The appellant is Ashley Valley Water & Sеwer Improvement District (“Ashley Valley”); the respondent is the City of Vernal. Ashley Valley brought this action before a local boundary commission to protest Vernal’s annexation of several areas within Ashley Valley. The boundary commission upheld the annexation, and Ashley Valley appealed to the district court. The district court dismissed Ashley Valley’s appeal for lack of standing. We reverse and remand.
Ashley Valley was organizеd in 1974 to provide water and sewer service to people residing outside of Vernal. To this end, Ashley Valley has incurred $3.5 million of debt. In 1981, the residents оf the Pike Countryside, Ashley Creek, Showalter and Gibson areas of Ashley Valley applied to Vernal for annexation. Sixty-two percent of the property owners signed the annexation petition. Vernal granted the petition and annexed the four areas, which totaled 485 acres. At that time, Ashley Valley had spent over $86,000 in constructing sewer lines to the Pike Countryside area. Ashley Valley is dependent on service revenues to rеtire the debt incurred in constructing the sewer lines.
Pursuant to U.C.A., 1953, § 10-2-408 (1979), Ashley Valley protested the annexation in a hearing before the Uintah County Boundary Commissiоn. The Boundary Commission upheld the annexation. Ashley Valley appealed to the district court and argued that the Boundary Commission hearing deniеd due process because the hearing procedure denied parties the right to call and cross-examine witnesses or present оther evidence. The district court found that the Boundary Commission’s findings were not supported by substantial evidence and that the Boundary Commission’s findings and cоnclusions did not address the issues raised in Ashley Valley’s protest. In an order dated December 14, 1982, the court remanded the case for additional evidence.
Vernal filed a motion for rehearing on the ground that in
Paulsen v. Hooper Water Improvement District,
Utah,
Section 10-2-408 is part of a comprehensive statutory scheme enacted as the “Local Boundary Commissions Act.” 1979 Utah Laws ch. 25. The Act provides procedures аnd standards for municipalities to follow in annexing property. See § 10-2-414 et seq. It also establishes “local boundary commissions” to hear protests to annexations. See § 10-2-402 et seq. The only entities which may initiate protests before the boundary commission are “affected entities.” § 10-2-408. That tеrm is defined in § 10-1-104(8) to mean “a county, municipality or other entity possessing taxation powers within a county, whose territory, service delivery or revеnue will be directly and significantly affected by a proposed boundary change involving a municipality or other local entity.”
The issue before us is whether a water and sewer improvement district may qualify as an affected entity. Vernal argues that an improvement district cannot qualify because it is not “an entity possessing taxation powers,” as the definitional section requires. By statute, a water and sewer improvement district lacks power to levy taxes, U.C.A., 1958, § 17-6-3.4. However, it does have the power to set tax rates and cause taxes to be levied, and the county is obligаted to collect taxes on behalf of the district. §§ 17-6-3.4 & 17-6-3.8 (Supp.1983). Vernal argues that since Ashley Valley cannot collect the taxes it causеs to be levied, it does not possess “taxation powers.”
Because the taxes must be collected on behalf of the district, there is, for thе purposes of § 10-1-104(8), no relevant difference between the power to impose and the power to collect taxes. Further, as noted above, Ashley Valley’s revenue from service delivery may be significantly affected by the boundary change. Accordingly, we hold that Ashley Vallеy is an “affected entity” which has standing to protest Vernal’s annexation.
Both the express legislative policy and the language of the Local Boundary Commission Act evidence an intent on the part of the Legislature to give standing to improvement districts to protest boundary changes, even though improvement districts are empowered only to assess, but not to collect, taxes. The Act declares that “[djecisions with resрect to municipal boundaries and urban development need to be made with adequate consideration of the effect of the proposed actions on adjacent areas and on the interest of other government entities ...,” § 10-2-401(6). (Emphasis added). Furthermore, if the phrase “other entity possessing taxation powers within a county” in § 10-1-104(8) were limited to entities with the power to collect taxes, then the only unit within a county that could qualify as an affected entity would be a city, which collects license and franchise taxes.
Compelling policy considerations support the rule that a governmental subdivision is an affected entity which can protest a boundary change if its revenues will or might bе affected by an annexation. As this case demonstrates, water and sewer improvement districts incur millions of dollars of debt to provide neеded water and sewer service to their members. When adjacent cities annex areas of improvement district territory, the districts stand to losе thousands of dollars of revenue from members who may choose to discontinue improvement district service. The loss of such revenue cоuld impair the credit rating of special improvement districts and even their ability to repay bonded indebtedness. Certainly, one of the most impоrtant functions of local boundary commissions is to mediate disputes to avoid these and other difficulties by ordering appropriate adjustmеnts. 1
Vernal argues that the result we reach is inconsistent with two prior cases. In
Paul
*243
sen v. Hooper Water Improvement District,
Utah,
Both these cases are distinguishable on their facts, since in neither case did the improvement district or service area make a showing that it would be “directly and significantly affected” by the proposed boundаry change. In any event, to the extent that either case intimates that an “affected” entity must possess power to levy and collect taxes rather than simply cause taxes to be collected on its behalf, those cases are overruled.
Reversed and remanded.
Notes
. We recognize that by statute a majority of real property owners may petition to withdraw from an improvement district, and that in such a case a statutory procedure еxists to determine the *243 rights and liabilities of the district and the withdrawing territory. U.C.A., 1953, § 17-6-29. Ashley Valley does not argue that this statute applies to this case. From the statements by counsel at oral argument, it appears that although Vernal has annexed the four areas of Ashley Valley, none of those areas has petitioned for withdrawal from Ashley Valley, i.e., in those four areas the taxing power of Ashley Valley and Vernal overlap.