A BILL TO BE ENTITLED
AN ACT to clarify the timing of collection of system development fees for each category of new development.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 162A‑213 reads as rewritten:
"§ 162A‑213.  Time for collection of system development fees.
(a)	Land Subdivision. – For new development as defined in G.S. 162A‑201(6)a., the system development fee shall be collected by a local governmental unit at the 
	time of plat recordation.
	
(b)	Other New Development. – For other new development as defined by G.S. 162A‑201(6)b. or c., the local governmental unit shall collect the system development fee at the 

time of issuance of the permit under Part 4 of Article 18 of Chapter 153A of the General Statutes or Part 5 of Article 19 of Chapter 160A of the General Statutes. If the local governmental unit collecting the system development fee is not the same as the local governmental unit issuing the permit under Part 4 of Article 18 of Chapter 153A of the General Statutes or Part 5 of Article 19 of Chapter 160A of the General Statutes, the local governmental unit issuing the permit shall notify the local governmental unit imposing the fee of the application for a permit.
(c)	Amount of Fee. – When imposing and collecting any system development fee, the amount of the system development fee to be imposed is the system development fee, as adopted by the local governmental unit, in effect on the date the system development fee is paid.
(d)	Exceptions. – A system development fee shall not be charged or assessed in either of the following circumstances:
(1)	On new development as defined by G.S. 162A‑201(6)b. or c., if both the following apply:
a.	The water or sewer lines were installed to the individual unit of development prior to October 1, 2017, or tap fees were paid for the individual unit of development prior to October 1, 2017.
b.	The local governmental unit did not impose a fee for capacity prior to October 1, 2017, or the facility was operated under Article 15 of Chapter 153A of the General Statutes or Article 16 of Chapter 160A of the General Statutes as of October 1, 2017.
(2)	On new development as defined by G.S. 162A‑201(6)b. or c., if a system development fee was paid upon recordation of the plat of subdivision in accordance with subsection (a) of this section."
SECTION 2.  G.S. 162A‑201 reads as rewritten:
"§ 162A‑201.  Definitions.
…
(2)	Capital rehabilitation project. – Any repair, maintenance, modernization, upgrade, update, replacement, or correction of deficiencies of a facility, including any expansion or other undertaking to increase the preexisting level of service for 
	land subdivisions, structures, and land uses in existence at the start of the system development fee analysis and more than one year prior to the adoption of a system development fee.
…
(6)	New development. – Any of the following actions with respect to real property which increases the availability of service necessary to serve that development:
a.	The subdivision of land.
b.	Initial construction on undeveloped property.
c.	Any use or extension of the use of land, including reconstruction, redevelopment, renovation, conversion, structural alteration, relocation, or enlargement of any structure on developed property which increases the number of service units.
…
(9)	System development fee. – A charge or assessment for service imposed upon new development to fund costs of capital improvements necessitated by and attributable to such new development, to recoup costs of existing facilities which serve such new development, or a combination of those costs, as provided in this Article. The term includes amortized charges, lump‑sum charges, and any other fee that functions as described by this definition regardless of terminology. The term does not include any of the following:
a.	A charge or fee to pay the administrative, plan review, or inspection costs associated with permits required for development.
b.	Tap or hookup charges for the purpose of reimbursing the local governmental unit for the actual cost of connecting the service unit to the system.
c.	Availability charges.
d.	Dedication of capital improvements on‑site, adjacent, or ancillary to a development absent a written agreement providing for credit or reimbursement to the developer pursuant to G.S. 153A‑280, 153A‑451, 160A‑320, 160A‑499 or Part 3A of Article 18, Chapter 153A or Part 3D of Article 19, Chapter 160A of the General Statutes.
e.	Reimbursement to the local governmental unit for its expenses in constructing or providing for water or sewer utility capital improvements adjacent or ancillary to the development if the owner or developer has agreed to be financially responsible for such expenses; however, such reimbursement shall be credited to any system development fee charged as set forth in G.S. 162A‑207(c).
…."
SECTION 3.  G.S. 162A‑203(a) reads as rewritten:
"(a)	A local governmental unit may adopt and impose a system development fee for water or sewer service on new development only in accordance with the conditions and limitations of this Article."
SECTION 4.  G.S. 162A‑205 reads as rewritten:
"§ 162A‑205.  Supporting analysis.
(a)	A system development fee shall be calculated based on a written analysis, which may constitute or be included in a capital improvements plan, that:
(1)	Is prepared by a financial professional or a licensed professional engineer qualified by experience and training or education to employ generally accepted accounting, engineering, and planning methodologies to calculate system development fees for public water and sewer systems.
(2)	Documents in reasonable detail the facts and data used in the analysis and their sufficiency and reliability.
(3)	Employs generally accepted accounting, engineering, and planning methodologies, including the buy‑in, incremental cost or marginal cost, and combined cost methods for each service, setting forth appropriate analysis as to the consideration and selection of a method appropriate to the circumstances and adapted as necessary to satisfy all requirements of this Article.
(4)	Documents and demonstrates the reliable application of the methodologies to the facts and data, including all reasoning, analysis, and interim calculations underlying each identifiable component of the system development fee and the aggregate thereof.
(5)	Identifies all assumptions and limiting conditions affecting the analysis and demonstrates that they do not materially undermine the reliability of conclusions reached.
(6)	Calculates a final system development fee per service unit of new development and includes an equivalency or conversion table for use in determining the fees applicable for various categories of demand.
(7)	Covers a planning horizon of not less than five years nor more than 20 years.
(8)	Is adopted by resolution or ordinance of the local governmental unit in accordance with G.S. 162A‑209.
(b)	For purposes of this section, new development shall include only that new development occurring after the date a local government begins the written analysis process required by G.S. 162A‑205, no more than one year prior to the adoption of a system development fee."
SECTION 5.  G.S. 162A‑209(b) reads as rewritten:
"(b)	After expiration of the period in subsection (a) of this section, the governing body of the local governmental unit shall conduct a public hearing prior to adoption of the system development fee. Notice of the public hearing shall be published not less than 10 days nor more than 25 days before the date fixed for the public hearing in a newspaper having general circulation in the area and may be published on the Web site of the local government."
SECTION 6.  This act becomes effective July 1, 2019, and applies to system development fees collected on or after that date.