HB 13

01-23 14:47  1st Sub. (Buff) H.B. 13
  Paul A. Cutler proposes the following substitute bill:
1Municipal Services Fees and Political Subdivision Lien Amendments
  2026 GENERAL SESSION
  STATE OF UTAH
  Chief Sponsor: Paul A. Cutler
  Senate Sponsor: Wayne A. Harper
2
3   LONG TITLE
4   General Description:
5This bill authorizes municipalities to place a political subdivision lien on property for
6   certain past due services and makes related amendments.
7   Highlighted Provisions:
8This bill:
9▸ defines terms and modifies definitions;
10▸ authorizes a municipality that sets a fee schedule by ordinance or resolution for water,
11   sewer, or utility-related services provided by the municipality, to bill a customer
12   receiving the water, sewer, or utility-related services;
13▸ authorizes a municipality to place a political subdivision lien on property for certain past
14   due service fees after providing notice of:
15●    the past due fees; and
16●    the municipality's intent to record a political subdivision lien if the past due fees
17   remain unpaid;
18▸ authorizes a municipality or special district to:
  1st Sub. H.B. 13
19●    charge interest on a past due fee; and
20●    charge and collect a one-time penalty on a past due fee as an administrative cost; and
21▸ makes technical and conforming changes.
22   Money Appropriated in this Bill:
23None
24   Other Special Clauses:
25None
26   Utah Code Sections Affected:
27   AMENDS:
2810-6-106, as last amended by Laws of Utah 2019, Chapter 136
1st Sub. (Buff) H.B. 13  01-23 14:47
2910-7-14, as last amended by Laws of Utah 2019, Chapter 99
3010-8-22, as last amended by Laws of Utah 2025, Chapter 102
3117B-1-902.1, as last amended by Laws of Utah 2023, Chapter 15
32   ENACTS:
3310-6-161, Utah Code Annotated 1953
3410-6-162, Utah Code Annotated 1953
35
36   Be it enacted by the Legislature of the state of Utah:
37Section 1. Section 10-6-106 is amended to read:
3810-6-106 . Definitions.
39      As used in this chapter:
40   (1) "Account group" is defined by generally accepted accounting principles as reflected in
41the Uniform Accounting Manual for Utah Cities.
42   (2) "Appropriation" means an allocation of money by the governing body for a specific
43purpose.
44   (3)(a) "Budget" means a plan of financial operations for a fiscal period which embodies
45estimates of proposed expenditures for given purposes and the proposed means of
46financing them.
47(b) "Budget" may refer to the budget of a particular fund for which a budget is required
48by law or it may refer collectively to the budgets for all such funds.
49   (4) "Budget officer" means:
50(a) the city auditor in a city of the first and second class[,] ;
51(b) the mayor or some person appointed by the mayor with the approval of the city
52council in a city of the third, fourth, or fifth class[,] ;
53(c) the mayor in the council-mayor optional form of government[,] ; or
54(d) the person designated by the charter in a charter city.
55   (5) "Budget period" means the fiscal period for which a budget is prepared.
56   (6) "Budgetary fund" means a fund for which a budget is required.
57   (7) "Check" means an order in a specific amount drawn upon a depository by an authorized
58officer of a city.
59   (8) "City general fund" means the general fund used by a city.
60   (9) "Current period" means the fiscal period in which a budget is prepared and adopted, i.e.,
61the fiscal period next preceding the budget period.
62   (10) "Department" means any functional unit within a fund that carries on a specific
  -2-
01-23 14:47  1st Sub. (Buff) H.B. 13
63activity, such as a fire or police department within a city general fund.
64   (11)(a) "Encumbrance system" means a method of budgetary control in which part of an
65appropriation is reserved to cover a specific expenditure by charging obligations,
66such as purchase orders, contracts, or salary commitments to an appropriation
67account at their time of origin.
68(b) [ Such obligations cease] An obligation described in Subsection (11)(a) ceases to be [
69encumbrances] an encumbrance when paid or when the actual liability is entered on
70the city's books of account.
