Ind. Code ch. 8-1.5-2

Ind. Code ch. 8-1.5-2
in effect

Ind. Code § 8-1.5-2-1 Application of chapter; exception

Sec. 1. This chapter applies to all municipalities except consolidated cities. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-2 Application of chapter; additional exceptions

Sec. 2. (a) This chapter does not apply to utilities governed by: (1) IC 8-1-13; or (2) IC 8-1-2 except for a municipally owned electric, natural gas, water, wastewater, or combined water and wastewater utility. (b) The law relating to acquisition of electric utility property and to electricity suppliers' service area assignments shall be governed by IC 8-1-2.3 and IC 8-1-2-95.1, and nothing in this chapter modifies or abridges those provisions. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.68-2015, SEC.1; P.L.120-2021, SEC.3; P.L.34-2024, SEC.3.

Ind. Code § 8-1.5-2-3 Disposition, construction, and acquisition of utilities; lease and operation of waterworks facilities

Sec. 3. (a) Subject to restrictions imposed by a bond ordinance, resolution, indenture, contract under IC 8-1-2.2, or similar instrument binding upon it, a municipality may sell or otherwise dispose of any of its municipally owned utilities under this chapter. (b) A municipality may own, lease, acquire, or construct a utility within the corporate boundaries of the municipality, and within a radius of six (6) miles from those boundaries or any place within the county in which the municipality is located, under this chapter without the consent of any agency other than the municipal legislative body. Waterworks facilities may be leased from a public utility and operated in conjunction with its municipal waterworks, whether or not the leased facilities are located within the corporate boundaries of the municipality, if the area served by the leased facilities outside those boundaries is contiguous to, or within one (1) mile of, those boundaries. For purposes of IC 36-4-3, a municipality that leases and operates waterworks serving such an area is considered to be furnishing water service to the area. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-4 Sale of nonsurplus property; writing providing for appraisal; sufficiency of written contracts with appraisers

Sec. 4. Whenever the municipal legislative body or the municipal executive determines to sell or otherwise dispose of nonsurplus municipally owned utility property, it shall provide for the following in a writing that shall be made available, upon request, for inspection and copying at the offices of the municipality's municipally owned utility in accordance with IC 5-14-3: (1) The appointment, as follows, of three (3) residents of Indiana to serve as appraisers: (A) One (1) disinterested person who is an engineer licensed under IC 25-31-1. (B) One (1) disinterested appraiser licensed under IC 25-34.1. (C) One disinterested person who is either: (i) an engineer licensed under IC 25-31-1; or (ii) an appraiser licensed under IC 25-34.1. (2) The appraisal of the property. (3) The time that the appraisal is due. It is sufficient for purposes of this section that the municipal legislative body or municipal executive provides for the appointment in written contracts with the appraisers or the firms with whom the appraisers are employed. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.113-2006, SEC.2; P.L.103-2008, SEC.2; P.L.68-2015, SEC.2; P.L.98-2016, SEC.7; P.L.229-2019, SEC.7.

Ind. Code § 8-1.5-2-5 Sale of nonsurplus property; appraiser qualifications; public hearing; ordinance for sale; effective date; petitions opposing sale; submission to voters; ordinances adopted after March 28, 2016

