Local governments, real estate developers, and all who are interested in how infrastructure development fees are allocated and assessed in North Carolina should take a moment to review House Bill 436, which was ratified by the General Assembly on June 29, 2017.

After much debate in the Legislature this session around the issue, the ratified version of HB 436 would not eliminate the authority of counties and cities to assess impact fees, as a prior version of the bill had done. Rather, HB 436 would provide uniform authority to units of local government to implement system development fees for public water and sewer systems. Effective October 1, 2017 (unless a local government unit is otherwise authorized by legislation to adopt a system development fee, in which case the bill’s requirements would take effect on July 1, 2018), HB 436 would require local governments to utilize a financial or engineering professional to prepare a written analysis to calculate their needed system development fees. The system development fee could not exceed the amount derived from the written analysis. Local government units would be required to hold a public hearing prior to setting the fee. The analysis supporting the fee would need to be updated every 5 years.

Notably, HB 436 would also clarify that the applicable statute of limitations for claims for refunds of unlawfully collected fees for water and/or sewer service is 3 years. The provision affecting the statute of limitations for such claims would have retroactive effect and apply to claims accrued or pending prior to and after the date that provision becomes law. It would not provide retroactive authority for any system development fee or similar fee collected prior to October 1, 2017.

As of the date of this writing, the bill has not been signed by the Governor. We will continue monitoring the bill’s progress and update this blog once we know more.