HomeMy WebLinkAboutOrdinance 0006
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ORDINANCE NO.
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AN ORDINANCE PRESCRfBING A SCHEDULE OF RATES
FOR THE DISTRIBUTION AND SALE OF WATER; AUTHORIZING
THE WATER COMPANY TO PRESCRIBE CERTAIN REGULATIONS;
CONTAINING PROVISIONS WITH REFERENCE TO PURITY:
PROVIDING FOR THE MAINTENANCE OF A STANDARD PRESŠURE;
PRESCRIBING ^ GROSS RECEIPTS TAX AS RENTAL FOR USE
OF THE STREETS, ALLEYS OR OTHER PUBLIC WAYS; AND
F t X t N GAPE t A L TY
Be it ordained by the City Council of the City of North
Richland Hills;
SECTION I
PRESCRIBING SCHEDULE OF RATES
AND AUTHORIZING CERTAIN COMPANY REGULATIONS.
All persons, partnerships, corporations or associations
of any character and all trustees or receivers howsoever appointed
engaged in the business of furnishing, distributing or delivering
water to customers for domestic purposes in the city for comren-
sation shall not charge, or attempt to charge, for such commodity
or service a rate in excess of the following schedule per month;
1,000 gallons or less--minimum charge $1.50
60¢ per thousand gallons for the next 3,000 gallons
55¢ per thousand gallons for the next 6,000 gallons
45¢ per thousand gallons for the next 5,000 gallons
40¢ per thousand gallons for the next 5,000 gallons
35¢ per thousand gallons for all water in excess of
20,000 gallons per month
Any such supplier of water may by its own regulation
require that all water charges be paid on or before ten (10) days
from the date +h0t the wôter bill is rendered and may also by its
own regulation provide that the water may be turned off if the
bill is not paid within the prescribed time and fix a maximum
charge of $1.00 for turning the water off, which may be required
to be paid before water is again supplied.
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SECT! ON 2
PURE AND CLEAN WATER
All persons, partnerships, corporations, associations
of any character, trustees or receivers supplying water in the
city through a water works system to the pUblic shall, before
supplying the same to the public use for drinking water, first
cause the supply of water to be chemically tested for any contami-
nated infusion of sand; dirt or fi lth or dangerous bacteria or
disease bearing germs. This test shall be made according to the
direction of the County Health Officer or such City Health Officer
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as may be designated by the City Councilor by both such officers.
Said water so supplied shall be subject to such test at any time
and the City Health Officer where such water supply is furnished
shall make such test at least once a year and more often where
there is an outbreak of any disease that might be induced through
the use of impure or unclean water. All persons, partnerships,
corporations, associations of any character, trustees and receivers
supplying water for such public use in the city shall provide
proper strainers for all wells and all other sources of suppl;'
so that sand, dirt or other foreign substances shall not be
carried into the water for such public use and cause all of the
conduits and drain pipes conveying said water to be thoroughly
washed out and flushed so as to clean the same at least one time
every ninety (90) days. Any such person, partnership, corporation,
association of any character, trustee or receivers or their
officers or agents, when any such drinking water as furnished is
pronounced unfit or infectious or impregnated with sand or dirt
or filth or unclean and dangerous to the public use by the Health
Officer of the County or such Health Officer as may be designated
by the City, shall immediately take steps to purify, clean or
sa~itlze the same.
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SECTION 3
REQUIRED PRESSURE
All persons, partnerships, corporations, associations
of any character, trustees or receivers supplying water through
a water works system to the public in the city shall be required
at all times to maintain as minimum a pressure of forty pounds.
SECTION 4
GROSS RECEIPTS TAX AS RENTAL FOR
USE OF STREETS, ALLEYS AND PUBLIC WAYS
All persons, partnerships, corporations, associations
of any character, trustees and receivers supplying water through
a water works system to the public in the city are hereby required
to pay and a tax is hereby levied upon them for the use of its
streets, alleys and public ways, which tax shall be such sum as
shall equal two per cent (2%) of the gross receipts for water
distributed and sold within the city and any person, partnership,
corporation or association of any character, trustee or receiver
supplying water for the public use in the city is hereby required
to file with the City Council a full and complete accounting and
full report under oath of all water distributed and sold within
the city on or before the 15th day of March of each year for the
preceding calender year or portion thereof and at the time of the
filing of such report shall tender and pay there*ith the aforesaid
tax and provided further that should the Ci ty Counei 1 be dissatlsfle d
with such report or have reason to believe that said report is
inaccurate or incorrect and th t the amount af tax tendered and
paid is inaccurate and incorrect then and in such event the City
Council may cause by order an audit to be made of the books and
records or in ìieu thereof, require such person, partnership,
corporation, association of any character, trustee or receiver to
furnish the Counci I with a certified audit of a reputable firm of
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certified public accountants having an office in Tarrant County,
Texas, for the purpose of determining the correct amount of the
tax here imposed.
SECTION 5
PE NAL TY
'--
In any case where any person, partnership, corporation,
ass 0 cia t ion 0 fan y c h a r d c t e r, t r u s t e 0 r r e c i v e r fur n ish i n º d r ink--
inq or domestic water to the city shall vio1dte any of the pro-
visions of this ordinance, such person, partnership, corporation,
association of any character, trustee or receiver shall be fined
not to exceed $100.00 for dny such offense and each separate dayls
violation shall constitute a separate offense.
SECT Im~ 6
CUMULATIVE EFFECT
Where any of the subject matter hereof is also covered
by any statute of this State this ordinance shal I be deemed and
construed to be cumulative thereof.
SECTION 7
EFFECTIVE DATE
This ordinance shall be effective from and after pub]i--
cation as required by law.
SECTION 8
SEVERABILITY
If any section, paragraph, sentence, phrase or clause
herein contained sha]1 be held to be invalid or unconstitutional
the same shall not affect the remaining portions thereof and the
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Council says that it would have passed the remaining portions
thereof without such inval id or unconstitutional provision.
SECTION 9
EMERGENCY
The fact that there is no ordiJlance in efrect in the city
protecting the inhabitants thereof from unreasonable and exorbitant
rates and charges and the fact that there is no ordinance to pro-
t(;ct the inhabitants of the city' from unclean and· impure water
injurious to the health and general welfare and the further fact
'-
that there is no ordinance in the city to require Lhe maintenance
of a reasonable pressure as a means of fire protection creates an
emergency and imperative necessity requiring he suspension of any
rule that ordinances should be read at three meetings of the City
Council and said rule is hereby suspended éJnd this ordinance is
put upon its final reading and passed by a vote of 5 ayes and
no nays and shall become effect ive from and after its passage and
publication as provided in Section 7.
Passed and approved this 1st day of February, 1954.
ATTEST:
.
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City Secretary
t~ 0 r t h R i c h 1 and H ill s
, ~Íi~A rcrR
North Richland Hills
(Se a 1 )
Publ iCdLion completed this
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An¿ST~¿ rJ! . L4é
City ~e~r"tury ~
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REPORT AND ORDER OF
CITY COUNCIL OF NORTH RICHLAND HILLS
and
ORDINANCE AMENDING ORDINANCE No.6
Establ i~.hin'J Water Rates
Dr ",or '~,..., D"'c"'n1r-c'r ¡ 19"") TO)/-'''' \,u·,tpr C()rTlo"""n,¡ sueo] "I ,-¡
j __ l ,,-' ! t: ,,(.... ,;,) _ , v ..) ,~. .. <:1 ...\ , Cl "- ~.' ! ¡:~ } _. tJ, l~ ,
nd h2S since continued tc supply, water for domestic and all other
uses to a majority of tho consumers in North Richland Hills. A com-
paratively few consumers are served by Smithfield Water Company.
Prior to said date the water rates of Texas Water Company were:
$1.50 minimum for 1000 gallons per month
.60 cents per 1000 gallons for next 3000 gallons
.55 " II II II II rt 60ÖO It
.45 II It II II II II 5000 It
.35 II It II II II II 5000 II
The rates of Sm i t h fie 1 d Water Company had been higher than
those of Texas Water Company but the number of their customers was
so sma 11 as to cause no concern.
Although North Richland Hill became an incorporated town
in April 1953 and had tal~en no action with reference to establishing
water rates, since the rates then appl icable seemed fairly reasonable,
nevertheless Texas Water Company, hereinafter referred to only as
Texas Water, ignoring municipal rate regulatory rights and with no
approach to the City Council, undertook to establ ish a new schedule
of rates, effective Decembcr 1, 1953, as follows:
$3.00 minimum for 2000 gallons per month
.65 cents per 1000 gallons for next 8000 gallons
048 " " " II It "10000 It
On February 1, 1954, City Council after long consideration,
adopted Ordinance No.-'-. establ ishing as lawful rates, those rates
which had been appl icable prior to December 1, 1953, first quoted
here i nabove.
City Council, nevertheless, feel in,) a deep sense of respon-
sibility both to its constituent citizenship and to the water companies
d termin d that it should hold a hearing, after notice, and give the
water companics an opportunity to present evidence along with all
interested parties, and on such evidence prescribe a reasonable rate.
Formal notice was served upon the water co anies under date
c·f March 1054 that City Council would c'n 2 .April lC1S4,
"...consider tho matter of prescribing a reasonabJ and
legall/ 2ppl icable r2te and 3fJpropriate schedule of rates which me)
be lawfull appl ied and collected bj' any water corn~anyrt, etc., and that,
!! t\ n y and a J 1 r e 18 van t Q n d fr:::t e r j ëd e \/ i d 2 nee, i n for m:.:Jt i c nor
facts with reference to such rates will be heard which may be pre-
sented by any party and
b' "'nv 1M1··tn¡:,<~<~ "
J '-" J of ~...."-'.
At the request of counsel for Texas Water this hearing was
postponed to May 7th and for convenience of City Council it was post-
paned to May 14, 1954, then at request of counsel for Texas Water it
was further postponed to May 28, 1954, at which time the heÐrin~ pro-
ceeded.
1l members of the City Council were present. Texas Weter
appeared by Counsel, Sam Burford, and also by its Manager and Engineer
J. 1<:. Ale win e, a s we 1 1 a s j t s 9 e n era 1 a C c 0 u n tin 9 0 f f ice r s , J 0 h n S cot t.
Smithfield Water Company, hereafter referred to only as Smithfield,
appeared by Counsel, Jenkins Garrett. All parties announced ready for
hearing and a full hearing was had, at least as to Texas Water and its
now successor the town of Richland Hills. The situation as to Smith-
field will be subsequently noticed.
It is Council's responsibility to establish rates which
being reasonable with respect to consumers, will yet produce a fair
return to the water companies under statutory standards based upon
the fair value of their properties used and useful in rendering its
service to the publ ic. "Fair return!! allows the exercise of a reason-
able discretion by Council, 1 imited nevertheless to an eight (8%) per
cent maximum. Art. 1119, V.A.C.S. 1925.
Public utility rates are usually fixed with reference to a
so-called rate base or valuation of the property devoted to the publ ic
use. The rate base to be employed is the present fair value of the
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propcrty of the util it}' used and usefu1 in rendering service to the
public. Sue hv a I u e ex pre sse din m 0 n e ya f t era 1 low a nee for 0 per a tin 9
capital establ ishes the rate base. The inquiry is as of the date of
the hearing.
Texas Water denied to us most useful evidence and information
ordinarily desirable in rate proceeding such as origina1 costs, per-
manent improvements, a statement of required operatinG capital and de-
preciation; and such as reporduction cost, less depreciation, plus
operatina carital; or even book values. Texas Water re1ied entirely
upon an appraisal by Joe J. Rody Co. Appraised value has been critioized
as a standard for arriving at a base rate and obviously is not as
satisfactory or reliable as other methods for arriving at a sa tis-
factory base. They did, however, introduce in evidence a plat or
drawing (received as exhibit No.1) which showed locations and distance
of the entire distribution system. All lines were described as to
kind and size and production facilities'Nere described and located by
witness Alewine. Counsel requested permission to withdraw the exhibit
and substitute a reproduction but no such reproduction has been suppl ied.
Had this been done, we on our own initiative could well have arrived
at values usually employed in these cases.
We accept the Rady appraisal - lacking any better evidence,-
with qualifications. Moreover, that report is 1acking in detai1.
