October 14,2015

There is a battle brewing between property owners in Readington over unused sewer capacity, and Readington is right in the middle.

Sewer capacity is critical for commercial development; septic systems can’t handle the waste coming from large scale residential or commercial development.  Readington’s sewer capacity is fully allocated, but is not being fully utilized. This unused capacity is the subject of scrutiny, and one lawsuit so far.

Readington Sewer Allocation Litigation

Everything You Didn't Think You Needed To Know About This Critical Component of Township Planning

Development applications can be denied by the Township Planning Board on the basis of inadequate wastewater treatment capacity. Those that have reserved sewer capacity want to keep it.  Those that don’t have it want it redistributed.  If reallocation occurs, then development can happen faster.  The outcome of this brewing battle will determine what property will get developed and what property will have to wait for some unknown future sewer capacity.

The Township sewer system is managed by the Readington-Lebanon Sewerage Authority (RLSA), which has a total capacity of approximately 1.2 million gallons per day (gpd).  Readington Township is allocated 939,000 gpd, of which about one third is not currently being used.  The Merck property holds over 40% of the unused sewer capacity.  The RLSA operates the sewer treatment plant, but the Township oversees how many gallons per day (or capacity) is allocated to the properties that are connected to the sewer system. A “use it or lose it” approach can set the pace for rapid development and allow for approval of big projects.

Sewer Allocation Litigation

In 2010, the property owner of 388 Route 22 in Readington brought a trial court case against the Township and several private property owners. They argued that the Township should buy back any unused sewer capacity of those property owners, so that it can be reallocated to the plaintiff’s property, for which the plaintiff was seeking commercial development.  The plaintiff in the case is seeking approximately 10,000 gallons per day of sewer allocation in order to commercially redevelop a property with road frontage on both Route 22 and Old Highway 28.  The owner’s intent is to build a restaurant, which can only be done if the property, which currently has a septic system, is instead connected to the sewer system. For the Township, the case is not about one specific restaurant, but about its authority to make decisions that affect the long term management of development in town.

After being heard in trial court and again on appeal, the case made its way to the NJ Supreme Court.  The Supreme Court ruled that the Township cannot maintain a “blanket policy of not recapturing unused sewer capacity,” and ordered the Township to complete a detailed assessment of any unused privately held sewer capacity.  The Supreme Court also agreed with the trial court’s finding that Readington’s sewer ordinance is suitable for guiding sewer allocation in the Township.

The recent New Jersey Supreme Court decision stated that a “blanket policy of not recapturing unused sewer capacity is the functional equivalent of a moratorium on development,” citing a 1991 decision that made townships responsible for adequately overseeing the use and reallocation of available sewer capacity.  The 2015 decision did not require sewer reallocation or capacity for private property owners seeking development, but rather it required that the Township assess current holdings and provide reasoning for not repurchasing unused sewer capacity.  The Readington sewer ordinance does set a time limit for holding unused sewer capacity, but it also allows for time extensions.  The purpose of the ordinance is to give the Township discretion to manage sewer allocation in the best interest of the general community.  There is no obligation or responsibility on the part of the Township to ensure that property owners have access to sewer capacity for residential or commercial development projects.  The NJ Supreme Court ruling outlined certain factors the Township should consider when exercising its discretion, including how long the capacity has been unused by a property owner, development plans and the imminence of those plans, economic factors and other proposed development plans in need of additional sewer capacity.

Our Township officials must now determine how to conduct this assessment and determine a strategy for this unused capacity that meets the guidance of the Supreme Court while retaining sound development decisions in town. There are several short- and long-term options, all of which create winners and losers. Should there be a lottery for sewer rights? Should we incent those not using capacity to relinquish it through higher fees on unused allocation? Should we terminate rights for those holding unused capacity the longest? Our officials will have to navigate this complex situation. Accelerated growth and additional lawsuits are possible outcomes.   If changes affect the capacity attributed to the Merck property it could jeopardize Merck’s sale and reuse.

So, while most residents would normally not give a thought to sewer capacity, we’ll all need to stay tuned.

Sources:

Readington Ordinance

http://bondcasebriefs.com/2015/05/12/cases/388-route-22-readington-realty-holdings-llc-v-township-of-readington/

http://www.law360.com/articles/651962/nj-justices-say-town-s-sewer-policy-stymies-development

http://scarincilawyer.com/nj-supreme-court-decides-sewer-rights-case/

http://www.nj.com/hunterdon-county-democrat/index.ssf/2015/05/court_battle_of_readington_townships_sewer_capacit.html