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Ocean Seniors, LLC v. Township of Ocean Sewerage Authority

2006 WL 1642165 (N.J. Super. Law Div. 2006) (Unpublished)

SEWERS — A multi-municipality sewerage authority is required to calculate connection fees on a municipality by municipality basis, and is not required to calculate connection fees based upon the aggregate number of connections in all of the municipalities that it serves.

A municipal sewerage authority (Authority) provided sanitary sewer collection, treatment, and disposal services to individual residential and commercial customers within its service area of the municipality. The Authority also entered into bulk treatment service agreements with the adjoining municipalities under which the Authority treated sewage delivered to it by the adjoining municipalities through collection systems owned and maintained by the respective adjoining municipalities. The Authority did not have individual customers within the adjoining municipalities, but instead, charged each adjoining municipalities at a bulk rate based on the volume of sewage delivered by that adjoining municipality to the Authority through its point of interconnection.

A real estate developer of age-restricted housing received approval from the municipal planning board for apartments. The developer applied to the Authority for sewer service to the apartments. The developer also prepared an application to be submitted through the Authority to the New Jersey Department of Environmental Protection (DEP) for approval to construct the required sanitary sewer extension. The DEP issued a permit for the sanitary sewer extension.

Pursuant to statutory requirements, the Authority reviewed its sewer connection fees annually. At a public hearing, the Authority called its auditor as its witness. The auditor performed a study to determine the usage for residence in the municipality. He calculated the water usage of all customers, calculated the capital base, and divided the capital base by the number of service units to arrive at a connection fee per dwelling unit which included the developer’s apartments.

The developer, as did every developer in the municipality, at its own cost, constructed the sewerage facilities necessary to extend sanitary sewer service to its development from the nearest feasible point of connection. Once completed, these improvements were dedicated to the Authority to become part of the public sewer system. The developer argued that the failure to include the sewage flows from the adjoining municipalities in the calculation was unfair to new connectors within the municipality, since it placed an excessive burden on those connectors.

The Law Division disagreed. It stated that the method utilized by the Authority in calculating service units was not only required by statute, but also placed new connectors within the municipality on exactly the same footing as all prior connectors to the Authority’s system.

The Court explained that the statute required the Authority to use the total number of service units served by the Authority and that such a calculation accounted for dwellings in the authority’s district to provide the number of service units to be attributed. The Court stated that the term “district” was defined by reference to boundaries, and in this case, the relevant “district” was the municipality. Further, the Court held that the Authority did not have service units outside of the municipality. It was undisputed that the only customers who had ever paid connection fees to the Authority were the customers in the municipality. In light of case law, statutory history and the municipality’s history in general, the Court reasoned that to permit connection fees to be imputed to the adjoining municipalities would place the developer in a better position than those customers in the municipality who previously contributed to the costs of developing the system.

The developer also cited to an unpublished case for the proposition that service units of the adjoining communities had to be included in the total units. The Court disagreed. Rather, the Court found that the case supported the proposition that the total number of service units served by the authority was a fact sensitive issue to be determined on a case-by-case basis. The Court reasoned that the Authority’s agreements with its customers in the adjoining municipalities were entered into well before the connection fee was established by statute. Those agreements showed that there was never an intent by either the Authority or the adjoining municipalities to consider the individual users in those adjoining municipalities as “service units” of the Authority. Further, the Court found that the connection fee statute did nothing to change the history dating back to when the Authority entered into agreements with the adjoining municipalities.

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