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Cherokee Village Water Association follows legal advice

Wednesday, October 19, 2011

Cherokee Village Alderman Jerry Adams (third from left) spoke to the Cherokee Village Water Association Board Oct. 12 about the franchise fee imposed by city council. General Manager Steve Rose and board members Bill Curzon, Bob Vittettau and Darrel Kehrli also helped answer questions during the meeting.
Cherokee Village Alderman Jerry Adams spoke at the Oct. 12 Cherokee Water Association board meeting regarding the department's refusal to collect the franchise fee imposed by the city council.

The council recently passed an ordinance to levy a franchise fee on water customers in Cherokee Village. To date, the department has not collected the fee.

Adams, along with Alderwoman Verna Mae Newman and other concerned citizens, met with the association to discuss the reasons the fee is not being collected.

Manager Steve Rose and board members William Curzon, Bob Vittettau and Darrel Kehrli were present for the meeting.

Rose explained to Adams that, under the advice of the association's attorney, they were told not to collect the fee, out of concern it would not stand up in the event the Water Association was sued for collecting the franchise fee.

Rose said, "I have used this attorney for years and he has never given me bad advice."

He went on to explain the association was governed as a facilities board, which is owned by the customers. Kehrli said, "You can not tax your own government."

The water association is governed by a board of directors who are appointed by the county judge.

Although the board is a government entity, members say they are not classified as a public utility. The group went on to explain to the council members and guests they would be glad to collect the fee had it been a tax it believes can legally be collected. Because of the question of the fee's legality, the association defers to the advice of its attorney.

The Cherokee Village Water Association sells tax exempt bonds for capital improvements.

Board members sympathized with the city's financial issues, which were the reason the ordinance to collect the new fees was passed.

Rose said, "We aren't against the city at all, but if we collect this, we will put ourselves in a position for legal issues." He expressed fear that the Cherokee Village Water Association could be responsible for paying the fees back to the users if a challenge to the fee was upheld.

Rose went on to say there are no cities within the state that collect franchise fees on water systems.

Adams quoted section 2.3 of the policies and goals of the Municipal League governing providing and franchising of services.

The section states. "Cities and towns should be allowed to exercise local discretion and to be free of unduly burdensome restrictive state or federal regulation, in the provision of local services. Those services include, but are not limited to, public safety, streets, water, wastewater treatment, parks, etc.. Further, when providing services or regulating various businesses or operations within their jurisdiction, cities and towns should be allowed local control to determine the need for, and the implementation of, exclusive or nonexclusive franchises, licenses, permits and other regulatory actions."

The franchise fee will be brought before council again at a future meeting, to discuss the city's options.

Councilman Adams thanked the board for their explanation saying, "Thank you for making things clearer."

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