Sec. 5. (a) Each appraiser appointed as provided by section 4 of this chapter must: (1) by education and experience, have such expert and technical knowledge and qualifications as to make a proper appraisal and valuation of the property of the type and nature involved in the sale; (2) be a disinterested person; and (3) not be a resident or taxpayer of the municipality. (b) The appraisers shall: (1) be sworn to make a just and true valuation of the property; and (2) return their appraisal, in writing, to the: (A) municipal legislative body; or (B) municipal executive; that appointed them within the time fixed in the writing appointing them under section 4 of this chapter. (c) If all three (3) appraisers cannot agree as to the appraised value, the appraisal, when signed by two (2) of the appraisers, constitutes a good and valid appraisal. (d) If, after the return of the appraisal by the appraisers, the legislative body and the municipal executive decide to proceed with the sale or disposition of the nonsurplus municipally owned utility property, the legislative body shall, not earlier than the thirty (30) day period described in subsection (e) and not later than one hundred eighty (180) days after the return of the appraisal, hold a public hearing to do the following: (1) Review and explain the appraisal. (2) Receive public comment on the proposed sale or disposition of the nonsurplus municipally owned utility property. Not less than thirty (30) days or more than sixty (60) days after the date of a hearing under this section, the legislative body may adopt an ordinance providing for the sale or disposition of the nonsurplus municipally owned utility property, subject to subsections (f) and (g) and, in the case of an ordinance adopted under this subsection after March 28, 2016, subject to section 6.1 of this chapter. The legislative body is not required to adopt an ordinance providing for the sale or disposition of the nonsurplus municipally owned utility property if, after the hearing, the legislative body determines it is not in the interest of the municipality to proceed with the sale or disposition. Notice of a hearing under this section shall be published in the manner prescribed by IC 5-3-1. (e) The hearing on the proposed sale or disposition of the nonsurplus municipally owned utility property may not be held less than thirty (30) days after notice of the hearing is given as required by subsection (d). (f) Subject to subsection (j), an ordinance adopted under subsection (d) does not take effect until the latest of the following: (1) The expiration of the thirty (30) day period described in subsection (g), if the question as to whether the sale or disposition should be made is not submitted to the voters of the municipality under subsection (g). (2) If: (A) the question as to whether the sale or disposition shall be made is submitted to the voters of the municipality under subsection (g); and (B) a majority of the voters voting on the question vote for the sale or disposition; at such time that the vote is determined to be final. (3) The effective date specified by the legislative body in the ordinance. (g) Subject to subsection (m) and to section 6.1 of this chapter in the case of an ordinance adopted under subsection (d) after March 28, 2016, if: (1) the legislative body adopts an ordinance under subsection (d); and (2) not later than thirty (30) days after the date the ordinance is adopted at least the number of the registered voters of the municipality set forth in subsection (h) sign and present a petition to the legislative body opposing the sale or disposition; the legislative body shall submit the question as to whether the sale or disposition shall be made to the voters of the municipality at a special or general election. In submitting the public question to the voters, the legislative body shall certify within the time set forth in IC 3-10-9-3, if applicable, the question to the county election board of the county containing the greatest percentage of population of the municipality. The county election board shall adopt a resolution setting forth the text of the public question and shall submit the question as to whether the sale or disposition shall be made to the voters of the municipality at a special or general election on a date specified by the municipal legislative body. Pending the results of an election under this subsection, the municipality may not take further action to sell or dispose of the property as provided in the ordinance. (h) Subject to subsection (m) and to section 6.1 of this chapter in the case of an ordinance adopted under subsection (d) after March 28, 2016, the number of signatures required on a petition opposing the sale or disposition under subsection (g) is as follows: (1) In a municipality with not more than one thousand (1,000) registered voters, thirty percent (30%) of the registered voters. (2) In a municipality with at least one thousand one (1,001) registered voters and not more than five thousand (5,000) registered voters, fifteen percent (15%) of the registered voters. (3) In a municipality with at least five thousand one (5,001) registered voters and not more than twenty-five thousand (25,000) registered voters, ten percent (10%) of the registered voters. (4) In a municipality with at least twenty-five thousand one (25,001) registered voters, five percent (5%) of the registered voters. (i) If a majority of the voters voting on the question vote for the sale or disposition, the legislative body shall proceed to sell or dispose of the property as provided in the ordinance, subject to subsection (m) and to section 6.1 of this chapter in the case of an ordinance adopted under subsection (d) after March 28, 2016. (j) If a majority of the voters voting on the question vote against the sale or disposition, the ordinance adopted under subsection (d) does not take effect and the sale or disposition may not be made, subject to subsection (m) and to section 6.1 of this chapter in the case of an ordinance adopted under subsection (d) after March 28, 2016. (k) If: (1) the legislative body adopts an ordinance under subsection (d); and (2) after the expiration of the thirty (30) day period described in subsection (g), a petition is not filed; the municipal legislative body may proceed to sell the property as provided in the ordinance, subject to subsection (m) and to section 6.1 of this chapter in the case of an ordinance adopted under subsection (d) after March 28, 2016. (l) Notwithstanding the procedures set forth in this section, if: (1) before July 1, 2015, a municipality adopts an ordinance under this section for the sale or disposition of nonsurplus municipally owned utility property in accordance with the procedures set forth in this section before its amendment on July 1, 2015; and (2) the ordinance adopted takes effect before July 1, 2015, in accordance with the procedures set forth in this section before its amendment on July 1, 2015; the ordinance is not subject to challenge under subsection (g) after June 30, 2015, regardless of whether the thirty (30) day period described in subsection (g) expires after June 30, 2015. An ordinance described in this subsection is effective for all purposes and is legalized and validated. (m) Subsections (g) through (k) do not apply to an ordinance adopted under subsection (d) after March 28, 2016, if the commission determines, in reviewing the proposed sale or disposition under section 6.1(h) of this chapter, that the factors set forth in IC 8-1-30.3-5(d) are satisfied as applied to the proposed sale or disposition. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.12-1995, SEC.99; P.L.3-1997, SEC.425; P.L.2-1998, SEC.34; P.L.103-2008, SEC.3; P.L.68-2015, SEC.3; P.L.149-2016, SEC.37; P.L.98-2016, SEC.8; P.L.229-2019, SEC.8.

