Planning for the Future

Planning is words on a page and lines on a map. It is not reality, but a projection of the future.  And the future is uncertain – just ask those who predict when the Federal Reserve will raise interest rates. 

A North Carolina Water and Sewer District possesses authority to charge fees “for the use of or the services furnished or to be furnished.”  In Point South Properties, LLC v. Cape Fear Public Utility Authority, (October 20, 2015), the North Carolina Court of Appeals addresses when a water and sewer district possesses authority to impose fees for services “to be furnished.” 

Two facts were prominent in the case.  First, the fees were assessed against properties already served adequately by a private water company and the property owners who had paid the fees had no desire to be served by the District, now merged into defendant Cape Fear Public Utility Authority.  Second, the District’s plans to furnish services to these properties were general, vague and without a timetable.  Accordingly, the Court of Appeals concluded that there was no evidence that the defendants “have ever planned for water and sewer service to be furnished to the subject properties” and affirmed summary judgment for the plaintiffs on their claim that the District’s imposition of impact fees was ultra vires.

But the future is uncertain in so many unknowable ways.   Is redundancy of water/sewer services unwise planning?  What if, when a district charges a fee, it intends to furnish services in the future but a private water company extends services sooner?  Should fees be refunded?  What if the private utility fails and citizens need water and sewer services from a district? What if real plans are made but current funding is inadequate to extend services?  Recognizing that appropriate and fair application of law in these circumstances is fact specific, the Court of Appeals expressly declined “to state any criteria, guidelines or standards for determination of whether evidence in a particular case is adequate to support assessment of impact fees for services ‘to be furnished.’” 

Knowing the Past

The past is known.  In Point South, the Court of Appeals holds that (1) a ten year statute of limitation applies to claims where a party asserts a government lacks authority to impose impact fees and (2) the equitable defense of laches (delay) does not apply to such claims.  

Consequently, any person paying a governmental fee possesses an option to bring a lawsuit, exercisable solely in the discretion of the payor, at any time for ten years.  A decade is a long time and with the benefit of knowing the past - how facts, relationships and law have changed during the option period, the payor makes an informed decision.  Perhaps, the payor has sold the property and cares little about the services available to it. Or perhaps a private utility company fails to provide quality services at a reasonable price and the payor demands services from a district.  Or perhaps law evolves, improving the party’s odds of success.  Real Option Analysis informs us that a ten year option is quite valuable.  After all, who knows the future?