Flat fee for sewer bills; budget to be adopted

The good news: Municipal taxes for the average Rahway home are going down $2 compared to last year, from $2,278 to $2,276. The bad news: sewer charges historically included in municipal taxes are not included in that figure for 2008. More good news: The average assessed home ($133,000) paid about $391 in taxes to cover sewer charges last year, but under a new sewer utility, will pay a flat $245 annual sewer fee, separate from property taxes.

The city’s $44.3 million budget for 2007-08 is up $1.2 million from the previous year, almost 3 percent, while the tax levy is up 0.6 percent. In addition to splitting out sewer fees, the city collected more than $2 million in water and sewer connection fees from new development, the city’s taxable assessed value rose $10 million, and $1 million was returned as Rahway’s share of surplus from the sewer authority. The redevelopment plan “is starting to work now, and as projects come on line that $10 million will increase,” said City Administrator/Redevelopment Director Peter Pelissier. A public hearing and final approval of the city budget is scheduled Thursday night at 6:30 p.m. in the Emergency Management Room at City Hall.

The City Council approved the creation of a sewer utility during a special meeting Thursday night. Historically, the Rahway Valley Sewerage Authority bills the city, which acts as a conduit and lumps a town’s assessment into the municipal tax bill. Annual sewer fees for various properties would be as follows, under the new sewer utility:

Single-family home, $245
Two-family home, $392
Three- or four-family home, $392 + $147 per unit
Condominium, $196
Nonprofit/Apartment/Government, $125 + $2.64 per 1,000 gallons
Commercial/industrial, $355 + $3.96 per 1,000 gallons
Industrial/Merck, $355 + $5.28 per 1,000 gallons

The annual sewer fee would not change for at least five years, said Pelissier, the city’s representative to the RVSA, adding that the only costs in creating a utility would be billing, which are expected to be about $50,000 a year. No new positions would be created. City Attorney Louis Rainone described the utility as merely an accounting mechanism.

Residential properties currently are charged for sewerage based on the value of their home, not on what’s being used. “A utility will make it more equitable,” said Dieter Lerch, the city’s auditor who presented the proposal to City Council last month. Residential properties currently cover about 62 percent of the city’s RVSA bill, according to officials, but are only responsible for 50 percent of the assessment, thus subsidizing commercial and light industrial properties.

RVSA member communities Woodbridge and Clark both created a sewer utility to handle sewerage assessments and Kenilworth also is considering establishing a utility in the wake of rising RVSA assessments the last several years as a result of a $250-million upgrade to increase capacity at the Rahway plant. “Had RVSA not increased its rates, Pelissier said, the city probably wouldn’t be doing this. “It’s not a gimmick, it’s the cost of sewers,” he said, and the costs are staggering, whether included in the tax bill or not, and are borne by property taxpayers.