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Builders League of South Jersey, Inc. v. Gloucester County Utilities Authority

July 13, 2006

BUILDERS LEAGUE OF SOUTH JERSEY, INC., A NEW JERSEY NON-PROFIT CORPORATION, PLAINTIFF-RESPONDENT,
v.
GLOUCESTER COUNTY UTILITIES AUTHORITY, IN THE COUNTY OF GLOUCESTER A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, L-1924-01PW.

The opinion of the court was delivered by: Winkelstein, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued Telephonically June 6, 2006

Before Judges Weissbard, Winkelstein and Sapp-Peterson.

In this case, the Builders League of South Jersey sued the Gloucester County Utilities Authority (the Authority), challenging the sewer connection fees for the Authority's 2004 fiscal year (November 1, 2003 - October 31, 2004). The parties arrived at a proposed settlement, which established a sewer connection fee of $1486. Following a "fairness hearing" in the Law Division, Judge Stanger approved the settlement.

On appeal, Glen Eyre at Monroe, L.L.C. (Glen Eyre), a developer that objected to the settlement in the Law Division, challenges both the use of a fairness hearing as a means to approve the settlement and the fairness of the settlement itself. We concur with the trial court that the fairness hearing was an appropriate vehicle to evaluate the settlement, and under the facts as presented at that hearing, the settlement was fair and reasonable and in compliance with the controlling law. Accordingly, we affirm.

The Authority, which commenced operations in 1973, provides sanitary sewerage service to portions of Gloucester County. It services at least sixteen participating public entity customers and several industrial customers. The Builders League is a nonprofit corporation whose members are engaged in construction in New Jersey. Glen Eyre, not a member of the Builders League, has received approvals to construct a large subdivision in Monroe Township, Gloucester County, which requires connection to the sanitary sewer system operated by the Monroe Municipal Utilities Authority (the Monroe MUA), a public entity customer directly serviced by the Authority.

Pursuant to N.J.S.A. 40:14B-22, a provision of the Municipal and County Utilities Authorities Law, N.J.S.A. 40:14B-1 to -78, a utilities authority has the power to charge a connection fee, sometimes called a tapping fee, for each property connecting to the sewerage system. The connection fee shall be uniform within each class of users . . . and the amount [of the fee] shall not exceed the actual cost of the physical connection, if made by the authority, plus an amount computed in the following manner to represent a fair payment towards the cost of the system:

a. The amount representing all debt service, including but not limited to sinking funds, reserve funds, the principal and interest on bonds, and the amount of any loans and the interest thereon, paid by the municipal authority to defray the capital cost of developing the system as of the end of the immediately preceding fiscal year of the authority shall be added to all capital expenditures made by a municipal authority not funded by a bond ordinance or debt for the development of the system as of the end of the immediately preceding fiscal year of the authority.

b. Any gifts, contributions or subsidies to the authority received from, and not reimbursed or reimbursable to, any federal, State, county or municipal government or agency or any private person, and that portion of amounts paid to the authority by a public entity under a service agreement or service contract which is not repaid to the public entity by the authority, shall then be subtracted.

c. The remainder shall be divided by the total number of service units served by the authority at the end of the immediately preceding fiscal year of the authority, and the results shall then be apportioned to each new connector according to the number of service units attributed to that connector. In attributing service units to each connector, the estimated average daily flow of sewage for the connector shall be divided by the average daily flow of sewage from the average single family residence in the authority's district, to produce the number of service units to be attributed. [N.J.S.A. 40:14B-22.]

The connection fee must be paid by new connectors to the system and "represent a fair payment towards the cost of the system." N.J.S.A. 40:14B-22. The "fair payment" is determined through the application of N.J.S.A. 40:14B-22a, b and c, and it is "apportioned to each new connector according to the number of service units attributed to that connector." N.J.S.A. 40:14B-22c. A "service unit" is essentially a single family home. The connection fee is expressed in dollars per "equivalent domestic consumer units" or EDCUs. The statutory formula to determine the fee may be expressed as follows:

Connection fee = debt service (¶ a) minus payments (¶ b) total number of service units (¶ c)

The connection fee shall "be recomputed at the end of each fiscal year of the authority, after a public hearing" and a "revised connection fee may be imposed upon those who subsequently connect in ...


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