Raleigh seeks Appeals Court review of suit challenging water, sewer fees

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  • Raleigh says the General Assembly granted the city permission in 1949 to charge fees linked to extending and enlarging its water and sewer system.
  • A lawsuit could affect $16 million in fees paid to Raleigh in a single year.

Raleigh is asking the N.C. Court of Appeals to take up a case of developers challenging city fees charged for new water and sewer users. Millions of dollars are at stake.

Lawyers for the capital city filed paperwork Thursday with the state’s second-highest court. They’re asking that court to review a trial judge’s April 12 ruling against Raleigh. The trial judge rejected the city’s motion to have the case thrown out.

“This case … is a putative class-action in which developers challenged fees that a city charged to new users of its water and sewer services,” according to Raleigh’s brief. “The two Plaintiffs here are developers who seek to represent a class of hundreds of putative class members who claim that the City of Raleigh lacked statutory authority for those fees.”

“After paying those fees years ago, the Plaintiffs now seek a refund, plus interest,” the brief added. “The Plaintiffs’ claims, however, are premised on a flawed legal theory: They assert that when Raleigh charged the fees at issue, “Raleigh had no … charter provision … to impose [fees] … for future expansion of its water systems and sewer systems.’ As a matter of law, however, that assertion is incorrect.”

Raleigh contends it has had legislative authority since 1949 to “impose ‘charges’ for the ‘extension’ and ‘enlargement’ of its water and sewer system,” according to the brief. The capital city urges the Appeals Court to follow the same procedure it has used to hear a similar case from Charlotte.

The plaintiffs, Wardson Construction and Homequest Builders, challenge fees charged from February 2016 through January 2018. During that time period, the city charged fees based on city ordinances that are no longer in effect. Since July 2018, the city has charged fees based on the General Assembly’s 2017 Public Water and Sewer System Development Fee Act.

“[T]his case is a putative class action challenging fees charged by North Carolina’s second largest city,” according to Raleigh’s brief. “By the Plaintiffs’ own allegations, there are ‘at least hundreds’ of putative class members, … and the stakes here are exceptionally high. … [T]he Plaintiffs here have alleged that they are entitled to millions of dollars from the City of Raleigh — indeed, they seek $16 million for 2017 alone.”