Quality Built Homes Inc. v. Town of Carthage
369 N.C. 15
| N.C. | 2016Background
- Town of Carthage adopted water and sewer "impact fee" ordinances in 2003 charging developers at final plat approval for system expansion costs (in addition to tap fees and monthly charges).
- Fees apply regardless of whether the landowner ever connects to the system or whether the town actually expands infrastructure; amounts vary by meter size ($1,000–$30,000 per connection). Plaintiffs (homebuilders) paid $123,000 in such fees.
- Plaintiffs sued for declaratory relief and money damages, alleging Carthage exceeded its statutory authority under the Public Enterprise Statutes (N.C.G.S. §§ 160A-311 to -338).
- Trial court granted summary judgment to Carthage; the Court of Appeals affirmed, applying broad-construction principles under N.C.G.S. § 160A-4.
- The Supreme Court granted discretionary review and held that the Public Enterprise Statutes unambiguously permit fees for contemporaneous use or services furnished, but do not authorize fees for prospective, future services (impact fees).
- Court reversed the Court of Appeals, declaring Carthage’s impact fee ordinances invalid for exceeding municipal authority and remanded for unresolved issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carthage may impose impact fees under the Public Enterprise Statutes | Impact fees are unauthorized; Town exceeded delegated municipal powers and must return fees | Statutes broadly authorize cities to set "fees" and thus permit impact fees for operation, maintenance, and expansion | Impact fees are not authorized: statutes allow fees for contemporaneous use/services furnished, not for services "to be furnished" (future expansion) |
| Whether statutory broad-construction (N.C.G.S. § 160A-4) permits reading in prospective authority | Broad construction cannot supply clear statutory language; express power required | §160A-4 supports including implied powers reasonably necessary to effectuate express powers | §160A-4 is a construction rule but is inoperative where statute is plain and unambiguous; cannot read in missing prospective language |
| Whether tap fees and rate-setting suffice to fund expansion | Plaintiffs: impact fees unlawfully collected in addition to tap fees; remedy required | Town: impact fees supplement tap fees and are authorized under enterprise powers | Town may rely on tap fees and rate increases authorized by statute; impact fees require separate legislative authorization |
| Whether prior case law supports municipal authority to charge for future services | Plaintiffs: precedent (Bissette) suggests municipalities cannot charge for services "to be furnished" absent language | Town: other decisions and §160A-4 support broad municipal charging authority | Court relies on Bissette and McNeill distinction: absence of "to be furnished" language precludes charging for prospective services under §160A-314 |
Key Cases Cited
- Lutterloh v. City of Fayetteville, 149 N.C. 65 (1908) (municipalities are creatures of legislative will)
- Bd. of Trs. of Youngsville Twp. v. Webb, 155 N.C. 379 (1911) (legislature delegates municipal powers and may modify them)
- Mills v. Bd. of Comm’rs of Iredell Cty., 175 N.C. 215 (1918) (additional local taxing authority requires legislative enactment)
- O’Neal v. Wake County, 196 N.C. 184 (1928) (implied powers necessary to exercise expressly conferred municipal powers)
- Carlyle v. State Highway Comm’n, 193 N.C. 36 (1927) (courts should not read words into statutes)
- City of Asheville v. Herbert, 190 N.C. 732 (1925) (acts beyond municipal powers are invalid)
- Town of Saluda v. County of Polk, 207 N.C. 180 (1934) (construction of municipal enabling statutes)
- Town of Spring Hope v. Bissette, 305 N.C. 248 (1982) (municipalities may lack power to charge for services "to be furnished")
- McNeill v. Harnett County, 327 N.C. 552 (1990) (county statute including "to be furnished" authorized charges for prospective services)
- Smith Chapel Baptist Church v. City of Durham, 350 N.C. 805 (1999) (plain statutory language governs municipal authority)
- Dunn v. Pacific Emp’rs Ins. Co., 332 N.C. 129 (1992) (ordinary rules of grammar apply in statutory construction)
- Bowers v. City of High Point, 339 N.C. 413 (1994) (clear statutes must be enforced as written)
- Lanvale Props., LLC v. County of Cabarrus, 366 N.C. 142 (2012) (§160A-4 broad-construction rule is a construction principle)
- N.C. Dep’t of Corr. v. N.C. Med. Bd., 363 N.C. 189 (2009) (courts presume legislature chose words carefully)
- King v. Chapel Hill, 367 N.C. 400 (2014) (discussing scope of delegated municipal authority)