Opinion ID: 1450853
Heading Depth: 1
Heading Rank: 3

Heading: reasonableness of water connection fee

Text: Home Builders Ass'n v. Provo City, 28 Utah 2d 402, 503 P.2d 451 (1972), sustained the validity of a sewer connection fee (in addition to the monthly sewer charge) for each living unit of newly constructed buildings connected to an existing sewer system. The fee was imposed in order to improve and enlarge the sewer system. It was not a revenue measure or an assessment, the court found, but a reasonable charge for the use thereof, as authorized by U.C.A., 1953, § 10-8-38. Significantly, the $100-per-lot charge was derived by dividing the total number of sewer connections in the municipality into the net value of the sewer system, and the funds obtained were to be restricted to the enlargement, improvement, and operation of the sewer system and to the retirement of indebtedness incurred in its construction. In approving the sewer connection fee in Home Builders, this Court relied on Airwick Industries, Inc. v. Carlstadt Sewerage Authority, 57 N.J. 107, 270 A.2d 18 (1970). That case approved a connection fee arrangement by which the capital and interest costs of a new central sewage system, although met initially by the actual users, would ultimately be borne by all properties benefited, including lands that were unimproved when the central expenditures were originally made. The municipality did this by including as part of its connection fee what our Court characterized as a sum of money which would represent a fair contribution by the connecting party toward the expense theretofore met by others. [3] The Home Builders case established the principle upon which the reasonableness of the water connection fee in this case should be judged. The fair contribution of the connecting party should not exceed the expense thereof met by others. Or, as the New Jersey Supreme Court held in a subsequent case, the rules governing the allocation of improvement costs between city and developer would ideally have been such as to insure, to the greatest extent practicable, that the cost of extending a municipal water facility would fall equitably upon those who are similarly situated and in a just proportion to benefits conferred. They should be sufficiently flexible to permit consideration to be given to the facts and circumstances of each particular case. Deerfield Estates, Inc. v. Township of E. Brunswick, 60 N.J. 115, 286 A.2d 498, 505 (1972). Therefore, where the fee charged a new subdivision or a new property hookup exceeds the direct costs incident thereto (as a means of sharing the costs of common facilities), the excess must survive measure against the standard that the total costs fall equitably upon those who are similarly situated and in a just proportion to benefits conferred. Stated otherwise, to comply with the standard of reasonableness, a municipal fee related to services like water and sewer must not require newly developed properties to bear more than their equitable share of the capital costs in relation to benefits conferred. To determine the equitable share of the capital costs to be borne by newly developed properties, a municipality should determine the relative burdens previously borne and yet to be borne by those properties in comparison with the other properties in the municipality as a whole; the fee in question should not exceed the amount sufficient to equalize the relative burdens of newly developed and other properties. Among the most important factors the municipality should consider in determining the relative burden already borne and yet to be borne by newly developed properties and other properties are the following, suggested by the well-reasoned authorities cited below: (1) the cost of existing capital facilities; (2) the manner of financing existing capital facilities (such as user charges, special assessments, bonded indebtedness, general taxes, or federal grants); (3) the relative extent to which the newly developed properties and the other properties in the municipality have already contributed to the cost of existing capital facilities (by such means as user charges, special assessments, or payment from the proceeds of general taxes); (4) the relative extent to which the newly developed properties and the other properties in the municipality will contribute to the cost of existing capital facilities in the future: (5) the extent to which the newly developed properties are entitled to a credit because the municipality is requiring their developers or owners (by contractual arrangement or otherwise) to provide common facilities (inside or outside the proposed development) that have been provided by the municipality and financed through general taxation or other means (apart from user charges) in other parts of the municipality; (6) extraordinary costs, if any, in servicing the newly developed properties; and (7) the time-price differential inherent in fair comparisons of amounts paid at different times. Home Builders v. Provo City, supra; Rose v. Plymouth Town, 110 Utah 358, 173 P.2d 285 (1946); Airwick Industries, Inc. v. Carlstadt Sewerage Authority, supra ; Deerfield Estates, Inc. v. Township of E. Brunswick, supra ; West Park Ave., Inc. v. Township of Ocean, 48 N.J. 122, 224 A.2d 1 (1966); Rutan Estates, Inc. v. Town of Belleville, 56 N.J. Super. 330, 152 A.2d 853 (App.Div. 1959); Zehman Construction Co. v. City of Eastlake, 92 Ohio Law Abst. 364, 195 N.E.2d 361 (Ct.App. 1962); Strahan v. City of Aurora, 38 Ohio Misc. 37, 311 N.E.2d 876 (Ct.Com.Pleas, 1973); R. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 Yale L.J. 385, 467-89 (1977); F. Michelman & T. Sandalow, Government in Urban Areas, 533-36 (1970). In adjudicating the validity of any individual application of this standard of reasonableness, the courts must concede municipalities the flexibility necessary to deal realistically with questions not susceptible of exact measurement. Precise mathematical equality is neither feasible nor constitutionally vital. Airwick Industries, Inc. v. Carlstadt Sewerage Authority, supra, 270 A.2d at 26. Similarly, municipal officials must also have the legal power to deal creatively with extraordinary or unforeseen circumstances in the provision of municipal services. Rose v. Plymouth Town, 110 Utah 358, 173 P.2d 285 (1946). We agree with and adopt the New Jersey court's ruling in Deerfield Estates, Inc. v. Township of E. Brunswick, supra, 286 A.2d at 507-508: The rule we lay down must be given a pragmatic application. Complete equality of treatment may sometimes be impossible, especially where a municipality has followed no set pattern with respect to past extensions. Nor should a municipality be denied the right to modify an established pattern where altered circumstances reasonably so dictate. Equality of treatment may upon occasion be forced to give way before some supervening public interest. But insofar as such equality can reasonably be achieved this must be done. The required flexibility will be implemented by the presumption of constitutionality incident to a municipality's exercise of its legislative powers. Call v. City of West Jordan, Utah, 614 P.2d 1257, 1258 (1980); Crestview-Holladay Homeowners Ass'n, Inc. v. Engh Floral Co., Utah, 545 P.2d 1150 (1976); Dowse v. Salt Lake City Corp., 123 Utah 107, 255 P.2d 723 (1953). Since the information that must be used to assure that subdivision fees are within the standard of reasonableness is most accessible to the municipality, that body should disclose the basis of its calculations to whoever challenges the reasonableness of its subdivision or hookup fees. Once that is done, the burden of showing failure to comply with the constitutional standard of reasonableness in this matter is on the challengers. Home Builders Ass'n of Greater Kansas City v. City of Kansas City, Mo., 555 S.W.2d 832 (1977).