71   (12) "Enterprise fund" means a fund as defined by the Governmental Accounting Standards
72Board that is used by a municipality to report an activity for which a fee is charged to
73users for goods or services.
74   (13) "Estimated revenue" means the amount of revenue estimated to be received from all
75sources during the budget period in each fund for which a budget is being prepared.
76   (14) "Financial officer" means the mayor in the council-mayor optional form of government
77or the city official as authorized by Section 10-6-158.
78   (15) "Fiscal period" means the annual or biennial period for accounting for fiscal operations
79in each city.
80   (16) "Fund" is as defined by generally accepted accounting principles as reflected in the
81Uniform Accounting Manual for Utah Cities.
82   (17) "Fund balance," "retained earnings," and "deficit" have the meanings commonly
83accorded such terms under generally accepted accounting principles as reflected in the
84Uniform Accounting Manual for Utah Cities.
85   (18) "General fund" is as defined by the Governmental Accounting Standards Board as
86reflected in the Uniform Accounting Manual for All Local Governments prepared by the
87Office of the Utah State Auditor.
88   (19) "Governing body" means a city council, or city commission, as the case may be, but
89the authority to make any appointment to any position created by this chapter is vested
90in the mayor in the council-mayor optional form of government.
91   (20) "Interfund loan" means a loan of cash from one fund to another, subject to future
92repayment.
93   (21) "Last completed fiscal period" means the fiscal period next preceding the current
94period.
95   (22) "Municipality" means a city or a town.
96   [(22)] (23)(a) "Public funds" means any money or payment collected or received by an
  -3-
 1st Sub. (Buff) H.B. 13  01-23 14:47
97officer or employee of the city acting in an official capacity and includes money or
98payment to the officer or employee for services or goods provided by the city, or the
99officer or employee while acting within the scope of employment or duty.
100(b) "Public funds" does not include money or payments collected or received by an
101officer or employee of a city for charitable purposes if the mayor or city council has
102consented to the officer's or employee's participation in soliciting contributions for a
103charity.
104[(23)]
105   (24) "Special fund" means any fund other than the city general fund.
106   [(24)] (25) "Utility" means a utility owned by a city, in whole or in part, that provides
107electricity, gas, water, or sewer, or any combination of [them] electricity, gas, water, or
108sewer.
109   (26) "Utility-adjacent service" means the maintenance, construction, and improvement of
110storm water infrastructure.
111   [(25)] (27) "Warrant" means an order drawn upon the city treasurer, in the absence of
112sufficient money in the city's depository, by an authorized officer of a city for the
113purpose of paying a specified amount out of the city treasury to the person named or to
114the bearer as money becomes available.
115Section 2. Section 10-6-161 is enacted to read:
11610-6-161 . Establishment of service fees -- Political subdivision lien for past due
117   service fees.
118   (1) As used in this section, "service" means a water utility service, sewer utility service, or a
119utility-adjacent service provided by a municipality, either directly or through a
120contracted third-party, to a customer in the municipality.
121   (2)(a) If a governing body of a municipality establishes by ordinance or resolution a fee
122schedule for a service, the municipality may charge a fee to a customer according to
123the fee schedule.
124(b) If a municipality contracts with a third-party to provide a service, the municipality
125may agree to:
126(i) pay the third-party directly for the contracted service; and
127(ii) collect the fees for the service from a customer either directly or through a
128third-party billing program.
129   (3)(a) A municipality, directly or through a contracted third-party, shall provide billing
130notices to a customer detailing:
  -4-
 01-23 14:47  1st Sub. (Buff) H.B. 13
131(i) the fees due for a service provided by the municipality or a third-party contracted
132by the municipality; and
133(ii) the due date for payment of the fees.
134(b) A municipality or third-party billing service may combine a service billing notice
135with another billing notice provided directly by the municipality or through a
136contracted third-party.
