers with the same prevailing quality, functionality and identification as other channels. 3. A licensing authority may require a cable operator to provide the basic service tier of cable service at no monthly service charge to offices and facilities of the licensing authority. 4. The value of any channel capacity provided pursuant to paragraph 1 of this subsection, the costs and expenses incurred pursuant to paragraph 2 of this subsection and the value of basic service provided pursuant to paragraph 3 of this subsection may not be offset against the license fee levied or assessed under this section. E. This section does not prohibit a cable operator from agreeing to provide in-kind services or make in-kind payments in the area of jurisdiction that are prohibited by subsection D of this section if the agreement with the licensing authority is not part of, or entered into as a condition of being issued, a new, renewed or amended license to provide cable service. An agreement that requires in-kind cable service or payments shall set forth the total annual fair market value of the in-kind cable service and payments, which shall be less than or equal to and offset against the license fee levied or assessed annually pursuant to this section. The license shall authorize the cable operator to retain license fees and taxes collected from its subscribers in the amount of this offset. In-kind cable services and payments include any channel capacity and all capital costs and charges for or in support of the use of any channel capacity that the cable operator agrees to provide under this subsection. F. Notwithstanding subsection C of this section, a licensing authority may require that a cable operator: 1. Bear reasonable costs that are associated with damage caused to public streets, roads and alleys by construction, maintenance and operation of its facilities in the public streets, roads and alleys and that are imposed on a competitively neutral and nondiscriminatory basis in relation to costs borne by telecommunications corporations under section 9-582, subsection C. 2. Pay fines, fees, charges or damages for breach of the terms and conditions of the license. G. This section does not affect the authority of a licensing authority to manage the public streets, roads and alleys within its boundaries or to exercise its police powers. H. A license that is in effect on September 21, 2006, including one that is later renewed or extended for a term that begins before July 1, 2007, is enforceable in accordance with its terms and conditions as of July 1, 2007 and is not subject to the provisions of the amendment to this section effective on September 21, 2006. If a license that is in effect on September 21, 2006 is later extended or renewed for a term that begins after June 30, 2007, the extended or renewed license is subject to the provisions of the amendment to this section effective on September 21, 2006 and the amendment to this section effective on September 19, 2007, effective on the first day of the renewal or extension term, unless the term begins before January 1, 2008, in which case the limitation in subsection C, paragraph 2, subdivision (c) of this section on the rates of the license fee and of any transaction privilege taxes on gross revenues is: 1. Five percent, if the gross effective rate is five percent or less. 2. If the gross effective rate is more than five percent, five percent plus the following percentage: (a) In the first year of the extension or renewal term, the gross effective rate minus five percent, multiplied by two-thirds. (b) In the second year of the term, the gross effective rate minus five percent, multiplied by one-third. (c) In the third year of the term, and thereafter, zero percent. I. On application a licensing authority shall issue to a cable operator or its affiliate a permit to attach allowed Wi-Fi radio equipment to the cable television system in public streets, roads and alleys in the area of jurisdiction. The permits shall allow installation, operation and maintenance of the allowed Wi-Fi radio equipment. A licensing authority may require that all of the allowed Wi-Fi radio equipment at a single location fit within a fifteen-inch cube and be contained entirely within a ground-mounted pedestal otherwise allowed by the license or be connected directly to and mounted at the same height as one of the cable operator's aerial horizontal conductors otherwise allowed by the license. J. Subsection I of this section does not: 1. Affect any authority of a political subdivision, including an agricultural improvement district or any other special taxing district, the licensing authority or any other person controlling utility poles in the public streets, roads and alleys to deny, limit, restrict or determine the terms and conditions for the use of or attachment to the utility poles or attachments to other poles of the political subdivision, licensing authority or other person by a cable operator. 2. Prohibit a licensing authority from imposing competitively neutral and nondiscriminatory requirements for a cable operator to underground aerial facilities to which allowed Wi-Fi equipment is attached. 3. Prohibit the imposition of a tax, rent, fee or charge on revenue from services provided through allowed Wi-Fi radio equipment. 4. Affect the authority of a licensing authority to manage the public streets, roads and alley within its boundaries or to exercise its police powers including review and approval of an application before issuing a permit. K. For the purposes of this section: 1. "Affiliate" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with a cable operator. 2. "Allowed Wi-Fi radio equipment" means radio equipment that uses only unlicensed radio spectrum and that enables wireless communication with a communications network for unlicensed services such as Wi-Fi service. 