Charlotte City Council is set to approve a $106 million settlement this week between Charlotte Water and real estate developers stemming from legal cases about improper development fees.
The settlement is part of two class action lawsuits that involve multiple cities in North Carolina, including Charlotte. Developers and home builders claimed that development fees by Charlotte Water for new connections were improperly charged for years and should be paid back. The first lawsuit was originally filed in November 2018, and the second was filed in April 2021.
Charlotte Water charges fees between $3,500 and over $1 million to developers and home builders to help with the cost of their initial investments. The differing fees are based on the size of the developments and how much new capacity they require. The developers and homebuilders claimed that before the state legislature amended laws in 2017, Charlotte Water didn't have the legal authority to charge the development fees for new connections.
“Though the City continues to dispute the allegations, a settlement was recommended to avoid further financial risk to all existing customers,” a Charlotte Water spokesperson said.
The utility company will make payments totaling $106 million over the next two years. The first $90 million has already been paid by Charlotte Water, using the utility's reserves.
The second installment of the settlement will be $16 million, and this payment will have an effect on Charlotte customers. The utility company will increase its annual rates by 72 cents per household beginning on July 1st in order to offset the cost. Charlotte Water says it will also delay some planned infrastructure improvements.
At City Council's Monday meeting, council members are expected to approve changes to the statutes governing water charges and fees.
Charlotte's growth — much of it still in newly incorporated areas along the city's edges — often requires expensive new water and sewer connections. The city is also trying to modernize old infrastructure in fast-growing, older parts of the city like South End. By charging development fees to new builders, Charlotte Water says it is able to more equitably spread the cost of new water system capacity.