Ind. Code § 8-1.5-2-6 Sale of nonsurplus property; terms of ordinance; satisfaction of existing obligations; bid submitted by trust; proceeds; sale for less than appraised value

Sec. 6. (a) The ordinance adopted by the municipal legislative body under section 5(d) of this chapter must provide for: (1) the sale or disposition of the municipally owned utility property; (2) the manner of the sale or disposition; (3) the price, terms, and conditions of the sale or disposition, which must be consistent with any contractual obligations previously incurred under IC 8-1-2.2; and (4) the officer or officers who are to execute the proper documents conveying title on behalf of the municipality. (b) Except as provided in subsection (e), the property may not be sold for less than its full appraised value, as set forth in the appraisal, less the amount of any bonds, liens, or other indebtedness due upon the property, and only in accordance with contractual obligations incurred under IC 8-1-2.2. The indebtedness shall either: (1) be paid in accordance with the terms and conditions of the instruments governing the indebtedness before the sale; or (2) be assumed and paid by the purchaser as part of the purchase price of the property. (c) This subsection applies if a municipal legislative body adopts an ordinance for the sale or disposition of municipally owned utility real property by acceptance of bids. A bid submitted by a trust (as defined in IC 30-4-1-1(a)) must identify each: (1) beneficiary of the trust; and (2) settlor empowered to revoke or modify the trust. (d) The proceeds of any sale under this chapter shall be paid into the treasury of the municipality making the sale and become part of the general fund, unless the municipal legislative body adopts an ordinance to provide that the proceeds of the sale shall be paid into a restricted fund to be used only in the manner set forth in the ordinance. (e) The municipally owned utility property that is the subject of an ordinance adopted under section 5(d) of this chapter may be sold for less than its full appraised value, as set forth in the appraisal, if the municipal legislative body determines that it would be in the municipality's best interests to sell the property for less than its full appraised value so as to result in lower utility rates to be charged by the prospective purchaser to customers of the municipality's municipally owned utility. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.104-1983, SEC.1; P.L.336-1989(ss), SEC.18; P.L.103-2008, SEC.4; P.L.98-2016, SEC.9.

Ind. Code § 8-1.5-2-6.1 Sale of nonsurplus property; ordinance adopted after March 28, 2016; approval of commission; terms and conditions; public interest determination; net original cost rate base; submission to voters