3. "Gross effective rate" means one hundred percent multiplied by the fraction in which the numerator is the sum of all taxes, fees and charges of the licensing authority that the cable operator itemized to subscribers and paid to the licensing authority under the license for the twelve calendar months immediately preceding September 21, 2006 and the denominator is the cable operator's gross revenues for that period in the area of jurisdiction. 9-507. Application for license; hearing; terms; conditions A. Any person desiring to obtain a license to construct, operate and maintain a cable television system from a licensing authority shall make application to such licensing authority in the form specified by the licensing authority and shall comply with requirements specified by the licensing authority. B. Prior to the issuance of a license, the licensing authority shall provide for the holding of a public hearing within the proposed service area, following reasonable notice to the public, at which every applicant and its proposals shall be examined and the public and all interested parties afforded a reasonable opportunity to be heard. Reasonable notice to the public shall include causing notice of the time and place of such hearing to be published in a newspaper of general circulation in the proposed service area once a week for two consecutive weeks. The first publication shall be not less than fourteen days before the day of such hearing. If there is no such newspaper in the proposed service area, then notice shall be posted in a conspicuous place in the city or town hall, if applicable, or other suitable location determined by the respective licensing authority for a period of not less than fourteen days before the day of such hearing. 9-508. License required before construction; provisions existing systems A. A new cable television system shall not be constructed within any incorporated city or town or within the unincorporated area of a county without a license therefor having first been issued pursuant to the provisions of this article. This subsection shall not apply to extensions of existing cable television systems wholly within the area of jurisdiction. B. Existing cable television systems with existing licenses for a fixed term of years shall be in compliance with this article for the term of such license. C. All other existing cable television systems with existing licenses not specifying a fixed term shall have a term expiring April 1, 1989, or upon the termination of the license by the licensing authority. D. Nothing in this section shall preclude a licensing authority from amending a license to bring the license into conformance with the applicable rules and regulations of the federal communications commission. E. A licensing authority may terminate a license according to its terms and conditions if a license holder is in default thereunder. 9-509. Municipal ownership A city or town shall not acquire an ownership interest in any commercial cable television system unless the ownership interest is acquired at not less than fair market value. 9-510. Control of programming A licensing authority shall not directly or indirectly control the content of any of the programming on a cable television system except those channels dedicated to government access. 9-511. Power to engage in business of public nature; outside water rates; right of eminent domain A. A municipal corporation may engage in any business or enterprise which may be engaged in by persons by virtue of a franchise from the municipal corporation, and may construct, purchase, acquire, own and maintain within or without its corporate limits any such business or enterprise. A municipal corporation may also purchase, acquire and own real property for sites and rights-of-way for public utility and public park purposes, and for the location thereon of waterworks, electric and gas plants, municipal quarantine stations, garbage reduction plants, electric lines for the transmission of electricity, pipelines for the transportation of oil, gas, water and sewage, and for plants for the manufacture of any material for public improvement purposes or public buildings. If a municipality provides water to another municipality, the rates it charges for the water to the public in the other municipality shall be one of the following: 1. The same or less than the rates it charges its own residents for water. 2. The same or less than the rates the other municipality charges its residents for water. 3. If the other municipality does not provide water, the average rates charged for water to the residents in the other municipality by private water companies. 4. Rates determined by a contract which is approved by both municipalities and in which such rates are justified by a cost of service study or by any other method agreed to by both municipalities. B. Nothing in this section shall affect a surcharge on water provided to another municipality adopted prior to July 1, 1986 provided that the surcharge did not exceed thirty per cent of the rates the municipality providing the water charges its own residents and except that any increase in the percentage of such surcharge proposed after August 13, 1986 shall be subject to the requirements of this section. C. The municipality may exercise the right of eminent domain either within or without its corporate limits for the purposes as stated in subsection A, and may establish, lay and operate a plant, electric line or pipeline upon any land or right-of-way taken thereunder, and may manufacture material for public improvement purposes and barter or exchange it for other material to be used in public improvements in the municipal corporation, or sell it to other municipal corporations for like purposes, and for any and all such purposes. 