The lawsuit, currently being appealed, alleges that CFPUA is “sitting on millions of dollars of these fees” that were “improperly collected.”

NEW HANOVER COUNTY — A Wilmington-based building company and a Charlotte-area development company are appealing their lawsuit against the Cape Fear Public Utility

Related: CFPUA asks court to deny trial for impact fees lawsuit and dismiss case ‘with prejudice’

The lawsuit was filed in August of 2018 by Mecklenburg-based J.A.C.K. Development, LLC, and the Wilmington-based Coastal Cypress Building Company, founded by Steve Swain; together, the two companies seek over $30,000 in returned fees from CFPUA.

System development fees (a.k.a. impact fees)

The central complaint of the lawsuit is what CFPUA calls “system development charges,” also known as impact fees. These fees aren’t related to the direct cost of sewer or water service, nor are they related to the cost of physically connecting new properties to the utility network. Instead, they are charges issued to new customers, often as a prerequisite for a building permit, designed to help pay for future CFPUA projects.

In 2016, the North Carolina Supreme Court ruled impact fees that estimated future service costs were unlawful. The following year, House Bill 436 was signed into law; it clarified the ruling, allowing impact fees but only when calculated for specific capital improvement projects and charged proportionately to new customers — something the plaintiffs claim CFPUA does has not done.

Several other lawsuits have been filed in the Cape Fear region over the same issue. In September of 2018, a similar lawsuit was filed against the Town of Leland, which has also collected several million dollars worth of impact fees over the years. In March of this year, D.R. Horton, the nation’s largest homebuilding company, filed suit against Brunswick County in federal court, claiming the county had charged over $5 million in excessive and unlawful fees.

Dismissal and appeal

In December of 2018, CFPUA filed a motion categorically denying any illegal fees and requesting that the court deny the plaintiff’s request for trial and instead dismiss the suit Two months later, in February of this year, Superior Court Judge Andrew T. Heath ruled in CFPUA’s favor, dismissing the case with prejudice.

Attorneys for J.A.C.K Development and Coastal Cypress Building Company then appealed.

“We are disappointed that the judge dismissed the case as a matter of law. We believe that CFPUA exceeded its authority with the water and sewer fees that it charged our clients. CFPUA is sitting on millions of dollars of these fees that we believe were improperly collected. We hope the Court of Appeals will reverse the ruling,” according to Daniel K. Bryson, attorney for the two companies.

CFPUA’s only comment, per spokesperson Vaughn Hagerty, was “we believe the court’s decision [to dismiss the case] was correct.”

Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001