Naturally we can and do only accept such items as may properly be con-
sidered under appl icable legal principles. It is a1so unfortunate that
Texas Water Counsel has not suppl ied us with a reproduct ion of the plat
or blueprint of Texas W::tcr facilities system. We have aJso made our
own investigations and have a1so considered such matter of common
knowledge as of which we may take judicial knowledgeo
A. THE WATER SYSTEM. Texas Water has a single integrated
system operating within the corporate 1 imits of North Richland Hills,
Richland Hills and Richland Park, as well as in surrounding areas whim
are outside the corporate 1 imits of any municipal ity. In such circumstances
the va 1 ue of the property of the ut i 1 i ty emp 1 oyed by it in the i ntrac i ty
business must be considered, for rate making purposes, separately and
apart from that employed in intercity business. Property employed
....
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jointly in the two classes of business must be proportioned between
the m ace 0 r din 9 tot he use act u all j mad e 0 fi 1. T e x a 5 Wa t e r s i rn p 1 i fie d
our problem here, however, by proposing that the capital investment of
production facilities for North Richland Hills be made on a pro-rata
basis of consumers throughout the entire system. We agree Ðnd find
that this is a fair method of apportionment. Witness .Alewine testified
that to the best of his knowledge there are approximately 1600 consumers
tied into the distribution system as a whole and that of these 162 arc
,
within the corporate 1 imits of North Richland Hills. He, therefore,
suggested an allocation of ten (lO%) per cent of the value of produc-
tion and storage facilities to capital investment in North Richland
Hills, which when taken with the value of the system actually located
in North Richland Hills, plus an allowance for operating capital would
ccnstitute a fair rate baseo We accept this as reasonable, being of
the op¡nion,as we are, that it offers a fair solution of the only diffi-
cult problem (if it was) presented in this proceeding.
In fact, in connection with allocations, our Mayor in Opf?n-
ing the proceedings had said: "While we are presently of the opinion
that by-and-1arge prorations and allocations should be based upon the
ratio of taps in North Richland Hills to the total taps in the inte-
grated system, that opinion is not firm nor does it foreclose our full
and fair consideration of any other formula advanced by the water
~omO::1n' <,s It
l, 't a ,.;..
80 CAPITAL INVESTMENTo We accept witness Alewine's allo-
cation of $29,664.00 as appropriate to production facil ities appl icable
to North Richland Hillso This is in spite of the fact that the Rady
report would indicate a figure of $20,094.52 if based upon the 1 %
allocation proposed by Texas Water as already noted. We will assume
that the difference of $9,570.00 represents an allocation of value of
distribution lines which bring the \'.vater to our city gate.
The oral testimony was that the value of facilities located
within North Richland Hills is $60,387.00. However, a review of the
Rady report or a;::Jpraisal indicates the value of these facilitie~ to be:
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Distribution mains
:1) 36,410.68
Service 1 ines
5,776.00
Customers meters
3,478.00
Total physical properties
45,66'1.68
Overhead
6,8.49. 7 C
Total
S 52,514.3E3
In view of the fact that the oral testimony fixes a value
here in excess of even th appraised value assioned by the Rady report,
IV hie hi::: its (, 1 f sub j e c t t t h é,; C r i tic ism :: 1 rea d y 1 eve 18 d a tit, 'IV e
accept the Rady report as the more re1 iable of the evidence submitted
in this respect.
~rom the foregoinG we conclude that th value of the prcperti s
of Texas Water uS2d and useful in rendering it's s2rvice to the con-
sumers of North Richland Hills is the sum of $82,178.
.
This fi:Jure
is therefor,:: th redo base appl icab1e al ike to Texas Water and to the
municipality of Richland Hills as successor to Texas Nater. This
succ ssion will be treated later.
c. INCO~[ AND OPERATING COSTS. Texas Water presented
e ¡dones that en th2 basis of the 1953 rates for 162 customers the
total inco~f was $9,279.80, whereas operating exposes were $8,22 .80.
Based on the 1953 rates, this wûuld indicate an average monthly water
bill of $4077 per customer. On the basis of the rates desired by the
Texas Water the total income would have been $ll,497.57, whereas oper-
ating expenses would have increased to $9,333.69 because of an income
tax factor. This would indicate an average monthly water bill of
,
$5.91 per custoffi8r, or a wat r USBJC r 0,
Gallons per month. It
is considered that this rate of water usuage is not representative of
this area for the following reasons:
(J) During 1953 a large percentage of the residences
involved were constructed and occupied. It is customary for the
ccnstruction contractor to subscribe to service prior to com-
rlction of the construction with a resulting low usage of water
until the structure is permanently occupiedQ By the end of 1953,
r
the major portion of the residences in the area served by Texas
Water were fully occupied.
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The residential lots arc much larger than averag
with resulting increased lawns, gardens and shrubbery. The
ratio of residences havin] more than one bath and air-conditioning
is also much hiJher than would be encountered in the average area.
(3) A review of water consumption reported in official rub-
1 ications in 145 towns with 2: population of 5,000 to 25,CiOC reveals
a daily water consumption of 9C.9 gallons per capita. Using this
avc~raSJe
and an estimate of
" 1
02' persons per
service, the
average
water consumption would be 9,544 gallons per month. In order to
provide an additional comparison 2 roview was made of the water
consumption of Texas City, Cameron, Memphis, Sealy, Valley Mills,
Pharr, Cisco, and 8renham. This review indicated an average con-
sumption of 9,271 gallons per service during 1949.
In ViE"N of the abo\',=, it is considered that the water con-
sumption will average approximately 9,500 gallons per tap per month
rather than 6,050 gallons per month.
Based on a more real ist ic water consumpt ion, as ind icated
above, the income and costs would be as follows:
2,000 ,.. @ 3.00 min. $ 3.00
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7,500 ,.. @ 0.65 per M. 4.88
\.:I Individual Bill $ 7.88
$7.88 x l62 x 12 - $15,318.72 Total Income
Direct costs
$ 5,483.20
4,917.}6
$10,400.96 Total Costs
The total net income after tax then appl icab1e to the invest-
Income tax factor
ment is $4,917.76.
D. PROFIT ON INVESTMENT. As Gutl ined in B above, the total
investment on which to apply the gross profit is $82,178.38. The
total profit under the desired rates and based on a reasonable water
consumption is $4,917.76. The percentage of profit on the value of
the system is therefore 5.908%.
E. REASONABLE PROFIT. A Texas Water witness testified that
a water company operating solely within North Richland Hills should be
entitled to a return of at least 7% and perhaps 8%, and that a larger
utility might conceivably get by with 6%. In establishing a fair rate
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of return, it is desirable but unnecessary to consid";r the entire
system, as was done in determining the valuation. It is also necessary
to consider the fact that the supply of water is essent ial to th::; 1 ive1 i-
hood of the residents in the area and is in constant demando The element
of capital risk is also of im~ortance since the greater the risk, the
larger the percentage of anticipated profit. It should also be noted
that the developer of North Richland Hills supplied initial capital
in the amount of $21,200.00. It is also necessary to consider the fact
that, accordina to th laws of the State of Texas, the rates must pro-
vide the utility with a profit..
Texas Water's element of risk has been substantially nil.
The evidence of Texas Water was that mortgage interest en its entire
system was 4% of the balance owed. Since the income tax factor of
50% which was used would allow deduction of this interest, it could
be considered that the maximum mortgage interest would be 2% of the
value of the system. It is, of course, something less. In view of
these facts, it is considered that a net profit of something in e:<cess
of 4% after taxes would be entirely reasonable. Such return is in
substantial agreement with the present money market.
F. DETERMINATION OF RATESo In determining a reasonable
rate, care must be given to the type of util it)' involved. It is
characteristic that the initial supply each month is expensive to
provide to the customer, whereas the cost per 1,000 gallons reduces
sharply as the volume increases. This condition exists to a certain
point where the costs reduce at a much slower rate. An attempt will
made to conform to these known facts. Based on a reasonable profit
of 4% on a valuation of $82,l78.38, a net profit of $3,287.l4 should b
real ized after operat ing expenses, 2% tax, and income taxes. With
operating expeses of $5,483.20 and a franchise tax of 2% of the gross
income amounting to approximately $250.00, a gross income of $12,307.48
would be required from the rates to be establ ished from an average
monthly consumption of 9,500 gal Ions per customer. An average monthly
bill of $6.33 per customer would be required to secure this income.
The following rates would provide this income for the consumption
noted:
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$2~50 minimum for 2000 gallons per month
0~5l cents per 1000 gallons for next 7500 gallons
Further consideration must be given to those instances of
non-payment of bills, to the cost of collection of del inquent bills,
and contingencieso It is therefore considered, and we flnd, that the
following rate schedule is reasonable:
$2.50 minimum for 2000 Gallons per month
0.60 cents per 1000 gallons for next 8000 gallons
0.40 " n !! 1\ n !I 1 naGC) !!
0.35 " " n II 11 over 20,000 gal 1 ons
G. COMPAR ISON !NITfl o T H Er~ RATES. The fol ¡ ow I ng tabul at ion
indicates a comparison of how the above proposed rates compare with
rab?s in other towns served by private util ¡ties:
TOWN CUSTOMERS 5t/:G 1 C MG 20 MG 25 t'JiG
North R i ch I and Hi 1 1 s 162 4,30 7.30 1 1 .30 1 3.05
Te xa s C i ty 3,243 1 . 75 3.00 5050 6.75
Ca rnf, r 0 n I ,460 3.25 5.75 1 0.75 1 3.25
tV'emph I s 1 ,075 2.70 4.55 o nr:: 9.55
l_' . \; ,,'
Seal ,,I 6C6 2 .50 4~5C 8.00 9.75
;
Val ley M i 1 1 s ':- r- ,) 2.70 4.2C 7.2(' 8.70
~ J ,)
The following tab~tation indicates a comparison of hew the
above rates comparE: with other town::: served by public utilities having
approximately the same number of customers as that of the Texas Water
integrated system:
TOWN CUSTOMERS 5 MG 1 0 MG 20 MG 25 MG
Nor tll R I :h 1 and 1J I 1 , <é' 1 ~ ~ .j (\ .,. ~n 1 J " r, 1 ')
¡¡ I r:;,¿ '" ,; ',: I . ..." \..' · ·
Beev ì 1 1 75 (; 1 ..,~ ":" .25 r:n ~n
I '-, , . I J '-,' ~J o ...J \} ;~:J · J ',I
Eag 1 e Pass 1 ,650 2 ?,.. 3. CC 4 .35 4 .95
eLJ
Pharr I 800 2 75 , ~50 7 00 R ?"
i'
, . j · " . ,- ;)
'"' i sea I 900 2 00 ? 75 /~ 25 5 00
l. , . . · ·
Branham I , 760 1 .86 3 .66 6 .66 8. 1 6
The ebove information was extract~d from Bulletin No. 60
issued by the League of Tex8s Municipal ¡ties. Froiìl the above, it is
apparent that the proposed rate is more than equitablc to the Texas Waèr.
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Ho SMITHFIELD WATER CO. Although the Snithfie1d Water
Co. i:: In a more development stooe and has not been op':'ratinQ within
the corporate 1 imits of North Richland Hills for a sufficient period
of time: tc cstab1 ish 2 rate b(lsed on the ir exper ience, it i~; con:': idpred
that the factors which affect thp rate for the Texas
U:r Sr;. will
ultimately affeGt th Smithfield Water Co. and the rates ~hould
ident ical.
I. TOWN OF RICHLAND HILLS AS SUCCESSOR TO TEXAS WATER.
Sine th hear in h r in !~¡chlëjnc! Hills, 2. rnunir::i~;·;lit. incorro;^,..'·'Ô
under G n r 1 law,has purchased the Texas Nater Company system described
herf:in ulder the heedinQ "The Wat r
ste~·n.!! The distribution of
'//.Jt(~;r is classed 3::=;
u U 1 i t y i nth s a me :?': n:J J :3 t h c: d i s t r i hut ion
f (PS or electric: s r\fic". Thé": rJi::otribution or :¡at r i~, r 0Uì:2t d
urd r TC'xJ~' st:ltut '3 ?~S 2. publ ic ut i1 ity.