9-511.01. Water and wastewater business; rates; procedures; responsibility for payments A. A municipality engaging in a domestic water or wastewater business shall not increase any water or wastewater rate or rate component, fee or service charge without complying with the following: 1. Prepare a written report or supply data supporting the increased rate or rate component, fee or service charge. The report or supporting data shall include cash flow projections that indicate all anticipated revenues from residential and nonresidential customers and the overall expenses for providing water or wastewater service. A copy of the report and cash flow projections shall be made available to the public by filing a copy in the office of the clerk of the municipality governing board and posting the report and cash flow projections on the municipality's website or the website of an association of cities and towns if the municipality does not have a website at least thirty days before the public hearing described in paragraph 2 of this subsection. 2. Adopt a notice of intention by motion at a regular council meeting to increase water or wastewater rates or rate components, fees or service charges and set a date for a public hearing on the proposed increase that shall be held at least sixty days after adoption of the notice of intention. A copy of the notice of intention showing the date, time and place of the hearing shall be published one time in a newspaper of general circulation within the boundaries of the municipality not less than twenty days before the public hearing date. 3. For the portion of a water or wastewater fee that is adopted or increased after December 31, 2026 to fund capital improvements to water or wastewater facilities that serve new growth, adopt growth-related fees as prescribed by section 9-463.05. B. After holding the public hearing, the governing body may adopt, by ordinance or resolution, the proposed rate or rate component, fee or service charge increase or any lesser increase. C. Notwithstanding section 19-142, subsection B, the increased rate or rate component, fee or service charge shall become effective thirty days after adoption of the ordinance or resolution. D. Any proposed water or wastewater rate or rate component, fee or service charge adjustment or increase shall be just and reasonable. E. Rates and charges demanded or received by municipalities for water and wastewater service shall be just and reasonable. Every unjust or unreasonable rate or charge demanded or received by a municipality is prohibited and unlawful. F. A municipality may not assess or collect a fee on new water or wastewater service connections at the time of the establishment of service to those connections for the purpose of recovering the municipality's costs of acquiring, whether by purchase or by eminent domain, the utility plant, facilities, system or other property of a public service corporation or another municipality engaged in the business of providing water or wastewater service. This subsection does not apply to water or wastewater fees adopted before January 1, 2016 or to water or wastewater fees included in a notice of intent to adopt or increase water or wastewater rates and fees adopted before January 1, 2016. G. For residential property of four or fewer units, a municipality shall not require payment of unpaid water and wastewater service rates and charges by anyone other than the person who the municipality has contracted with to provide the service, who physically resides or resided at the property and who receives or received the service. A property owner, an immediate family member of the person who does not reside at the property or any other entity, at its sole discretion, may contract for water and wastewater service with a municipality and shall provide payment. H. For residential property of four or fewer units, a municipality shall not refuse service within the municipality's service area for the unpaid water and wastewater rates and charges to anyone other than the person who physically resided and received the service at the property. A property owner, at the owner's sole discretion, may contract for water and wastewater service with a municipality and shall provide payment for that service. 9-511.02. Utility user fees; lien enforcement; procedures; payment responsibility; definition A. A city or town may file a lien on property for the nonpayment of utility user fees for services provided to the property if the payment of the fees is delinquent for more than ninety days. B. Before filing the lien, the city or town shall provide written notice to the owner of the property. The notice shall be given at least thirty days before filing the lien and shall include an opportunity for a hearing with a designated city or town official. The notice shall be either personally served or mailed to the property owner, at the last known address by certified mail, or to the address to which the tax bill for the property was last mailed. If the owner does not reside on the property, the notice shall be sent to the last known address. C. The unpaid utility user fees, from the date of recording in the office of the county recorder in the county in which the property is located, are a lien on the property until the fees are paid. The lien is subject and inferior to the lien for general taxes and to all prior recorded mortgages and encumbrances of record. A sale of the property to satisfy a lien obtained under this section shall be made on judgment of foreclosure and order of sale. A city or town may bring an action to enforce the lien in the superior court in the county in which the property is located at any time after the recording, but failure to enforce the lien by this action does not affect its validity. The recorded unpaid