Opinion ID: 2339485
Heading Depth: 2
Heading Rank: 1

Heading: The Sayreville Sewer-Connection Fees.

Text: Because the Sayreville sewer-connection case proceeded on summary judgment, the trial court had no occasion to resolve the factual issues before it concerning whether the fees were fair and equitable. The Borough characterizes the proposed fee as being in the nature of an equalization charge. In White Birch, this Court analyzed a similar equalization charge in the context of a utilities authority. There, a municipal utilities authority sought to impose sewer-connection charges upon two real estate developers seeking to connect their developments to the existing sewerage system. 80 N.J. at 168-69. In calculating the connector's fair share of the construction cost theretofore paid by prior users[,] id. at 171, the Court adopted a methodology whereby monies attributable to the construction costs of the system, including debt service, would be treated as credits in favor of the prior connectors. The fair share of original construction costs and subsequent improvements or betterments to the system would then be assessed proportionately against the new connectors. Id. at 184. Together with Airwick, supra, 57 N.J. 107, White Birch stands for the principle that connection fees may include some portion of actual costs of construction and debt-service charges sufficient to put the connecting parties on an equal footing with prior connectors' contributions to the debt service of initial construction. Concededly, this is not the only theory for such fees, White Birch, supra, 80 N.J. at 176-77, but it is the theory purportedly followed by Sayreville. Plaintiffs assert that they are already on an equal footing with other connectors because they paid the taxes on their property, which was assessed at a fair value that presumably reflected an enhanced value for the availability of sewers. Sayreville's position is that whatever contribution the properties made through taxation while unimproved was insignificant compared to the contributions made by existing connectors of improved properties. The parties dispute whether the Borough followed the White Birch rationale in that it calculated earlier connectors' contributions on the basis of total municipal principal cost rather than debt retired. The Borough contends that its connection fee is, in any event, less than an allowable one since it did not include interest on the retired debt. It argues further that other capital contributions of the Borough borne by improved properties should be considered lest there be a windfall to the later connectors. In sum, the Borough states that it merely seeks equity between previous and new connectors as to contributions toward the capital costs of this system, arguing that if this were not allowed, developers such as Kaplan would be unduly enriched in those municipalities that have not created authorities. Since this case went off on summary judgment, we believe that it is premature to resolve these factual issues on the papers before us. On a remand, consideration of actual equality will include the extent to which such fees are included as part of the purchase price of improved properties, [8] and analysis of the comparative position of the new connector vis-a-vis the old connector whose initial cost has been increased by repayment to the utility of original construction costs through tax payments. In this regard, the new connection-fee formula established by L. 1985, c. 526, although not controlling in the context of municipally operated utilities, may nevertheless provide guidance to the parties in developing an equitable connection fee. In addition, as noted, we have expressed the view that some consideration should be given to the principles of law applicable to special-assessment cases. See Rutan Estates, Inc., supra, 56 N.J. Super. at 336. Ordinarily, there is a presumption in a special-assessment case that the assessment is equivalent to the benefit conferred upon the property. It does not seem unreasonable to us to presume that property will be enhanced to the extent of the proposed $500 sewer-connection fee through the availability of a public sewer system.