Cities and towns ncrfor both QGV rnmental fun:tions dn2
0n3au in private ent2rprise. Thp distribution of water as Q publ i
util it IS not the exercise of :3 uovernmr:nLì1 fun::::tion. To thc::::ontrz'r,
it i5 the.' ;<crcise of:) busin~'ss or callina cêlrri"d on by F:ichl':.n:'
Hills in::¡ purel)' proprietary s nse. \Ve c;on:::lucie, therefore, as:3 ¡natter
o f I a ':1 t h 2: t w hen R i c h 1 and H ill s e n gag e s j nth e p r i v 2, t c bus in" s s, 22 ~'
distinguish(::d fran, the p'xnrcise of a gevprnr¡¡ ntal function, of c!is-
tributing vJab=r in another incorporated tO'Nn of co-equal rank and
status (or even Jess) th;:¡t it is subject to the same laws as any other
privately owned wat r company - such for instance as Texas Water. It
follows that the rates which it may charge in North Richland Hills,
l' h· 1
\,'-} 11 ( C i J S a S Q a
C)"'')<;ral law town,
is subject
to regulation by the
;OVBrnment body of North Richland Hills.
The rates which we have found to be reasonable as to Texas
Water, we also find to be reasonable as to Richland Hills as successor
to Texas Water. In prescribing such rates we are not unaware of the
fact that some substantial factors entering into our consideration as
appl ied to Texas Wat r arp not present when such system is in the
hands of Richland Hills, such for instance as the income tax factor
appl ied at 50~, and ad valorem tax and other items.
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It is sufficient to the present to say that we have con-
sidered the maximum mortgage interest rate for Texas Water in arriving
at the rates to be prescribed and that we find that such factor would
be an off setting equivalent of r~ichland Hills' intr;~rest on bonded
indebtedness apportionab1e to North Rich1and Hills. We ar~ content
for the time being to overlook those factors which would contribute
to a lesser rate and alJow the present opF;rating utility (Richland Hill::,)
to accumulate an operating Dxperience.
J.
Ti-
"
S WAT~R ORDERED TC MAKE REFUNDS.
Þfter North Richland
Hills City Council adopted its Ordinance No. ~ prcs:::ribing rates
and penalties, Texas Water ceasF;d bill ino its consumers in North
Richland HilJs. Thereafter and under date af March 29, 1954, legal
counsel, Sam P. Burford, proposed:
. eo.
it would seem desirable not only from the standpoint
"
of the Company, but also of the woter users, for the Company to bill
Its customers in tho orea. As you k~ow, the Com~any discontinued its
bill in'J shortly after the rate ordinance was pnacted. In this con-
nection~ the Company proposed to bill the water users on the basis
of the rate which prevailed prior to your recent ordinance, that is,
the higher rate.
If upon final determination a rate is establ ish"d
lower than that which the Company will use in the interim period, that
is to say, lower than the rates which prevailed prior to your ordinance,
then the Company wil I refund to the customers the difference betwAen
such lower and higher rates from the time cf passage of said ordinance
until such final determination."
Th2 for going rop sa] was accepted by Council on March 31,
1954 "with the '~ualific2tion and the distinct understandinç; that the
Cityfs permitting you to render such bills is not to be accepted as any
waiver of any character of any rights which the City Council hasl! and
I'This action is taken as merely a practical solution to a practical
problem and no more. The Council also agrees that by you rendering
such bills in the interim period you shall not be subjected to the
penalties prescribed in the present ordinance.!!
In view of the rates prescribed herein and of the foregoing
agreement Texas Water Company is hereby ordered and directed to make
-10-
refunds to all water users within North Richland Hills of the differe~ e
between the higher rates at which users were billed and the lower rates
herein prescribed and as will be set out in an amended ordinance. Such
refunds shall be made for the months of February to September inclusive
and shall be made within thirty days from the date of adoption of this
report. Such refund may be made, if desired by Texas Water, in one
check to North Richland Hills accompanied by a 1 ist of users, addresses
and individual amounts.
K. CONCLUSION: On the basis of the preceding analysis the
present water rate ordinance will be amended to provide the rates set
forth in paragraph F above. This amendment will be acted upon during
the next regular scheduled council meeting. Copies hereof shaIl be
served en all intc:rested parties by the Secretary immediate])!.
APPROVED AND ORDERED FILED this
,'(
December 1954.
~~
-" (--
D. F. DENNEY
Mêyor
- - (f
r3-~~ -'_~
BO~; ;;-~ ð-r
Alderman & Secretary
~t
Kg B.. NACE
Alderman
7' f ~¿-'..ú-LJ-
T.~:~'HJlSTOPH~
Alderman
w7 /hÆ-4A ~
W. T. MacCARTHY "\j
Alderman
~
N. A. ELLENBURG
Alderman
--
-11 -
LAW OFFICES
CHRISTCF'HER & BAILEY
FORT WORTH 2. TEXAS
T. B. CHRISTOPHER
M. WARD BAILEY
October 8, 1953
CONTINENTAL LIFE BUILDING
F"ANNIN 23S6
Honorable J. W. Watson, Mayor
and Board of Aldermen
North Richland Hi lls~. Texas
Re: Proposed water franchise:
C. F. Alexander, Charles
E. McArthur and Hilding F.
Hendrickson
Gentlemen:
At the last counci 1 meeting a representative of the
above mentioned three gentlemen and apparently also as repre-
sentative of Texas Water Company placed before the counci 1 an
ordinance proposing that North Richland Hi lls grant said three
gentlemen a franchise to furnish and supply water to the general
public in North Richland Hills and providing for a term of 50
years. The original of this proposed ordinance was handed to
me for study and a report.
Th ere pre s e n tat i ve a t the c 0 u n c i 1 me e tin g s tat e d t hat
each of the above named gentlemen were stockholders in Texas Water
Company, which the proposed ordinance shows to be a Texas corpora-
tion. Under the terms of the ordinance the obligations under the
franchise may be performed by the named gentlemen their assigns,
or Texas Wa ter Company". See Sec t i on 6. The represen ta t i ve
explained to us that Texas Water Company is an operating company
only and owns no properties. In other words, it is simply a
management and operating company.
The proposed ordinance presents difficulties requiring
that we move very cautiously.
(1) As far as I am concerned, and I assume each of the
rest of you, I do not know who Messrs. Alexander, McArthur and
Hendrickson are. I do not know whether they live in Fort Worth
or wnere they live. An ordinance of this kind granting a person
or persons a franchise to supply water imposes reciprocal obliga-
tions and substantial financial responsibility.
Page -2-
(a) Therefore, I suggest that before we even
further consider the enactment of the proposed ordinance that we
require one or more of these gentlemen to appear before the council~
that we require each of these gentlemen to supply us with personal
sworn balance sheet statements for the purpose of establishing their
financial responsibi lity, or should they be a partnership that the
partnership furnish us with a sworn balance sheet statement for the
purpose of establishing its financial responsibility.
(b) Moreover, I am in complete ignorance as to the
ownership of the water system presently provided in North Richland
Hills. I had assumed that the present system had been installed
when North Rich1and Hi 11s was merely a suburban development by the
Texas Water Company, which is the only concern I have ever heard of.
The owner or owners of the present system has some rights in the
vi 11age and due to this fact I suggest that we require the above
mentioned gentlemen who have applied for the franchise to satisfactor-
ily establish their ovvnership of that system. This is important
because within certain limits hereinafter discussed I do not think
that it would be advisable either to grant franchises or to permit
competing water systems.
(2) The foregoing discussion also leads me to now con-
sider the uncertainty as to whom the franchise should be granted
in view of the fact that the three gentlemen above named individually
apply for the franchise, but specifically provide in Section 6, cited
earlier herein, that the obligation of supplying water may be per-
forme~ by, Texas Water Comp~ny. Specifically no~i~e the use of the
word I'or'. I attach some Importance to our definite knowledge of
who is to perform the obligation, recognizing, however, at the same
time that the franchise as granted is a valuable right which may be
assigned. It is important, if for no other reason than that the
assignment of the contract does not relieve the persons to whom the
franchise is granted of the obligations thereof. The way Section 6
is now prepared we would not know whether we could look to the
grantees or whether we would have to look to Texas Water Company for
enforcement of the obligations of the franchise or of whom we would
require performance in the exercise of the counci 1 's duty of regula-
tion. The franchise should be granted to some person definite in
order that we not at sometime now or in the future find ourselves
dealing with persons who may be in the position of being able to pass
the buck. Pardon the use of the well understood colloquialism.
(3) In considering this proposed franchise there is also
the important question to consider as to what portion of the city
within which it might or should be granted. You, as I, are aware
of the fact that the present water distribution system, by who ever
operates, is presently occupying the streets and distributing water
Page -3-
in a segment only of the territory comprehended within the city
limits. You are also aware of the fact that a portion of the terri-
tory within the city limits either already has or else a water
distribution system is in the process of being constructed by another
wa ter company.
(a) We must consider the wisdom, or lack of it, of
granting a water franchise co-extensive with the city limits such
as proposed by the ordinance here under consideration and, there-
fore, of having competing water systems in North Richland Hi lls,
or whether it would be the part of wisdom to grant the present appli-
cants the right to operate in that portion of the city presently
occupied by them and to grant the other water company a franchise
to operate in that part of the city limits presently occupied by,
or about to be occupied by, the other water company. If there
should be a division of franchises the ordinance should certainly
provide a definite fixed line of demarkation within which each may
operate. That at least is my thought because I am not of the
opinion that they should operate in competition. The matter of
competition, however, is also a matter, the advisabi lity of which
the counc i 1 must pass upon.
(b) In this very connection also, I think that it
is necessary for us to have more information than we presently have
as to general status and future possibi lities, particularly in con-
nection with the fact that at some future date the city must be
supplied with a sewer system. We all know from rumor and report
that another water company is under contract to install not only a
water system, but also a sewer system, in that part of our city known
as North Richland Hills, Second Filing. Moreover, the probability
of the city itself installing and operating a sewer system is some-
thing which must be in the future. Nevertheless, sewers might be-
come available to us through the other company by reason of the fact
that the sewer system wi 11 come down to within what we might call a
stone's throw of us. There islhe possibility, since rumor and
report has it that the same people who are preparing to furnish
water in the Second Filing portion of the city are also to install
the sewer system, that they might be sufficiently grasping and
greedy to refuse to install sewers in the territory known as the
First Filing unless they could also provide the water that runs
through the sewers. In event that such a situation should arise and
should the Second Fi ling be provided with sewers, but the portion
known as the First Filing have no sewers, it would certainly compli-
cate the situation at some time in the future and might compel
purchase of the system installed in Second Filing. Of course that
could be what would want to be done anyway, but on the other hand,
it might never become advisable, at least at the moment and under
all of the circumstances, we do not know.
Page -4-
(4) In connection with Section 2 of the proposed
ordinance there is the provision that the grantees after making
any excavation in the streets ¡;shall at their expense promptly re-
fi 11 and restore the surface of same to an approximate original
condition as before such excavation:.
(a) As was brought out by some one of you gentlemen
a t the 1 a s t c 0 u n c i 1 me e tin g Vi hen t his m ë:. t t e r Vv' asp res e n t ed, the
word 'Iapproximate:; is indefinite and somewhat uncertain and the
language should be more certain.
(b) The language should be more certain particularly
in view of the fact that, as each of you know, we have under con-
sideration the adoption of an ordinance which would include definite
and certain specifications for restoring the pavement by any utility
which may make excavations therein. My suggestion would be, there-
fore, that no ordinance of this type be presently adopted, at least
unti 1 such time as we have enacted the proposed ordinance specifying
the method for restoring excavations in the pavement in order that
any franchise which is granted shall be subject to the requirements
of any valid ordinance. I am of the opinion that they would be any-
way, but in view of the other difficulties presented I could personal-
ly see no reason for being in any great burry about the adoption of
the present proposed water franchise.
(5) Further, in connéctionwith Section 2, last sentence
thereof, the question arises in my mind as to whether or not in the
granting of a franchise of this character we should not reserve some
right to require the use of water lines of sufficient capacity to
adequately supply the demand. This is just a suggestion for your
consideration. It might be that the reservation should take the
form of being able to require, under some sort of penalty, the main-
tenance of a given pressure. This primarily occurs to me, as it has
perhaps to you, by reason of the fact that we have all experienced
times during this past summer when we found that we had practically
no water and no pressure during certain hours of the day.
(6) In connection with Section 3, I must admit that I do
not know the general custom, but it does occur to me that the water
company, if it is going to distribute water, should make all instal-
lations up to and including the meter without cost to the consumer.
To that point it is the property of the water company and the water
company should be prepared to make that investment.
