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Hillside Estates, Inc v. Borough of Sayreville

December 11, 2012

HILLSIDE ESTATES, INC., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
v.
BOROUGH OF SAYREVILLE, A NEW JERSEY MUNICIPAL CORPORATION, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-10570-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 30, 2012 -

Before Judges A. A. Rodriguez, Sabatino and Ashrafi.

This litigation involves a dispute over the fairness of a municipality's method of imposing sewerage charges upon a large apartment complex, Winding Woods Apartments ("Winding Woods"). Plaintiff Hillside Estates, Inc. ("Hillside"), the owner of Winding Woods, appeals the trial court's June 17, 2011 order granting summary judgment to defendant, the Borough of Sayreville ("the Borough") and denying its own cross-motion for summary judgment.

The summary judgment order dismissed with prejudice Hillside's action in lieu of prerogative writs contesting, under both statutory and constitutional theories, the Borough's classification of Winding Woods as an "industrial" user. The classification results in Hillside having to pay a higher sewerage rate than other residential property owners that use the Borough's sewerage system, including six other apartment complexes. The Borough contends the rate differential is justified because Winding Woods, unlike the other local residential properties, has its own sewerage meter, which shows that the composition of Winding Woods's sewage exceeds the maximum standards for a residential user in the Borough.

We reverse the trial court's decision on non-constitutional grounds, as the record establishes that the Borough's method of calculating Winding Woods's sewerage fees is not "equitable," as is required by N.J.S.A. 40A:26A-10. The Borough's classification of Winding Woods as an industrial user, while simultaneously treating all other apartment complexes as residential users, results in a system that does not impose sewerage charges, as the law requires, in "fair proportion" to the user's characteristics. Subject to the resolution of certain open issues, including the timeliness of Hillside's lawsuit, we remand this matter for the trial court to fashion an appropriate remedy, on notice to interested parties.

I.

Hillside is the owner and operator of Winding Woods, which opened in 1981. Winding Woods contains 1,958 garden-apartment units, and it is the largest apartment complex in the Borough.*fn1

When Winding Woods was built, it was not located near an existing sewerage collection system. Consequently, the project's developer installed a pumping station on the property, enabling sewage to be pumped directly from the premises to the collection system of the Middlesex County Utilities Authority ("MCUA").

Pursuant to an arrangement with the MCUA, a sewerage meter was installed many years ago at the complex. That meter measures, among other things, the biochemical oxygen demand ("BOD"), the suspended solids content ("SS"), and chlorine demand ("CD"), of the sewage discharged from the property. It is undisputed that no other residential property in the Borough's system, including the six other apartment facilities, has a meter that measures the sewage flow generated solely from each individual site.*fn2

In 1988, the developer of Winding Woods and the Borough entered into a settlement agreement conveying the property's wastewater pumping station to the Borough. Since that time, the Borough has relied upon data from the meter to place Winding Woods in a municipal user class for calculating the sewerage charges it owes. Specifically, the meter data is collected by the MCUA, which then bills the Borough for sewerage services. In turn, the Borough assesses sewerage charges upon Winding Woods.

The Borough assesses its sewerage charges in accordance with Chapter XIV, Article III, Section 14-49, of the Sayreville Code (the "Code"), "Rules and Regulations of the Sewer System." Section 14-49.1 of the Code provides, in pertinent part:

User Classes shall mean and include eight

(8) classes of users which shall be established.

(a) User Class A. Users (Residential and Apartment) discharging domestic normal sewage. The domestic normal sewage shall be defined as sewage with a maximum: Five (5) day biochemical Oxygen Demand (BOD) of two hundred twenty (220) MG/L. Suspended solids content (SS) of two hundred twenty (220) MG/L. Chlorine Demand (CD) of fifteen (15) MG/L.

(b) User Class B. Users discharging non-domestic waters and/or industrial wastes. Industrial wastes shall mean any solid, liquid or gaseous substance discharged, permitted to flow or escaping the course of any industrial, manufacturing, trade or business process or in the course of the development, recovery or processing of natural resources, as distinct from domestic sewage. [Emphasis added.*fn3 ]

Article IV of the Water and Sewer chapter in the Code explains why industrial users, who do not treat their own sewage, are classified differently from residential sewerage users. The preamble to Article IV, Section 14-55.1, states:

The Borough of Sayreville has a contract with the Middlesex County Sewerage Authority for processing its domestic sewage which now represents one (1) of its larger operating expenses, i.e., several hundred thousand dollars per annum; and with the exception of several of our very large industries which are individual members of the Middlesex County Sewerage Authority, or who treat their own industrial sewage, there is discharged into the Sayreville Sewage System the effluent from all other industries as well as the domestic sewage from individual home owners, all of which is handled without additional charge.

The effluent discharge by these industries not only exceeds the average effluent discharge by a home owner by upwards of one thousand (1,000%) percent or more, but the industrial effluent is of such a character as to impose a heavier burden upon the treatment facilities and a much heavier expenditure on behalf of the Borough under its contract, by reason of the nature of such sewage. All of these factors result in an unfair discrimination against the home owner in favor of industry and an unreasonable burden on the cost of furnishing governmental services by the Borough to its constituents.

Schedule A to Section 14-49.22 of the Code specifies the "rents, rates and fees and other charges" to be assessed for connection, use, and service of the sewerage system. Schedule A sets forth respective "Sewer User Charges" for Class A and B users. The Class A charges are based upon a rate solely tied to the rate of water consumption:

Class A Users Discharging Normal Domestic Sewage. All Class A users of the Borough of Sayreville sanitary sewer system discharging normal domestic sewage, as herein described in the Sanitary Use Regulations, shall be charged at a rate of nineteen dollars and ...


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