Charlotte, NC Hit with Homebuilders’ Class Action Lawsuit Over Water, Wastewater Capacity Fees

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The City of Charlotte and its water management unit are staring down a proposed class action lawsuit filed by a faction of homebuilders who allege the city has charged unlawful water and wastewater capacity fees as a mandatory condition for service before certain properties were in use or able to be furnished with water systems.

The plaintiff companies stress in the 30-page lawsuit that they take no issue with water and wastewater fees charged by the defendants prior to the establishment of the October 2017 “Public Water and Sewer System Development Fee Act.” Rather, the companies take issue with the defendants allegedly charging capacity fees for use of Charlotte’s water and wastewater systems prior to the actual use of those systems by any of the plaintiffs’ properties. The plaintiffs cite an August 2016 North Carolina Supreme Court decision that granted no authority to municipalities to charge for services “to be furnished” in the future, including fees for properties that “did not have actual use of water and wastewater services, and no present service was furnished to the property.” From the complaint:   

“The North Carolina Supreme Court in Quality Built Homes held that the plain language of N.C. Gen. Stat. § 160A-314(a), allowing the imposition of fees for the “use of or services furnished by” a municipality, only authorizes the imposition of fees for the actual, contemporaneous use of the municipality’s water and/or wastewater systems.

Under the unambiguous holding of Quality Built Homes, Defendants lacked authority, at all times relevant hereto, to impose and assess water and wastewater capacity fees prior to Plaintiffs’ properties being connected and having the contemporaneous ability to use the services furnished by Defendants’ water and/or wastewater systems.”

According to the lawsuit, the plaintiffs’ properties were not connected to Charlotte’s water and/or wastewater system when the time came for them to remit capacity fees. Further still, the plaintiff companies say that, by the defendants’ own estimate, it typically takes a minimum of four to six weeks before actually properties receive water services.