An Act concerning fees charged by sewerage and utilities authorities, amending P.L.1946, c.138, P.L.1957, c.183, and P.L.1977, c.384.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 8 of P.L.1946, c.138 (C.40:14A-8) is amended to read as follows:

8. (a) Every sewerage authority is hereby authorized to charge and collect rents, rates, fees, or other charges (in this act sometimes referred to as "service charges") for direct or indirect connection with, or the use or services of, the sewerage system. [Such] These service charges may be charged to and collected from any person contracting for [such] the connection or use or services or from the owner or occupant, or both of them, of any real property which directly or indirectly is or has been connected with the system or from or on which originates or has originated sewage or other wastes which directly or indirectly have entered or may enter the sewerage system, and the owner of [any such] that real property shall be liable for and shall pay [such] the service charges to the sewerage authority at the time when and the place where [such] the service charges are due and payable.

(b) Rents, rates, fees, and charges, which may be payable periodically, being in the nature of use or service charges, shall as nearly as the sewerage authority shall deem practicable and equitable be uniform throughout the district for the same type, class, and amount of use or service of the sewerage system, except as permitted by section 1 of P.L.1994, c.78 (C.40:14A-8.2), and may be based or computed either on the consumption of water on or in connection with the real property, making due allowance for commercial use of water, or on the number and kind of water outlets on or in connection with the real property, or on the number and kind of plumbing or sewerage fixtures or facilities on or in connection with the real property, or on the number of persons residing or working on or otherwise connected or identified with the real property, or on the capacity of the improvements on or connected with the real property, or on any other factors determining the type, class, and amount of use or service of the sewerage system, or on any combination of [any such] these factors, and may give weight to the characteristics of the sewage and other wastes and any other special matter affecting the cost of treatment and disposal thereof, including chlorine demand, biochemical oxygen demand, concentration of solids, and chemical composition. In addition to any [such] periodic 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 sewerage system, may be imposed upon the owner or occupant of the property so connected. [Such] The connection charges shall be uniform within each class of users, except as provided by section 2 of P.L.2005, c.29 [(C.40:14A-8.30)] (C.40:14A-8.3) and except as provided by section 2 of P.L.2005, c.173 (C.40:14A-8.4), and the amount thereof 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 toward the cost of the system:

(1) 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 interest thereon, paid by the sewerage 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 the 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.

(2) 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.

(3) 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, to produce the connector's contribution to the cost of the system. 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 for the average single family residence in the authority's district to produce the number of service units to be attributed.

The connection fee shall be recomputed at the end of each fiscal year of the authority, after a public hearing is held in the manner prescribed in subsection (c) of this section. The revised connection fee may be imposed upon those who subsequently connect in that fiscal year to the system. The combination of [such] the connection fee or tapping fee and the [aforesaid] periodic service charges shall meet the requirements of subsection (c) [hereof] of this section.

(c) The sewerage authority shall prescribe and, from time to time when necessary, revise a schedule of service charges, which shall comply with the terms of any contract of the sewerage authority and in any event shall be such that the revenues of the sewerage authority will at all times be adequate to pay all expenses of the operation and maintenance of the sewerage system, including reserves, insurance, extensions, and replacements, and to pay punctually the principal of and interest on any bonds and to maintain [such] the reserves or sinking funds therefor as may be required by the terms of any contract of the sewerage authority or as may be deemed necessary or desirable by the sewerage authority. [Said] The schedule shall [thus] be prescribed and from time to time revised by the sewerage authority after public hearing thereon which shall be held by the sewerage authority at least 20 days after notice of the proposed adjustment is mailed to the clerk of each municipality serviced by the authority and publication of notice of the proposed adjustment of the service charges and of the time and place of the public hearing in at least two newspapers of general circulation in the area serviced by the authority. The sewerage authority shall provide evidence at the hearing showing that the proposed adjustment of the service charges is necessary and reasonable, and shall provide the opportunity for cross-examination of persons offering [such] evidence, and a transcript of the hearing shall be made and a copy thereof shall be available upon request to any interested party at a reasonable fee. The sewerage authority shall likewise fix and determine the time or times when and the place or places where [such] the service charges shall be due and payable and may require that [such] the service charges shall be paid in advance for periods of not more than one year. A copy of [such] the schedule of service charges in effect shall at all times be kept on file at the principal office of the sewerage authority and shall at all reasonable times be open to public inspection.

