MS 2020-11-R-Lawrence-November-10-2020-Contracting-with-private-business-to-collect-municip November 10, 2020

Can a Mississippi city hire a private company to take payments on the city's water and sewer bills?

Short answer: The AG concluded that a Mississippi municipality may contract with a private business to bill and collect water and sewer fees under Sections 21-27-7 and 21-27-11. The AG declined to suggest specific contract parameters, treating that as a discretionary call for the city.

Disclaimer: This is an official Mississippi Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Mississippi attorney for advice on your specific situation.

Plain-English summary

The City of Crystal Springs asked whether it could outsource the actual job of accepting water and sewer payments to a private company. The AG said yes. Section 21-27-7 lets municipalities erect, purchase, maintain, and operate waterworks and to "contract with any person for the maintenance and operation of waterworks." Section 21-27-11 et seq. governs municipally-owned utility systems and provides the broader framework for operating and contracting around them.

Earlier AG opinions had already approved this kind of arrangement. MS AG Op., Herring (Jan. 12, 2007), pulled together Thompson (June 5, 1998), Littlejohn (Feb. 23, 1995), and Hall (Oct. 3, 1997), each of which approved a private entity contracting to bill and collect water or sewer fees on the city's behalf. The 2020 opinion follows that line.

The AG also reminded the city of two procedural points. First, before the mayor signs anything, the Board of Aldermen has to authorize the action and that authorization must appear in the official minutes; the governing authority speaks only through its minutes (MS AG Op., Carroll, July 14, 2003). Second, on the practical question of what specific contract parameters (fees, bonding, etc.) should look like, the AG declined to suggest specifics, calling the question too broad and a matter for the city's discretion.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is the city's source of authority to outsource billing?

Sections 21-27-7 and 21-27-11 et seq. Section 21-27-7 specifically lets a municipality "contract with any person for the maintenance and operation of waterworks," and the broader chapter governs municipally-owned utility systems.

Does this just cover billing, or also collection?

Both. Earlier AG opinions specifically approved private entities contracted to handle "billing and collection of fees for water services and sewer services."

Can the city require the vendor to keep collecting from delinquent accounts?

The 2020 opinion does not directly address service termination as a collection tool. A separate AG opinion (Barber, Aug. 31, 2020) concluded that neither a county nor its third-party vendor may suspend service to delinquent customers. The same logic likely applies to a city, but the Lawrence opinion did not get into specific delinquency mechanics.

Does the city have to put the contract on the official minutes?

Yes. The mayor needs Board authorization to sign, and that authorization must be reflected in the minutes. The governing authority speaks only through its official minutes.

What happens if the AG won't suggest contract parameters?

The city has to decide. The AG flagged the breadth of the question and left the parameters (fees, bonding, scope, performance standards) to the city's discretion. The cited authorities provide the framework but not the specifics.

Background and statutory framework

Section 21-27-7 authorizes municipal governing authorities to "erect, purchase, maintain and operate waterworks, and to regulate the same" and to "contract with any person for the maintenance and operation of waterworks."

Section 21-27-11 et seq. governs the formation and operation of municipally-owned utility systems. These statutes provide the broader authority structure around municipal utilities.

A line of AG opinions had already approved private billing-and-collection contracts: MS AG Op., Herring at *1 (Jan. 12, 2007); MS AG Op., Thompson (June 5, 1998); MS AG Op., Littlejohn (Feb. 23, 1995); MS AG Op., Hall (Oct. 3, 1997). The procedural reminder about authorization and minutes traces to MS AG Op., Carroll (July 14, 2003) and reflects the longstanding rule that municipal governing authorities act only through their minutes.

The opinion is signed by Special Assistant Attorney General Phil Carter on behalf of Attorney General Lynn Fitch.

Citations

Miss. Code Ann. Section 21-27-7 (waterworks authority and contracting)
Miss. Code Ann. Section 21-27-11 et seq. (municipally-owned utility systems)
MS AG Op., Herring at *1 (Jan. 12, 2007)
MS AG Op., Thompson (June 5, 1998)
MS AG Op., Littlejohn (Feb. 23, 1995)
MS AG Op., Hall (Oct. 3, 1997)
MS AG Op., Carroll (July 14, 2003)

Source

Original opinion text

November 10, 2020

Robert W. Lawrence, Esq.
City Attorney, City of Crystal Springs
Post Office Box 473
Crystal Springs, Mississippi 39059

Re: Contracting with private business to collect municipal utility bills

Dear Mr. Lawrence:

The Office of the Attorney General has received your request for an official opinion.

Questions Presented

May the City of Crystal Springs (the "City") contract with a private business to accept payment of municipal water and sewer bills?
If the response to question 1 is affirmative, what parameters are required (i.e., payment of fees, bonding) or, what does the Office of the Attorney General suggest with respect to these parameters?

Brief Response

With respect to your first question, yes. The governing authority of a municipality may enter into a contract with a private entity for the billing and collection of fees for water services and sewer services, pursuant to the municipality's authority under Sections 21-27-7 and 21-27-11 et seq.

With respect to your second question, given its broad nature, we make no suggestion regarding the parameters of the City's billing arrangement with the private company.

Applicable Law and Discussion

Mississippi Code Annotated Section 21-27-7 authorizes the governing authorities of municipalities to, among other things, "erect, purchase, maintain and operate waterworks, and to regulate the same" and to "contract with any person for the maintenance and operation of waterworks." Section 21-27-11 et seq. governs the formation and operation of municipally-owned utility systems.

Our office has previously opined that the governing authority of a municipality may enter into a contract with a private entity for the billing and collection of fees for water services and sewer services, pursuant to its authority under Sections 21-27-7 and 21-27-11 et seq. MS AG Op., Herring at 1 (Jan. 12, 2007) (citing MS AG Op., Thompson (June 5, 1998); MS AG Op., Littlejohn (Feb. 23, 1995); MS AG Op., Hall (Oct. 3, 1997)). In our Herring opinion, we noted that "prior to entering into a contract on behalf of the municipality, authorization must be given to the Mayor to take such action and such approval must be accurately reflected in the official minutes of the municipality as the governing authority speaks only through its official minutes." MS AG Op., Herring at 1 (citing MS AG Op., Carroll (July 14, 2003)). Accordingly, the City is authorized to contract with a private business to accept payment of municipal water and sewer bills.

With respect to your second question, given its broad nature, we make no suggestion regarding the parameters of the City's billing arrangement with the private company.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,
LYNN FITCH, ATTORNEY GENERAL

By: /s/ Phil Carter
Phil Carter
Special Assistant Attorney General