utility user fees are prima facie evidence of the truth of all matters recited in the recording and of the regularity of all proceedings before the recording. D. Unpaid utility user fees pursuant to this section accrue interest at the rate prescribed by section 44-1201. E. A prior assessment of unpaid utility user fees for the purposes provided in this section does not bar a subsequent assessment for these purposes and any number of liens on the same lot or tract of land may be enforced in the same action. F. Subsection A of this section does not apply to residential property occupied by a lessee where the lessee is responsible for payment of the utility user fees. The city or town shall determine the status of leased residential property prior to filing the lien. G. For residential property of four or fewer units, a city or town may not require payment of unpaid utility user fees by anyone other than the person who has contracted with the city or town to provide the service, who physically resides or resided at the property and who receives or received the service. The property owner, an immediate family member of the person who does not reside at the property or any other entity, at their sole discretion, may establish service in their name for utility service with a city or town and shall be responsible for payment. H. For purposes of this section "utility user fees" means fees charged for the provision of sewer. 9-511.03. Outside waste or garbage collection, landfill services or recycling collection or processing services; requirements; exceptions A. If a city or town provides waste or garbage collection services, landfill services or recycling collection or processing services outside of its boundaries, for those services the city or town shall: 1. Keep all records of the services separate from all other city or town municipal records. 2. For land and equipment dedicated to providing services outside of its boundaries and for any net income generated from providing services outside its boundaries, make an in-lieu contribution to all state, city, town, county and other taxing districts equal to the taxes that would be required of private companies performing the same service. 3. For the portion of equipment or land used by a city or town to provide services outside its boundaries, make an in-lieu contribution to all state, city, town, county and other taxing districts equal to the taxes that would be required of private companies performing the same services, including any income tax obligation that would be incurred by a private company for services provided by the city or town outside of the city or town. 4. Pay an in-lieu contribution to the solid waste fee fund established by section 49-881 equal to the federal taxes that would be required of private companies performing the same service. 5. Pay all fees and costs that are applicable to private companies, including landfill fees. 6. Ensure that no city or town taxes, fees or revenues are used to subsidize those services outside the city or town. B. This section does not restrict the ability of a city or town to enter into mutual aid or intergovernmental agreements with other cities or towns to respond to requests for emergency assistance. C. This section does not apply to a city or town if all of the following apply: 1. The city or town provides waste or garbage collection services, landfill services or recycling collection or processing services outside its boundaries in an unincorporated territory that is within three miles of its boundaries and within its municipal planning area as designated in the land use map of the municipality's general plan. 2. The city or town does not provide waste or garbage collection services, landfill services or recycling collection or processing services in an incorporated area other than its own. 3. The city or town is located in a county with a population exceeding two million persons or the city or town has a population of less than two thousand five hundred persons and allows private enterprise to provide commercial and residential waste or garbage collection services, landfill services or recycling collection or processing services in the city or town. D. For a city or town that has entered into a contract or mutual aid, reciprocal assistance or intergovernmental agreement with another entity before January 1, 2015 for landfill services or recycling collection or processing services outside of its boundaries, this section does not apply until the contract or mutual aid, reciprocal assistance or intergovernmental agreement expires or terminates or January 1, 2020, whichever is earlier. E. This section does not apply to the disposal of noncommercial solid waste from a single-family residence brought to a municipal landfill by a private person who resides outside of the municipal boundaries. F. This section does not apply to a city or town with a population of less than five thousand persons and that only provides landfill services or recycling collection or processing services outside of its boundaries. 9-512. Issuance of bonds; service rates A. The municipal corporation, for any and all purposes provided in section 9-511, may issue and sell bonds bearing interest not to exceed nine per cent per annum. B. When the enterprise or public improvement has been purchased or constructed by means derived from the sale of bonds, the municipality shall fix the rates charged for service to the public as nearly as practicable so as to pay the interest and not less than three per cent per annum on the principal of the bonds, in excess of the expense of maintenance and operation. 