RICE BILL tO AUTHORIZE FEES AND CREDITS FOR MUNICIPAL UTILITIES SIGNED INTO LAW

TRENTON – A bill sponsored by Senator Ronald L. Rice to authorize certain local government water and sewage utilities to impose additional connection fees and establish certain credits and reductions to make the fees more equitable was signed by Governor Phil Murphy today.

The law will allow new connection fees to be imposed for an addition, alteration, or change in use that materially increases the level of use and imposes a greater demand on the utility system, but does not involve a new physical connection of the property to the system.  These additional fees will be equal to the amount by which the increased use and demand on the utility systems exceeds the use and demand that existed prior to the addition, alteration, or change in use.  They will not take the place of fees for any new or additional connections.

The law will require local government water and sewer entities to apply credits to connection fees charged for the reconnection of certain disconnected properties to a water or sewer system and to charge reduced connection fees for all affordable housing projects. This will result in a loss of local revenues because the connection fees would be less than the amount authorized under current law.

“The foundation for a municipality’s economic growth is its solid, well-maintained infrastructure,” said Senator Rice (D-Essex).  “Without the lifeline of robust utilities, new initiatives and prosperity wither.  But when municipalities are authorized to impose fair fees for water and sewerage connections and apply equitable credits and discounts, they maintain and expand the proper infrastructure for a strong economy.”

The law specifies that if utility reconnection does not require any new physical connection, increase the nature or size of the service or the number of service units, or expand the use of the utility system, the credit will be equal to the amount of the new connection fee.  If the reconnection requires any of the foregoing, the credit will be equal to the amount of any connection fee previously paid for the property.  If no connection fee was ever paid for the property, but all service charges due and owing on the property have been paid for at least 20 years, the credit will be equal to the amount of the new connection fee.

However, the law will establish that if no connection fee was ever paid for certain disconnected properties, a connection fee will be charged in addition to any amount due and owing after application of a credit.

This fee will be equal to the lesser of:

1. 20 percent of the service charges that would have been paid based upon the usage for the last full year that the property was connected to the utility system for the period from the date of the disconnection from the utility system to the date of the new connection; or

1. The new connection fee.

Finally, the law will provide that the existing connection fee reductions for certain types of affordable housing serviced by sewerage authorities and municipal authorities be extended to all affordable housing, including affordable housing units in inclusionary projects.  The law will also establish the same connection fee reductions for all affordable housing serviced by local units operating a county or municipal sewerage facility or water supply facility.

“Previously the law required connection fees to be calculated using a statutory formula that accounted for capital expenditures and payments to local government water and sewer entities from other government and private users of water and sewer systems,” said Senator Rice.  “This law will allow and empower local governments to make the necessary changes in order to bolster their local economies.”