137   (4) A municipality may hold a political subdivision lien, as that term is defined in Section
13811-60-102, on a customer's property for a past due service fee authorized under this
139section by:
140(a) notifying the customer of the past due service fee;
141(b) subject to Subsections (5)(a) and (5)(b)(i), if the past due service fee remains unpaid,
142no earlier than 60 days after the day on which the customer is notified of the past due
143service fee, notifying the customer that the municipality intends to file a political
144subdivision lien on the customer's property to which the utility or utility-related
145service was provided if the past due service fee continues to remain unpaid; and
146(c) subject to Subsection (5)(b)(ii), if the past due service fee remains unpaid, no earlier
147than 10 days after the day on which the customer is notified that the municipality
148intends to file a political subdivision lien on the customer's property:
149(i) certifying to the county treasurer of the county in which the customer's property is
150located the amount of:
151(A) past due service fees; and
152(B) if applicable, subject to Section 10-6-162, interest and administrative costs;
153and
154(ii) recording the political subdivision lien with the county recorder of the county in
155which the customer's property is located.
156   (5)(a) Before notifying the customer that the municipality intends to file a political
157subdivision lien, as described in Subsection (4)(b), the municipality shall make
158reasonable efforts to determine whether the customer is a different person than the
159owner of record of the property where the customer receives service.
160(b) If the municipality determines the customer and owner of record are different, as
161described in Subsection (5)(a), the municipality shall:
162(i) provide the same notice to the owner of record as the notice the municipality
163provides to the customer under Subsection (4)(b) as described in Subsection (5)(c);
164and
  -5-
 1st Sub. (Buff) H.B. 13  01-23 14:47
165(ii) if the past due service fee remains unpaid, record the political subdivision lien as
166described in Subsection (4)(c) no earlier than 20 days after the day on which the
167customer and owner of record is notified that the municipality intends to file a
168political subdivision lien.
169(c) When providing notice to the owner of record under Subsection (5)(b)(i), the
170municipality shall:
171(i) use the current residential or business address of the real property owner;
172(ii) if the municipality is not reasonably able to obtain the address described in
173Subsection (5)(c)(i), use the last known address of the real property owner that the
174municipality is able to obtain via a reasonable inquiry into public records; or
175(iii) if the municipality is not reasonably able to obtain an address described in
176Subsection (5)(c)(i) or (ii), post the notice:
177(A) on the real property; and
178(B) on the municipality's website, if the municipality has a website, for at least 20
179consecutive days or until the past due service fee is paid, whichever occurs first.
180   (6) Upon certification and recording under Subsection (4)(c), the past due service fees, and
181interest and administrative costs if applicable, become a political subdivision lien on the
182customer's property, in accordance with Title 11, Chapter 60, Political Subdivision Lien
183Authority.
184   (7) Upon payment of the full amount owed under a political subdivision lien authorized by
185this section, the municipality shall file a release of the lien with the county recorder's
186office.
187Section 3. Section 10-6-162 is enacted to read:
18810-6-162 . Interest -- Collection of administrative costs.
189   (1)(a) A municipality may charge interest on a past due service fee authorized under
190Section 10-6-161.
191(b) If a municipality charges interest as described in Subsection (1)(a), the municipality
192shall calculate the interest rate in the same manner as a property tax lien described in
193Section 59-2-1331.
194   (2)(a) In pursuing payment on a past due service fee, in addition to interest authorized
195under Subsection (1), a municipality may also charge and collect a one-time penalty,
196not to exceed 8% for a past due service fee.
197(b) A municipality may not charge interest on the penalty described in Subsection (2)(a).
198Section 4. Section 10-7-14 is amended to read:
  -6-
 01-23 14:47  1st Sub. (Buff) H.B. 13
19910-7-14 . Rules and regulations for use of water.
200   (1) As used in this section:
201(a) "Designated water service area" means the area defined by a municipality in
202accordance with the Utah Constitution, Article XI, Section 6, Subsection (1)(c).
203(b) "Retail customer" means an end user:
204(i) who receives culinary water directly from a municipality's waterworks system; and
205(ii) whom the municipality described in Subsection (1)(b)(i) bills for water service.
206(c)(i) "Waterworks system" means municipally owned collection, treatment, storage,
207and distribution facilities for culinary or irrigation water, including any pipe,
208hydrant, or appurtenance to a pipe or hydrant.