9-513. Lease of privately owned utility A. When it is impracticable to issue bonds as provided by section 9-512 for an improvement or enterprise deemed necessary for the public welfare, the municipal corporation may lease at a stipulated rental a public improvement or utility. B. The rental contract shall reserve to the municipal corporation the option to purchase the improvement or utility in the future. 9-514. Authority to engage in utility business A. Except as provided in section 9-571, before construction, purchase, acquisition or lease by a municipal corporation, as authorized in sections 9-511, 9-511.01, 9-511.02, 9-512 and 9-513, of any plant or property or portion of plant or property devoted to the business of or services rendered by a public utility shall be undertaken, the construction, purchase, acquisition or lease shall be authorized by the affirmative vote of a majority of the qualified electors who are taxpayers of the municipal corporation voting at a general or special municipal election duly called and held for the purpose of voting on the question. B. This section does not apply to the construction, purchase, acquisition or lease of water or sewage system utilities by a city or town incorporated pursuant to section 9-101.02. 9-515. Purchase of existing utility plant and property; valuation; appeal A. When a municipal corporation and the residents thereof are being served under an existing franchise by a public utility, the municipal corporation, before constructing, purchasing, acquiring or leasing, in whole or in part, a plant or property engaged in the business of supplying services rendered by such public utility, shall first purchase and take over the property and plant of the public utility. B. The property and plant shall become the property of the municipal corporation upon payment by the municipal corporation of the fair valuation thereof within eighteen months after the determination of the valuation in the manner hereinafter provided. C. The fair valuation of the public utility shall be the equivalent of the compensation to be paid for the taking of private property for public use as provided by article 2, chapter 8 of title 12, and the amount shall be determined by one of the following methods: 1. By agreement between the municipal corporation and the public utility. 2. By arbitrators chosen in a manner agreed upon at the time by the municipal corporation and the public utility. 3. By a court of competent jurisdiction determining the compensation for the taking of private property for public use as provided by article 2, chapter 8 of title 12. D. The municipal corporation and the public utility shall have right of appeal as provided by article 2, chapter 8 of title 12. 9-516. Declaration of public policy; eminent domain A. It is declared as the public policy of the state that when adequate public utility service under authority of law is being rendered in an area, within or without the boundaries of a city or town, a competing service and installation shall not be authorized, instituted, made or carried on by a city or town unless or until that portion of the plant, system and business of the utility used and useful in rendering such service in the area in which the city or town seeks to serve, has been acquired. B. The city or town which seeks to acquire the facilities of a public service corporation shall have the right to do so under eminent domain. Such action shall be brought and prosecuted in the same manner as other civil actions. C. A city or town acquiring the facilities of a public service corporation rendering utility service without the boundaries of such city or town, or which renders utility service without its boundaries, shall not discontinue such service, once established, as long as such city or town owns or controls such utility. A city or town which renders utility service outside of its boundaries as prescribed by this subsection shall not be prohibited from selling a part of its utility operation to another utility which operates under regulations prescribed by law. D. It is declared the public policy of the state that when a city or town has purchased the property or plant of a public utility serving in an area within or without the boundaries of the city or town pursuant to this article, the corporation commission shall not be authorized or empowered to grant a new certificate of convenience and necessity or franchise to any person, firm or corporation to provide the same kind of public utility service within the area or territory previously authorized to said public utility under its certificate of convenience and necessity or franchise, but if the city or town refuses to provide utility service to a portion or part of the area or territory previously authorized to the public utility, the corporation commission may issue a new certificate of convenience and necessity or franchise to a public utility to provide utility service in that portion or part of the area or territory. 9-517. Exception to purchase requirement When a public utility operating under an existing franchise wilfully and persistently violates any provision of the franchise, the municipal corporation shall thereby be relieved from purchasing or taking over the property or plant of the public utility. 