Notwithstanding the provisions of this section or the provisions of any other law, rule, or regulation to the contrary, commencing in the preparation of its annual budget next following enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), a sewerage authority may not increase the portion of any rent, rate, fee, or other charge, imposed by the sewerage authority that is not related to debt service, in excess of two percent of the portion of the previous year's rent, rate, fee, or other charge, that is not related to debt service, subject to the following exclusions:

(1) Capital expenditures, including appropriations for current capital expenditures, as a component of a line item elsewhere in the sewerage authority's budget, provided that the current capital expenditures would be otherwise bondable;

(2) An increase based upon emergency temporary appropriations made to meet an urgent situation or event which immediately endangers the health, safety, or property of the sewerage system and its users, and over which the sewerage authority had no control and for which it could not plan; or

(3) An increase exercised so as not to affect in any way the covenants contained in the bond indentures of the sewerage authority.

(d) Any county sewerage authority may establish sewerage regions in portions of the district. Rents, rates, fees, and charges which may be payable periodically, being in the nature of use or service charges, shall as nearly as the sewerage authority shall deem practicable and equitable, be uniform throughout the district for the same type, class, and amount of use or service of the sewerage systems, except as permitted by section 1 of P.L.1994, c.78 (C.40:14A-8.2), and shall meet all other requirements of subsection (b) hereof.

(cf: P.L.2005, c.173, s.1)

2. Section 21 of P.L.1957, c.183 (C.40:14B-21) is amended to read as follows:

21. a. Every municipal authority is hereby authorized to charge and collect rents, rates, fees, or other charges (in this act sometimes referred to as "water service charges") for direct or indirect connection with, or the use, products or services of, the water system, or for sale of water or water supply services, water supply facilities, or products. [Such] These water service charges may be charged to and collected from any person contracting for [such] the connection or use, products, or services or for [such] the sale or from the owner or occupant, or both of them, of any real property which directly or indirectly is or has been connected with the water system or to which directly or indirectly has been supplied or furnished [such] the use, products, or services of the water system or water or water supply services, water supply facilities, or products, and the owner of [any such] that real property shall be liable for and shall pay [such] the water service charges to the municipal authority at the time when and place where [such] the water service charges are due and payable. [Such] The rents, rates, fees, and charges shall as nearly as the municipal authority shall deem practicable and equitable be uniform throughout the district for the same type, class, and amount of use, products, or services of the water system, except as permitted by section 1 of P.L.1992, c.215 (C.40:14B-22.2), and may be based or computed either on the consumption of water on or in connection with the real property, or on the number and kind of water outlets on or in connection with the real property, or on the number and kind of plumbing fixtures or facilities on or in connection with the real property, or on the number of persons residing or working on or otherwise connected or identified with the real property, or on the capacity of the improvements on or connected with the real property, or on any other factors determining the type, class, and amount of use, products, or services of the water system supplied or furnished, or on any combination of [such] these factors, and may give weight to the characteristics of the water or water services, facilities, or products and, as to service outside the district, any other matter affecting the cost of supplying or furnishing the same, including the cost of installation of necessary physical properties.

Every municipal authority that furnishes water supply services or operates water supply facilities shall establish a rate structure that provides for uniform water service charges for water supply service and fire protection systems.

[No] A municipal authority may not impose standby fees or charges for any fire protection system to a residential customer served by a water service line of two inches or less in diameter.