Sec. 6.1. (a) This section applies to a municipality that adopts an ordinance under section 5(d) of this chapter after March 28, 2016. (b) Before a municipality may proceed to sell or otherwise dispose of all or part of its nonsurplus utility property under an ordinance adopted under section 5(d) of this chapter, the municipality and the prospective purchaser must obtain the approval of the commission under this section. (c) As part of the sale or disposition of the property, the municipality and the prospective purchaser may include terms and conditions that the municipality and the prospective purchaser consider to be equitable to the existing utility customers of: (1) the municipality's municipally owned utility; and (2) the prospective purchaser; as applicable. (d) The commission shall approve the sale or disposition of the property according to the terms and conditions proposed by the municipality and the prospective purchaser if the commission finds that the sale or disposition according to the terms and conditions proposed is in the public interest. For purposes of this section, the purchase price of the municipality's nonsurplus utility property shall be considered reasonable if it does not exceed the appraised value set forth in the appraisal required under section 5 of this chapter. (e) The following apply to the commission's determination under subsection (d) as to whether the proposed sale or disposition according to the proposed terms and conditions is in the public interest: (1) If: (A) the prospective purchaser petitions the commission under IC 8-1-30.3-5(d); and (B) the commission approves the prospective purchaser's petition; the proposed sale or disposition is considered to be in the public interest. (2) If subdivision (1) does not apply and subject to subsection (h), the commission shall consider the extent to which the proposed terms and conditions of the proposed sale or disposition would require the existing utility customers of either the prospective purchaser or the municipality's municipally owned utility, as applicable, to pay rates that would subsidize utility service to the other party's existing customers. For purposes of this subdivision, the proposed terms and conditions will not result in rates that would subsidize service to other customers if the amount to be recorded as net original cost under subsection (f) is not greater than two percent (2%) of the prospective purchaser's net original cost rate base as determined in the prospective purchaser's most recent general rate case, plus any adjustments to the rate base under IC 8-1-31 and IC 8-1-31.7 that have occurred after the rate case. If the amount to be recorded is greater than two percent (2%), the commission shall proceed to determine whether: (A) the proposed terms and conditions would result in a subsidy described in this subdivision; and (B) the subsidy would cause the proposed terms and conditions of the proposed sale or disposition not to be in the public interest. The commission shall calculate the amount of the subsidy that would result and shall set forth in an order under this section such changes to the proposed terms and conditions as the commission considers appropriate to address the subsidy. The prospective purchaser and the municipality shall each have thirty (30) days from the date of the commission's order setting forth the commission's changes to either accept or reject the changes. If either party rejects the commission's changes, the proposed sale or disposition is considered not to be in the public interest. (3) In reviewing the proposed terms and conditions of the proposed sale or disposition under either subdivision (1) or (2), the commission shall consider the financial, managerial, and technical ability of the prospective purchaser to provide the utility service required after the proposed sale or disposition. (4) In reviewing the proposed terms and conditions of the proposed sale or disposition under either subdivision (1) or (2), the commission shall accept as reasonable the valuation of the nonsurplus utility property determined through an appraisal and review under section 5 of this chapter. (f) As part of an order approving a sale or disposition of property under this section, the commission shall, without regard to amounts that may be recorded on the books and records of the municipality and without regard to any grants or contributions previously received by the municipality, provide that for ratemaking purposes, the prospective purchaser shall record as the net original cost rate base an amount equal to: (1) the full purchase price; (2) incidental expenses; and (3) other costs of acquisition; allocated in a reasonable manner among appropriate utility plant in service accounts. (g) The commission shall issue a final order under this section not later than two hundred ten (210) days after the filing of the parties' case in chief. (h) In reviewing a proposed sale or disposition under subsection (e), the commission shall determine whether the factors set forth in IC 8-1-30.3-5(d) are satisfied as applied to the proposed sale or disposition of the municipality's nonsurplus municipally owned utility property for purposes of section 5(m) of this chapter. If the commission determines that the factors set forth in IC 8-1-30.3-5(d): (1) are satisfied as applied to the proposed sale or disposition, section 5(g) through 5(k) of this chapter does not apply to the municipality's ordinance adopted under section 5(d) of this chapter; or (2) are not satisfied as applied to the proposed sale or disposition: (A) section 5(g) through 5(k) of this chapter applies to the municipality's ordinance adopted under section 5(d) of this chapter; and (B) the question as to whether the sale or disposition should be made must be submitted to the voters of the municipality at a special or general election if at least the number of the registered voters of the municipality set forth in section 5(h) of this chapter sign and present a petition to the legislative body opposing the sale or disposition, in accordance with section 5(g) through 5(k) of this chapter. However, notwithstanding this subsection, in reviewing a proposed sale or disposition under subsection (e)(2), the commission may not condition its approval of the proposed sale or disposition on whether the factors set forth in IC 8-1-30.3-5(d) are satisfied or on any other factors except those provided for in subsection (e)(2), (e)(3), and (e)(4). As added by P.L.98-2016, SEC.10. Amended by P.L.64-2018, SEC.2; P.L.229-2019, SEC.9; P.L.61-2022, SEC.12.

Ind. Code § 8-1.5-2-7 Public convenience and necessity; declaratory resolution

Sec. 7. (a) A certificate of public convenience and necessity is not required as a condition precedent to the owning, leasing, acquisition, construction, or operation of a utility by a municipality, even if there is a public utility engaged in a similar service. The acquisition of electric utility property and assignment of a municipal electric utility's service area are, however, subject to the provisions of IC 8-1-2.3 and IC 8-1-2-95.1. (b) Subsection (d) applies to the following: (1) A municipality that wants to acquire an existing utility, including by purchase or condemnation under IC 8-1-2-92, IC 8-1-2-93, or otherwise. (2) A municipality that wants to own and operate a utility in a location where, or contiguous to where, there is a public utility engaged in a similar service: (A) under a franchise granted by the municipality; or (B) under an indeterminate permit as defined in IC 8-1-2-1. (c) Notwithstanding subsection (b), subsection (d) does not apply to the following: (1) A municipality that owns and operates a water utility as of July 1, 2012. (2) An action brought under: (A) IC 8-1-2-92; (B) IC 8-1-2-93; or (C) this chapter; before March 1, 2013. (d) Before a municipality described in subsection (b) may declare by ordinance that public convenience and necessity require the establishment of a municipally owned utility, the municipality shall conduct a hearing under section 10 of this chapter. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.172-2009, SEC.3; P.L.270-2013, SEC.4.