(7) Section 5 contains a provision with reference to
taxes, being approximately one-half of the first full paragraph of
Section 5 and the latter part thereof which reads:
Page -5-
¡'And it is a lso express ly agreed that the
aforesaid annual payment shall be in lieu of any
and all other and additional occupation taxes,
easement and franchise taxes or oharges (whether
levied as an ad valorem, special or other character
of tax or charge) ~ and in 1 i eu of a 11 other and
additional municipal taxes, charges, levies, fees
and rentals of whatsoever kind and character and
howsoever levied which Vi 1 lage may impose or here-
after be authorized to levy and collect, excepting
only the usual general and special ad valorem
taxes which Vi 1 lage is authorized to levy and im-
pose upon real and personal property. Should
Village not have the legal power to agree that the
payment of the foregoing sums of money shall be
in lieu of taxes, licenses, fees, street or alley
rentals or charges, easement or franchise taxes
or charges aforesaid, then Village agrees that it
wi II apply so much of said sums of money paid and
to be paid as may be necessary to satisfy said
grantees' obligations, if any, to pay any such
taxes, licenses, charges, fees, rentals, easement
or franchise taxes or chargesil.
If this or simi lar franchises are granted the language
with respect to taxes should be as follows:
And it is also expressly agreed that the
aforesa i d annua 1 paymen t sha 11 be in 1 i eu of any
and all other and additional occupation taxes,
easement and franchise taxes or charges, and in
lieu of all other and additional municipal charges,
license fees and rentals of a like or s-imilar kind
or character to those herein enumerated and howso-
ever levied which Vi llage may impose or hereafter
be authorized to levy and collect, however, specifi-
cally and only excepting the usual general and
special ad valorem taxes which Village is authorized
to levy and impose upon real and personal property
and nothing herein contained shall be construed to
relieve grantees from the payment of such usual,
general and special ad valorem taxes which Village
is authorized to so levy and impose.
Respectfully s
TS C / m r
I
't>
Richland Hills \oJater System
Old Rates
$]..50 minimum for 1,,000 gallons per month
Next 3,000 gallons at &J¢ per 1,000 gallons
Next 6,000 gallons at 5S¢ pe~ 1,000 gallons
Next 5,000 gallons at h5¢ per 1,000 gallons
Next 5,000 gallons at 40¢ per 1,000 gallons
Over 20,000 gallons at 35¢ per 1,000 gallons
Richland Hills Water System
New Rates
Effective December 1, 1953
$3.00 minimum for 2,000 gallons per month
Next 8,000 gallons at 6S¢ per 1,000 gallons
Over 10,000 gallons at 48¢ per 1,000 gallons
,
4': I c""
L
...,
LAW OFFICES
CHRISTOPHER & BAILEY
FDRT WDRTH 2. TEXAS
T. S. CHRISTOPHER
M. WARD BAILEY
December 18, 1953
CONTINENTAL LIFE SUILDING
FANNIN 2396
Mr. J. W. Watson
4217 Cummings Drive
Fort Worth, Texas
Dear Sir:
In connection with the recent unreasonable increase in
water rates I suggest that the Council immediately consider
adoption of the enclosed ordinance.
Not only is the adoption of such an ordinance necessary
from a rate standpoint, but is equally advisable from the stand-
point of providing appropriate regulations with reference to
purity, pressure and providing a tax.
The rates set out in the schedule of rates in Section
1 are the rates which were applicable by Texas Water Company in
all areas in Tarrant County served by them prior to the increase
reflected in your November bill. For the ordinary homeowners in
our area during late fall, winter and early spring months, which
i sat 1 e a s t half 0 f the yea r, the i n c rea s e i s sub s tan t i all y 1 00% .
I understand that this increase was also made effective
in Richland Hills and Richland Park and perhaps some other
districts, but that it was not made effective In Riverside nor
Arlington Heights and possibly other areas within the city limits
of Fort Worth where Texas Water Company supplies water. In those
areas the schedule of rates remain as set out in the above schedule
except that their rate is 38¢ per thousand for all water consumed
in excess of 20,000 gallons whereas the above scheduje provides a
rate of 35¢ per thousand for water in excess of 20,000 gallons, it
is not important, at least for the present time and no doubt for
a long time to come, it being extremely doubtful that a rate for
water in excess of 20,000 would have application to any person in
our area.
It might be advisable to have some of the officers of
Rithland Hi lls and Richland Park confer with us and probably lake
joint action in the premises.
This for your prompt consideration.
Yours
S. CHR IS TOPHER
TSC/mw
cc: N. A. Ellenburg
R. F. Lambert
Jim Norman
Paul Kuti lek
,,,",,
SMITHFIELD WATER COMPANY
4828 GREEN OAKS DRIVE
FORT WORTH 14. TEXAS
January 12, 1954
Mr. J. W. Watson
4217 Cummings Dr. W.
Fort Worth 11, Texas
Dear Mr. Watson:
Pursuant to your request today I am sending you
the water rates of the Smithfield Water ComDany:
$3.00
49¢
36¢
For the first 267 Cu. Ft.
For each additional 100 Cu. Ft. up
to 1,337 Cu. Ft.
per 100 Cu. Ft. over 1,337 Cu. Ft.
Very truly yours,
~~~
Je 1kins Garrett
JG: jh
v
~
1'CRi N lu l1ulUH l\'¡ ¡;rt.i....n.iiD HI LLS
North h1chland ~11., 1'.xa~
February 8.. 19M
~mi thfield,iator Com1)any
4d:¿b Jreen Oaks
i ort 4iorth. J,'eXf.\8
\rentlemenz
Attached is a cory of an ordin¡;noe enaoted a.... the rCf';ular
meeting of' our oity council. i<cbruary 1. 1£164. T/'1is
ordtïnD.nce i3 in tho hnnds of the Neighborhood hews and
will be published on February 11. 1954.
Yours very truly,
J. ". Watson
Mayor
,j ~¡ /-
-~-'~
TOWN OF NORTH RICHLAND HILLS
North Rlohland fiills, T.xas
Febr.1ary 8, 1954
Texas Water Compeny
2811 Raoe Street
Fer t Worth 11. Texas
Gentlemen,
Attaohed is a copy of an ordiilanoe ena.oted at the rÚbl.dar
meeting of our oity oouncil, February 1. 1954. This
ordinance is in the hands of the Neighborhood lIbW!> and
will be published 011 I'ebrutlry 11, 1954.
Yours very truly.
JVì/w
J. Y'ì. Viatson
;:';a.yor
v.øm W.ITIIJI
IOIrI IGCltLØD BILlS
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....... VO\i14 .... .,,796.ou ac1er \M I'" n'-a Ød vo1l1d be ",CJ14.3'7
_II" tbe ...iN4 œ\el. The pwo..ta¡e of pretl' OD tbe iDftatlla' t.a
tJaentOft II toUcwa.
1'" _. .. .',796.60 t "',265.90. s.-
D.t..... __ 16,014." t 165,265.90 a 9.-
~ n.a-- .. ., 1De111d. .. ....u.. \az of ~ ,.,.w.. '- \be ..
_ .... N'''''.
&. ~-'-i~I" ~f'J'
!be !... w.t.er Co. ,..Ut1e4 ... a vø.r .....".., .,..\1111
..1.e1r' dtatSa ..rt.h nt~.. IUJJa aIIo1d4 "- _\1 t1etl to a roet;øa .r
-4-
*' 1.., ,. aaci ""'s- ':r..... ., .. lU'¡." -'uu.. IIic1I' ....,,-'t4J'
pt, '" vitlt ft.C. Ia .....~ 1dac.. tat? 1Úe .t "'-a. 1.\ Þ ....
.1~ ......". to ~e tJa. _tiN qat_. u .. doH 1&
.....I\'1ta¡ \Þ -.p1t;al ..........t, ra\he. t.ba OpeftUoa. .t .. ..n
..., J.a l.rUi Ri.h....,~ 1IS.118. III. _ Uae .,..., _s.... ooad1-
u.a, i' 1. to1I81&tN4 ..., . ~ of . oa .. oaplta1 ~1'.1Ma\
Sa .. ft17 fa! r"~ AAJoord.!nc1.7. 1t 18 eonaWend till, . 1'"
__ .. ., appear t,o ,....u.. .. ....tM1e ...,.,vIIenM .... cItIu.t
__ ......... t.o N RI"'S....
,. ~Rai_t4_ I't !t...
Ia ~."" . ecpd._h1. M., .... ..,. -, .. Ii"
.. .. .". .f .'111.. iawGl.1N1. It t.a Øt.1"act.eria\1o that. tba t1ft'
t. .'].'" .r va'kr are y.." .,..1," to pftÞY1d. _ tate euttoMl',
..."- iåe OM" ,.. ]J)OO ¡a] 1... l'ac:---n .~ . \be w1..
1M~... ft&a --'1t4AÞG ex1au t.o .. oerta1a po1a\ .... t.M eoat. ....
~ ltJN1a oft .. .. r.1.rq ...ta' 1'ipre. .AD at.'-" .... ...
... t,o eoat.. '- UMH boø tMt.a. au... on .. rMaQM1>l. .....n.t. .t
. _.. .Jd.tal s..... et t6f.265.90. .. paM pNf1t. fit .J,915.95
........ .. N&11H4 aner .,...tia¡ ..... ... 14'" of .. %S
.,.au..... W1t1a .,.-u.c -.u ... fit ",48).30 .. opøa~
__ .1- ....u~ .-'00, .. '1M' tfl", or applUJ..t.atr 19,600.00
....... '- ........ r.. \M ..'-a to 'be ...bJ-'flW. ......,.
...... 1d11 ., 14." ,.. _-... ...u '* .......- .. at.taia ......
.I.'J !Ida.-.a14" ob'4alJ'At' ,.,. .. aft__- -WJ- -'- ....
..,.. ., 6,050 p)].. ,.. fRII'--. In ft_ of \hit ..... 1\ s..
_1«'" \ilia, ... to11MrS.q raw. tI01I1cI .. eqaS.tab1.e \0 aU
"'-;L\ rta
~ I:U1
.tad 8.000 0a1.
Oyer 1Õ,OOO Gal.
. a.50 (incl. 2000 '4l.)
0.61 ,.. 11 Gal.
0.40 pI1" K 0&1.
A1.~F Ud.a ft.'-.,., ...... ..rtidD ~t.auea. }1I'OåM .. re\unl
n11 t.a ..... .t _. l' ... .-.UeNd tllat, 1a DO .... wiU .. re\1Øll
taU ~ t1d.a ft&Ve ... vUl "... to be equ1t&b1. \0 all eoDC......
ø. r~t1Aft1t v:tilå I~~ RaV-
... to1~ t.ûu1at1oa bd1_'- . ooçarÞoD or bow \1&.
a.... ."....... ft.'- ~ v11i111'&UII 1D 0.. towa øernd 117 prJ......
11\i1.1 u. .
·,.
tœ C.m118 .. tam .. HID
.
...... Jt\th11f'1 161 .." 1.30 11." U.JO
au.
taM ca\J" ',IU 1.75 '.00 '-SO 6.71
Iw .._ 1,460 ,.ø ,." J.O.." U.1f
~n 1V.~· 1,'" ..ft 4." "OS .."
..... '" ..,. 4.50 ... 9.'"
y.u.., J8.Ua "' z.l7Q 4.20 ".- .."
!1M ~ .w.u. taU__ . ~ ., ... u. ....
.... . 11 ..tie da ... __ ....... '" JIIII'11e 1I\Uiu.. IIIiøf.IIc .".....
.__ .. ...~. ·.,.t _-.._ . ..~ ., 111M ,_ Waw Ct.
tatecaW .,...
.I1fI .
.,
.Ç"~
,'III
", .
alIA
"~
.."" ~1..fI
au. 161 4-JO
-....u.le 1,?tO 1."
.... .... 1,650 1.25
..... 1,_ a.." 4.50 ".00 I. If
0iH0 1,900 2.00 a." 4.6 '.GO
II. ..... 1,'" 1.- '.66 6." "16
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I....- of t_ ......paU.U.. "- take ..... it. Sa .......~ *~ 1M
".,~u.... ..... Sa aN \'IlIa ......tP1.e .. *- f_ WaW c..
1.JO 11.JO U.JO
'.25 '.50 ...
'.00 '-" 4.95
.. ........ .....~
....... .. ... ....... __ ~ Ie.. __ _UN
.,.. .. . 1111" -t4.-1 tax ., ., _ .. _\1.. ..... Nt- .,
...,.... .. .... ft_ W1I1t .,....sA. .. to11ødJtc'
-,-
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~ ....... '5,41).ao 110
cm.u '-ft.,
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· J7,....