Nothing in this section shall preclude a municipal authority from requiring separate dedicated service lines for fire protection. A municipal authority may require that fire service lines be metered. Nothing in this section shall alter the liability for maintenance and repair of service lines which exists on the effective date of P.L.2003, c.278.

b. 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 owner or occupant of the property so connected. Such connection charges shall be uniform within each class of users, except as provided by section 5 of P.L.2005, c.29 (C.40:14B-22.3) and except as provided by section 5 of P.L.2005, c.173 (C.40:14B-22.4), and the amount thereof 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 toward the cost of the system:

(1) 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 interest thereon, paid by a 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 the 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.

(3) 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, to produce the connector's contribution to the cost of the system. In attributing service units to each connector, the estimated average daily flow of water for the connector shall be divided by the average daily flow of water to the average single family residence in the authority's district, to produce the number of service units to be attributed.

c. The connection fee shall be recomputed at the end of each fiscal year of the authority, after a public hearing is held in the manner prescribed in section 23 of P.L.1957, c.183 (C.40:14B-23). The revised connection fee may be imposed upon those who subsequently connect in that fiscal year to the system. The combination of [such] the connection fee or tapping fee and the [aforesaid] water service charges [all] shall meet the requirements of section 23 of P.L.1957, c.183 (C.40:14B-23).

d. The foregoing notwithstanding, [no] a municipal authority shall not impose any charges or fees in excess of the cost of water actually used for any sprinkler system required to be installed in any residential health care facility pursuant to the "Health Care Facilities Planning Act," P.L.1971, c.136 (C.26:2H-1 et seq.) and regulations promulgated thereunder or in any rooming or boarding house pursuant to the "Rooming and Boarding House Act of 1979," P.L.1979, c.496 (C.55:13B-1 et al.) and regulations promulgated thereunder. Nothing herein shall preclude any municipal authority from charging for the actual cost of water main connections, except as provided by section 5 of P.L.2005, c.29 (C.40:14B-22.3) and except as provided by section 5 of P.L.2005, c.173 (C.40:14B-22.4).

e. Notwithstanding the provisions of this section or the provisions of any other law, rule, or regulation to the contrary, commencing in the preparation of its annual budget next following enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), a municipal authority may not increase the portion of any service charge or fee, imposed by the municipal authority that is not related to debt service, in excess of two percent of the portion of the previous year's service charge or fee, that is not related to debt service, subject to the following exclusions:

(1) Capital expenditures, including appropriations for current capital expenditures, as a component of a line item elsewhere in the municipal authority's budget, provided that the current capital expenditures would be otherwise bondable;

(2) An increase based upon emergency temporary appropriations made to meet an urgent situation or event which immediately endangers the health, safety, or property of the utility system and its users, and over which the municipal authority had no control and for which it could not plan; or

(3) An increase exercised so as not to affect in any way the covenants contained in the bond indentures of the municipal authority.

(cf: P.L.2005, c.173, s.3)

3. Section 22 of P.L.1957, c.183 (C.40:14B-22) is amended to read as follows:

22. Every municipal authority is hereby authorized to charge and collect rents, rates, fees, or other charges (in this act sometimes referred to as "sewerage service charges") for direct or indirect connection with, or the use or services of, the sewerage system. [Such] These sewerage service charges may be charged to and collected from any person contracting for [such] the connection or use or services or from the owner or occupant, or both of them, of any real property which directly or indirectly is or has been connected with the sewerage system or from or on which originates or has originated sewage or other wastes which directly or indirectly have entered or may enter the sewerage system, and the owner of [any such] that real property shall be liable for and shall pay [such] the sewerage service charges to the municipal authority at the time when and place where [such] the sewerage service charges are due and payable. [Such] The rents, rates, fees, and charges, being in the nature of use or service charges, shall as nearly as the municipal authority shall deem practicable and equitable be uniform throughout the district for the same type, class, and amount of use or service of the sewerage system, except as permitted by section 1 of P.L.1992, c.215 (C.40:14B-22.2), and may be based or computed either on the consumption of water on or in connection with the real property, making due allowance for commercial use of water, or on the number and kind of water outlets on or in connection with the real property, or on the number and kind of plumbing or sewerage fixtures or facilities on or in connection with the real property, or on the number of persons residing or working on or otherwise connected or identified with the real property, or on the capacity of the improvements on or connected with the real property, or on any other factors determining the type, class, and amount of use or service of the sewerage system, or on any combination of any such factors, and may give weight to the characteristics of the sewage and other wastes and any other special matter affecting the cost of treatment and disposal of the same, including chlorine demand, biochemical oxygen demand, concentration of solids and chemical composition, and, as to service outside the district, the cost of installation of necessary physical properties.