209(ii) "Waterworks system" does not include a water right or a source of supply such as
210a well, spring, stream, or share in a mutual irrigation company.
211   (2) A municipality may enact ordinances, rules and regulations for the management and
212conduct of the waterworks system owned or controlled by it.
213   (3) A municipality that provides water to a retail customer outside of the municipality's
214boundary shall:
215(a) create and maintain a map showing:
216(i) the municipality's designated water service area; and
217(ii) each area outside the municipality's designated water service area where a retail
218customer receives water service from the municipality;
219(b) transmit a copy of the map described in Subsection (3)(a) to the state engineer;
220(c) if the municipality has more than 500 retail customers, post the map described in
221Subsection (3)(a) on the municipality's website;
222(d) define, by ordinance, the area included in the municipality's designated water service
223area;
224(e) adopt, by ordinance, any municipality rule or regulation applicable to the
225municipality's designated water service area or to a retail customer located outside of
226the municipality's designated water service area; and
227(f) adopt, by ordinance or resolution, reasonable water rates for retail customers in the
228municipality's designated water service area, in accordance with Section 10-8-22.
229   (4) Within the municipality's designated water service area, a municipality shall:
230(a) provide service to all retail customers in a manner consistent with principles of equal
231protection; and
232(b) apply restrictions on water use to all retail customers in times of anticipated or actual
  -7-
 1st Sub. (Buff) H.B. 13  01-23 14:47
233water shortages in a manner consistent with principles of equal protection.
234   (5) Nothing in this section:
235(a) prohibits a municipality from enacting a service restriction or other restriction:
236(i) affecting:
237(A) a localized area; or
238(B) the municipality's entire designated water service area; and
239(ii)(A) based on an operational or maintenance need;
240(B) based on an emergency situation; or
241(C) to address a health, safety, or general welfare need;
242(b) expands or diminishes the ability of a municipality to enter into a contract to supply
243water outside of the municipality's designated water service area; or
244(c) alters the authorities or definitions described in Title 19, Chapter 4, Safe Drinking
245Water Act.
246   (6) A municipality may not sell or convey an interest, in part or in whole, of the
247municipality's waterworks system, except to a public entity as defined in Section 73-1-4.
248Section 5. Section 10-8-22 is amended to read:
24910-8-22 . Water rates.
250   (1) As used in this section:
251(a) "Designated water service area" means the area defined by a municipality in
252accordance with the Utah Constitution, Article XI, Section 6, Subsection (1)(c).
253(b) "Large municipal drinking water system" means a municipally owned and operated
254drinking water system serving a population of 10,000 or more.
255(c) "Retail customer" means an end user:
256(i) who receives culinary water directly from a municipality's waterworks system; and
257(ii) whom the municipality described in Subsection (1)(c)(i) bills for water service.
258   (2) A municipality shall fix the rates to be paid for the use of water furnished by the
259municipality.
260   (3) The setting of municipal water rates is a legislative act.
261   (4) Within the municipality's designated water service area, a municipality shall:
262(a) establish, by ordinance or resolution, reasonable rates for the services provided to the
263municipality's retail customers;
264(b) use the same method of providing notice to all retail customers of proposed rate
265changes; and
266(c) allow all retail customers the same opportunity to appear and participate in a public
  -8-
 01-23 14:47  1st Sub. (Buff) H.B. 13
267meeting addressing water rates.
268   (5)(a) A municipality may establish different rates for different classifications of retail
269customers within the municipality's designated water service area, if the rates and
270classifications have a reasonable basis.
271(b) A reasonable basis for charging different rates for different classifications may
272include, among other things, a situation in which:
273(i) there is a difference in the cost of providing service to a particular classification;
274(ii) one classification bears more risk in relation to a system operation or obligation;
275(iii) retail customers in one classification invested or contributed to acquire a water
276source or supply or build or maintain a system differently than retail customers in
277another classification;
278(iv) the needs or conditions of one classification:
279(A) are distinguishable from the needs or conditions of another classification; and
280(B) based on economic, public policy, or other identifiable elements, support a
281different rate;
282(v) there is a differential between the classifications based on a cost of service
283standard or a generally accepted rate setting method, including a standard or
284method the American Water Works Association establishes; or
285(vi) water conservation is used as an element in determining the rate charged for a
286block unit of water as provided in Section 73-10-32.5.
