Charlotte Water will propose increasing bills to help pay $106 million from lawsuits
Charlotte Water is proposing a 6-cent monthly increase for ratepayers starting July 1 to help pay for $106 million lawsuits over development fees.
In 2018, a group of developers sued Charlotte Water, the public water and sewer utility for Mecklenburg County, for unlawfully using a capacity fee paid by developers when connecting to Charlotte’s water and wastewater systems prior to 2017. The utility used the fee for future expenses rather than existing services, the court said.
In October 2017, the state legislature passed the North Carolina Public Water and Sewer System Development Fee Act, allowing cities and utilities to set the fee and use the funds collected from it toward future capital improvement projects.
Daedalus, LLC, a Phoenix-based corporate real estate consulting company representing developers, sued Charlotte Water again, challenging the utility’s methodology for calculating said fee between 2016 and 2018.
Each capacity fee charged to a development depended on the water meter size needed for the project and ranged from $3,000 to $1 million depending on the scope of the project.
The first lawsuit was completed in April with a $90 million judgment, and Charlotte Water settled the second lawsuit in December for $16 million.
Charlotte Water disagrees with the court’s determination, but settled so ratepayers wouldn’t have to pay out even more, spokesperson Jennifer Frost said. The legislation passed by the state in 2017 leaves ambiguity in how the fees can be set, Frost said, and the utility plans to seek further clarification.
The utility’s contingency plan will cover $80 million of the pay out, Charlotte Water officials said Friday.
The remaining $26 million is expected to show up on ratepayers’ water bills in the form of 6 cents a month — 72 cents annually. Charlotte Water has more than 300,000 active water service connections.
Charlotte Water officials will make the increase part of their budget proposal for fiscal year 2024, which starts July 1, and it will need to be approved by the Charlotte City Council this summer before it will appear on water bills.
Charlotte Water officials said they are unsure of how the $106 million will be distributed to developers who paid the fee. Daedalus did not return a request for comment immediately Friday afternoon.
This story was originally published January 21, 2023 at 6:00 AM.
