In Re Referendum on City of Trenton Ordinance 09-02

990 A.2d 1109, 201 N.J. 349, 2010 N.J. LEXIS 380
CourtSupreme Court of New Jersey
DecidedApril 6, 2010
DocketA-70 September Term 2009
StatusPublished
Cited by60 cases

This text of 990 A.2d 1109 (In Re Referendum on City of Trenton Ordinance 09-02) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Referendum on City of Trenton Ordinance 09-02, 990 A.2d 1109, 201 N.J. 349, 2010 N.J. LEXIS 380 (N.J. 2010).

Opinions

PER CURIAM.

“The Legislature has conferred on the voters of Faulkner Act1 municipalities, such as Trenton, ‘the power of referendum,’ the right to test a challenged ordinance in the crucible of the demo[353]*353cratic process.” In re Referendum Petition to Repeal Ordinance 04-75, 192 N.J. 446, 450, 931 A.2d 595 (2007) (citing N.J.S.A. 40:69A-185) (footnote omitted). The referendum power is one of the key provisions of the Faulkner Act. It is an exercise in democracy that profoundly affects the relationship between the citizens and their government by affording the people the last word if they choose to take a stand against the wisdom of an ordinance that the government has enacted. Thus, “[w]hen a referendum petition is properly filed, the voters have the final say in approving or rejecting an ordinance at the ballot box.” Ibid.

This case involves the interplay between the Faulkner Act, N.J.S.A. 40:69A-185, and the Municipal Utilities Law (MUL), N.J.S.A. 40:62-1 to -151. In particular, the question presented is whether N.J.S.A 40:62-3.1, which governs the sale of a municipal water utility, was intended to strip the public of the power to challenge an ordinance by referendum afforded by N.J.S.A 40:69A-185. Because there is no clear evidence of such an intention on the part of the Legislature, Ordinance 09-02 of the City of Trenton, which authorizes the sale of a municipal water utility system to a private entity, is subject to referendum under the Faulkner Act.

I.

The City of Trenton (the City), a Faulkner Act municipality organized under a mayor-council form of government, see N.J.S.A. 40:69A-32, controls a water distribution system, the Trenton Water Works (TWW). The TWW consists of two parts: the Inside Water Utility System (IWUS), which serves residents and businesses within the City, and the Outside Water Utility System (OWUS), which serves residents and businesses in the townships of Ewing, Hamilton, Hopewell and Lawrence. The TWW is a revenue-generating operation providing the City with over forty million dollars per year, about sixty percent of which comes from the OWUS.

[354]*354In 2000 and 2005, the City commissioned two outside consulting firms to prepare reports to determine whether OWUS could be separated from IWUS. The firms concluded that separating the two water utility systems would serve the interests, public health and safety of both Trenton and the townships served by OWUS.

In 2007 the City negotiated a contract for the sale of OWUS to New Jersey-American Water Company (NJAW), a shareholder-owned water utility. The City submitted a petition to the Board of Public Utilities (BPU) pursuant to section 3.1 of the MUL, which provides that if the government deems it advisable to transfer a water utility system serving less than five percent of its population to another entity, the transfer may be authorized by ordinance subject to review by the BPU. N.J.S.A 40:62-3.1.

Among the reasons advanced for the sale were: that the City would be relieved of operating and maintaining a water system that does not serve its residents; the proceeds of the sale would enable the City to pay down water system and other City debt; the sale would provide the City with the ability to finance needed infrastructure improvements and stabilize real estate taxes, thus encouraging economic revitalization; the City would continue to receive IWUS revenues; and residents and customers of OWUS would be better served if it was run by a qualified utility operator.

Several organizations, including the townships serviced by OWUS, intervened; consequently, the BPU referred the matter to the Office of Administrative Law (OAL), which conducted a public hearing. At that proceeding, the parties agreed on amendments to the contract, and the matter was referred back to the BPU for review.

On February 3, 2009, the Trenton City Council adopted Ordinance 09-02, which authorized the sale of OWUS to NJAW. The mayor approved the sale. An administrative law judge (ALJ) subsequently found that the agreement was acceptable and recommended that the decision be adopted by the BPU. Shortly thereafter, a group of Trenton citizens (the citizens) filed a petition for referendum pursuant to the Faulkner Act, N.J.SA 40:69A-[355]*355185. According to the citizens, they opposed the sale because “it is a bad business arrangement, transforming the TWW from its current profile as a successful and profitable enterprise yielding healthy and vitally needed surpluses for the benefit of all users, to a state of virtual insolvency.” Further, the citizens questioned the wisdom of selling a revenue-generating asset to fill an operating budget gap. The City countered with a Superior Court complaint seeking that the petition be declared null and void. NJAW moved to intervene.

The inquiry in the Law Division focused on whether section 3.1 supersedes the Faulkner Act; whether OWUS served more than five percent of the City’s population; and whether OWUS and IWUS constitute a single system or two separate systems. The trial judge found in favor of the City and NJAW, concluding that the Legislature had opted to limit the power of the Faulkner Act when it enacted section 3.1 of the MUL. The judge concluded that IWUS and OWUS are separate entities, not two portions of the same system, and that dividing them would therefore not cause harm.2

The BPU then issued an order adopting the initial decision of the ALJ and incorporating the amendments to the contract agreed upon at the public hearing. The BPU considered, as required by statute, “the impact of the acquisition on competition, on the rates of ratepayers affected by the acquisition of control, on the employees of the affected public utility or utilities, and on the provision of safe and adequate utility service at just and reasonable rates.” N.J.S.A. 48:2—51.1(a). Ultimately, the BPU adopted the proposed findings of the parties:

The proposed acquisition will not adversely affect competition because there is no traditional competition within the water utility industry.
Customers within the OWUS will receive an immediate rate decrease. Existing NJAW customers will not see any immediate rate increase as a result of the acquisition. Purchased water costs under the Water Supply Agreement, which will [356]*356initially be lower under the amended WSA, will be recovered in base rates beginning with NJAWs next base rate case. Over the long run, the approximately 40,000 additional OWUS costumers will contribute to the recovery of fixed costs— thus benefiting all NJAW customers.
There will be no adverse impact on employees of NJAW. As a result of the proposed acquisition, the management of NJAW will not change. Nor will there be changes to any day-to-day operations of NJAW as a result of the proposed acquisition. No workforce reductions are anticipated. In fact, the parties to the Stipulation claim that NJAW will add additional employees to serve the OWUS. The proposed acquisition will not affect existing collective bargaining agreements currently entered into by NJAW.

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Bluebook (online)
990 A.2d 1109, 201 N.J. 349, 2010 N.J. LEXIS 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-referendum-on-city-of-trenton-ordinance-09-02-nj-2010.