I posted earlier about enterprise fund versus Municipal Light Plant status for GCET. In response, Town Councilor Otis Wheeler mentioned that the town’s legal counsel is advising that GCET needs to remain an MLP, but that it can also be changed to an Enterprise Fund.
The advice (which can be found on page 33 of the packet for the February meeting of the Town Council) reads:
An “enterprise fund” establishes a separate accounting and financial reporting mechanism for municipal service for which a fee is charged in exchange for goods or services. Under enterprise accounting, the service’s revenues and expenditures are segregated into a separate fund with its own financial statements, rather than being commingled with the revenues and expenses of all other governmental activities.
The “enterprise fund” statute, however, outlines an accounting and budgeting method for municipalities to follow. It does not provide the source of authority for Greenfield to own or operate a telecommunications system such as what GCET provides. In fact, based on a review of the Massachusetts General Laws, there is a strong argument that the sole source of legal authority for towns and cities to operate telecommunications systems (like GCET) is M.G.L. Chapter 164, the statute under which GCET was formed. Section 47E of Chapter 164 appears to provide the sole source of authority for constructing and operating a municipal telecommunications system and it provides, in relevant part:
“A municipal lighting plant or a cooperative public corporation and any municipal lighting plant member thereof, established pursuant to this Chapter or any general or special law may construct, purchase, lease, and maintain such facilities as may be necessary for the distribution or the operation of a telecommunications system for municipal use or for the use of its customers. . . . Wherever apt, the provisions of this chapter and chapter 44, which apply to the operation and maintenance of a municipal lighting plant, shall apply also to the operation and maintenance of such telecommunications system.”
This argument has support from a line of cases in Massachusetts that establishes that “where cities and town are authorized to enter into the field of business enterprises . . . they do it not under the laws relating to private corporations . . . but under special statutory provisions. Adie v. Mayor of Holyoke, 303 Mass. 295, 299 (1939). Section 47E appears to be that special statutory provision. It should also be noted that other provisions of the Massachusetts General Laws pertaining to telecommunications systems refer to “municipal Lighting plants” that operate telecommunications systems, not towns and cities operating telecommunications systems. See e.g., Chapter 166, Section 11 filing of annual returns with the Department of Telecommunications); Chapter 166, Section 13 (equal access to exhanges); and Chapter 166, Section 21 (lines in public ways).
The short version is that the Enterprise Fund statute does not provide any authority for a town to run a telecommunications service such as GCET, but the Municipal Light Plant statue does provide such authority. However, and MLP can also be an Enterprise Fund for accounting purposes.
That explanation clears up another question I had about this whole plan of changing GCET to an Enterprise Fund. As it currently stands, GCET reports up to the Mayor, but this structure is an interim measure pending action by the state legislature that will make GCET official (the ongoing delay of which maybe explains why we don’t show up on the state’s list of communities served by Municipal Light Plants?). At that point, GCET will be governed by an independent board of commissioners.
However, I have been wondering what would become of these commissioners were GCET to be switched to an Enterprise Fund. Based on the opinion above, though, authority for and governance of GCET would still need to come from its status as an MLP (presumably leaving the board of commissioners intact), while its finances and reporting would be handled under an Enterprise Fund.
That arrangement still seems like a better solution than what we currently have.
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