In addition to any [such] sewerage 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 sewerage system, may be imposed upon the owner or occupant of the property so connected. Such connection charges shall be uniform within each class of users, except as provided by section 5 of P.L.2005, c.29 (C.40:14B-22.3) and except as provided by section 5 of P.L.2005, c.173 (C.44:14B-22.4), and the amount thereof 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.

The connection fee shall be recomputed at the end of each fiscal year of the authority, after a public hearing is held in the manner prescribed in section 23 of P.L.1957, c.183 (C.40:14B-23). The revised connection fee may be imposed upon those who subsequently connect in that fiscal year to the system.

The combination of [such] the connection fee or tapping fee and the [aforesaid] sewerage service charges shall meet the requirements of section 23 of P.L.1957, c.183 (C.40:14B-23).

Notwithstanding the provisions of this section or the provisions of any other law, rule, or regulation to the contrary, commencing in the preparation of its annual budget next following enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), a municipal authority may not increase the portion of any service charge or fee, imposed by the municipal authority that is not related to debt service, in excess of two percent of the portion of the previous year's service charge or fee, that is not related to debt service, subject to the following exclusions:

(3) An increase exercised so as not to affect in any way the covenants contained in the bond indentures of the municipal authority.

(cf: P.L.2005, c.173, s.4)

4. Section 15 of P.L.1977, c.384 (C.40:14B-22.1) is amended to read as follows:

15. a. Every municipal authority is hereby authorized to charge and collect rents, rates, fees, or other charges (in this act sometimes referred to as "solid waste service charges") for the use or services of the solid waste system. [Such] These solid waste service charges may be charged to and collected from any municipality or any person contracting for [such] the use or services or from the owner or occupant, or both of them, of any real property from or on which originates or has originated any solid waste to be treated by the solid waste system of the authority, and the owner of [any such] that real property shall be liable for and shall pay [such] the solid waste service charges to the municipal authority at the time when and place where [such] the solid waste service charges are due and payable. [Such] The rents, rates, fees, and charges, being in the nature of use or service charges, shall as nearly as the authority shall deem practicable and equitable be uniform throughout the county for the same type, class, and amount of use or service of the solid waste system, except as permitted by section 1 of P.L.1992, c.215 (C.40:14B-22.2), and may be based or computed on any factors determining the type, class, and amount of use or service of the solid waste system, and may give weight to the characteristics of the solid waste and any other special matter affecting the cost of treatment and disposal of the same.

b. Notwithstanding the provisions of this section or the provisions of any other law, rule, or regulation to the contrary, commencing in the preparation of its annual budget next following enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), a municipal authority may not increase the portion of any service charge or fee, imposed by the municipal authority that is not related to debt service, in excess of two percent of the portion of the previous year's service charge or fee, that is not related to debt service, subject to the following exclusions:

(3) An increase exercised so as not to affect in any way the covenants contained in the bond indentures of the municipal authority.

(cf: P.L.1992, c.215, s.3)

5. This act shall take effect immediately, but shall remain inoperative for 60 days following the date of enactment.

STATEMENT

This bill prohibits local sewerage and utilities authorities from increasing in excess of two percent annually the non-debt service portion of the charges or fees that they impose on their customers. The bill provides exceptions to the limit for: 1) capital expenditures provided that the current capital expenditures would be otherwise bondable; 2) increases based upon emergency temporary appropriations made to meet an urgent situation or event which immediately endangers the health, safety, or property of the sewerage or utility system and its users, and over which the authority had no control and for which it could not plan; or 3) increases exercised so as not to affect in any way the covenants contained in the bond indentures of the authorities.