Ind. Code § 8-1.5-2-8 Preliminary expenses; appropriation

Sec. 8. Before a municipal legislative body: (1) proposes to construct or acquire a utility; and (2) makes a determination as to public convenience and necessity; it may appropriate out of its general fund an amount not exceeding five percent (5%) of the total estimated cost of constructing or acquiring the utility, as necessary to pay the expenses of a preliminary investigation, surveys, plans, specifications, and appraisals, including engineering and legal expenses in constructing or acquiring the utility. Any action by the municipal legislative body in making an appropriation is final and not subject to review by the department of local government finance. The municipal legislative body may renew or adjust the appropriation on an annual basis until the construction or acquisition of the utility is complete. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.90-2002, SEC.313; P.L.172-2009, SEC.4.

Ind. Code § 8-1.5-2-9 Appropriation for preliminary expenses; repayment

Sec. 9. If the municipal legislative body proceeds to construct or acquire the utility, there must be included in the total amount of money to be raised by the issuance of bonds in connection with the construction or acquisition of the utility the amount of the expenditures that will be repaid to the general fund of the municipality from the money derived from the issuance and sale of the bonds. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-10 Ordinance declaring public convenience and necessity; notice and hearing

Sec. 10. (a) Before a municipal legislative body adopts an ordinance declaring that public convenience and necessity require the construction or acquisition of a utility as provided by section 7 of this chapter, each public utility furnishing a similar utility service in the municipality, or in the contiguous territory in which the municipality proposes to operate, shall be given ten (10) days notice by the legislative body of the time and place where the hearing will be held. At the hearing, the public utility is entitled to be heard in person or by counsel in opposition to the proposed action. (b) Notice must be served by delivering a copy to an officer or manager of the public utility in the municipality, if possible, or to an officer of the public utility elsewhere in Indiana. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-12 Sale of heat, light, water, or power to municipality

Sec. 12. (a) Upon the approval by resolution of the municipal legislative body, a municipally owned utility may sell or furnish heat, light, water, or power to the municipality to be used exclusively for the furnishing of utility service to the municipality for its own municipal purposes. (b) This section is not intended to permit the sale or furnishing of power to the municipality where the sale would affect the obligation of any contract or franchise. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-13 Contracts for acquisition, construction, or replacement of public utility property; authorizing ordinance

Sec. 13. A contract made by the municipal legislative body for the acquisition, construction, extension, or replacement of the property of a public utility must be authorized by ordinance. The ordinance must provide for the principal and interest of bonds issued for the payment of the cost of the acquisition, construction, extension, or replacement to be paid exclusively from the income and revenue of the property acquired with the proceeds of the bonds. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-14 Costs of construction or acquisition; security for payment

Sec. 14. A municipality that constructs or acquires a utility may, through its municipal legislative body, provide for and secure the payment of the cost of constructing, acquiring, extending, or improving the utility by assigning or otherwise pledging the property acquired, together with the net earnings or profits derived or to be derived from the operation of the utility or utilities. Contracts, warrants, debentures, or pledges of future revenues entered into by a municipally owned utility are not an indebtedness of the municipality within the meaning of any constitutional debt limitation. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-15 Condemnation; authorization

Sec. 15. (a) This section applies to the following: (1) A municipality that, as of July 1, 2012, had established and operated a water utility. (2) An action brought under: (A) IC 8-1-2-92; (B) IC 8-1-2-93; or (C) this chapter; before March 1, 2013. (b) If the municipality and the owners of a public utility are unable to agree upon a price to be paid for the property of the public utility, the municipality may: (1) by ordinance declare that a public necessity exists for the condemnation of the utility property; and (2) bring an action in the circuit or superior court of the county where the municipality is located against the utility for the condemnation of the property. (c) An ordinance adopted under subsection (b) is final. (d) For the purpose of acquiring the property of a public utility, the municipality: (1) may exercise the power of eminent domain in accordance with IC 32-24; and (2) is required only to establish the necessity of taking as this chapter requires. (e) The provisions of this section do not apply to the acquisition of electric utility property or the assignment of service areas covered by IC 8-1-2.3 and IC 8-1-2-95.1. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.2-2002, SEC.38; P.L.270-2013, SEC.5.

