Developers brought consolidated actions against county seeking refunds for one-time fees paid to county for water and sewer services to be furnished to their future real estate developments, which county imposed as precondition for its concurrence in developers’ applications to North Carolina Department of Environmental Quality (DEQ) for water and sewer permits, as well as seeking declaratory judgment that fee ordinance was invalid.
The Superior Court granted county’s motion for judgment on the pleadings, and developers appealed. The Court of Appeals affirmed. The Supreme Court granted discretionary review.
The Supreme Court held that:
- Water and sewer fees were impact fees, not user fees;
- As a matter of first impression, water and sewer fees constituted exactions;
- “unconstitutional conditions” doctrine required water and sewer fees to have essential nexus and rough proportionality with county’s costs of expanding water and sewer infrastructure into developments;
- Developers adequately alleged that county coerced them to pay fees in order to obtain land use permits;
- Developers’ admission precluded any argument that fees lacked essential nexus to costs of infrastructure expansion;
- Issue of whether fees were roughly proportional to costs of infrastructure expansion could not be resolved on motion for judgment on the pleadings; and
- New fee ordinance pursuant to new statute did not render action moot.
One-time fees that county charged developers for water and sewer services constituted impact fees, not user fees, for purpose of determining whether fees were takings without just compensation under “unconstitutional conditions” doctrine, even though county called fees “capacity use” fees; such fees were intended to cover cost of expanding water and sewer infrastructure to accommodate new development, rather than being paid by customers at fixed rate in accordance with their monthly water and sewer usage for purpose of paying for services they used at time of actual use.
Impact fees that county required developers to pay for water and sewer services as condition of county’s concurrence in water and sewer permit approval constituted exactions, for purpose of determining whether fees constituted takings without just compensation under “unconstitutional conditions” doctrine; fees were imposed on developers based on their respective prorated shares of cost of expanding utility services to developments, and term “exaction” included monetary exactions, not only a requirement that a developer dedicate land.
Under “unconstitutional conditions” doctrine, one-time impact fees that county charged developers as monetary exactions for water and sewer services, as precondition for county’s concurrence in developers’ water and sewer permit applications, were required to have essential nexus and rough proportionality with costs that proposed developments imposed on county’s water and sewer infrastructure in order for fees not to constitute takings, even though fees were not discretionary, administrative, or imposed in lieu of any dedication of land; each fee was linked to specific parcel of land proposed for development, and allowing county to increase fees or use fee proceeds for non-development-related purposes would enable county to pressure developers to give up property without just compensation.
Developers adequately alleged that county’s imposition of one-time sewer and water fees, which constituted impact fees and exactions, had effect of coercing developers into paying fees in order to obtain land use permits, supporting their claim against county for takings without just compensation under “unconstitutional conditions” doctrine, where developers alleged that county conditioned its concurrence in developers’ applications for sewer and water permits on developers’ payment of impact fees, that payment of fees was not merely necessary to permit developers to connect to water and sewer system, and that requiring fees before county would support developers’ applications for water and sewer permits necessary to record subdivision plots precluded development of properties as planned.
In developers’ action against county for violations of Takings Clause based on county’s imposition of impact fees for expansion of water and sewer system into planned developments, which developers alleged constituted unconstitutional condition on county’s consent to water and sewer permits, county, not developers, bore burden of showing that fees had essential nexus to and were roughly proportional to developments’ impact on county’s water and sewer infrastructure.
Developers’ admission, in their complaint against county for imposing monetary exaction in form of water and sewer impact fees as condition of county’s consent to water and sewer permits in violation of Takings Clause, that water and sewer impact fees were collected by county to pay for costs of future improvements to county’s water and sewer system precluded developers from arguing that fees lacked essential nexus to county’s objective of funding expansion of its water and sewer system capacity to serve proposed developments, as requirement for fees to be permissible under “unconstitutional condition” doctrine.
Issue of whether water and sewer impact fees that county imposed on developers as condition of its consent to developers’ water and sewer permit applications were roughly proportional to costs of expansion of water and sewer system to serve proposed developments, as necessary for fees to be permissible under “unconstitutional conditions” doctrine, could not be resolved on county’s motion for judgment on the pleadings with respect to developers’ complaint against county for violation of Takings Clause based on contention that fees constituted unconstitutional conditions on permits; county had not demonstrated that its estimates of water and sewer capacity expansion costs, upon which fees were estimated, were roughly proportional to actual cost of expanding water and sewer system to accommodate proposed developments.