9-518. Compensation for taking public utility; procedure for determining A. Whenever the fair valuation of the plant and property of a public utility has not for any reason been determined by any other method provided by law, or where no other method is provided, the city or town may, subject to the provisions of this section, by the exercise of the right of eminent domain institute an action pursuant to article 2, chapter 8, of title 12, and the court or jury shall, in the manner hereinafter provided, ascertain and assess the compensation to be paid for the taking of the plant and property of the public utility. B. The court or jury shall ascertain the compensation to be paid for the taking of the plant and property of the public utility, which shall include the fair and equitable value of such plant and property, including its value as a going concern, and the actual and consequential damages, if any, sustained by the public utility by reason of the severance from the other plant and property of the public utility of the plant and property to be taken. Compensation and damages shall be fixed as of the date of the commencement of the trial at which such compensation and damages are finally determined. C. Any party of the action may appeal to the supreme court in the same manner as is provided for appeals in other civil actions by filing a notice of appeal with the superior court within thirty days from the entry of the judgment or order appealed from and posting a bond for costs. Any such appeal to the supreme court shall be preferred and shall be heard and determined in preference to other civil matters, except election actions, habeas corpus, quo warranto, mandamus, injunction and other extraordinary writs to state officers and inferior courts of which the supreme court has original jurisdiction. D. Within six months after the date when the judgment has become final following an appeal, or within six months after the expiration of the time allowed by this section for appeal if no appeal is taken, the city or town shall pay into court the amount fixed by the judgment for the use of the public utility and such other persons as the judgment may provide. The public utility and such other persons as the judgment may provide who are entitled to the money paid into court may demand and receive the money at any time after its deposit upon filing a satisfaction of the judgment or a receipt for the money. If the city or town fails or refuses to pay the amount of the judgment into court within such period of six months, the court shall vacate the judgment and enter judgment dismissing the complaint and taxing costs in favor of the defendants in the action, including in such event a reasonable allowance for engineering costs and expert witness fees. E. Within thirty days after the date when the judgment becomes final following an appeal, or within thirty days after the expiration of the time allowed for appeal if no appeal is taken, the public utility shall file with the court a report, verified under oath, of the amounts actually expended by it for additions, betterments, improvements and extensions which it has been required to make between the date of the commencement of trial and the date of such report, together with an estimated forecast of the amounts it will be required to make for the public convenience and necessity during the ensuing six months. Thereafter, and until the expiration of the time provided for the payment by the city or town of the amount of the judgment into court, the public utility shall every thirty days file with the court a verified supplemental report of the amounts it has actually expended for such purposes since the date of the initial report. Such reports may be considered by the court in determining the amount of the deposit to be made or bond to be posted by the city or town as provided by subsection F, and may be considered at the trial provided by subsection I but shall not be conclusive of the amount to be ascertained as the compensation to be paid by the city or town for such additions, betterments, improvements and extensions. F. Upon payment of the amount of the judgment into court within the time provided, the city or town shall make application to the court for an order permitting it to take possession of, and use and operate the plant and property of the public utility, including the additions, betterments, improvements and extensions for the public convenience and necessity which the public utility has been or will be required to make between the date of the commencement of the trial and the date of taking possession thereof by the city or town. Upon filing the application a time shall be fixed by the court for a hearing to determine the probable fair and equitable value of such additions, betterments, improvements and extensions, and written notice of such hearing shall be given to the public utility and other defendants, if any, at least ten days prior to the date fixed, by service of a copy of such notice in such manner as the court directs. On the day fixed for the hearing, the court shall determine the probable value of the additions, betterments, improvements and extensions which the public utility has been required to make since the date of the commencement of the trial, and shall direct that upon deposit of money, or the posting of a bond with good and sufficient sureties, in the amount so determined, the city or town shall be let into the possession and full use of the plant and property of the public utility described in the judgment, together with the additions, betterments, improvements and extensions made since the date of commencement of the trial. Upon deposit of the money or the posting of a bond in the required amount, the city or town may go into the possession and full use of the plant and property of the public utility, described in the judgment, together with the additions, betterments, improvements and extensions referred to in the order of the court. No appeal may be taken from an order of the court determining the amount of the deposit to be made or the bond to be posted by the city or town. G. The parties may stipulate as to the amount of the deposit or of the bond in lieu of the deposit; but such stipulation or evidence of such deposit or of the bond shall not be introduced in evidence or used to the prejudice of any party to the action. H. At the hearing to fix the probable value of the additions, betterments, improvements and extensions, the court shall direct the parties to file such supplemental pleadings as