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Builders – You May Be Due A Refund For Water And Sewer Fees

Last Friday, the Supreme Court of North Carolina decided that the statute of limitations for lawsuits seeking a refund for certain illegal water and sewer impact fees is three (3) years. This decision follows up on the court’s August 2016 decision in Quality Built Homes v. Town of Carthage which held that it was unlawful for the town to collect water and sewer impact fees for services “to be furnished” under its public enterprise authority. If you have paid water and sewer fees to a local government as a condition of development approval within the past three years, you may have the right to a refund of the fees you paid, with interest!

This case was brought by NCHBA member and Moore County builder Ron Jackson who challenged whether the town possessed the statutory authority to collect impact fees to be used “to cover the costs of expanding the [water and sewer] systems” which are in addition to the regular water and sewer tap fees and the monthly service charges to water and sewer customers. NCHBA filed an amicus (friend of the court) brief in support of the plaintiffs in the Supreme Court in the original case.

As a result of the earlier decision, a number of builders and developers filed refund lawsuits but the question remained unresolved as to how far back refunds could be claimed. The court’s decision on Friday held it was three years from the date the illegal fees were paid (rejecting the town’s argument that is was from the date the ordinance was adopted). Likewise, the court rejected the town’s arguments that a shorter time period to claim refunds was applicable.

Carthage’s practice was not unusual. Many municipalities and counties who operate systems under the authority of their public enterprise statutes have collected similar illegal fees. These decisions not only open the door for the recovery of these fees but the possible award of 6% interest per year thereon (as a result of legislation successfully sought by NCHBA in 2007).

This litigation was brought by attorneys Jim Scarbrough and Jim DeMay from Concord with whom NCHBA has worked closely over the years to produce other similar legal victories for our industry (including the Lanvale case which struck down Cabarrus County’s adequate public facilities ordinance). To date, they have filed lawsuits in several jurisdictions seeking refunds on behalf of builders and developers based on the Quality Built Homes decision. They stand ready to discuss your particular situation. Contact them at jdemay@fspa.net

 If you have paid a similar illegal fee within the past three years, you may find it in your interest to contact them, or an attorney of your choosing, to determine your legal rights.  

Sincerely,

Mike Carpenter

General Counsel, NCHBA

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