58:28-7 Approval, conditional approval of application

6. a. Within 45 days of receipt of the application, the board and division shall approve, or conditionally approve, an application submitted by a governing body pursuant to subsection f. of section 5 of P.L.2002, c.47 (C.58:28-6). Within 25 days of receipt of the hearing report, the department shall provide any comments on the hearing report that it deems appropriate to the board, division and the governing body. If the board or division fail to approve or conditionally approve the application within 50 days after receipt, the application shall be deemed approved, unless the governing body has agreed to an extension of the period.

b. If either the board or the division conditionally approves the application, the board or division shall state in writing the revision to the proposed contract that is necessary in order for it to be approved. If the board or division determines that the required revision is substantial, the governing body shall hold a public hearing on the revision and adhere to the provisions of section 5 of P.L.2002, c.47 (C.58:28-6) in so doing, except that the required notice shall be published at least seven days prior to the public hearing. A substantial revision shall be a change that results in an increase in the charges, rates or fees which will be paid for water supply services or wastewater treatment services by users in the jurisdiction or service area that will receive the water supply services or wastewater treatment services pursuant to the terms of the contract, or that materially changes other terms and conditions of the contract. The proposed revision to the contract shall be submitted to the board, division and the department 15 days prior to the date of the public hearing.

If the board or division determines that the required revision in the conditional approval is not substantial, the governing body shall submit the proposed revision to the contract to the board and the division for approval and to the department for review. The revision shall be approved if found to be consistent with the conditions set forth in the conditional approval, or disapproved with a written explanation as to why the revision is not consistent, within 15 days after the next public meeting of the board or division.

c. In its review of a contract, the board shall apply the following criteria in determining whether to approve the contract:

(1) The duly incorporated nonprofit association entering into the contract has the technical and administrative experience to ensure continuity of service over the term of the contract and that the standards and requirements contained in the application documents concerning the technical and administrative capacity of the nonprofit association are necessary and sufficient to protect the public interest.

(2) The terms of the contract are not unreasonable. In determining whether the terms of the contract are not unreasonable, the board shall review the charge, rates or fees to be charged or assessed under the contract to determine that they are reasonable to the city of the first class, taking into consideration all of the obligations undertaken by the nonprofit association and all the benefits obtained by the city of the first class. In making this determination, the board shall not use the traditional rate based rate of return methodology.

(3) The franchise customers of a public utility participating in a contract are protected from the risks of the proposed contract and that they are not subsidizing the contract. If the nonprofit association is not a public utility, the board shall ensure that under the terms of the proposed contract the users of water outside of the jurisdiction or service area that will receive water supply services under the contract are also protected from the risks of the contract and that water users outside the jurisdiction or service area are not subsidizing the contract through increased charges, rates or fees for the supply of water.

(4) The contract contains the provisions required by paragraphs (1), (2) and (6) of subsection d. of section 4 of P.L.2002, c.47 (C.58:28-5).

Upon approval of a contract as proposed or as revised in response to a conditional approval, the jurisdiction of the board over the contract shall terminate until or unless the contract is amended to change the formula or other basis of determining charges, rates or fees contained therein.

d. In its review of a contract, the division shall apply the following criteria in determining whether to approve the contract:

(1) The terms of the proposed contract do not materially impair the ability of the governing body to punctually pay principal and interest due on its outstanding indebtedness and to supply other essential public improvements and services;

(2) A concession fee paid by a duly incorporated nonprofit association as a result of the contract is paid directly to the municipality that created or constitutes the governing body, and any concession fee paid by a duly incorporated nonprofit association to a governing body is used for the purposes of reducing or off-setting property taxes, reducing water supply services or wastewater treatment services charges, rates or fees, one-time nonrecurring expenses or capital asset expenditures related to water supply facilities or wastewater treatment systems; and

(3) The contract contains the provisions required by paragraphs (3), (4), (5), (7) and (8) of subsection d. of section 4 of P.L.2002, c.47 (C.58:28-5).

The division shall also review and specifically approve any contract provision pursuant to which a governing body will or may execute a financing instrument for the purposes set forth in the contract. In addition, the division shall review any contract between the governing body of a city of the first class and a duly incorporated nonprofit association in which a concession fee is paid by the nonprofit association to determine if the payment of the concession fee is in the best interest of the parties to the contract.

e. The board or division may provide the governing body with any non-binding comments or advice during or after the review of the application as the board or division deems appropriate.

f. The board or division shall assess and the applicant shall pay a fee equal to the cost incurred by the board or division for an analysis of an application by an independent person who has expertise in the areas of water supply services or wastewater treatment services if during the review of an application the board or division determines that such an analysis is required.

g. If the governing body of a city of the first class and the duly incorporated nonprofit association would like to amend a contract after approval of an application by the board and division, the governing body shall submit proposed amendments to the board and division for approval and to the department for review. At the next public meeting of the board and of the division after receipt of proposed amendments, the board and the division shall determine whether the proposed amendments are substantial. If the amendments are substantial in nature as determined by either the board or the division, the governing body shall conduct a hearing pursuant to section 5 of P.L.2002, c.47 (C.58:28-6). Within 45 days of the receipt of proposed amendments that are not determined to be substantial, or within 45 days of the receipt of an application for approval of proposed amendments that are determined to be substantial, the board and division shall approve or conditionally approve the amendments in accordance with the applicable procedures established for approval of an original contract pursuant to this section.

L.2002,c.47,s.6.