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In re Application of Township of Howell

Decided: May 24, 1991.

IN RE THE APPLICATION OF TOWNSHIP OF HOWELL, MONMOUTH COUNTY, TO DISSOLVE THE HOWELL TOWNSHIP MUNICIPAL UTILITIES AUTHORITY. HOWELL TOWNSHIP MUNICIPAL UTILITIES AUTHORITY, A MUNICIPAL UTILITIES AUTHORITY OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
MAYOR AND TOWNSHIP COMMITTEE OF THE TOWNSHIP OF HOWELL, MONMOUTH COUNTY, NEW JERSEY; AND TOWNSHIP OF HOWELL, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANTS-RESPONDENTS



On appeal from Department of Community Affairs, Local Finance Board.

J.h. Coleman, Dreier and Ashbey. The opinion of the court was delivered by Coleman, J.h., P.J.A.D.

Coleman

The opinion of the court was delivered by

COLEMAN, J.H., P.J.A.D.

This is an appeal from a final decision dissolving the Howell Township Municipal Authority (Authority). We affirm.

The Authority was created by Howell Township (Township) in November 1980 to provide for an adequate supply and distribution of potable water and the collection and disposal of sewage for its residents. At its peak, the Authority serviced about 5,688 sanitary sewer customers and about 5,149 potable water customers who comprised the ratepayers. Other residents in the Township were serviced by four private sewer and water companies, or their own wells and septic tanks.

By 1988, the Authority had incurred indebtedness of approximately $58 million, largely for capital projects relating to the potable water system. Faced with this huge debt, the Township formed a committee in June 1988 to study dissolution of the Authority. The study committee examined whether the Authority could be dissolved without the Authority's consent and what would be the financial and nonfinancial impact of a dissolution.

On September 5, 1989, the Township introduced three ordinances designed to dissolve the Authority. The first ordinance provided for the dissolution, the second provided for refunding the Authority's debts, and the third provided for the creation of a self-liquidating water and sewer department within the Township's governmental structure. Prior to the adoption of the ordinances, however, the Township filed an application seeking approval of the ordinance from the Local Finance Board (Board) in the Department of Community Affairs on September 18, 1989, as required by N.J.S.A. 40A:5A-20. The matter was thereafter referred to the Office of Administrative Law as an uncontested case at the Authority's request. Hearings were conducted over a five-day-period in which the Authority fully participated.

Administrative Law Judge Robert S. Miller issued his Initial Decision on January 30, 1990. The ALJ concluded that

the Township has met its burden of proving that (1) the proposed ordinances make adequate provision for the payment of all creditors or obligees of the Authority, and (2) the Township has made adequate provision to assume those services now provided by the Authority which are necessary for the health, safety and welfare of the recipients thereof. In accordance with N.J.A.C. 1:1-21.5(a) and with N.J.S.A. 40A:5A-20, I therefore recommend that the application of Howell Township to dissolve the HTMUA be APPROVED.

On February 20, 1990, the Board adopted the findings and recommendations of ALJ Miller. The Board found that the Township had satisfied all of the requirements of N.J.S.A. 40A:5A-20, and it approved the Township's three ordinances and its application to dissolve the Authority as well. The Township formally adopted the three ordinances on February 26, 1990, dissolving the Authority.

Within two weeks thereafter, the Authority filed a complaint in the Law Division in lieu of prerogative writs. Shortly thereafter, a notice of appeal from the decision of the Board was filed. Once the notice of appeal was filed, the Law Division action was transferred to the Appellate Division. The two matters have been consolidated. However, an order entered on March 13, 1990 in the Law Division restraining the Township from ...


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