the court may deem necessary to set forth the claims of the public utility with respect to such value and the response of the city or town thereto, shall fix the time within which such pleadings should be filed, and shall set the matter for trial before the court or a jury for the purpose of ascertaining the compensation to be paid for the additions, betterments, improvements and extensions required to be made by the public utility between the date of commencement of the trial and the date the city or town is let into possession of the public utility's plant and property. I. The court or jury shall ascertain the compensation to be paid for additions, betterments, improvements and extensions, which shall be the fair and equitable value thereof as of the date the city or town took possession of the public utility plant and property, and the amount so determined shall draw interest at the legal rate from such date. In fixing such value such additions, betterments, improvements and extensions shall not be considered or treated as being severed from the plant and property included in the judgment theretofore entered. Such additions, betterments, improvements or extensions shall be deemed to have been made for the public convenience and necessity, if such additions, betterments, improvements or extensions are found by the court to have been reasonably necessary and prudently made as incidental capital expense in the ordinary and usual conduct of a public utility business, or if the additions, betterments, improvements or extensions were ordered to be made by the corporation commission. Upon such value being determined a supplemental judgment shall be entered therefor, from which any party to the action may appeal to the supreme court in the same manner and within the same time as is provided for appeals from the judgment in the action, except that any asserted grounds for appeal shall be limited to those arising in the proceeding to fix the compensation to be paid for the betterments, additions, improvements and extensions. J. Within ninety days after the date said supplemental judgment has become final following an appeal, or within ninety days after the expiration of the time allowed for appeal if no appeal is taken, the city or town shall pay into court all amounts fixed by the supplemental judgment for the use of the public utility and such other persons as the supplemental judgment shall provide, less any amount theretofore deposited with the court if such amount be less than the supplemental judgment. If the city or town shall have posted a bond, all amounts provided by the supplemental judgment shall be paid into court and the bond exonerated. The public utility and such other persons as the supplemental judgment may provide may demand and receive from the money deposited the amount of the supplemental judgment with interest and costs, if any. K. If the complaint of the city or town is dismissed as provided by subsection D, no action in court to acquire or take the same plant and property of the public utility, or any portion thereof, shall be instituted by the city or town within three years after such dismissal. L. All proceedings and trials provided by this section shall be preferred and shall be heard and determined in preference to other civil matters, except election actions. M. The provisions of this section for ascertaining and assessing compensation for the taking of the plant and property of a public utility and the obtaining of possession and use of such property by a city or town are intended to be remedial. 9-519. Common carriers; duplication of service prohibited When territory within or without the corporate limits of a municipal corporation is being adequately served by a common carrier of passengers under authority of law, the municipal corporation shall not engage in business as a common carrier of passengers over the route or routes or within the territory being served by the common carrier. 9-521. Definitions In this article, unless the context otherwise requires: 1. "Bond" means any bond issued pursuant to this article, including any tax secured bond. 2. "Governing body" means the board, commission or other body having charge of the financial affairs of a municipality. 3. "Municipality" means any incorporated city or town. 4. "Tax secured bond" means any bond authorized and issued pursuant to both this article and title 35, chapter 3, article 3. 5. "Utility undertaking" means any one or combination of the following: (a) Electric light or power, water, storm water, sewer, gas, common carrier of passengers, garbage, or rubbish plant or system, including but not limited to disposal, treatment or reduction plants, buildings, incinerators, dams and reservoirs. (b) Airport buildings or other airport facilities or buildings or structures to provide off-street parking of motor vehicles, together with all parts thereof and appurtenances thereto. 9-521.01. Recreational facilities A. For the purposes of this article only, the term "utility undertaking", in addition to the definition prescribed in section 9-521, shall mean recreational facilities. B. "Recreational facilities" means swimming pools, parks, playgrounds, municipal golf courses, and ball parks. C. Provisions of this section shall apply only to municipalities of seventy-five thousand or less. 9-522. Power to issue bonds A. In addition to its other powers, a municipality may: 1. Subject to the requirements and restrictions of sections 9-515 through 9-518, within or without its corporate limits, construct, improve, reconstruct, extend, operate, maintain and acquire, by gift, purchase or the exercise of the right of eminent domain, a utility undertaking or part thereof, and acquire in like manner land, rights in land or water rights in connection therewith. 2. Issue its bonds to finance the cost thereof. 