Ind. Code § 8-1.5-2-15.5 Condemnation of public utility

Sec. 15.5. (a) This section does not apply to the following: (1) A municipality that, as of July 1, 2012, had established a water utility. (2) An action brought under: (A) IC 8-1-2-92; (B) IC 8-1-2-93; or (C) this chapter; before March 1, 2013. (3) The acquisition of electric utility property or the assignment of service areas covered by IC 8-1-2.3 and IC 8-1-2-95.1. (4) The acquisition of water or sewer utility property, unless the requirements of IC 8-1-30 are satisfied. (b) If the municipality and the owners of a public utility are unable to agree upon a price to be paid for the property of the public utility, the municipality may bring an action in the circuit or superior court of the county where the municipality is located against the utility for the condemnation of the property. (c) For the purpose of acquiring the property of a public utility, the municipality shall exercise the power of eminent domain in accordance with IC 32-24-1. As added by P.L.270-2013, SEC.6.

Ind. Code § 8-1.5-2-16 Repealed

As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.3-1997, SEC.426; P.L.2-1998, SEC.35. Repealed by P.L.172-2009, SEC.8.

Ind. Code § 8-1.5-2-17 Acquisition of property rights inside or outside boundaries; utility lines; protection of services from injury or pollution; attachments from abuse, destruction, or waste

Sec. 17. (a) A municipality, by exercising the power of eminent domain in accordance with IC 32-24 or other applicable law, may acquire property rights inside or outside its corporate boundaries as necessary for the business of a municipally owned utility. (b) The municipal legislative body may provide for utility lines to be laid through the municipality as the municipally owned utility requires. The municipality may use any property or property rights necessary for constructing, acquiring, operating, or protecting from injury or pollution the municipally owned utility services. (c) For the purpose of preserving and protecting from injury or pollution the municipal water services, the municipality may exercise its powers in areas within twenty-five (25) miles outside its corporate boundaries. (d) All attachments made to the utility fixtures, whether intended for public or private use, are subject to the supervision and rules of the utility for protection against abuse or destruction or the inordinate use or waste of utility services. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.2-2002, SEC.39.

Ind. Code § 8-1.5-2-18 Bonds; payable out of special account; issuance

Sec. 18. (a) To provide money to pay for the construction or acquisition of a utility under this chapter, or its extension, improvement, or replacement in whole or in part, or its repair, the municipal legislative body may issue and sell bonds bearing interest at any rate, executed and payable at times not to exceed forty (40) years from the date of issuance, and at places as the legislative body determines. The bonds and interest on them are payable only out of a special account, and the bonds do not constitute an indebtedness of the municipality within the meaning of the constitutional limitations. (b) Each bond must state plainly upon its face: (1) that it is payable only from a special account; (2) the account and the ordinance creating it; and (3) that it does not constitute an indebtedness of the municipality within the meaning of any constitutional debt limitation. (c) The bonds shall be sold in accordance with IC 5-1-11. (d) This section provides an alternative method of financing for all municipalities, notwithstanding any other law. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-19 Bonds, notes, or other obligations; issuance; approval by commission for long term bonds

Sec. 19. (a) A municipality may not issue bonds, notes, or other obligations under this chapter without the approval of the commission if the bond, notes, or other obligations are payable more than twelve (12) months after their execution, except as authorized by IC 8-1-2.2-11. (b) If the evidence presented to the commission establishes that the rates and charges proposed by the municipally owned utility will provide sufficient funds for the operation, maintenance, and depreciation of the utility, and to pay the principal and interest of the proposed bond issue, together with a surplus or margin of at least ten percent (10%) in excess, the commission shall so certify in its order approving the issuance of bonds. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.103-2008, SEC.5.

Ind. Code § 8-1.5-2-19.5 Purchase of equipment requiring lead time before availability; approval of contracts if sufficient funds available

Sec. 19.5. If a municipality desires to purchase and install equipment for its utility which requires more than three (3) months lead time for the supplier to make such equipment and installation available, the legislative body may, by ordinance, approve a contract therefor even though it does not have sufficient funds appropriated or on hand to pay for such purchase if the utility: (1) has annual net operating revenues for the immediately preceding calendar year sufficient to permit the municipality: (A) to pay the principal of and interest on an issue of its utility revenue bonds in the principal amount necessary to fund such purchase (including engineering costs, legal costs, and costs of bond issuance associated therewith); and (B) a margin of safety which it deems necessary to market such bonds on acceptable terms; (2) if required by section 19 of this chapter, has received approval from the commission to issue bonds, notes, or other obligations sufficient to fund such purchase; or (3) has received approval from the commission to raise its rates and charges in an amount sufficient to permit the issuance of said bonds. As added by P.L.105-1983, SEC.1. Amended by P.L.103-2008, SEC.6.

