The Christie administration is moving to repeal an anti-sprawl measure that sought to discourage growth in undeveloped areas by imposing the cost of extending utility services on the developer or customers served by the extension.
In a draft rule unveiled by the New Jersey Board of Public Utilities (BPU), the agency would now allow those costs to be potentially spread over the entire ratepayer base. Under the current rule, developers can spread the costs among all ratepayers only when building in designated growth areas with an existing infrastructure, such as towns and suburbs.
But that provision was struck down by a state appeals court in 2009, which ruled the agency lacked the statutory authority to place that requirement on developers. The draft rule is the agency’s response to the court decision, which stemmed from a developer balking at paying $8 million in utility extension costs for a 555-home development in Howell Township.
Although the BPU says it has little choice but to repeal the measure, smart growth advocates say the result will be to encourage development in undeveloped areas. They are looking to the state legislature to resolve the issue in favor of smart growth policies.
The original rationale behind the proposal, one of the key parts of former Gov. Jim McGreevey’s anti-sprawl agenda, was to provide a disincentive for developers seeking to build in relatively remote areas where there are no sewer lines, water mains, or gas and electric lines.
While not criticizing the BPU, smart growth advocates said they hope to have legislation passed that would allow state agencies to create such rules. The state, they argue should be allowed to implement policies that steer development away from areas not designated for growth under the State Plan.
“The BPU’s hands are tied,’’ said Chris Sturm, senior director for state policy for New Jersey Future, a nonprofit group concerned with land use issues, referring to the appellate court decision. “This is the wrong direction. It’s going to encourage sprawl.’’
Sturm also said her group is hoping the administration’s strategic plan for development, a Cabinet-level review of state land use policies, will “create a new investment framework for encouraging economic growth in the right areas.’’
“This is a step back for smart growth and sound land use planning in New Jersey,’’ added Lucy Vandenberg, executive director of PlanSmart, a nonprofit civic planning group. “It does call out for legislative action.’’
A Legislative Matter
Smart growth advocates are interpreting the court ruling as an indication that the matter is now something that the legislature must take up, rather than the BPU.
The proposal is the second draft rule in the past two weeks to have been issued by the agency to overhaul policies governing where the state aims to encourage or discourage new development. At the end of September, the agency said it would consider changing where financial incentives are awarded to curb energy consumption in new buildings, saying limiting the incentives to smart growth regions could jeopardize reaching goals to cut energy consumption in New Jersey.
The administration has generally been critical of many of the state’s major planning initiatives, including the Office of Smart Growth. In its first year, the Office of Smart Growth, the agency tasked with coordinating growth among state agencies, was moved from the Division of Community Affairs to the Secretary of State’s office, chaired by the lieutenant governor.
To Jeff Tittel, director of the New Jersey Sierra Club and a persistent critic of the administration, the rule proposal amounts to a “big rollback’’ of the agency’s smart growth policies. “It also will undermine smart growth and urban revitalization,’’ he said. “Now, we will subsidize sprawl, and subsidize growth in the wrong places.’’
Under the draft proposal, the subject of a stakeholder meeting next Tuesday, the agency is seeking input on how much of the cost of an extension should be paid by the applicant, whether the utility could require a deposit for the extension, and if the agency should be the determining factor if the applicant and utility could not agree on what the cost of the extension should be.
Calls for comment to the New Jersey’s Builders Association, New Jersey Board of Public Utilities and New Jersey Utilities Association were not returned.
However, according to the New Jersey Builders Association’s web site, the implications of the court decision means developers who want to grow in “smart growth’’ areas, will now be eligible to receive extension service so long as the development will provide sufficient revenue for the utilities.
Much of how the draft rule will play out is still undecided. The administration also is contemplating changes to the State Plan, adopted in 1985, as a way of coordinating land use, housing, economic development, and natural resource protections — among other issues.