· ".,910.."
..
r=
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.... Deplel... 1,. X',,.
IloJldac CapJ.W. ",.,.00 I II . ~~.
fetal 11'_ 1'1w.... . 714,--"
tate.,...... .",,,.._ L 714,"" 5."
.
~r T~ . . .... ftøNI an _.. _ _ s.m.... ,.. .., !\\¡.·1~
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d ... ,...
16U.u..1 ._ \0 .....\Sate .. ".''''11'' 1.\ of UaeI. ..tel
. ..~ Þ. r.U.....
(1) ,...,..w. s......' .. .... - . ."..s.a1 ... .., -
... ""1f1 1Jrne--'e ~1Ir"'''. f_ Waw. c... ~ \eni.-
~ _ d~ " ...tllaUate tMb ....iN .... .. ùo1S... ...
aU c.;; to ..... cIÞ... .. --.J. s.ane...." l' _, ,.. ,..... ..,
.... .ø.1 tane--' --' ... ~ .. .. .".... .,.¡-.
(2) 'file ,..J...... ...... ~ wel _ .. ...,... ,....
IftJn1. _ .... ~ va'- ...-.,üta .t ',050 pn... ,.. ....s.o..
..,..
j ........ ., a_ .......~ ta 24' __ vitia a JIOPQ1a..... of ,,000 to
.,,001 ~ . da!.!¥ -- ~_,t. of 90.' ..u.- pI1" eapf.ta.
.... .. - ...... .1 . "I'HIII pel' ..rd.ee. wld.1II s.. ftJ7 nu.a1tJ.e
1a tId.I ....... .. .....,. _t.w ....,t4a w1I14 'lie ',144 .".' per
.... I....... et .... .]IIf. T r'" f.a ,_ Ct.", O-.u-. W..,..-_,
1e&I;r. Yall.,.1U11I, ftarIt. Cia_, ..s II. Ida .,ud- _ ...,.,. ....
.1.U.., ',171 .-"_ pel' ..m._. ia __ ot .. tu\ tala,....
raM ta ... ... are ~ lara- u. ....,. ... taw ..... I.a
..1~, .., ... te1~ \la, .. ...~ ........... vn14 be ...."~
.... .. tM '-ISO ¡a11_ 18d1ea\4111 cbø'1IIc __1-..
Al".". ... ....Wte14 WaWlt Ce. .. ., .. operaUac vttbia tile
..,.... uu.ta of..... ¡~1·.\, f IU1a ,.. a ntftei_ ...... et U.l1e
'- ... v~ _~.1f1ll to ...\11,)-. . fat.. ..... ~Ir"."u-, it Sa .....
.10'1.... .., .. ,..... ...... attM\ .. ... r.. .. t_ va.. Co.
1d.1l 1d\SMMlJ' atlee\ ....tllfte14 WaW Co. ... \1M __ ÛID1I1d be *
....
Ð. '. DaJlEI,
-.
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'" ,,- ,," "".... .... ..,
NOTICE Of HEARING FOR THE PURPOSE OF PRESCRIBING
WA TER RATES
CITY OF
NORTH RIC"lAND HillS, TEXAS
TO TEXAS WATER COMPANY, SMITHFIELD WATER COMPANV, AND All OTHER
INTERESTED PARTIES:
You are hereby notified that the City Council of North Richland
Hills will on the _j.~ day of "~ ' 1954, take up and further
consider the matter of prescribing a reasonable and legally applicable
and appropriate schedule of rates which may be lawfully applied and
collected by any water company furnishing water for domestic use or
for any other purpose whatsoever within the mun.cipal limits of North
Rlchland Hills, Texas. Any and all relevant and material evidence,
information or facts .ith reference to such rates .ill be heard which
may be presented by any interested party and by any witness.
The aforesaid hearing before the City Council of North Richland
Hll1s, Texas, will be he¡Jd at 7JÞ:)- ~"~/'#-;t/~.~.,-? - beginning at
7:30 P.M. on the ~......,. day of r~' , 1954, and of this /earlng
you are commanded to take due notice.
Following said hearing the City Council of North Richland Hills,
Texas, will by appropriate ordinance fix and establish a schedule of
reasonable and lawful rates and charges which ..y be assessed and col-
lected by any water company or uti I Ity furnishing water for domestic
or any other purpose within the corporate limits of North Richland Hills.
This notice is issued In conformity with the order of the City
Council and under its authority and at Its direction.
- .·A
Dated at North Rlchland "ills, Texas, this ~d8Y of March, 1954.
ATTEST:
...
J., ..~ ~lSðlÍ~ Û;yt;¡:;:L-
Mórth Richland Hills, Texas
.. '.....,., ¡/-. 1..--'" ~_ \."_..'
R. f.'-tAD.EKI,'tJty Secretary
( 51:: AL )
\I
."',' c'~' _....~. . ,'. ~:'- .', .'-¡ ..., ,-.~.,.
", .,'. .. ..'-:.' . ' -~, "'.',,~ ."\ . -.' ...", ,'..."'. "," ,'.'"
PROPOS I T ION
I.
Citl.. and tow"s incorporated vnier general 1.. have only'such
authority.. the stat. ha. ...ft fit to conf.r on th.. .nd have no
g8.er.1 ,ow.r to ae t for the ,ubI i c aood, with ft. r i ¡hte of ..I f
,over..."t exce,t luch ., ha. been granted. Their functlonl a"d
,ower. ar. strictI, )i.,ted by tbe statutory ,rovitlons granting
the., .nd ar. .trictly co. ,trued.
'1.":-- ."
II.
m. j ¡e c it i.. and t.w..s 8xere ¡ s. both gover...nt aAd prot)r 'etory
'uA(, t lOfts the ir pro,r I. tor)' øowers aM ,..nct ions are tra"tei for the
....c i.' IItU'.' it of the urN" c_nit y ..racett with I. t.., corpor,at.
bound."'.'.
~ . , \ .
III.
Citl.. and towns ..y do .nl, thoa. thin'l which .... ,pselfical1,
or by nee....ry i.,llcatlon authorized by their ch.rt.r or the .tatut..
un..r which they are incorporated.
IV.
Upon the foregoinG ,re.i.. (the thr.. propo.itions. It n.'....rily
followl th.t Rlch1."d "III. ha. .0 .uthority_ .Ither ".c....ry or
i.lled. to e.o.o. in ....1..... .. a pu.llc utit it, 8ftd to dlatribute
..ter uAeer a fr.nchl.e fr~ lort" Rlchl.nd "ill, .nd Rlehl.nd 'ark_
and thia ia true d.,p.te the provi,lons of Art. '108 of r.... Civil
statut...
v.
'rtlcl. 1108, r.... Civil statut.., doea not pur,ort to authorize
. clt1 or tOWft to lAY'" the ..nlel,.. I.ve,..onty .f aft adjacent or
.'utt'ftg city or town and cont.i"a ftO authority, .,.cl'ic or ..,lled,
either tG "oldfr.nch.... "yon" it', _ftle'p.JI)' ow"ed utI) iti..
into .nother incorpor,t.d MU"ici,a"ty.
VI.
A city .r town ..y not I..fully pledge it'. revenu.. frOM .n
r-.
e"tlre and integr.te' p.bllc vtlllt, ',.ch ., a .ater work,) where
.ublta"ti.1 ,ortio"s of I ",J't a e,st.. Ii. beyon41 ...ch _n'ci,alitl..
boundari.. and within the b."Mfarie. of oth.'" ",eorpor.ted ..."iei-
p.titi.. In viotation of t~. J.tt.r's lov.reign .tatutory (or Charter)
Juri.4icti.. although luch I,.t.. ..y be o,.rated in such other city
or tOWA .t luff.ran,e.
VII.
Mun Ie '1'1 Ji t i... t A the operat iOft of ut II ity .,et.... Ii k. any
other public utJllty, ..st ,u"ly Its .ervice ., r.a.o".bl. rate.,
hence it is . fraud .pOft the utility u..r. of Rlehlaad HilI. it..lf
to r.pr...nt t~ .ueh ....,..., as ba. b..n doneþ that they .tll get
ch.aper .ater rat.. .ith an I...di.t. reduction of ten (10S p.r
cent, whe" Morth Richla.d "illl and Richland 'ark ..y withdr.w the
right to furn',. wat.r to ."roxl..tel, 600 u..rs (."roxl.at.ly
one-t.ird (1/3) of the .y.t..) which action would r.ault in ..horbltant
an. confi_c.tory .at.r rat...
Yilt.
n ;.. fraud upon the citizens and water ...ser. of Richland Hill.
for it. Coune i , to r.,re..nt to it. e I t ¡ za ns . ft. ..ter u.er., .. h..
.... " do..e, that by purch... of T.... .at.r C"."1 t he y . ¡ II get
ch..,.r ..t.r rat.. with an 1_.11 ate r.due. t loft of ten (10S) p.r ,.nt
wheft Iorth Ilchle"d Hill. and Richland Park have not gra"t.. franchl...
to Rlchla"d Hill, to dlltrlbute .at.r in .aid .un¡cip.lities and in
'act have thus far r.fu... to 40 .., thuI d.,rivlng Richland "Ills of
a,proximate'y one-third of distribution .yst.. and .addling the us.r.
of Riehl.nd Hill. with an ..horbitant ..t.r rate which ....st n.c..sarily
~. sufficient te .r.duce ft.t revenu.. to r~tir~ th~ bonds whi~h it ha.
..... r.ør..arttad woc;ld ù. "e:t ired by U.. ....t i"1l an" ¡nt_¡r'ate. .yste.
a. now o,.rat.. by T.Ä.. \fat.r CRIP."Y.
iX.
,t is fraud ~pon the ,itizens and ..ter user. of Richlaftd HilJI
for it. Cc~n¢¡J to r.pr...nt to it, c.tiz.na and .ater u.era. as he.
b.en done, that oy ,ureh... of T.x.. water Company they .¡11 oet a
ch..øer rat. and an ,...dlate reduction of ten (101) per cant Inas.uch
· ,',' ..,', .-~_..,._" ,,~-,~".';'"'=,; ,~.:!.;'~, .
..J.;")':;:-'~$~i'::....'/_;:"'{. _,'_'
al Iort.. Richland "i'1. and Rlchlan4 'ark have r.fu.ed to ,rant
fr..chl... to Rlchla"d "Ills ."4 ..y t.n4 c.rtalnly ar. at liberty
to) ,ra.t fraftC~I... to I...diataly avallabl. co.petitor., thereby
IlIb.te"t'aU, r.duclng, if ft.t ....tr.ylng, the r.y."u.. fr_ a"r..I-
..tel, ofte-tbir. (1/3) of the Inteurat.. .,.t.. aftd thereby .a4dllng
o. tho beak. of the vier. of .ater in Richla.d Hills an ..horbit.nt
.at.r rat. which ..t n.c....rily be ..fficie"t to ,rMuee ..t reven....
to r.tlr. tbe bond. wblch it h.. been r.,r...nte. ...Id be retir.. by
the e"tJr. .ftd I"t..rat.d .}'st.. .. now oP.rat.. by Texa. Water Company.
X.
Should North Rlchle.d "III. and Rlehland 'ark grant fra"chi...
to Richland "ill, to o,.rata a water .yst.. It i. .tlll a fraud u,on
the citiz.ftl and v..r. of ..t.r in Rlchland Hili. for It. Council to
r.,r..ent to It. c It i ze,,"that they . ill ,et a eh.a,.r .at.r rat.
with an ¡......t. reduction of te" (IOS ,.r ce.t ."d that a t.. ca.
..yer b. lev ¡e. to ret ire the bo"da i" that if R leta 1 a "41 "it I, h.. any
authority to enoage in the .atar utility bu.lae.. In other incor,orated
clti.. and to... then it, like other utility ,..,a"i.., ...t .v,ply
the ..rviee at r...o"..'. rat.., fi.ed or which ..y be fi..d and regulate.
by lortft Rlchland "Ills .ftd Rlcblaft4 'ark, which who" ao fi..d would
r..ult in ch..per rat.. but by the .... tokett would r..ult either In
n.e....'y t.... or .Iternatively ift bankruptcy for the ..ter .yat...
XI.
