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K-Land Corp. No. 28 v. Landis Sewage Authority

A-0575-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

MUNICIPALITIES; SEWERAGE — A municipal sewerage authority is allowed to charge sewer users their fair share contribution of the development and construction cost of the system, but it would be arbitrary and capricious to require a particular developer to sustain the entire cost of construction while not requiring users of the sewerage system to contribute their fair share.

The approval of construction of a residential development was conditioned on the developer constructing an off-site sewer line and a pumping station to connect the residences in its development to existing municipal sewer utility lines. The municipal sewage authority requested that the developer increase the size of the sewer line from 6 to 8 inches to accommodate future development. The developer agreed to construct the larger sewer line if the sewage authority apply a “fair share” policy allowing for other users of the sewer line and pumping station to pay for their share of the costs of construction of the entire sewer line and pumping station. The sewage authority agreed to charge other users of the sewer line and pumping station their fair share of the construction costs, which would be used to reimburse the developer. The developer reached a separate agreement (which was never signed) with a potential user of the sewage system for reimbursement of construction costs.

At all times, the municipal sewage authority contemplated the issue of reimbursing the developer. The agreement between the sewage authority and the developer, as well as a letter to the developer from the sewage authority, confirmed that the developer would have the right to collect assessments from future users of the sewer line and pumping station. The development and construction costs of sewer facilities were to be borne initially by the developer and later by all parties benefitting by the sewage facilities. The municipal sewage authority was thus allowed to charge sewer system users their fair share contribution of the development and construction costs. According to the Appellate Division, to require the developer to sustain the entire costs of construction while not requiring users of the sewage system to contribute their fair share would be arbitrary and capricious. Although precise mathematical calculations are not required in this context, the fees assessed to the users of the sewage system must “contemplate rough equality, keeping in mind that ... absolute equality is neither feasible nor constitutionally vital.” To the extent the developer used the sewage facility, it should be burdened only with its fair share of the costs. The fact that the tentative agreement for reimbursement was not realized could not bar the developer’s claim for reimbursement under the statutory scheme. Thus, the dismissal of the developer’s complaint was reversed, and the matter was remanded to determine the appropriate amount of reimbursement due to the developer. The issue whether the developer could apply its future connection fees as a credit against any deficiency existing because the fees collected from the other sewage users did not result in full reimbursement also had to be answered on remand.


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