The opinion of the court was delivered by: Lehrer, P.J.Ch.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS
The plaintiff, Ocean Seniors, L.L.C., is a real estate developer developing age-restricted housing in Ocean Township, Monmouth County, New Jersey. The defendant, The Township of Ocean Sewerage Authority ("Authority") was created by the governing body of the Township of Ocean under the Sewerage Authorities Law N.J.S.A. 40:14A-1 to -45. The Authority provides sanitary sewer collection, treatment, and disposal services to individual residential and commercial customers within its service area in Ocean Township.
The Authority has entered into bulk treatment service agreements with the adjoining municipalities of Deal, Interlaken, Allenhurst and Loch Arbour (the "Customer Communities") under which the Authority treats sewage delivered to it by the Customer Communities through collection systems owned and maintained by the respective Customer Communities.
The Authority does not have individual customers within the Customer Communities, but instead, charges each Customer Community at a bulk rate based on the volume of sewage delivered by that Customer Community to the Authority through its point of interconnection. Collectively, the Customer Communities generate approximately 1.343 million gallons per day (mgd) of sewage flow, while approximately 4.556 mgd are generated within the Township of Ocean.
On May 14, 2001, Ocean Seniors received preliminary and final approval from the Ocean Township Planning Board for 124 age-restricted apartments known as Primrose Place at Ocean (the "Project"). The Project is located exclusively within the Township of Ocean.
On March 20, 2001, Ocean Seniors applied to the Authority for sewer service to the Project, estimating the sewage flows from the Project would be 27,000 gallons per day. Ocean Seniors also prepared an application to be submitted though the Authority to the New Jersey Department of Environmental Protection ("NJDEP") for Treatment Works Approval ("TWA") to construct the required sanitary sewer extension. On July 11, 2003, NJDEP issued a TWA permit for a flow of 27,000 gallons per day for the sanitary sewer extension for the Project.
In accordance with the requirements imposed by statute, the Authority reviews its sewer connection fees annually. The applicable review for the purpose of this decision occurred on May 4, 2004.
At the May 4, 2004, public hearing, the Authority called David A. Kaplan as its witness. Kaplan is a certified public and registered municipal accountant. He has been the auditor for the Authority for approximately twenty years. Kaplan performed a study to determine the average daily water usage for a single-family residence in Ocean Township during the period December 1, 2002 through November 30, 2003. Kaplan reviewed water use figures provided by New Jersey American Water Company, and, based upon a representative sample of 184 single-family residences in Ocean Township, determined that the average daily water usage in 2003 for a single-family residence in the Authority's district was 237 gallons per day. Water use figures within the Customer Communities were not used in the study.
Kaplan then calculated the water usage of all customers within Ocean Township during the study period and found the average to be 3,550,768 gallons per day. Using 237 gallons per day per service unit, Kaplan determined that, pursuant to the statutory formula, there were 14,973 service units in the Authority's district.
Kaplan then calculated the Authority's capital base by adding all debt service payments (principal and interest) made by the Authority to defray the capital cost of developing the sewer system through the end of the prior fiscal year, together with all reserve funds and capital expenditures paid in cash for the development of the sewer system through the end of the prior fiscal year. Kaplan ...