Should Richlend Hin. bee_ the holf1.r of franchi,.. to distri-
bute ..ter to Morth Ricbl.nd "ill. a'- Ricbland 'ark, tben it. .tatus
t. th.t e.te"t i. the .... a. any otMr pu'" ie ut i Ilty c....ny, and
1ft tbat re.,eet would be bound by the .... pri"cl,ala of la..
Xlt.
A ,ubtic ut¡llty i. compel Ie. by la. to 'urni.h It, .ervie.. to
all u..r. thereof without di,cri.lnatlon a. to r.t...
XIII.
Th. au,.ici,ality of RiehlaftC' Hilt. ,. withovt power to fix .at.r
rat.. in the _,,¡ci..llti.. of lorth R¡chl."d HII1. and Rlehl.nd 'ark,
.hich I.tt.r have jurisdiction to r.,vlate .at.r rate. and .., not
.'dleato such authority, thus r..ulting in the aft~ly of Rlchlaft. MI11s
'" >",'"".'.,:',' ':'; ,,:-, ~"" ._. <",,~ "'"...",;,,:.:.. ~',"1'~,. _..,'t..;""'f......"'" _':(.t"' ~'¡'!- _:;¡-''''' .,. "." .... j~'. .......,.~.,...~ -'.:_ -' ',;: 'II' ."....~~. ..l.. 0;' '.. ;','."~ '. ._, ..,.~~~" .J.",\,,:"·f'_" ~..., .'~'.":'-"',,~'~, ,..~.¡¡.;:-o¡:o;.,~i..':: ';.,........t.;¡r'.,'~~......,,"".'.i'~~¡::.. ~f~,_.t·..".¡;::-.<i¡th.>Î~
undertaking, co"trary to J.., to abdicat8 the .... authority, by
holding fra.chi... fro. the.. other incorporat.d town., In oø..r to
,r.vent discrlmi.ation.
XIV.
It I. . fraud v, Oft the citizens and u..r. of .ater .. Riehland
H,II, for It. Councl' to re,r...nt to ..ch citiz8n' aftd u..r. that
through the ,,,reha.. of the T.xa. W.ter C..,a"y that th.y .i 11 get
a ehea,.r rat. .Ith aft ¡...dlate reduction of ten (101' p.rcent .n'
no t...., when the facts ar. that (1) substantial ,ortionl of the
pr..."t .ater f'M..re constructed to 2-iftch galvanized pi,. which
is boUt i"a'eQuat. and corroded both in. I'. and out to the ,oint wltere
the .a. wi 11 requ I r. i_d 'ate r.,,' aee."t at a" eX'8"" "'0"" that
,rovide. for by the pr..."t bond I. sue; (2) and In vl.w of the further
fact that the pre..nt ".t.. ,r.,o... to ... purch..._ i. o,.r.tlng
at its pr..."t ..ximu. ca,acity and the .at.r production Must be
enlarged .iU,i" the y.,r; (3) anet 'ft vi.. of the fact that Ut. ,r..e.t
.,st.. eo"sist, of ..ye" ..11., only t.o of which are in tha Trinity
.a"d an. 5 of wftlch ar. in the paluxy .and, and when it i, a known
fact that the ..11, in the oaluxy .and ar. .andlno '.yond the point of
us. and .he" it i. al,o a knOWft fact that the ..ter table i. droppl"G
at the rat. of .,prox ¡..t, J y 1(; f..t ,.r y.ar I .0 that 5 _III 0' the
Iyst.. will b. ob..let. a"d unu,e.bl. .ithln . ".riod of "ot ..c..ding
thr.. or four y..r.; .11 of which .¡I' r.,ult and MU.t n.c....rily
r.sult In tr..."dou, addltlo"al e.,endltur.. of -.ney "ot provided
for in the pr..."t boft~ i..ue but which MUst... provided for and which
can be prov'ôe. for 0.11 by the levy of taxes. .11 contrary to the
r.pr....tations .... to the voter. of Rlebland Hill. to influence eRd
indveo aft .fflrMatlve vote 8ftd ar. ther.fore fraudulent .,rrantie..
..
. " '..t'. 't~' ;~.-,:;:}.F:' .. ~"':~~ .',.J..';..'~' '.~ ',- ,L,·.':"~ '..~ '.', , .- ..,!,"~: ..!...~~.. ~. ..\Jtd....:.o:.t" ...._.. -é ' i..",::~;~ o':',','j¡\'; .- ... '!-~'<"'..- :.I,," [_;....;..~ ~"'~.." "'£' ' ·;,·.~r '..-_.~: ,;','..~.I':: ·I:~_;.'·,"~')!.t 1>,'N.·.'~,rè""~ .".~.'~' ),' -; ", ., 1 ".... " \'1"
OUTLINE FOR USE IN
WATER RATE HEARING
Cities and towns having Incorporated wnder general law, and
have authority to regulate utility r~tes. See Article 1119, Revised
Civil Statutes, 1925.
Prior to the amendMent ~the above mentioned Article in 1931
and again in 1947, It was held that this article and subsequent Arti-
cles 1121 and 1122, did not apply general law to citl.. having a
population of less than 2,000, and it had also been held that Articles
1121 and 1122 did not apply to an integrated system furnishing util ity
services to more than one city. This holding has been reversed in the
City of Baird'vs. West Texas Utilities Company, 174 S.W. 2d, 649 (655).
See also to the same .ffect loui.iana Power and Light Company vs. City
of Farmersvil1e, 62 S.W. 2d, 235.
Cities and towns Incorporated under general law, even though having
a population of Jess than 2,000, may regulate utility ratesl Including
the rates of water companies.
For a procedural ordinance consult 256 S.I. 2d, 187.
RATE BASE
,
Public utility rates are uswally fixed with ~ reference to a
so-called rate base or valuation of property devoted to the public
use, and such rate base has been construed to be the present fair
value of the property of the utilities, either higher or lower than
the original cost.
Public utility
l base ra te .
rates are customarily f.jed with reference to this
The rate base to be employed is the present fair value of the
property of the utility useful, and being used by it, in the service
of the public, without regard to encumbrance of indebtedness.
The criteria' is the present value as of the date to which the
inquiry relates, expressed in ter.s of money.
VALUE OF PHYSICAL PROPERTY AND DETERMINATION
THEREOF
Whether the ialue of any given property shall be Included In the
f'li' '. 'J;.'t' '. Þ, ' .~".?J'Jt,. ~.( ·'./:1<!(,'~Y'".,.i,;, i~"'··' " ' Ó''''''.; ."""", ,"""""" ~." ."", .;:,,,. c:~''::'>.:'~.''''~'''.'.'' ".- ,.",.," :."1">, i,.." <.'1.":"";'.'_"<,"1< -"þ.._:, .<¡- 'b..~ ¡*;¡:'<,Q-,.-~,I!o""",J ! ':'i "',~,,,,: .''I":;,':'':.~ ''J'o "1" ~.~.....".,..{ ':·;'~V"".""""'.-.,.~" \{,ç,.:·":lff,:" ",,~.,., 'f. .. .~.. -oj'''' , '.' :""",', ,~I!'I" ", iI·, ...~;. . "',~.~r ~"'.' '.", . ...., ~ ....., ,.. "~:"',:"...,_'~ ~',. .. '. " "'_" -__""""T' "",-."
base rate depends upon the property being used and useful in supplying
the commodity or service that the utility undertakes to furnish.
(a) Items of property not used or realonably necessary to the
furnishing of the comModity should not be Included in the rate base.
(b) Property which is partially or wholly devoted to a private
use, as distinguished from the public service, should be excluded from
the rate base, at least to the èxtent of such private use.
(c) Util ities, although entitled to some latitude with respect
to plant entargement, must bear the burden of an unreasonable exten-
sion of its plant, and the risk that port ions of It prudently acquired
may become obsolete or not useful. However, It should not be pena 11 zed
for failure to exactly anticipate future demands for service.
(d) The burden is on the uti I itles to .how that any particular
item of property should be included in the rate base.
(e) Property, the value of which depends on earnings of the
utll ities, should not be included in the rate base.
(f) The value of property leased by one pub I ic uti I Ity to another
cannot be reflected In the rat. base.
(g) Where the cost of maintenance of an asset is treated as a
business expense, there Is no capital investment which may be Included
In the rate base.
(h) Interest on money necessarily invested during the construc-
tion period Ii part of the cost of property (capital Investment).
OE,TERWIN.ATION OF .VALUE. PARTICULAR FACTORS INVOLVED
The clas.ic rule for ascertainment of the faIr value of property
as Is used by a utility requires consideration of:
(a) Original coats of construction;
(b) The amount expended in permanent improve.ents;
(c) The amount In market value of bonds and stocks;
(d) The present as compared with original cost of construction;
(e) The probable earning capacity of the property;
(f) The sum requIred to meet operating expenses; and,
(g) Any other facts which will aid In ascertaining the fair value.
All of these various factors should be properly considered and
9 i va n we i 9 h t.
-2-
~.... ."'c. ,'T,>. ',; ....'..".'.".._;-., ;¡ ,·"t,.'.'t,. ,'ë\~..' '__~,_'I"'~~',"" '.'~...,..""":.'~~.~,. :':<;:''0:'', ,'';, .",.',' "'10. ,~.:~,.""",~., :~~W''':''''''~'·'.'~ .~, "~" ,C'" ,fI.-'.. :t'i:-' -,......:I'","":.,~:,,'-..~""~,·~.,··."', ,~,~.."'YI!,......,,¡.'~."'.('i.... '.J!.~. ~~'!f,'.."I,J'o,.'·. ,~,,·>·,:t.~·~ ,. ;.,. .' ~':' .;.,,' "~....~}', -or,. '¡- ~'''''' "'''''';¡''''' ..> ".-'.' ,"" ..,J..... ,",.'.' ':."",' .' '.7',I·~ ,.. ~,'.' "¥J;"" '~"~ .-1':...... ~.... .::_..~.,I-
RE'RODUÇTION COST IN ARRIVING AT FAIR VALUE OR RATE BASE
After arriving at the cost of reproduction, de~reciatiQn should
be deducted.
, .
Reproduction cost .ay or may not produce a faIr value, dependIng
upon:
(a) Whether or not such cost fairly reflect. normal and stable
,
prices prevailing at the time; aAd,
(b) Which prices may be øresumed with reasonable certainty to
continue in the future.
The general principal is that cost of reproduction is to be deter-
mined at prevailing prices for both labor and materials. lands should
be included at its market value as of the date to which the inquiry
relates.
Reproduction cost ordinarily must include reasonable allowance
for overhead charges such as,
(a) Organization expenses;
(b) Engineering;
(c) Administrative costs;
(d) Legal Expense;
(e) Superintendence;
(f) Taxes;
(g) Insurance during constructIon
(h) Damages or compensation for injuries;
(i) Contingencies and other undistributed construction charges.
Charges which are considered and paid as operating expenses shou1d
not be included.
These various items are Aot proper1y allowed in a lump sum, but
. .,. . .
should ~e determined separate~J and in spe.ciflcamounts. Such amounts
are not properly determined upon .er. estimates where etldence of
actual expenditures is available.
Brokerage fees for the borrowing of money or the sale of stocks
or securities is not properly allowsble, upon the theory that the
utility is financially able to build and equlpl Its ptant.
DEPRECIATION ASCERTAINMENT
(
In the ascertainment of the present fair value of the property
of the pub I ic uti) Ity, its reproduction cost Is to be determined, and
the extent of existing depreciation of plant and equipment must be
-3-
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-.. òJ~,,,,\~·';'.;'''1o:·i-·~:;'-~;;::c..:··.:-,~,.:·,,''';~.-'>~·..J.'.i _·.,~·~t..,ß.~1.:_~,.~'''.....';'.'','''~'';' . .<-'~ ~." 'c" ".'
....... ,,~ . "~'-'-.-" -- "..-. . ,.,.
ascertained and deducted from the cost of repooduclng them new. The
foregoing is true notwithstanding that the existing faci' ities Ire
presently capable of rendering substantially the saMe service as tbough
new.
A deduction should also be made for functional depreciation due
to obsolescence and inadequacy.
The amount fixed for accrued depreciation should be reasonably
consistent with the allowance for annual depreciation as an op.ratln~
expense.
Under the deferred maintenance theory, the depreciation to be sub-
tracted from reproduction cost new I. the åeferred maintenance, that Is,
the expenditure necessary to make the uti1 ity considered as a single
service unit_ as efficient in rendering service 81 a plant repþ.duced
new.