Ind. Code § 8-1.5-2-20 Bonds; payment from revenues not derived from particular utility; restriction

Sec. 20. Except as provided by section 22 of this chapter, the municipal legislative body may not adopt an ordinance, or enter into or ratify a contract, for the payment, directly or indirectly, of a bond or bonds by revenues derived by the municipality from the levy of taxes, from the issuance of any bonds other than from the issuance of bonds specifically authorized by this chapter or by a refunding statute, or from any source except the revenues derived from that particular utility. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-21 Bonds payable out of special account; purchase by municipality

Sec. 21. A municipality may invest its own money in the bonds issued under section 18 of this chapter. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-22 General obligation bonds; authorization; limitation

Sec. 22. (a) If the municipal legislative body decides that it is impracticable to raise the entire amount necessary to construct or acquire the utility solely by the issuance and sale of revenue bonds, the legislative body may, by ordinance, provide that a part of the amount may be raised by the issuance and sale of bonds pledging the general credit of the municipality. (b) The bonds shall be issued in accordance with IC 6-1.1-20. The bonds may not exceed one-third (1/3) of the total cost of the utility. This limitation does not apply to a utility to be owned and operated by a municipality exclusively for the purpose of furnishing utility service to the municipality for its own municipal purposes. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-23 General obligation bonds; terms; sale

Sec. 23. If general obligation bonds are issued, they: (1) may be issued in any denomination; (2) are payable at a time not to exceed forty (40) years from issuance; (3) may bear interest at any rate payable semiannually; and (4) shall be sold for not less than par value and accrued interest; as provided by ordinance. The bonds shall be sold in accordance with IC 5-1-11. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-24 Revenue bonds; money set aside for payment of interest and principal

Sec. 24. (a) The board of a municipally owned utility, as defined by IC 8-1.5-3-2, shall, at least semiannually, set aside from the net earnings a sufficient amount to pay the interest and principal, as they become due, on revenue bonds issued in payment for the utility or for its improvement. This money may not be used for any other purpose. (b) The commission shall approve the amount set aside for the payment of the interest and principal when the commission approves the rates and charges of the municipality. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-25 Special utility account; establishment by municipality; use

Sec. 25. (a) The municipal legislative body, after providing for the: (1) payment of operation and maintenance expenses of the utility; (2) payment of the interest and principal on revenue bonds and creation of reserves for them; (3) payment of the interest and principal on general obligation bonds and creation of reserves for them; and (4) payment of assessed taxes; shall set aside a sufficient remainder of the earnings into a separate and special account to be identified as the special utility account, to be used and applied in the extension, replacement in whole or in part, repair, and operation and maintenance of the utility. (b) The remaining earnings may be applied to: (1) the general fund of the municipality in accordance with IC 8-1.5-3-11, outstanding bond ordinances, and contract provisions under IC 8-1-2.2; (2) the payment of the interest on a loan made for utility construction; or (3) the creation of a sinking fund for the liquidation of the debt; as the legislative body determines. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-26 Tax levy for payment of bonds

Sec. 26. (a) To pay the principal and interest on bonds issued for the construction, acquisition, extension, or improvement of a municipally owned utility, the municipal legislative body may levy an annual tax of sufficient amount on all taxable property of the municipality. (b) If the legislative body: (1) has contracted with a person for supplying utility services or has agreed to lease or purchase utility services; and (2) has, in the contract, agreed to pay a stated rental, a stipulated purchase price, or other compensation to the person, or has issued bonds to pay for stock in the company or to purchase the plant; it may levy an annual tax for payment of the rent or other consideration or purchase price to be paid for utility services, or for the purchase price of a plant, and to pay the principal and interest on the bonds. (c) The tax under this section shall be levied and collected as other municipal taxes are levied and collected, and the proceeds shall be used only for the purpose for which the tax was levied. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-27 Lease of waterworks facilities; term; option to purchase or renew; transfer of property to municipality

Sec. 27. (a) A municipality may lease waterworks facilities from a not-for-profit corporation, a public utility, a county, or a municipality. The term of the lease may not exceed fifty (50) years. The lease must provide that the municipality has an option to: (1) renew the lease for a further term on like conditions; and (2) purchase the waterworks facilities covered by the lease contract with the terms and conditions of the purchase specified in the lease. (b) If the option to purchase the waterworks facilities covered by the lease is exercised, the municipality, for the purpose of procuring money to pay the purchase price, may issue and sell revenue bonds under other laws governing the issuance and sale of waterworks revenue bonds for additions and extensions to municipal waterworks. (c) If the municipality has not exercised an option to purchase the property covered by the lease at the expiration of the lease, and upon the full discharge and performance by the municipality of its obligations under the lease contract, the property covered by the lease thereupon becomes the absolute property of the municipality, and the lessor shall execute proper instruments conveying to the municipality good and merchantable title thereto. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.35-1990, SEC.26; P.L.252-2015, SEC.20.

