
Daniel T. McKillop
Partner
201-896-7115 dmckillop@sh-law.comFirm Insights
Author: Daniel T. McKillop
Date: February 7, 2019
Partner
201-896-7115 dmckillop@sh-law.comSenate Bill 1073 has reached the desk of Gov. Phil Murphy that would allow New Jersey municipalities to establish local stormwater utilities, which could then charge property owners a fee based on “a fair and equitable approximation” of how much runoff is generated from their property.
While former Gov. Chris Christie vetoed similar legislation in the past, the odds of enactment are far better under Gov. Murphy. The New Jersey Department of Environmental Protection (NJDEP) also publicly supports the legislation.
Under Senate Bill No. 1073, the governing body of any county or municipality could approve a resolution or ordinance that establishes a stormwater utility for the purposes of acquiring, constructing, improving, maintaining, and operating stormwater management systems. Similarly, the governing body or bodies of one or more municipalities that have established a municipal sewerage authority or utilities authority could request that the authority establish a stormwater utility.
Local governments that establish a stormwater utility would be authorized to charge and collect reasonable fees and other charges to recover the utility’s costs for stormwater management. Under the proposed bill, these fees and other charges would be collected from the owner or occupant (or both) of any real property from which originates stormwater runoff which enters the stormwater management system or the waters of the State.
Senate Bill 1073 provides that any stormwater management fee would be based on a “fair and equitable approximation of the proportionate contribution of stormwater from a real property.” The bill provides that municipalities that establish stormwater utilities must issue credits in certain circumstances, including a partial fee reduction in the form of a credit for any property that maintains and operates a stormwater management system that complies with the State and local stormwater management standards that were in place at the time the system was approved.
Under the legislation, the owner of a stormwater management system that complies with stormwater management standards that were in place at the time the system was approved may retain ownership of the system or may offer to dedicate it to the county, municipality, or authority. However, an owner who dedicates a system would still be liable for paying any applicable utility fees imposed under the bill.
Municipalities would also be required to provide a credit for any property that has installed and is operating and maintaining current stormwater best management practices that reduce, retain, or treat stormwater onsite. An additional credit would be required for any property which has installed and is operating and maintaining green infrastructure onsite. Notably, Senate Bill 1073 specifies that the credit for installing and operating stormwater best management practices applies only if current best management practices are used.
With respect to enforcement, the proposed stormwater utility bill provides counties, municipalities, and authorities with several enforcement mechanisms, which are similar to the enforcement mechanisms that currently exist for water and sewer utilities. Specifically, interest would accrue on the unpaid fees and other charges; the unpaid balance and any accrued interest would constitute a lien on the parcel which would be enforced in the same manner as delinquent property taxes and municipal charges; and the unpaid balance and any accrued interest could be recovered in a civil action, along with attorney’s fees.
While most agree that New Jersey needs to better address stormwater runoff, critics of Senate Bill 1073 maintain that its proposed solution amounts to a “rain tax” on businesses that are often already doing their part to curb runoff. They further maintain that local cities and towns would have too much discretion in determining what fees to impose.
“For many businesses, the fees authorized in this bill would amount to double taxation,” NJBIA Vice President of Government Affairs Tony Bawidamann said. “Companies would be assessed a fee by a local stormwater authority, even if they already have a [stormwater] permit. Furthermore, there is no guarantee that these fees will be used for their intended purposes.”
The New Jersey Legislature passed the bill on January 31, 2019. Gov. Phil Murphy has up to 45 days (this Sunday) to sign or reject the bill. If no action is taken by then, the bill becomes law. Provided Gov. Murphy does sign it into law, the NJDEP would then draft the regulations needed to implement it, which may take time. The next step would be for local municipalities to determine whether to create stormwater utilities. Given the importance of this issue for New Jersey businesses, the attorneys of the Environmental and Land Use Law practice group at Scarinci Hollenbeck will keep you posted on any updates.
If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
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