Still another theory of depreciation, referred to as the service
life theory, considers that depreciation Is the amount which each
physical unit of property has lost in Its total service life through
the passage of time, action of the elements, use and obsolescence.
Depreciation may also be fixed by use of the so-called "straight
Ii ne n or perce ntage standard wh i chi s œsed on t he age of t he proper ty
in question and its probable 1 ife and usefulness and assumes the
accrual of depreciation at a uniform rate over the entire period.
The sinking fund method for fixing the amount of depreciation con-
sists In charging for depreciation an annual sum which with compounding
Interest thereon will at the termination of the estimated life of the
Investment replace the original cost, and if cut off at any given period
the accumulation will represent the depreciated value to that date.
Yet another measure of depreciation Is a consideration of the
depreciation reserve. Depreciation may not, however, be measured by
the amount of a depreciation reserve fund set up by the utility since
It does not represent actual depreciation but only what observation and
experIence suggest is likely to accrue. The maintenance of such a fund
in an amount Qreater than the depreciation claimed by the utitlty at the
time of the inquiry constitutes an admission against interest, which
although not irrevocably binding on the uti I Ityþ hes more evidentiary
ve1ue than mere estimetes of outside experts.
-4-
-.." . _:.....,:,;;Z...' ,;.;,._...,~_{'>~":;;''i'.'')\''':,'... ¡
,.).,;";:¡","':,;.!"~".:.~. ....~.. ';':'~.'
'I¡"".~. ,'. .".,I-f..-'.'"..:!t-...., ·7",.i;~ ;é,~~' '~""''''' . ,..- ~.' .~"'" ,,' ,.'..', I;" ',."'.. -'''.0,,_,;1 '. ,,,,,. ....>'j ;J<'.II,;.'~" ~:1'j. ';" _ 'J; ,'" -'.. < .....' "'" .." .'\:."_,._ ,., ..,..... .1-. \. l', .."."J,... ,~'l '.' ... . ..," . .'''' """"'." . ".,''''
PI~EMT INVESTMENT
Where the rate bas. employed Is tbe fair value of the property,
a utilIty Is not li.ited to a return only on its prudent investment or
the original cost, although It may be considered In connection with
other factors for arriving at present value.
Our Texas Statute denies the use of t.a prudent Investment theory,
by requiring that "the governing body shall not prescrIbe any rate or
compensation which shall yield more than a fair return upon the fair
va1ue of the property ~sed and useful in rendering its service to the
public. "FaIr return~ is fixed in the language of th~ statute and
"in no event shalJ ever exceed 81 per annum", Article 1119 V.A.C.S. 1925.
OTHER PARTIC~AR FACTQRS TO BE CONSIDERED
The value of the property of a public utility for rate-making
purposes cannot be determined by a consideration of the return earned
on It In the past or by what the property is worth as an Income-pro-
ducing Instrumental fty, sInce the propriety of the return Is itself
dependent on the value of the property.
Value of stocks and securities: While the value of stocks and
securities may be properly considered In determlnJnQ.falr value it
Is not an essential factor thereof, nor is it a proper measure of the
basic valuation, and in fact Ilttlo or no weight can be given to It,
particularly In view of the requirement. of Article 1119 of the Texas
Statute.
Sale value: The Texas statute also denies the use of the principle
of sale value. Not only that, but general rules of law hold that sale
value can have little or no weight In determining fair value.
Assessed valuation: The value of the property of a public
. -. . . \ -~ ..
utility ca!,~ot be determined from assessed value for purposes of
rate-making.
Terms of lease or private contract: The terms of a lease or other
private contract between a public utility and the owner of the pro-
perty It operates are not necessarily to be considered in determining
present value.
-5-
..
.Þ,,:'."";..'<, ;'.':. ,r<.
EVIDENCE OF VALUE
Ordinarily the present fair value of property of a pub1 ic uti. ity
may be shown by evidence of an actual appraisement thereof.
Under the foregoing rute, however, the appraisement Is confined
under the terms of our Texas Statute to an appralse..nt of "the
property used and useful In rendering its services."
Under the foregoing rules no valve may be assigned to franchlees.
Book value, while of substantial evidentiary nature, Is not con-
clusive but It has been held that the va1ue at which the property is
carried on the books of the utility should be considered as more de-
pendable evidence of Its value than the higher estimates of appraisers.
GO '"6 VALUE
Our Texas Statutes In fixing the limit of a fair return at 81.
obviously denlse consideration of what is usually known as going value.
Going value .ay be defined as that sum which represents the added
vatue of the plant as a whole over the sum of the vôlues of Its compone.t
parts, and which attached to It because it i. operating and doing
business. Such value ordinarily would be required to be considered
except for the requirement of Texas Statute.
Going value, br.adly speaking, includes cost of developing the
organization and income of the utility to Its condition at the time to
which the inquiry relates.
Going vatue is not to be confused with good wltl, which is not to
be considered In the fixing of the valuation of a PVblic utility for
rate making purposes.
Operating expanses cannot be cap Ita I I zed 8' going value.
Franchise value Is not to be considered as a part of going value.
Deficit$ or losses Incurred during f or ",e r periods of operation
may not be Inc1uded in gOing va1ue.
Economy of operation and establishment and maintenance of good
credit are not an element of g~ing value.
MODE OF ALLOWANCE; GOING VALUE
Where going value is a proper element of value It ~ust be directly
or indirectly considered. If overall context of an order indicates
-6-
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- ·'~·:"''''..1''~ ;"'I.~.~-',"'''''). ,';!, !"..,~,..",¡',.".,,,,. ,\...
",..'" '.,!,.~(' '.' .
consideration of going value, that is sufficient without specific
ref.rence to going value or th~ asslgnm8ftt of some partIcular amount
under that particular heading. In other words, it ,. not essential
that the element of going value be given an independent and distinct
expression.
GOOD Will
As already Indicated good will may not be considered in fixIng
the valuation of a public utility for purposes of rate making.
FRANCHiSES
As already Il\dlcated the 'Y'Ðlue of franchises Is excluded from
the rate base.
WORK ING CAP I TAL
A proper aMount for working capital should be included in the rate
base. Determination of the amount to be allowed is a matter of JudgMent
and discretion.
It has been held that working capita) may properly be equal to
the utility operating expenses during such period of time as would
ordinarly elapse before collections could be made from patrons or
customers.
In this particular case it ;s suggested that working capital to
be allowed should equal operating expenses over a period of 45 days.
Nevertheless, actual experience of the companies In this instance
should govern as to the æmount required if sufficient and satisfactory
evidence is offered in connection therewith.
~AlUE OF PROptRTY AND PUBLIC SERVICES
A specwlatlve incre.ent cannot be attfibuted to the property of
the public utility solely by reason of the fact that it Is used In the
p vb J Ie ser v ì ce .
APPORTIONMENT OF VALUE BETWEEN INTERCITY AND INTRACITY
BUS I "£_.$5
The value of the property of a public utility employed by it In
an intracity business must be considered for purposes of rate making
-7-
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',..~ T, . .[ .j."¡," ~
\0'1" , : .:..,.,. ~;'õ.' ." , '1..'(":. ...... <".:..:';0-'. ''''. ... .< f""~ .,. ,.... ..fi/:.-. : ·'1':1 "-";<
": f!' '.:':~. ",
"
separateìy aAd apart from that employed tn Intercity b~l.in,e$.$.. Pro-
, .
~peffY\'empJOyed)oJ"t"" In t,e two ~1ass.s of ,business mU'$t be propor-
tioned between (Wem ~¿c~Pding'i~ the use actually made of It.
It is not proper to make an apportionment on the basj~ of the
gross revenu..e cterlvedfrom the class of business, but there should
be ..¡iODed to each the propórtion of the tetalvaJue oft~e property
whIch corresponds to the extent of its eMpl~yment in that business.
., "
'. ¡
-8-
----,....;... ..,
LAW CF"F"ICES
CHRISTOPHER & BAILEY
FDRT WDRTH 2, TEXAS
T. 8. CHRISTCPHEA
M. WARD BAILEY
July 6, 1954
CONTINENTAL LIFE BUILDINII
FANNIN 2386
I
Hon. Sam P. Burford
Burford, Ryburn, Hinck, & Ford
Fidei ity Union life Bldg.
Dallas I, Texas
Re: ,North Richland
/
~
r Rate Hearing
Dear Sir:
Please
30.
There are certa whl were received In
evidence of which YOJ were to ,pply copies not yet
received, speciflcal1 Includi'1 the map showing the
Texas W.ater Company,. stem in 'chland Hills and surround-
ing areas, ~n r.~~ t of ginesr Joe Rady, which we
will apprec celv""t..a p IItptly, and if received I
th I nk we III'· t as we 11 cons ider the hear I ng closed as the
record is )'obably s ficient and the Council will proceed
with a rat) order.
If the x s are received proMptly you may consider
the hearing s~Lo~~ ed for 7:30 P.W. Friday, July 9, as can-
celled, and the record closed. We must and will appreciate
receiving these exhibits.
With kindest regards and best wishes I am
Yours truly,
TSC:1 nd
cc: Mr. Homer Morton, Wayor, Richland Hills
Mr. N. A. Ellenburg
Mr. Boyd Ray
Mr. K. B. Nace
Mr. w. T. MacCarthy
LAW OFFICES
CHRISTOPHER & BAILEY
FDRT WDRTH 2, TEXAS
T. S. CHRISTOPHER
M. WARD BAILEY
August 13, 1954
CDNTINENTAL LIFE BUILDING
F'ANNIN 2386
Hon. Donald F. Denney
Mayor, North RichlaAd Hills
Fort Worth, Texal
I
Dear Mr. OeAney:
/ .
Your analysis of the evidence received in t~~ter rate hearing
is an excellent one and you have no d ached rrect result
with extreme I ¡berallty to the opera g c panies b cause of the
exceedingly low average .onthly am of e water bill which you
have uled a. a base, and which.y perl e and that of my neighbors
Is much too low. You must have pu n great de.J of effort, and
I not only congratulate you on the. lence of your product, but
allo thank you for your time .ffo
I am sure
that the contrl
Is no cons_quel'"
as it owns and
makes no d iff.r
reached fnas.uch
due to refunds. The et
cordance with the relult
ily lee, as the courts have held,
tlon by the developer cannot be excluded because It
utility company gets it, capitol as long
operty. The capitol can be donated. It
s particular analysis, and the result
item was practically entIrely credited back
result reached by you is obviously in ac-
reached by Joe Rady In his appraisal.
er of law two erroneous
ion to your deduction of the
veloper to the water company,
he item of income tax.
Frankly, howevert th
conclusionl, the firs b.
amount of lIoney contribu~
and secondly, in your exc
Unfortunately, the Courts have also held that in arriving at a
fair rate for a util ity company that a regulatory body·must take
into consideration and make alJowances for income tax. I do not regard
that 81 of any consequence In this particular case particularly
inasmuch as the rates prescribed will .pply not oniy to the present
owner and operaters of Texas Water COMpany, but will shortly hereafter
apply to the town or Richl.nd Hills which his purchased the Texas
Water Company and will not only not be subject to Income tax, but
will also not be subject to ad valore. as well. The net result would
not be changed.
I have
a t the next
schedules.
date of the
prepared and enclose suggested ordinance to be adopted
meeting of the Council amending the former rate
It will be necessary of course, to put in the number and
prevloul ordinance.
I
',1.,(; ,"..;,">,",
;;,:.,y/;....
,'.'~_ '. .~.' ... C-," 'I.
. , ":, .-,~ ". '.' .:."
Hon. Donald F. Denney
August 13, 1954
Page 2
I wonder if it would not be advisable. and If you de.. It to
be advisable then' would appreciate you authorizing .., to prepace
copy of your analy.is and serve it upon T.xas Water Co.,any and itl
attorney, and alto on Smithfield 'ater Company, a. we}1 al the City
Council of IIch1and Hi111.
Your. truly,
--
CHRISTOPHER
TSC d nd
eel Mr. N A. EI)enberg
..,.. loyd Ray
Mr. K. B. Nace
Mr. W. T. MacCarthy
LAW OFFICES
CHRISTOPHER & BAILEY
FORT WORTH 2. TEXAS
T. S. CHRISTDPHER
M. WARD BAILEY
January 12, 1955
CONTINENTAL LIFE BUILDING
FANNIN 2386
Cf) j3¿1
, '- 'I I
~-d' J
I
Mon. Donald F. Denney, Mayor
lorth Rlch1.nd M111.
