A BILL TO BE ENTITLED
AN ACT to provide for uniform authority to implement system development fees for public water and sewer systems in North carolina.
The General Assembly of North Carolina enacts:
SECTION 1.  Part 1 of Article 16 of Chapter 160A of the General Statutes is amended by adding a new section to read:
"§ 160A‑314.2.  System development fees for water and sewer.
(a)	In addition to monthly or periodic rates, the governing board of a water or sewer, or water and sewer, system may impose a system development fee only as provided in this section. The system development fee shall be comprised of two parts as follows:
(1)	A charge for a portion of the infrastructure existing at the time the new customer asks for additional infrastructure or new services to be provided.
(2)	A charge for a portion of the future needs of the water or sewer, or water and sewer, system that bears a reasonable relationship to the service requested and its impact on the water or sewer, or water and sewer, system.
(b)	A system development fee may be charged and collected from only the following:
(1)	Real property not previously served by the water or sewer, or water and sewer, system.
(2)	A developer or other owner of real property that agrees to pay the system development fee as part of a development agreement under Part 3A of Article 18 of Chapter 153A of the General Statutes or Part 3D of Article 19 of Chapter 160A of the General Statutes.
(c)	The formula or other means of calculating the system development fee shall be reviewed annually and published in the budget ordinance, with any changes in the formula or other means of calculating the system development fee being effective from July 1 until June 30 of each year. The formula or other means of calculating the system development fee shall take into account the future growth of the system, the age of the system, the estimated users, and other factors related to repair, maintenance, and expansion of the system. The formula or other means of calculating the system development fee shall not take into account personnel or other overhead costs of the system.
(d)	The monies collected as a system development fee shall be segregated and used only for repairs, maintenance, expansion, or other construction needs of the water or sewer, or water and sewer, system. The monies collected as a system development fee shall not be used for overhead costs of the system or transferred to the general fund of the governing board.
(e)	Notwithstanding the provisions of any local act, it is the intent of the General Assembly that, effective October 1, 2017, the authority set out in this statute is the exclusive authority to impose fees of property owners connecting to the water or sewer, or water and sewer, system for the availability of the services and future needs of the service. Effective October 1, 2017, a local act granting the authority to impose an impact fee or other type of system development fee for connecting to a water or sewer, or water and sewer, system, is not effective for that use or purpose. Provided that any fee properly imposed under such a local act prior to October 1, 2017, may be lawfully collected pursuant to the provisions of that local act.
(f)	For purposes of this section, "governing board" means the governing body of the city, county, or other unit of government as established by Part 2 of Article 2 of Chapter 130A, Article 1 of Chapter 162A, Article 4 of Chapter 162A, Article 5 of Chapter 162A, Article 5A of Chapter 162A, or Article 6 of Chapter 162A of the General Statutes."
SECTION 2.  G.S. 160A‑314 is amended by adding a new subsection to read:
"(a4)	A city may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 3.  G.S. 160A‑317 is amended by adding a new subsection to read:
"(a1)	A city may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 4.  G.S. 130A‑64 reads as rewritten:
"§ 130A‑64.  Service charges and rates.
(a)	A sanitary district board shall apply service charges and rates based upon the exact benefits derived. These service charges and rates shall be sufficient to provide funds for the maintenance, adequate depreciation and operation of the work of the district. If reasonable, the service charges and rates may include an amount sufficient to pay the principal and interest maturing on the outstanding bonds and, to the extent not otherwise provided for, bond  anticipation notes of the district. Any surplus from operating revenues shall be set aside as a separate fund to be applied to the payment of interest on or to the retirement of bonds or bond anticipation notes. The sanitary district board may modify and adjust these service charges and rates.
(b)	A sanitary district board may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 5.  G.S. 153A‑277 is amended by adding a new subsection to read:
"(a2)	A county may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 6.(a)  G.S. 162A‑6(a) is amended by adding a new subdivision to read:
"(9a)	To impose and require system development charges only as in accordance with G.S. 160A‑314.2."
