Homebuilders Ass'n of Charlotte, Inc. v. City of Charlotte
442 S.E.2d 45, 1994 N.C. LEXIS 168, 336 N.C. 37 (1994)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A municipality's express grant of power to regulate an activity is broadly construed to include the supplementary power to impose reasonable user fees to cover the costs of that regulation, even without specific enabling legislation.
Facts:
- A joint city-county citizens' committee recommended that the City of Charlotte implement user fees for various governmental regulatory services.
- The City of Charlotte hired Arthur Young and Company, a consulting firm, to conduct a comprehensive study to determine the cost of its regulatory services and recommend appropriate fees.
- On August 22, 1988, the Charlotte City Council passed a resolution implementing a user fee policy for numerous regulatory services based on the study's methodology.
- The fee schedule was codified in Section 2-4 of the City Code.
- The City began imposing and collecting fees for regulatory services related to land development, such as commercial driveway permit review, subdivision reviews, rezoning review, erosion control inspection, and tree ordinance review.
- The fees were calculated to recover only the direct costs of providing the services, limited to 80% of those costs, to account for economic fluctuations.
Procedural Posture:
- Homebuilders Association of Charlotte, Inc. filed a complaint in Superior Court, Mecklenburg County, seeking a declaratory judgment to invalidate the City of Charlotte's user fee ordinance.
- Both parties moved for summary judgment.
- The Superior Court (trial court) entered a declaratory judgment order in favor of the City of Charlotte.
- The Homebuilders Association, as appellant, appealed the decision to the North Carolina Court of Appeals.
- The Court of Appeals reversed the trial court, holding that the City lacked authority to impose the fees, and remanded for entry of judgment in favor of the Association.
- The City of Charlotte, as petitioner, and the Homebuilders Association, as petitioner, both sought discretionary review from the Supreme Court of North Carolina, which was granted.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a municipality have the authority to impose user fees for its regulatory services as a reasonably necessary and expedient power incident to its express authority to regulate, without express enabling legislation from the state legislature?
Opinions:
Majority - Frye, Justice.
Yes. A municipality possesses the authority to charge regulatory user fees as an additional and supplementary power that is reasonably necessary or expedient to carry its express regulatory powers into effect. The court's interpretation is governed by N.C.G.S. § 160A-4, which mandates a broad construction of municipal powers, rather than the restrictive 'Dillon's Rule.' The power to regulate an activity, such as land development, implies the power to fund that regulation through reasonable fees charged to those who necessitate and benefit from the service. The existence of taxing authority as another means of funding does not make it the exclusive method. The user fees imposed by the City of Charlotte are reasonable because they are based on a comprehensive cost study, are calculated to recover only a portion of the direct costs, and are reasonably related to the expenses of providing the services.
Dissenting - Mitchell, Justice
No. The City of Charlotte lacks the authority to impose these fees, which are not true 'user fees.' The regulatory activities at issue, such as subdivision review and erosion control, benefit the entire public, not just the specific developers paying the fees. The General Assembly has provided a specific means for funding such public-benefit activities: general property taxes. The legislature's express authorization of user fees for some services (like sewer) implies that such fees are not permitted for other services where the statutes are silent. Imposing the full cost of these public services on a small segment of the public is improper.
Analysis:
This decision formally replaces the restrictive 'Dillon's Rule' with the 'Broad Construction' rule mandated by N.C.G.S. § 160A-4 for interpreting municipal powers in North Carolina. It establishes that an express grant of regulatory authority carries the implied power to fund that regulation through reasonable user fees. This empowers municipalities with greater financial autonomy, allowing them to shift the cost of specific regulatory services from the general taxpayer to the developers or individuals who require those services, so long as the fees are reasonably related to the actual costs incurred.
