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Trump Plaza Corp. v. Atlantic City Municipal Utilities Authority

Decided: August 30, 1983.


Williams, J.s.c.


Three casino developers have challenged the validity of a resolution adopted by the Atlantic City Municipal Utilities Authority establishing certain water-connection fees for projects receiving certificates of occupancy after January 1, 1981. The matter was submitted to the court upon a stipulated record.

The Atlantic City Municipal Utilities Authority (hereinafter referred to as "ACMUA") was created pursuant to the provisions of Section 5 a of N.J.S.A. 40:14B-4 by the passage of Ordinance No. 63 of 1978 by the Board of Commissioners of the City of Atlantic City. Thereafter, on January 22, 1980, pursuant to an agreement between it and the City of Atlantic City, the ACMUA purchased the water facilities owned by the Atlantic City Water Department. At that time, new customers of the ACMUA, pursuant to prior practice of the Atlantic City Water Department, were charged as follows:

a. $60 payable to the City of Atlantic City for a street opening permit.

b. An amount payable to the ACMUA based upon time plus material for the cost of service installation, including tapping sleeves, valves, lines, meters, etc.

c. Reimbursement to the ACMUA for the time expended in the inspection of large projects.

In December 1980, by Resolution No. 112-1980, the ACMUA enacted a connection-fee program which required payment of a water-connection fee by all projects receiving certificates of occupancy from Atlantic City after January 1, 1981. The fee was based on increased usage of water over 1980 levels and

comprised two parts: (1) a nonrefundable $1.00 per gallon of increased-usage charge for the first 100,000 gallons per day, and (2) a 5% surcharge applied to the total connection fee for each full year after January 1, 1981 that the fee was paid in full. A third part requiring a $2.00 per-gallon charge for all anticipated usage over 100,000 gallons per day, to be repaid to the customer through a 20% reduction in annual user charge until totally paid, was reserved.

On May 13, 1981, the ACMUA adopted Resolution No. 50-1981, which amended, in part, the connection-fee schedule of the ACMUA in the following respects: (1) the proposed $2.00 per-gallon over 100,000 gallons per-day connection charge was reduced to a $1.00 per-gallon nonrefundable charge for any project that was either commenced after June 30, 1982 and/or was completed (acquisition of a certificate of occupancy) after December 31, 1983, and (2) projects opening between January 1, 1984 and June 30, 1984 were required to pay a charge of $5,000 for all or any part of any month after January 1, 1984 prior to opening.

The connection fee adopted pursuant to Resolution No. 112-1980 was based upon time of receipt of certificate of occupancy rather than time of connection to the water system, connection being a prerequisite to issuance of a certificate of occupancy. The pre-existing charges for cost of service installation and inspection of large projects continue to be required and paid by new customers, in addition to the connection fees set forth in Resolutions 112-1980 and 50-1981.

Certain hotel/casinos, namely, Resorts International, Harrah's, Sands, Bally's Park Place, Caesars and Golden Nugget, were operating prior to the institution of the connection-fee program in question, and therefore were not charged the $100,000 connection fee. Claridge Limited presently operates the Claridge Hotel and Casino. Adamar of New Jersey, Inc., presently operates the Tropicana Motel and Casino. Harrah's Associates is presently constructing a hotel/casino scheduled for

opening in the first half of 1984. The Claridge Hotel, as a hotel, prior to expansion as a hotel and casino, was connected to the water system prior to December 1980, but required a new certificate of occupancy as a result of its expansion. Claridge and Harrah's Associates are defined by the ACMUA as Class 6 users, as are all other casino/hotels excepting the Tropicana, which is a Class 7 user.

Claridge Limited and Adamar of New Jersey, Inc., are subject to the $100,000 fee by the ACMUA pursuant to its connection-fee schedule and its terms. Adamar has paid the fee; Claridge has not. Harrah's Associates is also subject to the $100,000 fee and has paid same, and is also subject to additional charges of $1.00 per gallon for approximated daily use of water over 100,000 gallons should its casino/hotel not receive a certificate of occupancy before June 30, 1984. Should it receive a certificate of occupancy between January 1, 1984 and June 30, 1984, it is subject to a fee of $5,000 per month for each month that it did not have the certificate of occupancy.

For clarification of the issues involved, some review of the development of the law with respect to connection fees is necessary. The authority for a municipal utilities authority to charge and collect a connection fee is set forth in N.J.S.A. 40:14B-21, which provides in part:

In addition to any such water service charges, a separate charge in the nature of a connection fee or tapping fee, in respect of each connection of any property with the water system may be imposed upon the person making such connection or upon the owner or occupancy of the property so connected. Such connection charges shall be uniform within each class of users and the amount thereof shall not exceed the actual cost of the physical connection plus an amount representing the fair contribution of the connecting party toward the debt service charges on the bonds issued for the installation and construction of the water system previously paid by users of the water system, in order that the combination of such connection fee or tapping fee and the aforesaid water service charges shall meet the requirements of section 23 (C. 40:14B-23).

A similar statutory provision, N.J.S.A. 40:14A-8, was interpreted by our Supreme Court in Airwick Industries, Inc. v. Carlstadt Sewerage Auth., 57 N.J. 107 (1970). That provision was part of the Municipal Sewerage Authorities Law. N.J.S.A.

40:14A-1 et seq. Following Airwick Industries the Legislature amended provisions in the Municipal Utilities Authorities Law, N.J.S.A. 14B-1 et seq., so that they contained the identical language as the Sewerage Authorities Law. L. 1971, c. 298, ยง 1 (amendment to N.J.S.A. 40:14B-22). The purpose of the amendment as expressed in the statement attached thereto was to accord to municipal utilities authorities the same authority with respect to sewer-connection fees as was accorded to municipal sewerage authorities.

Thereafter in 1977 the Legislature again amended the Municipal Utilities Authorities Law with respect to charges for water. L. 1977, c. 441 (amendment to N.J.S.A. 40:14B-21). The statement annexed to the legislation provided in pertinent part as follows:

Senate Bill No. 69 authorize [ sic ] any county or municipal water and sewage disposal authority operating under the "municipal utilities authorities law," to charge a separate connection fee or tapping fee for any connections to the water system of such authority. The fees are to be imposed upon any person or persons contracting for such connections.

The provisions of this bill are identical to those for sewerage connection or tapping fees charged by (1) sewerage authorities pursuant to P.L.1946, c. 138 (C. 40:14A-8), as amended by P.L.1968, c. 317, and by (2) municipal utilities authorities under (C. 40:14B-22), as amended by P.L.1971, c. 298.

Thereafter, our Supreme Court held that the principles enunciated in Airwick Industries were equally applicable to municipal sewerage authorities operating under N.J.S.A. 40:14B-1 et seq. White Birch Realty Corp. v. Gloucester Tp. Mun. Util., 80 N.J. 165 (1979). Although White Birch dealt with sewerage charges, the court's ...

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