SECTION 6.(b)  G.S. 162A‑9 is amended by adding a new subsection to read:
"(a5)	An authority may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 7.(a)  G.S. 162A‑36 is amended by adding a new subdivision to read:
"(8a)	To impose and require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 7.(b)  G.S. 162A‑49 reads as rewritten:
"§ 162A‑49.  Rates and charges for services.
(a)	The district board may fix, and may revise from time to time, rents, rates, fees and other charges for the use of land for the services furnished or to be furnished by any water system or sewerage system or both. Such rents, rates, fees and charges shall not be subject to supervision or regulation by any bureau, board, commission, or other agency of the State or of any political subdivision. Any such rents, rates, fees and charges pledged to the payment of revenue bonds of the district shall be fixed and revised so that the revenues of the water system or sewerage system or both, together with any other available funds, shall be sufficient at all times to pay the cost of maintaining, repairing and operating the water system or the sewerage system or both, the revenues of which are pledged to the payment of such revenue bonds, including reserves for such purposes, and to pay the interest on and the principal of such revenue bonds as the same shall become due and payable and to provide reserves therefor. If any such rents, rates, fees and charges are pledged to the payment of any general obligation bonds issued under this Article, such rents, rates, fees and charges shall be fixed and revised so as to comply with the requirements of such pledge. The district board may provide methods for collection of such rents, rates, fees and charges and measures for enforcement of collection thereof, including penalties and the denial or discontinuance of service.
(b)	The district board may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 8.(a)  G.S. 162A‑69 is amended by adding a new subdivision to read:
"(8a)	To impose and require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 8.(b)  G.S. 162A‑72 reads as rewritten:
"§ 162A‑72.  Rates and charges for services.
(a)	The district board may fix, and may revise from time to time, rents, rates, fees and other charges for the use of and for the services furnished or to be furnished by any sewerage system. Such rents, rates, fees and charges shall not be subject to supervision or regulation by any bureau, board, commission, or other agency of the State or of any political subdivision. Any such rents, rates, fees and charges pledged to the payment of revenue bonds of the district shall  be fixed and revised so that the revenues of the sewerage system, together with any other available funds, shall be sufficient at all times to pay the cost of maintaining, repairing and operating the sewerage system the revenues of which are pledged to the payment of such revenue bonds, including reserves for such purposes, and to pay the interest on and the principal of such revenue bonds as the same shall become due and payable and to provide reserves therefor. If any such rents, rates, fees and charges are pledged to the payment of any general obligation bonds issued under this Article, such rents, rates, fees and charges shall be fixed and revised so as to comply with the requirements of such pledge. The district board may provide methods for collection of such rents, rates, fees and charges and measures for enforcement of collection thereof, including penalties and the denial or discontinuance of service.
(b)	The district board may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 9.  G.S. 162A‑85.13 is amended by adding a new subsection to read:
"(a1)	The district board may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 10.  G.S. 162A‑88 reads as rewritten:
"§ 162A‑88.  District is a municipal corporation.
(a)	The inhabitants of a county water and sewer district created pursuant to this Article are a body corporate and politic by the name specified by the board of commissioners. Under that name they are vested with all the property and rights of property belonging to the corporation; have perpetual succession; may sue and be sued; may contract and be contracted with; may acquire and hold any property, real and personal, devised, sold, or in any manner conveyed, dedicated to, or otherwise acquired by them, and from time to time may hold, invest, sell, or dispose of the same; may have a common seal and alter and renew it at will; may establish, revise and collect rates, fees or other charges and penalties for the use of or the services furnished or to be furnished by any sanitary sewer system, water system or sanitary sewer and water system of the district; and may exercise those powers conferred on them by this Article.
(b)	The district board may require system development charges only in accordance with G.S. 160A‑314.2."
SECTION 11.  G.S. 1‑52 is amended by adding a new subdivision to read:
"§ 1‑52.  Three years.
