CHAPTER 260

SEWER REVENUE BOND ACT OF 1949

AN ACT PROVIDING FOR THE PLANNING, ACQUISITION, PURCHASE, CONSTRUCTION, RECONSTRUCTION, IMPROVEMENT, BETTERMENT, EXTENSION, OPERATION, AND MAINTENANCE OF REVENUE-PRODUCING UNDERTAKINGS FOR THE COLLECTION, TREATMENT, AND DISPOSAL OF SEWAGE, WASTE, GARBAGE, AND STORM WATER BY ANY COUNTY, INCORPORATED CITY OR TOWN OF THE STATE OF DELAWARE; AUTHORIZING THE EXERCISE OF THE POWER OF EMINENT DOMAIN AND THE FIXING OF RATES IN CONNECTION WITH SUCH UNDERTAKINGS; AUTHORIZING AND REGULATING THE ISSUANCE OF REVENUE BONDS FOR FINANCING SUCH UNDERTAKINGS; AND PROVIDING FOR THE PAYMENT OF SUCH BONDS AND THE RIGHTS OF THE HOLDERS THEREOF; PROVIDING FOR REFERENDUM ELECTION.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met (two-thirds of all the Members elected to each House concurring therein):

Section 1. Short Title of Act. This act may be cited as "The Sewer Revenue Bond Act of 1949."

Section 2. Definitions. Whenever used in this Act, unless a different meaning clearly appears from the context:

(a) The term "undertaking" shall mean plants, properties, works, systems, or facilities, or any part thereof, used or useful in connection with the collection, treatment and disposal of sewage, waste, garbage and storm water.

(b) The term "municipality" shall include any county, incorporated city or town of the State of Delaware.

(c) The term "governing body" shall include bodies and boards, by whatsoever names they may be known, having authority to govern a municipality.

Section 3. Declaration of Policy. It is hereby declared to be the policy of this State that to provide benefits to the public health and welfare by the abatement, prevention or reduction of pollution of the rivers, waters and streams of this State, any municipality planning, acquiring, purchasing, constructing, reconstructing, improving, bettering or extending an undertaking pursuant to this Act, shall manage such undertaking in the most efficient manner consistent with sound economy and public advantage to the end that such pollution shall be reduced, prevented or abated and that the services of the undertaking shall be furnished to consumers at the lowest possible cost. No municipality shall operate such undertaking for gain or profit or as primarily a source of revenue to the municipality, but shall operate such undertaking for the use and benefit of the consumers served by such undertaking and for the promotion of the welfare and for the improvement of the health and safety of the inhabitants of the municipality and of the State of Delaware.

Section 4. Additional Powers of Municipalities. In addition to the powers which it may now have, any municipality shall have power under this Act: (a) to plan, construct, acquire by gift, purchase, or the exercise of the right of eminent domain, reconstruct, improve, better or extend any undertaking, within or without the municipality, or partially within or partially without the municipality, and to acquire by gift, purchase, or the exercise of the right of eminent domain, lands or rights in land or water rights in connection therewith, (b) to operate and maintain any undertaking and furnish the services, facilities and commodities thereof for its own use and for the use of public and private consumers within or without the territorial boundaries of such municipality, (c) to enter into and perform contracts, whether long term or short term, with any industrial establishment for the provision and operation by a municipality of the undertaking to abate or reduce the pollution of waters caused by discharges of industrial wastes by the industrial establishment and the payment periodically by the industrial establishment to the municipality of amounts at least sufficient, in the determination of the governing body, to compensate the municipality for the cost of providing (including payment of principal and interest charges, if any), and of operating and maintaining the undertaking or part thereof serving such industrial establishment, (d) to issue its bonds to finance, either in

whole or in part, the cost of the planning, acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any undertaking, (e) to prescribe and collect rates, fees, charges for the services, facilities and commodities furnished by such undertaking, (f) to pledge to the punctual payment of said bonds and interest thereon an amount of the revenues of such undertaking (including the revenues of the existing facilities, if any, comprising an undertaking which is being improved, bettered, or extended, and the revenues to be derived from any improvements, betterments, extensions thereafter constructed or acquired), or of any part of such undertaking, sufficient to pay, on either an equal or priority basis, said bonds and interest as the same shall become due and to create and maintain reasonable reserves therefor, which amount may consist of all or any part or portion of such revenues, and (g) to accept from any authorized agency of the State or the Federal Government, or from persons, firms, or corporations, grants or contributions for the planning, construction, acquisition, lease, reconstruction, improvement, betterment or extension of the undertaking and to enter into agreements with such agency respecting such loans and grants. The governing body of the municipality in determining the cost of acquiring or constructing any undertaking may include all costs and estimated costs of the issuance of said bonds, all planning, engineering, inspection, fiscal and legal expenses, and interest which it is estimated will accrue during the construction period and for six months therafter or money borrowed or which it is estimated will be borrowed pursuant to this Act.

