ASSEMBLY SPECIAL COMMITTEE ON INFRASTRUCTURE AND NATURAL RESOURCES COMMITTEE
STATEMENT TO
ASSEMBLY, No. 5407
with committee amendments
STATE OF NEW JERSEY
DATED: MARCH 15, 2021
The Assembly Special Committee on Infrastructure and Natural Resources reports favorably and with committee amendments Assembly Bill No. 5407.
As amended by the committee, this bill would revise various public finance laws to remove existing restrictions on the ability of local governments and authorities to finance the costs of lead service line replacements. P.L.2018, c.114 authorized municipalities and affiliated public water purveyors to levy special assessments, and issue bonds, to replace certain lead-contaminated water service lines. However, the provisions of P.L.2018, c.114 apply only to service line replacement projects that are: (1) undertaken as environmental infrastructure projects, as defined under section 3 of P.L.1985, c.334 (C.58:11B-3); and (2) funded either by loans from the New Jersey Infrastructure Bank or by loans issued through the Department of Environmental Protection (DEP). This bill would remove these restrictions. The bill would also add a definition of "lead service line" to the "municipal and county utilities authorities law," P.L.1957, c.183 (C.40:14B-1 et seq.). Specifically, the bill would define “lead service line” to mean a water supply connection that is made of, or lined with, a material containing lead, and which connects a water main to a building inlet. The definition expressly includes lead pigtails, goosenecks, and other lead fittings, regardless of the composition of the service line or other portions of the piping to which such piece is attached. A galvanized service line would also be considered to be a lead service line. The bill would specify, moreover, that a lead service line may be owned by the public community water system, by the property owner, or both. The bill would further clarify that P.L.2018, c.114 applies to the replacement of water service lines that connect publicly-owned water systems to residential, commercial, or institutional properties.
Additionally, the bill would extend to 30 years the period of time over which a municipality may allow a property owner to pay assessments attributable to the replacement of lead service lines. Current law allows assessments to be paid over the lesser of: the period of years for which the bonds were issued, or 20 years.
The bill would supplement the "Local Budget Law," N.J.S.40A:4-1 et seq., and the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.), to require local governments that supply water to their residents and authorities to conduct a periodic study of the rates that they charge, and submit the study to the Director of the Division of Local Government Services in the Department of Community Affairs (DCA). The Local Finance Board in the DCA would be required to adopt the procedures, requirements, and frequency of the study. The bill would also authorize the Local Finance Board to hold hearings based on the study and to order the local government or authority to adjust its rates, or take such other action as the board deems appropriate to ensure the integrity of the water infrastructure operated by the local government or authority.
The bill would also amend the "Local Budget Law" to require local governments to include infrastructure improvements required under the "Water Quality Accountability Act," P.L.2017, c.133 (C.58:31-7) (WQAA) and the "Water Pollution Control Act," P.L.1977, c.74 (C.58:10A-1 et seq.) in the capital budget and statement of capital undertakings of the local government. If a budget fails to include the improvements, the bill would authorize the Director of the Division of Local Government Services to order the inclusion of the improvements, along with any revenues or appropriations necessary to fund them. Similarly, the bill would amend the "Local Authorities Fiscal Control Law" to require authorities to include improvements required under the WQAA and the "Water Pollution Control Act" in the authority's budget and would authorize the Director of the Division of Local Government Services to order their inclusion and a means of financing them.
Under the bill, whenever there is available an undesignated fund balance or unreserved retained earnings held by a municipal utilities authority that is being dissolved by a municipality, no more than five percent of the annual costs of operation of the authority could be appropriated by the municipality for uses not directly related to drinking water management, unless the Local Finance Board determines that the municipality has demonstrated a need for greater than five percent based on a showing of significant fiscal distress.
The bill would amend the "New Jersey Water Supply
Public-Private Contracting Act," P.L.1995, c.101 (C.58:26-19 et al.), to
require that any contract entered into pursuant to that law include provisions
addressing the allocation of responsibility for compliance with the provisions
of the WQAA. The bill would also require the Local Finance Board to verify that
a contract includes the provisions, prior to giving its approval.
COMMITTEE AMENDMENTS:
The committee amended the bill to expand its provisions to apply to any municipal utilities authority with a water supply operation, rather than applying solely to water-only utilities. The amendments delete language that referred exclusively to water-only authorities, systems, and utilities, and they replace such phraseology with new language referring to water-related authorities, systems, and utilities.
The amendments additionally revise the definition of “lead service line” to make the definition consistent with the definition used in A5343 (Shaer/McKnight/Spearman/Karabinchak), and they further clarify that the terms of P.L.2018, c.114 are intended to apply to residential, commercial, and institutional lead service lines.
Finally, the committee amendments remove all provisions of the bill that modified various requirements of the “Water Quality Accountability Act,” P.L.2017, c.133 (C.58:31-7).