The North Carolina General Assembly is starting to take a close — and skeptical — look at the development Impact Fees charged by local governments across the state, and some big changes could be on the way in the months ahead.
Last week, the House State and Local Government I Committee heard two bills dealing with impact fees. Representative Sarah Stevens (R-Surry) introduced two bills in March regarding impact fees which were authorized by the General Assembly more than 30 years ago. The first, HB 406 Repeal Orange County Impact Fee, would strip Orange County of its ability to impose impact fees. Stevens noted that Orange County recently modified its impact fee structure causing the fee for a multi-family project to increase from $302,000 to $1,593,000. Impact fees for single family residences built in Orange County have been in excess of $10,000 per house.
The second bill, HB 436 Local Government/Regulatory Fees, would prohibit the future imposition of impact fees by cities and counties, and would repeal all existing authority for the twenty municipalities and three counties who were granted this authority pursuant to local acts passed primarily between 1985 and 1989.
Despite opposition from local governments and their advocates, both bills were approved in committee, mainly along party lines. Representative Stevens explained that impact fees were unfair since they singled out our industry to pay for infrastructure that benefits the community as a whole. The bills will now move to the House Finance Committee for further consideration.
The impact fee issue is receiving legislative attention largely as a result of the recent decision of the Supreme Court of North Carolina finding that water and sewer impact fees imposed for “future capacity” are not authorized and must be refunded. That case, Quality Built Homes v. Town of Carthage, was brought by a builder member with the support of the North Carolina Home Builders Association (NCHBA), which filed an amicus brief in the Supreme Court.
Similar fees have been collected by many other jurisdictions across the state and, as a result of this decision, are now subject to being refunded with interest. Local governments have turned to the General Assembly for relief. NCHBA has been in discussions with interested parties and this issue will remain a top priority for NCHBA’s team in the weeks ahead.