Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Will Your New Jersey Business Soon Be Charged a Rain Tax?

Author: Daniel T. McKillop

Date: February 7, 2019

Key Contacts

Back

Senate Bill 1073 Has Reached the Desk of Gov. Phil Murphy, Which Would Allow New Jersey Municipalities to Charge Property Owners a Rain Tax

Senate 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. 

New Jersey Stormwater Utility 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.”

What’s Next?

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, please contact us

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.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
When a Child Turns 18: The Gap in Your Family’s Estate Plan post image

When a Child Turns 18: The Gap in Your Family’s Estate Plan

Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]

Author: George McGowan

Link to post with title - "When a Child Turns 18: The Gap in Your Family’s Estate Plan"
Business Mediation: An Overview and Practical Tips post image

Business Mediation: An Overview and Practical Tips

Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]

Author: Paul Grossman

Link to post with title - "Business Mediation: An Overview and Practical Tips"
Top 5 Causes Leading to Construction Defect Litigation post image

Top 5 Causes Leading to Construction Defect Litigation

The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]

Author: Paul Grossman

Link to post with title - "Top 5 Causes Leading to Construction Defect Litigation"
How to Protect Your New Jersey Business When Going through a Divorce post image

How to Protect Your New Jersey Business When Going through a Divorce

The most effective ways to protect your business in a divorce are put in place before one begins: a prenuptial or postnuptial agreement, clean separation of business and personal finances, and divorce contingencies built into your operating or buy-sell agreements. If divorce is already underway, the priorities shift to establishing how the business is classified […]

Author: Jay McDaniel

Link to post with title - "How to Protect Your New Jersey Business When Going through a Divorce"
10 Common Issues in Franchise Disputes post image

10 Common Issues in Franchise Disputes

The most common franchise disputes involve breach of contract, franchise termination and non-renewal, intellectual property rights, territorial encroachment, royalty and fee payments, franchisor support obligations, and violations of state franchise laws such as the New Jersey Franchise Practices Act. Franchisors and franchisees can often resolve these conflicts by providing written notice detailing the dispute and […]

Author: Paul Grossman

Link to post with title - "10 Common Issues in Franchise Disputes"
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together post image

Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together

New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]

Author: Sean M. Pena

Link to post with title - "Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.
“If you would like to submit a file, please email it directly to info@sh-law.com.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!