Within three years an action ‑
…
(21)	Against a county, a municipality, or other unit of government as established by Part 2 of Article 2 of Chapter 130A, Article 1 of Chapter 162A, Article 4 of Chapter 162A, Article 5 of Chapter 162A, Article 5A of Chapter 162A, or Article 6 of Chapter 162A of the General Statutes for refund or release of any system development fee improperly imposed pursuant G.S. 160A‑314.2."
SECTION 12.(a)  Statement of Defense. – All persons asserting a valid claim to the return of monies paid to a county, municipality, or other unit of government as established by Part 2 of Article 2 of Chapter 130A, Article 1 of Chapter 162A, Article 4 of Chapter 162A, Article 5 of Chapter 162A, Article 5A of Chapter 162A, or Article 6 of Chapter 162A of the General Statutes as a fee improperly imposed prior to October 1, 2017, for the future services of a water or sewer system, or both, shall proceed as follows:
(1)	If the fee has not been paid, the person may make a demand for the release of the claim by submitting to the governing body of the unit a written statement of his or her defense to payment or enforcement of the fee and a request for release of the fee at any time prior to payment of the fee.
(2)	If the fee has been paid, the person, at any time within 36 months after the fee first became due or within 36 months from the date of payment of such fee, whichever is the later date, may make a demand for a refund of the fee paid by submitting to the governing body of the unit a written statement of his or her defense and a request for refund thereof. A claim not brought within 36 months shall be untimely and declined by the governing board of the unit.
SECTION 12.(b)  Action of Governing Body. – Upon receiving a person's written statement of defense and request for release or refund, the governing body of the unit shall within 90 days after receipt of such request, determine whether the person has a valid defense to the fee imposed or any part thereof and shall either release or refund that portion of the amount of the fee that is determined to be in excess of the correct liability or notify the person in writing that no release or refund will be made. If the real property associated with the improperly imposed fee has transferred ownership between the time of the payment of the improperly imposed fee and the request for release or refund of the fee, the governing body may require proof from the person requesting release or refund that the amount of the fee was not considered in the purchase price of the real property and adjust the amount of the release or refund accordingly. The governing body may, by resolution, delegate its authority to determine requests for a release or refund of fees of less than one hundred dollars ($100.00) to the finance officer, manager, or attorney of the unit. A finance officer, manager, or attorney to whom this authority is delegated shall report monthly to the governing body of the unit the actions taken by him or her on requests for release or refund. All actions taken by the governing body or finance officer, manager, or attorney on requests for release or refund shall be recorded in the minutes of the governing body.
SECTION 12.(c)  Suit for Recovery of Improper Fees. –
(1)	Request for release before payment. – If within 90 days after receiving a person's request for release of an unpaid fee claim under subsection (a) of this section, the governing body of the unit has declined the request for untimely filing, failed to grant the release, has notified the person that no release will be granted, or has taken no action on the request, the person shall be liable to pay the fee.
(2)	Request for refund. – If within 90 days after receiving a person's request for refund under subsection (a) of this section, the governing body has failed to refund the full amount requested by the person, has notified the person that no refund will be made, or has taken no action on the request, the person may bring a civil action against the unit for the amount claimed. Such action shall be brought at any time within three years from the expiration of the 90‑day period in which the governing body is required to act.
SECTION 12.(d)  Civil Actions. – Civil actions brought pursuant to subsection (c) of this section shall be brought in the appropriate division of the general court of justice of the county in which the unit is located. If, upon trial, it is determined that the fee or any part of it was improper, judgment shall be rendered therefor with interest thereon at six percent (6%) per annum, plus costs, and the judgment shall be collected as in other civil actions.
SECTION 13.  Sections 1 through 10 of this act become effective October 1, 2017. Section 11 of this act becomes effective October 1, 2017, and applies to pending actions and actions arising on or after that date. The remainder of this act is effective when it becomes law.