3. Pledge to the punctual payment of the bonds and interest on such bonds an amount of the revenue of the utility undertaking, including improvements or extensions thereafter constructed or acquired, sufficient to pay the bonds and interest as they become due, and create and maintain reasonable reserves therefor. The amount pledged may consist of all or any part of such revenue. 4. With respect to tax secured bonds, pledge its full faith and credit to the payment of the bonds and interest on such bonds and if such pledge is made shall provide for the levy of a tax for the payment of the bonds pursuant to title 35, chapter 3, article 3. B. The governing body of the municipality, in determining the cost of the utility undertaking for which bonds are to be issued, may include all costs and estimated costs of issuance of the bonds, all engineering, inspection, fiscal and legal expenses allowed by law and interest which it is estimated will accrue on money borrowed or which will be borrowed during the construction period and for six months thereafter. 9-523. Bond election Questions on bond issues under this article shall be submitted to the qualified electors of the municipality. No bonds shall be issued without the assent of a majority of the qualified electors voting at an election held for that purpose as provided in this article. 9-524. Election order and call; publication; posting A. The governing body shall order and call an election upon the question of the issuance of bonds. The order and call shall state in substance: 1. The maximum amount of bonds to be issued. 2. The purpose for which the bonds are to be issued. 3. The maximum rate of interest which the bonds are to bear. 4. A brief concise statement, which need not include any detail other than the mere statement of the fact, showing that the bonds will be payable solely from revenues unless the bonds are to be tax secured bonds in which case the order and call shall state in substance that the bonds shall be payable from revenues and shall additionally be payable from taxes levied upon all taxable property in the municipality. 5. The date on which the election is to be held as prescribed by section 16-204, subsection B, paragraph 1, subdivision (d). 6. The places where votes may be cast. 7. The hours between which polling places will be open. B. The order and call of election shall be published in full at least once, not less than fifteen nor more than thirty days prior to the date of the election, in a newspaper published in the county and of general circulation in the municipality. If there is no such newspaper, the order and call shall be printed in full and posted in five conspicuous places in the municipality not less than fifteen nor more than thirty days prior to the date of the election. C. If the bonds are to be tax secured bonds, the order and call of election shall state, in addition to the requirements of subsection A of this section, the matters required by title 35, chapter 3, article 3 and shall be posted and published as required by that article rather than as provided in subsection B of this section. 9-525. Registration of voters The governing body may require the registration of all persons desiring to vote at the election, in which case the election resolution shall state the dates, times and places when and where such persons may register. Registration shall begin not less than ten and shall close not less than five days prior to the date of the election. 9-526. Form of ballot At the election the ballot shall contain the phrases "for the bonds" and "against the bonds." To the right of and opposite each phrase shall be placed a square approximately the size of squares placed opposite the names of candidates on ballots. The voter shall indicate his vote "for the bonds" or "against the bonds" by inserting the mark "x" in the square opposite such phrase. No other question, word or figure need be printed on the ballot. The ballot need not be any particular size, nor need sample ballots be printed, posted or distributed. A number of ballots, exceeding by not less than ten per cent the number of registered voters whose names appear on the precinct register of the precinct, town or city for which printed, shall be printed and furnished each polling place. 9-527. Canvass of votes A. The governing body shall canvass the returns and declare the result of the election. If it appears to the governing body that a majority of the qualified electors voting thereon assent to issuance of the bonds, the governing body shall provide for their issuance. B. The determination of the governing body that a majority of the qualified electors voting thereon have assented to issuance of the bonds shall be conclusive in any action or proceeding involving the validity of the election or determination or declaration of the result thereof instituted after the date of delivery of and payment for the bonds. 9-528. Application of election laws Except as otherwise provided in this article, the manner of conducting the registration and election, keeping the poll lists, making the returns, declaring the results and doing all acts relating to the election shall conform to the procedure provided by law for the registration and qualification of electors and holding elections wherein the question of issuance of bonds of municipal corporations is submitted to an election. 9-529. Form of bonds; payment and call; interest; sale; bids; interim receipts; rates and procedures; definition A. Bonds issued under this article shall be fully negotiable within the meaning and for all purposes of title 47. They may be in one or more series, may bear dates, may be payable in a medium of payment, at places, may carry registration privileges, shall be executed in a manner, may contain other terms, covenants a