Fort lorth, Texa.
Oe.r Dona Ide
I .. in rec.lpt of . lett
Attorne, for T.... Water Co.p
Iftvolv.d .,th Much argu..nt, b
plr.gr.ph.
/
~
"I. that ..
d..lr. to give t
b.ck out of an
our part, as I a
be .111 i ng to r.
Rlch1and , p
Riehl. III., the er.nce bet...n the higher r.t.,
that I the rat. '.retofore ch.rge. b, Texa. 'at.r Co. and
the rat pr..ent ~ In eff.ct throughout the Rlchla.. H111.
.at.r I .t..,. ~h I understa"d ,. approx l..t.1 y 101 1e..
than t~' or.. Igher r.te, .ueh r.fund to b. .ad. fro.
'.brua~~ t " up to the date of the actual tra..f.r
a.d .a1e of the propertl.. to the Clt, of Richland H'II. on
AUI".t 3, lil".-
I r.co...nd to the Council thlt In vi.. of the dlfflcu1tle. In-
volved and the fact that we have not y.t found opportunity to
adopt the a..nded ordlnanc., that .e acc.pt Mr. lurf.r.'. pro-
po.,tlon a. ..t out In the quote. p.ragraph of hi. letter.
I .oul4 appr.clate It If you could advl.e .,th the .aJorlty
of the ...ber. of the CouncIl 1...dlat.I" all of .hoM are receivIng
cop I.. of thl. 'etter, a"d l.t .. know If .. .,11 accept It .0 that
I can pro.pt1, take t e ..tter up .,th Mr. Burford a.4 hope to
,et the check.
. Sa. lurford,
I. rather 10ftg Iftd
at.I.. the fol10.Iftg
Your. trul"
T. s. CftRISTO'ttER
TSCt 1 nd
CCI Mr. I. A. EI1..burg
Mr. 80,d RIY
Mr. I. V. 'ace
Ur_ w_ T. Uacearthv
'.0'."."'.'
T. S. CHRISTOPHER
M. WA~D BAILEY
LAW OFFICES
CHRISTOPHER & BAILEY
FORT WORTH 2, TEXAS
CONTINENTAL LIFE BUILDINe
FANNIN 2396
January 11. 1155
..n. Jlnkl.. Garrett
~o L....r~ 'r...
200 M'.lto. St.
'ort Worth. Te.a.
D.ar Jeakl"'t
TSC I tact
eel Mr. Donl14 F. '.""ey
Mr. I. A. £11."Hr.
Wr.. Boyd .ay
.... I. B. .ace
ur. W. T. MacCarthy
I
/
~
I ch la.4 "111.
..t. rat. or.l.a"c.
, to ~e hel4 at the
y. 4201 c...,.._ Dr.
4"'4ay. January 21.
V,ur. truly.
T. S. CHRISTO'HER
T. S. CHRISTOPHER
M. WARe BAILEY
,~,.
LAW OFFICES
CHRISTOPHER & B
AILEY
PORT WORTH 2
, TEXAS
January 19, 1955
/
Mon. ø..er Nort.n
Yay.rt RlchlaA' Mil
3201 wiana Dr'.,.
'ort '.rth, Tex..
De.r Sir *
TIC. Ittd
CONTINENTAL LIFE aUILOING
FANNIN 23S6
_1
~
of North Rlehland Hills
ded .ater r.t. ordinance
uneil to be held at the
. Oenn.y, 4209 Cu..tno. Dr.
next led..sday, January 21.
Yeur. truly,
T. S. CHRISTOPHER
eel Mr. Do..ld F. tenney
..... ... A. £ l1.ft"r,
Yr. loyd Ray
Mr. K. B. ..ee
Ur. W. T. MacCarthy
PUBLISHER'S AFFIDAVIT
THE STATE OF TEXAS:
COUNTY OF TARRANT:
Before me the undersigned authority, on this day personally
appeared h_S_t_~~~l_!:1E.!3!_~~~__hhh_______hh____' known to me,
who, being by me duly sworn, on his oath deposes and says that he is
the publisher of the H1ii.l..tQJILQUY_JiEtW.S.h_________h__h__' a weekly
newspaper of general circulation published in said county, that a copy
of the attached notice concerning the passage of Ordinance No. hfL___
of the City ~~_r_t}~.}~!~~~~n_dhIig!~___hhh___ was published in one
issue of said newspaper, such publication being on the following date:
Feb. 12. 1954
________________________, a
newspaper copy of such publication notice
-- - m ------- --~~-U~ ~
D SUlbgsc;¡ibed and sworn to before me this th J'!;Jloday of hx~~Mrr
A. ., 5.:>.
being hereto attached.
_ __L~ _I::: __~i'.i-~_l..Í _:.. ___ ~i ____ ~'_ ~~.~_ _ _ __
Nota:ry Public, Tarrant Coul1.~Y, 'I'exas
'H"
Fri., Feb,.í
LEGAL NOT
.~.
ORDINANCE NO.6
AN ORDINANCE PRESCRI
¡SCHEDULE OF RATES FOR THE
DISTRIBUTION AND SALE OF
IWATER; A UTHORIZING THE'
,WATER COMPANY TO PRE-
¡SCRIBE CERTAIN REGULA TIONS'
CONTÄ.INING PROVISIONS wIni
HE FERENCE TO PURITY; PRO-
VIDING FOR THE MAINTENANCE
OF A STANDARD PRESSURE;
PRESCRIBING A GROSS RE-
CEIPTS TAX AS RENTAL FOR
USE 9F THE STREETS, ALLEYS
OR OTHER PUBLIC WAYS· AND
F'lXING A PENALTY. '
t~d;'withSändor 'dirt or
~' ..
::únclean anqdangeroùs to
'public use by the Health Of-
ficer of the County or such Health
-Officer as may be designated by
the City, shall immediately take
steps to purify, clean or sanitize
the same.
such invalid or unconstitutional
provision.
SECTION 9
EMERCENCY
SECTION <-
REQUIRED PRESSURE
The fact that there is no ordi-
nance. in effect in the city pro-
tecting the inhabitants thereof from
unreason.able and exorbitant rates
and charges and the fact that
t~ere is no ordinance to protect
the inhabitants of the city from
uncleaq and impure water injuri-
0us to the health and gener al wel-
fart; and the further fact that there
is no ordinance in the city to re-
quire the maintenance of a reason-
able pressure as a means of fire '
protection creates an emergency
and imper ative necessity requiring
the suspension of any rule that
ordinances should be read at three
meetings of the City Council and
said rule is hereby suspended and
this ordinance is put upon its final
reaaing and passed by a vote of 5
ayes and no nays and shall become
effective from and after its passage
and publication as provided inSec-
tion 7.
,",;',r
All persons, partnerships, corp-
or ations, associations of any char-
acter' trustees or receivers suþ-
plying W1lter through a water wor ks
system to the public in the city
shall be required at all times to
maintain as minimum a pressure
of forty pounds.
~;1ße it ordained by the CityCoun-
cil of the City of North Richland
HHls;
SECTION 4
SECTION 1
GROSS RECEIPTS TAX AS.
PRESCRIBING SCHEDULE OF RENTAL FOR USE OF STREETS
RATES AND AUTHORIZING CER- ALLEYS -AND PUBLIC WAYS '
TAIN COMPANY REGULATIONS.
All personi, partnerships, corp-
Al! persons. partnerships, corp- orations, associations of any char-
orations or associations of any acter, trustees and receivers sup-
oharacter and all trustees or re- plying water through a water works
ceivers howsgever appointed en- system to the public in the city are Passed and approved this 1st
gaged in the business of furnish- hereby required to pay and a tax day of February, 1954.
ing, distributing or delivering is hereby levied upon them for the
water to customers for domestic use of its streets, alleys and
purposes in the city for compen- public ways, which tax shall be
sation shall not charge, or attempt .such sum as shall equal two per
to charge, for such commodity or Cent (Z'/o) of. the. gross receipts ATTEST:
service a r ate in excess of the for water dlSlnbuted ~nd sold sl R. F. Lambert
following schedule per month; within the city and and any per- City Secretary
1,000 gallons or. less __ mini- son, ,partnershiP., corporation or North Richland Hill~
mum charge - $1.50, 60¢ per association of any character , trus··
thousand gallons for the next 3,000 tee or receiver supplying watel·~al)
> .-
sl J. W. Watson
MAYOR
North RichlanQ Hills
gallons, 55¢ per thousand gallons
for the next 6,000 gallons, 45¢
per. thousand gallons for the next
5,ÖÐO gallons, 40¢ per thousand
gaJ,lons for the next 5,000 gallons,
3~ ~r thousand gallons for all
, w:ier. in excess of 20,000 gallons
per ,month.
Any such supplier of water may
by its own regulation r7quire that
¡ill water charges be paId on or be-
fore ten (10) days fromthe date
that the water bill isr~nd~red and
may also by its own règulation
preWide that the water may be
tur~ed of' it the bill is not paid
wit,in the prescribed time and
fix ¡a maximum charge of $1:00
for ¡ turning the water off, WhICh
mat be required to be paid before
wa*r is again supplied.
SE<ZTION 2
PURE AND CLEAN WATER
All persons, partnerships, corp-
or ations, associations of any char-·
acrer, trustees or receivers
supplying water in the city through
a water works system to the public
shall, before supplying the same to
the public use for drinking water,
fir st cause the supply of water to
be chemically tested for any con-
taminated infusion of sand, dirt or
filth or dangerous bacteria or
disease bearing germs. This test
shall be made according to the di-
rection of the County HealthOffic-
er or such City Health Officer
as may be designated by the City
Council or by both such officers.
Said water so supplied shall Ix:
subject to such test at any time
and the City Health Officer where
such water supply is furnished
shall make 9Uch test at least once
a year and more often where
there is an outbreak of any disease
that might be induced through the
use of impure or unclean water.
All persons, partnerships, corpo-
rations, associations of any char-
Lacter, trustees and receivers sup-
¡plying water for such public use
in the city shall provide proper
strainers for all wells and all
other sources of supply so that
sand dirt or other foreign sub-
stan~es shall not be carried into
the water for such public use and
cause all of the conduits and dr ain
pipes conveying said water to be
thoroughly washed out and flushed
so as to clean the same at least
one time every ninety (90) days.
Any such person, partnership, cor-
por ation, association of any cha~-
acter, trustee or receivers or theIr
officers or agents, when any such
drinking water as furnished is
pronounced unfit or infectious or
for the public use in the city is.
hereby required to file with the
City Council a full and complete
accounting and full report under ,
oath of all water distributed and \
sold within the city on or before
the 15th day of March of each
year for the preceding calender
year or portion thereof and at the
time of the filing of such report
shall tender and pay therewith the
aforesaid tax and provided further
that sQould the City Council be
dissati$fted with'. sUCh 'report. or
have reason to believe that said
report is inaccurate or incorrect
and that the amount oftax tendered
and paid is inaccurate and in-
correct then and in such event the
City Council may cause by order
an audit to be made of the books
and records or in lieu thereof,
require 'such person, partnership,
cor por ation, association of !iny
character, trustee or receiver to
furnish the Council with a certi-
fied audit of a reputable firm of
certified public accountants hav-·
ing an office in Tarrant County,
Texas, for the pur pose of deter-
mining the correct amount of the
tax here imposed.
In âny case where any per SO?,
partnership, corporation, aSSOCI-
.ation of any c~ar~cter, t!u~teeor I
receiver furmshing dnnkmg or ,
domestic water to the city shall \
violate any of the provisions of
this ordinance, such person, part-
ner ship. cor por ation, association
of any character, trustee or re-
ceiver shall be fined not to exceed
$100.00 for any such offense and
each separate day's violation shall
constitute a separate offense.
SECTION 6
CUMULATIVE EFFECT
Where any of the subject matter
hereof is also cove~ed by any
statutê of this State this ordinance
shall be deemed and construed to
be cumulative thereof.
SECTION 7
effective date
This ordinance shall be effect-
ive from and after publication as
,required by law.
SECTION 8
SEVERABILITY
If any section, paragraph, sen-
. tence, phr ase or clause herein
contained shall be held to be in-
valid or unconstitutional the same
. shall not affect the remaining pOl" - .
tions thereof and the Council says
that it would have passed the re-
maúiíng portions thereof without