Section 5. Authorization of Undertaking; Form and Contents of Bonds. The planning, acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any undertaking may be authorized under this Act and bonds may be authorized to be issued under this Act to provide funds for such purpose or purposes by resolution or resolutions of the governing body which may be adopted at the same meeting at which they are introducted by a majority of all the members thereof then in office and shall take effect immediately upon adoption. Said bonds shall bear interest at such rate or rates not exceeding five per centum per annum, payable semi-annually, may be in one or more series, may bear such date or dates, may mature at such time or times not exceeding forty years from

their respective dates, may be payable in such medium of payment, at such place or places, may carry such registration privileges, may be subject to such terms of redemption, may be executed in such manner, may contain such terms, covenants and conditions, and may be in such form, either coupon or registered, as such resolution or subsequent resolutions may provide. Said bonds shall be sold at public sale, after advertisement, at not less than. par: Provided, however that any of said bonds may be sold at private sale to the United States of America, or any agency, instrumentality or corporation thereof, at not less than par. Pending the preparation of the definitive bonds, interim receipts or certificates in such form and with such provisions as the governing body may determine may be issued to the purchaser or purchasers of bonds sold pursuant to this act. Said bonds and interim receipts or certificates shall be fully negotiable within the meaning of and for all the purposes of the Negotiable Instruments Law of the State of Delaware.

Section 6. Covenants in Resolution Authorizing Issuance of Bonds. Any resolution or resolutions authorizing the issuance of bonds under this act may contain covenants as to (a) the purpose or purposes to which the proceeds of sale of said bonds may be applied and the use and disposition thereof, (b) the use and disposition of the revenue of the undertaking for which said bonds are to be issued, including the creation and maintenance of reserves, (c) the transfer from the general funds of the municipality to the account or accounts of the undertaking an amount equal to the cost of furnishing such municipality or any of its departments, boards or agencies, with the services, facilities and commodities of said undertaking, (d) the issuance of other or additional bonds payable from the revenue of said undertaking, (e) the operation and maintenance of such undertaking, (f) the insurance to be carried thereon and the use and disposition of insurance moneys, (g) books of account and the inspection and audit thereof, and (h) the terms and conditions upon which the holders of said bonds or any proportion of them or any trustee therefor shall be entitled to the appointment of a receiver by the appropriate court, which court shall have jurisdiction in such proceedings, and which receiver may enter and take possession of said undertaking, operate and maintain the same, prescribe rates, fees, or charges, and collect, receive and apply all revenue thereafter arising therefrom in

the same manner as the municipality itself might do. The provisions of this Act and any such resolution or resolutions shall be a contract with the holder or holders of said bonds, and the duties of the municipality and of its governing body and officers under this Act and any such resolution or resolutions shall be enforceable by any bondholder, by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction.

Section 7. Validity of Bonds. Said bonds bearing the signatures of officers in office on the date of the signing thereof shall be valid and binding obligations, notwithstanding that before the delivery thereof and payment therefor any or all the persons whose signatures appear thereon shall have ceased to be officers of the municipality issuing the same. The validity of said bonds shall not be dependent on nor affected by the validity or regularity of any proceedings relating to the planning, acquisition, purchase, construction, reconstruction, improvement, betterment, or extension of the undertaking for which said bonds are issued. The resolution authorizing said bonds may provide that the bonds shall contain a recital that they are issued pursuant to this Act, which recital shall be conclusive evidence of their validity and of the regularity of their issuance.

Section 8. Lien of Bonds. All bonds of the same issue may, subject to the prior and superior rights of outstanding bonds, claims or obligations, have a prior and paramount lien on the revenue of the undertaking, for which said bonds have been issued, over and ahead of all bonds of any issue payable from said revenue which may be subsequently issued and over and ahead of any claims or obligations of any nature against said revenue subsequently arising or subsequently incurred. All bonds of the same issue may be equally and ratably secured without priority by reason of number, date of bonds, of sale, of execution, or of delivery, by a lien on said revenue in accordance with the provisions of this Act and the resolution or resolutions authorizing said bonds, or all bonds of the same issue, or such ones thereof as may be specified, may, to the extent and in the manner prescribed, be subordinated and be junior in standing, with respect to the payment of principal and interest and the security thereof, to such other bonds as are designated in the resolution or resolutions authorizing said bonds.