Ind. Code § 8-1.5-2-28 Lease of waterworks facilities; payment of operating expenses; sufficiency of rates and charges

Sec. 28. (a) A waterworks lease may provide that as a part of the lease rental for the waterworks facilities the lessee agrees to: (1) pay all property taxes and assessments levied against or on account of the leased facilities; (2) maintain insurance on the leased facilities for the benefit of the lessor; and (3) assume all responsibilities for the operation, maintenance, repair, alterations, and additions of the leased facilities. (b) All of the expenses incurred under subsection (a) and the lease rental are payable solely from the revenues derived from water rates and charges to be collected by the lessee from property and users in the area served by the leased facilities. (c) The lessee may establish, fix, bill, and collect rates and charges with respect to the property and users in the area served by the leased facilities that are sufficient: (1) to pay the costs of operation, maintenance, repair, alterations, depreciation, and additions of the leased facilities; and (2) to pay the lease rental as it becomes due. Rates and charges too low to meet these requirements are unlawful. These rates and charges are subject to approval in accordance with IC 8-1.5-3-8. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-29 Lease of waterworks facilities; notice and hearing

Sec. 29. (a) When the municipality and the lessor have agreed upon the terms and conditions of any waterworks lease proposed to be entered into under this chapter and before the final execution of the lease, a notice shall be given by publication in accordance with IC 5-3-1 to all persons interested, of a hearing to be held before the municipal legislative body, which hearing must be on a day not earlier than twenty (20) days after publication of the notice. (b) The notice must: (1) name the day, place, and hour of the hearing; and (2) set forth a brief summary of the principal terms agreed upon, including: (A) the name of the lessor; (B) the character of the property to be leased; (C) the lease rental to be paid; and (D) the number of years the lease is to be in effect. (c) The proposed lease must be available for inspection by the public during the twenty (20) day period and at the hearing. (d) All persons interested are entitled to be heard, at the time fixed, upon the necessity for the execution of the lease and whether the rental to be paid to the proposed lessor is a fair and reasonable rental for the waterworks facilities. The hearing may be adjourned to a later date or dates. As added by Acts 1982, P.L.74, SEC.1. Amended by P.L.35-1990, SEC.27.

Ind. Code § 8-1.5-2-30 Lease of waterworks facilities; execution; limitation of actions

Sec. 30. (a) After the hearing under section 29 of this chapter, the municipal legislative body may: (1) authorize the execution of the waterworks lease as originally agreed upon; or (2) make modifications as may be agreed upon with the proposed lessor; but the lease rental as set out in the published notice may not be increased without a new notice and hearing. (b) If the execution of the lease as originally agreed upon, or as modified by agreement, is authorized by the legislative body, a notice of the signing of the contract of lease shall be given by publication in accordance with IC 5-3-1. (c) An action to: (1) contest the validity of the lease; or (2) enjoin the performance of any of the terms and conditions of the lease; must be brought not later than thirty (30) days after publication of the notice of execution of the lease. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-31 Leased waterworks facilities; tax exemptions

Sec. 31. All waterworks facilities leased by a lessor contracting with a municipality under this chapter are exempt from all state, county, and other taxes. However, the rental paid to a lessor under the terms of such a lease is subject to all applicable taxes. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-32 Leased waterworks facilities; applicable statutes

Sec. 32. As to waterworks facilities leased and acquired under this chapter, it is not necessary to comply with any other statutes concerning the leasing and acquisition of waterworks facilities by municipalities except as specifically required by this chapter. As added by Acts 1982, P.L.74, SEC.1.

Ind. Code § 8-1.5-2-33 Action to determine public convenience and necessity

Sec. 33. (a) This section does not apply to the following: (1) A municipality that, as of July 1, 2012, had established and operated a water utility. (2) An action brought under: (A) IC 8-1-2-92; (B) IC 8-1-2-93; or (C) this chapter; before March 1, 2013. (b) Not more than thirty (30) days after a municipality described in section 7(b)(1) or 7(b)(2) of this chapter adopts an ordinance under section 7 of this chapter, the utility may bring an action against the municipality in the circuit or superior court of the county in which the municipality is located to determine the question of public convenience and necessity. (c) The court shall stay further action by the municipality under the ordinance adopted under section 7 of this chapter pending the court's determination. (d) The court shall try the cause without delay and without a jury and review the evidence de novo. As added by P.L.270-2013, SEC.7.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/8Fetched: 10/17/2026

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