Upfront Charges for Local Government Water and Sewer Capital

<p>In the wake of a recent North Carolina Supreme Court decision invalidating certain water and sewer fees (Quality Built Homes, Inc. v. Town of Carthage), counties and municipalities across the state have been taking a closer look at their own fee schedules. (A summary of the case and its holding is here.) Through Quality Built Homes, and other relevant case law, the North Carolina courts have set out the basic outlines of the types of fees that are lawful and unlawful. Unfortunately, there is still quite a bit of grey area (or as I refer to it below, yellow light area) as to the full contours of a county’s or municipality’s authority. Each local unit must work with its attorney and, if applicable, rate-setting consultant, to determine if changes are needed to its fee schedule. The following sets out a framework to aid in that analysis.</p> <p>There are two primary fee statutes that authorize counties and municipalities to assess charges associated with their water and sewer systems—the general utility fee statute and the availability fee statute. This post focuses on the general utility fee statute. (Previous posts have discussed the availability fee authority for both municipalities and counties in detail. See here, here, here.) Note also that this post only looks at county and municipality authority. It does not address the fee authority of other local government entities that provide water and sewer services.</p> <p>General Fee Statutes</p> <p>As a reminder, the general utility fee statutes for both counties and municipalities provide, that the local unit “may establish and [...]</p>