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Positive Changes to Sewer and Water Connection Fee Laws for Redevelopment Projects
By Jeffrey D. Winitsky on August 16, 2018

On August 10, Governor Murphy signed into law S1247/A2779, which amends the existing sewer and water connection fee laws (N.J.S.A. 40:14A-1 et seq., N.J.S.A. 40:14B-1 et seq. and N.J.S.A. 40A:31-1 et seq.) in several ways to address how sewer and water connection fees (or tapping fees) are implemented and charged to various development projects (the Law).  Of particular note, the Law establishes certain reductions and credits for sewer and water connection fees, including for all types of affordable housing development projects and those undertaken by for-profit developers.

Under the prior statutes, public housing authorities and non-profit organizations building affordable housing projects (but not-for-profit developers) were entitled to a 50% reduction in sewer and water connection fees for new affordable unit connections to the sewer and water system.  The Law amends these provisions to apply to all affordable housing development projects (including those undertaken by for-profit developers), such that all affordable housing development projects are:  (i) entitled to the 50% reduction in new connection fees for affordable units; and (ii) permitted the credit against the connection fee for affordable units previously connected to the sewer and water system that were demolished or refurbished.

Additionally, the Law generally allows for credits to be applied to connection fees for a reconnection of certain disconnected properties that were previously connected to the sewer or water system for at least 20 years and have not been disconnected for more than five years.  The credit is calculated based on several factors, including but not limited to, whether the reconnection does not require any new physical connection or increase the nature or size of service or expand the use of the system, or whether a connection fee was previously paid for the existing use.

For properties already connected to the sewer and water system, the Law allows local or regional authorities to charge a new connection fee for an addition, alteration or change in use that "materially increases" (as defined in the Law) 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.  The connection fees for any new or additional connections are still imposed.

As noted above, the Law provides substantial benefits and savings for redevelopers (including those of affordable housing projects).  In that regard, for additional information about the impact and operation of the Law on redevelopment projects in New Jersey, please contact the attorneys in Parker McCay's Real Estate and Public Finance departments at any time. 

The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.

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