Utility Boards ? Water and Gas Board ? Public Corporations ? Real Property ? Baldwin County
The rental of property on a short-term basis by North Baldwin Utilities (?NBU?) constitutes a ?disposition? of property as that term is used in section 11-50-314(a)(10) of the Code of Alabama.
The governing body of the municipality in which NBU is incorporated may not pass an ordinance or resolution prospectively consenting in a continuing manner to actions on the part of NBU to enter into short-term rental agreements.
Dear Mr. Lewis:
This opinion of the Attorney General is issued in response to your request on behalf of North Baldwin Utilities.
QUESTION 1
Under the circumstances described hereinabove, where real property is rented by NBU on a short-term basis, does the rental constitute a ?disposition? as that term is used in section 11-50-314(a)(10) of the Code of Alabama?
FACTS AND ANALYSIS
North Baldwin Utilities is a public corporation organized pursuant to section 11-50-310, et seq., of the Code of Alabama.? Ala. Code ???11-50-310 to 11-50-324 (2008).? NBU provides potable water, sewer, and natural gas services to citizens in north Baldwin County, Alabama.? You informed this office that pursuant to section 11-50-314(a)(4), NBU acquires various parcels of real property that are necessary and convenient for NBU?s operations.? Ala. Code ??11-50-314(a)(4) (2008).
NBU does not always use such property for its exclusive use.? When real property is not used exclusively, the corporation makes the property available for monthly rentals at commercially reasonable rental rates.? NBU does not enter into written leases in connection with these monthly rentals.? Instead, the lease arrangements are subject to termination on 30 days? notice.? The purpose of acquiring ownership of the rental property is not to operate it as income producing property, but the revenues that are generated from monthly rentals are used to defray the operating expenses of NBU.
You seek guidance as to whether these short-term rentals constitute a disposition of the property as contemplated in section 11-50-314(a)(10).? Ala. Code ??11-50-314(a)(10) (2008).? Section 11-50-314(a)(10) provides for the following power of a utility:
????????? To lease, exchange, sell, convey, and otherwise dispose of its real, personal, or mixed property by any form of legal conveyance or transfer; provided, however, that the governing body of the municipality in which such system authorized under this article is incorporated shall consent to the lease, exchange, sale, conveyance, or other disposition and such consent shall be evidenced by a duly adopted ordinance of the said governing body, which ordinance shall be adopted within 30 days of such lease, exchange, sale, conveyance, or other disposition;
Id. (emphasis added).
Under the established rules of statutory construction, words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used, a court is bound to interpret that language to mean exactly what it says. In re Inc. of Caritas Vill. v. Fuhrmeister, 152 So. 3d 1238, 1241 (Ala. 2014).? This provision authorizes a utility corporation to dispose of property through any form of legal conveyance or transfer.? Black?s Law Dictionary defines a conveyance as ?the voluntary transfer of a right or of property.?? Black?s Law Dictionary 407 (10th ed. 2014).? Black?s Law defines the term transfer as ?any mode of disposing of or parting with an asset or an interest in an asset including a gift, the payment of money, release, lease or creation of a lien or other encumbrance.?? Black?s Law Dictionary 1727 (10th ed. 2014).? Accordingly, it is the opinion of this Office that the rental of property on a short-term basis would be considered a disposition of property in the form of a conveyance or transfer.
CONCLUSION
The rental of property on a short-term basis by NBU constitutes a ?disposition? of property as that term is used in section 11-50-314(a)(10) of the Code of Alabama.
QUESTION 2
If so, can the City of Bay Minette pass an ordinance or resolution consenting prospectively and in a continuing manner to the rental by NBU of such real property?
FACTS AND ANALYSIS
This Office has explained that section 11-50-314(a)(10) further requires that, should NBU choose to dispose of its property, ?it may do so only with the consent of the governing body of the municipality in which the NBU is incorporated.?? Opinion to Honorable Jessica M. McDill, Attorney, North Baldwin Utilities, dated May 21, 2013, A.G. No. 2013-049 at 2.? This Office has also previously determined that a governing body of a municipality cannot, by agreement, bind its successors to forego or to exercise their legislative authority.? Opinions to Honorable Phillip B. Hammonds, Superintendent, Board of Education of Jefferson County, dated June 2, 2008, A.G. 2008-101; Honorable Benny B. Barrow, Mayor, City of Andalusia, dated February 24, 1997, A.G. No. 97-00118; Honorable Michael S. Harper, Schmitt & Harper, dated March 27, 1996, A.G. No. 96-00167.? Accordingly, it is the opinion of this Office that the municipal governing body may not pass an ordinance or resolution prospectively consenting in a continuing manner to actions on the part of NBU to enter into short-term rental agreements.
CONCLUSION
The governing body of the municipality in which NBU is incorporated may not pass an ordinance or resolution prospectively consenting in a continuing manner to actions on the part of NBU to enter into short-term rental agreements.
I hope this opinion answers your questions.? If this Office can be of further assistance, please contact Monet Gaines of my staff.
Sincerely,
STEVEN T. MARSHALL
Attorney General
By:
WARD BEESON, III
Chief, Opinions Section
STM/MMG/as
2289259/195291