287(c) An adjustment based solely on the fact that a particular classification of retail
288customers is located either inside or outside of the municipality's corporate boundary
289is not a reasonable basis.
290   (6)(a) If more than 10% of the retail customers within a large municipal drinking water
291system's designated water service area are located outside of the municipality's
292corporate boundary, the municipality shall:
293(i) post on the municipality's website the rates assessed to retail customers within the
294designated water service area; and
295(ii) establish an advisory board to make recommendations to the municipal legislative
296body regarding water rates, capital projects, and other water service standards.
297(b) In establishing an advisory board described in Subsection (6)(a)(ii), a municipality
298shall:
299(i) if more than 10% but no more than 30% of the municipality's retail customers
300receive service outside the municipality's municipal boundary, ensure that at least
  -9-
 1st Sub. (Buff) H.B. 13  01-23 14:47
30120% of the advisory board's members represent the municipality's retail customers
302receiving service outside the municipality's municipal boundary;
303(ii) if more than 30% of the municipality's retail customers receive service outside of
304the municipality's municipal boundary, ensure that at least 40% of the advisory
305board's members represent the municipality's retail customers receiving service
306outside of the municipality's municipal boundary; and
307(iii) in appointing board members who represent retail customers receiving service
308outside of the municipality's municipal boundary, as required in Subsections
309(6)(b)(i) and (ii), solicit recommendations from each municipality and county
310outside of the municipality's municipal boundary whose residents are retail
311customers within the municipality's designated water service area.
312   (7) A municipality that supplies water outside of the municipality's designated water service
313area shall supply the water only by contract and shall include in the contract the terms
314and conditions under which the contract can be terminated.
315   (8) A municipality shall:
316(a) notify the director of the Division of Drinking Water of a contract the municipality
317enters into with a person outside of the municipality's designated water service area,
318including the name and contact information of the person named in each contract; and
319(b) each year, provide to the director of the Division of Drinking Water any
320supplementing or new information regarding a contract described in Subsection (8)(a),
321including whether there is no new information to provide at that time.
322Section 6. Section 17B-1-902.1 is amended to read:
32317B-1-902.1 . Interest -- Collection of administrative costs.
324   (1)(a) A special district may charge interest on a past due fee or past due charge.
325(b) If a special district charges interest as described in Subsection [(1)(b)] (1)(a), the
326special district shall calculate the interest rate [for a calendar year:] in the same
327manner as a property tax lien described in Section 59-2-1331.
328[(i) based on the federal short-term rate determined by the secretary of the treasury
329under Section 6621, Internal Revenue Code, in effect for the preceding fourth
330calendar quarter; and]
331[(ii) as simple interest at the rate of eighteen percentage points above the federal
332short-term rate.]
333[(c) If a special district charges interest on a past due fee collected by the special district,
334regardless of whether the fee is certified, the special district may charge the interest
  - 10 -
 01-23 14:47  1st Sub. (Buff) H.B. 13
335monthly but may not compound the interest more frequently than annually.]
336   (2)(a) [A ] In pursuing payment on a past due fee or a past due charge, in addition to
337interest authorized under Subsection (1), a special district may also charge and collect [
338only one of the following:]
339[(i)] a one-time penalty[ charge] , not to exceed 8% for a [past-due] past due fee[; or]
340or past due charge, as an administrative cost.
341[(ii) an administrative cost for some or all of the following:]
342[(A) the collection cost of a past due fee or charge;]
343[(B) reasonable attorney fees actually incurred for collection and foreclosure costs,
344if applicable; and]
345[(C) any other cost.]
346(b) A special district may not charge interest on[ an administrative cost.] the
347administrative cost described in Subsection (2)(a).
348Section 7. Effective Date.
349   This bill takes effect on May 6, 2026.
  - 11 -