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Act 57 Clarifies Reimbursement Provisions

For years, a great deal of confusion over reimbursements has plagued the industry. Questions abound as to when builders are entitled to them and how much money they should be reimbursed. Some authorities have collected a reimbursement as part of their tapping fee that they were no longer required to pay to the person who constructed the facilities. Now, however, Act 57 requires authorities to make a written agreement with the person constructing the facilities before that authority can add a reimbursement part to their tapping fee. The act also allows the authority to collect the reimbursement part of their tapping fee only if they are obligated to pay it over to the person who paid for the facilities. If you are required to construct facilities and turn them over to the authority or municipality, you should probably attempt to negotiate a reimbursement agreement – especially if potential exists that the facilities you build can be used or extended by others some time in the future.

While Act 203's provision for an automatic reimbursement that is paid without a written agreement still exists in Act 57, its applicability has not changed. A builder or developer is entitled to a reimbursement only when a property connects a “service line” directly to the main the builder constructed. The authority is responsible for tracking these reimbursements and remitting them to those who paid for the main extension, but there is a 10-year limitation. Also, since the amount of the reimbursement is represented by the “Distribution or Collection Part” of the tapping fee, those authorities that did not include such a part in their fee may not have to pay a reimbursement at all.

NEXT Addition of New Refund Provisions

© 2008 Herbert, Rowland & Grubic, Inc.