Section 9. Bonds Not a General Obligation of Municipality. No holder or holders of any bonds issued under this Act shall ever have the right to compel any exercise of taxing power of the municipality to pay said bonds or the interest thereon. Each bond issued under this Act shall recite in substance that said bond, including interest thereon, is payable from the revenue pledged to the payment thereof, and that said bond -does not constitute a debt of the municipality within the meaning of any statutory or constitutional limitation.

Section 10. Undertakings to be Self-Supporting. The governing body of a municipality issuing bonds pursuant to this Act shall prescribe and collect reasonable rates, fees or charges for the services, facilities and commodities of such undertaking, and shall revise such rates, fees or charges from time to time whenever necessary so that such undertaking shall be and always remain self-supporting. The rates, fees or charges prescribed shall be such as will procure revenue at least sufficient (a) to pay when due all bonds and interest thereon, for the payment of which such revenue is or shall have been pledged, charged or otherwise encumbered, including reserves therefor, and (b) to provide for all expenses of operation and maintenance of such undertaking, including reserves therefor. '

Section 11. Use of Revenue From Undertaking. Any municipality issuing bonds pursuant to this Act for the planning, acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any undertaking shall have the right to appropriate, apply or expend the revenue of such undertaking for the following purposes: (a) to pay when due all bonds and interest thereon, for the payment of which such revenue is or shall have been pledged, charged or otherwise encumbered, including reserves therefor, (b) to provide for all expenses of operation and maintenance of such undertaking, including reserves therefor, (c) to pay and discharge notes, bonds or other obligations and interest thereon, not issued under this Act for the payment of which the revenue of such undertaking is or shall have been pledged, charged or encumbered, (d) to pay and discharge notes, bonds or other obligations and interest thereon, which do not constitute a lien, charge or encumbrance on the revenue of such undertaking, which shall have been issued for the purpose of financing the planning, acquisition, purchase, con-

struction, reconstructions, improvement, betterment or extension of such undertaking, and (e) to provide a reserve for betterments to such undertaking. Unless and until adequate provision has been made for the foregoing purposes, no municipality shall have the right to transfer the revenues of such undertaking to its general funds.

Section 12. Joint Action by Municipalities. Any two or more municipalities through their respective governing bodies are hereby authorized and empowered to enter into and perform such contracts and agreements as they may deem proper for or concerning the planning, construction, lease or other acquisition and the financing of an undertaking and the maintenance and operation thereof. Any such municipalities so contracting with each other may also provide in any contract or agreement for a board, commission or such other body as their governing bodies may deem proper for the supervision and general management of the undertaking and for the operation thereof, and may prescribe its powers and duties and fix the compensation of the members thereof. Such contract or agreement shall be in full force and effect when ratified by a majority of the qualified voters of such municipality voting upon such proposition at an election held in accordance with the provisions of existing law.

Section 13. Consent of Another Municipality. No municipality shall construct an undertaking wholly or partly within the corporate limits of another municipality except with the consent of the governing body of such other municipality.

Section 14. Construction of Act. The powers conferred by this Act shall be in addition and supplemental to the powers conferred by any other general, special or local law. The undertaking may be planned, acquired, purchased, constructed, reconstructed, improved, bettered, and extended, and bonds may be issued under this Act for said purposes, notwithstanding that any general, special or local law may provide for the planning, acquisition, purchase, construction, reconstruction, improvement, betterment, and extension of a like undertaking, or the issuance of bonds for like purposes, and without regard to the requirements, restrictions, limitations or other provisions contained in any other general, special or local law, including, but not limited to, any requirement for the approval by the voters of any municipality. Insofar as the provisions of this Act are inconsistent with the provisions of any other general, special, or local law, the provisions of this Act shall be controlling.

Section 15. Excision of Unconstitutional or Ineffective Parts of Act. It is hereby declared that the sections, clauses, sentences and parts of this Act are severable, are not matters of mutual essential inducement, and any of them may be exscinded by any court of competent jurisdiction, and shall be adjudged unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provisions thereof, but shall be confined in its operation to the specific provision or provisions so held unconstitutional or invalid, and the inapplicability or invalidity of any section, clause, sentence or part of this Act in any one or more instances shall not be taken to affect or prejudice in any way its applicability or invalidity in any other instances.

Section 16. Termination of Power to Issue Bonds. Except in pursuance to any contract or agreement theretofore entered into by any municipality, no municipality shall borrow any money or deliver any bonds pursuant to this Act to the purchaser or purchasers thereof after June 30, 1953.

Section 17. This Act shall not become operative until the same has been submitted to a referendum vote of all freeholders of the municipality proposing to make any of the improvements contemplated under the provisions of such Act. The procedure therefor shall be as follows:

(1) The proper officers of the municipality shall by resolution propose to the electors the project or improvement contemplated under the provisions of this Act. The resolution shall set forth with reasonable certainty the project or improvement contemplated, together with all other pertinent facts relative to the same; it shall set forth the amount of bonds, to be issued for the purpose of completing said project or improvement and shall direct an election to be held at a time and place to be named therein.

(2) A copy of said resolution shall be published for at least two (2) weeks in a newspaper of general circulation in

said municipality immediately preceding the date of said election. At the same time a notice shall likewise be published of the election to be held, setting forth the proposed project or improvement, the cost thereof and the amount of bonds to be issued. Said notice shall also set forth the qualifications of persons entitled to vote, the method of voting, the date, hour and place of said election. Said notice shall be published in at least ten (10) public places in said municipality at least two (2) weeks prior to the date of said election.

(3) Said election shall be held not less than twenty (20) days nor more than thirty (30) days after the date of the first publishing of said resolution. The proper officer or officers in said municipality shall prepare from the books and records of the assessments of said municipality a list of the names of all freeholders entitled to vote. There shall be placed opposite the name of each freeholder the number of votes which each freeholder may cast, which shall be on the basis of one vote for each frontage foot of property owned by each freeholder abutting said contemplated project or improvement. Upon determining the number of votes to be cast by each freeholder, the fraction of feet shall be disregarded. Such list, except as hereinafter provided, shall constitute the voting list for said election.

(4) Thereafter, and in no event less than twelve (12) days prior to the date set for said election, the proper officer or officers of said municipality shall cause to be mailed to each person on said voting list, at the address appearing on said list, a printed notice of the time and place of said election. Said notice shall state that the purpose of said election is to determine whether or not a majority of the freeholders of said municipality is in favor of the issuance of bonds by said municipality to cover the cost of said project or improvement and shall also state the total amount of such bond issue.

(5) The election shall be held at such public place in said municipality as may be determined by the proper officers of said municipality. The voting shall be by printed ballot, which shall give the voter an opportunity clearly to indicate his consent or objection to the issuance of bonds for the project or improvement contemplated. The officers designated in said municipality, to preside at General Elections, shall preside at

said Election. The voting list theretofore prepared shall be evidence of the right of a person to vote and the number of votes to which each freeholder is entitled, except as hereinafter provided.

A. Any freeholder who has sold his property or properties in said municipality subsequent to the publishing of said resolution by the officers of said municipality shall not be permitted to vote, but the then owner of said property or properties shall be entitled to vote in his place and stead upon furnishing the election officers with the original or certified copy of the deed to said property or properties, which said deed shall clearly evidence that it was duly recorded.

B. Any person claiming the right to vote at said election as an heir of any freeholder in said municipality who has died since the preparation of said voting list, or as Trustee or Guardian under the last will and testament of any such freeholder, who has died since the preparation of said voting list, shall furnish the election officers with the original or certified copy of the will or other document evidencing his ownership of, or interest in, the property of any said freeholder and shall thereon be entitled to vote in his place and stead of such deceased freeholder.

C. Whenever the property of such deceased freeholder is left to joint tenants or tenants in common, the following rules shall prevail:

(1) The vote of any one joint tenant or tenant in common, shall be received where no other such tenant appears and claims the right to vote;

(2) Where one joint tenant or tenant in common votes in opposition to another, the vote shall be cancelled;

(3) A majority of the votes of any such joint tenant or tenant in common shall determine the manner in which the votes shall be cast;

joint tenant or tenant in common having a reversionary interest in said municipality.

(6) Promptly after the holding of the election the election officers shall tabulate the ballots and certify the results to the proper officers of said municipality, the ballots shall be retained in safekeeping by the proper officer or officers of said municipality for one year before being destroyed. If it shall appear from the certificate of said election officers that a majority of votes cast at said election, in favor of the issuance of bonds by said municipality to cover the cost of the project or improvement contemplated, the officers of said municipality shall proceed with said project or improvement and with the issuance of bonds, or other certificate of indebtedness, to cover the cost of the project or improvement contemplated. If it shall appear from the said certificate that a majority of the votes cast were against the issuance of bonds for said project or improvement, said municipality shall not proceed with said project or improvement or with the issuance of bonds therefor. However, another election may be held by said municipality to determine the issuance of bonds for such improvement at any time after one year from the date of said election.

Section 18. Time of Taking Effect. An emergency existing, this Act shall be in force and effect from the date of its approval.

Approved June 15, 1949.