Court Opinion

ID: 9348757
Source: CourtListenerOpinion
Date Created: 2022-12-20 14:14:46.406993+00
Date Added: 2024-06-11T16:43:49.053508
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                     2022-NCCOA-203

                                      No. COA21-329

                                     Filed 5 April 2022

     Mecklenburg County, No. 18 CVS 21073

     DAEDALUS, LLC, and EPCON COMMUNITIES CAROLINAS, LLC, Plaintiffs,

                 v.

     CITY OF CHARLOTTE, Defendant.

           Appeal by Defendant from Order entered 18 March 2021 by Judge Carla N.

     Archie in Mecklenburg County Superior Court. Heard in the Court of Appeals 11

     January 2022.

           Milberg Coleman Bryson Phillips Grossman, PLLC, by James R. DeMay,
           Daniel K. Bryson, Martha A. Geer, Mark R. Sigmon, John Hunter Bryson, and
           Scarbrough, Scarbrough & Trilling, PLLC, by James E. Scarbrough, John F.
           Scarbrough, and Madeline J. Trilling, and Shipman & Wright, LLP, by Gary
           K. Shipman and William G. Wright, for Plaintiffs-Appellees.

           Cranfill Sumner LLP, by Steven A. Bader, Patrick H. Flanagan, and Stephanie
           H. Webster, for Defendant-Appellant.

           HAMPSON, Judge.

                             Factual and Procedural Background

¶1         City of Charlotte (Defendant) appeals from Order entered in favor of Daedalus,

     LLC, Epcon Communities, LLC, and NVR, INC., (collectively Plaintiffs) on 18 March
                                  DAEDALUS V. CITY OF CHARLOTTE

                                         2022-NCCOA-203

                                        Opinion of the Court

     2021 partially granting Plaintiffs’ Motion for Summary Judgment. The Record before

     us reflects the following:

¶2         Defendant, a municipality organized under the laws of North Carolina, enacted

     an ordinance for the collection of water and sewage capacity fees.

¶3         At all relevant times, this Ordinance—Charlotte’s City Ordinance § 23-12—

     mandated:

               Each applicant for water or sewer service shall pay the applicable
               capacity charge for the type and size of service connection
               requested. The capacity charge shall be arrived at in accordance
               with the water and sewer rate methodology documents as set
               forth in the schedule of current rates, fees, and charges.

     As provided for in the Ordinance, Defendant determines the capacity fee amount

     utilizing the water and sewer rate methodology set forth in the Charlotte-

     Mecklenburg Utility Department Revenue Manual (Revenue Manual). The Revenue

     Manual provides:

               Capacity fees are one time fees paid at the time of application for
               a new service and are charged to pay for a portion of the capital
               costs associated with providing capacity to serve new growth.

     The Revenue Manual also instructs Defendant to calculate the fees using the “buy-

     in” method. The “buy-in” method establishes the amount of the fee based on “the unit

     cost of capacity of the water and sewer system in a way that results in the cost of

     capacity being equal to that which existing customers of the system have paid.”
                               DAEDALUS V. CITY OF CHARLOTTE

                                        2022-NCCOA-203

                                       Opinion of the Court

¶4         The capacity fees are calculated and paid at the time property owners apply

     for new water and sewer service. Defendant also required property owners to pay a

     separate “connection fee” or “tap fee” to cover the cost of actually connecting the

     property to the water and sewer systems. Upon receipt of the capacity fee and

     connection/tap fee, Defendant began working to establish the connection—a process

     that typically took between four to six weeks. After property owners connect to the

     water and sewer system, they pay user rates based on their use of the water and

     sewer system. Defendant’s ordinances state user rates should be used to pay for the

     debt incurred for construction of the water and sewer system, as well as for operation

     and maintenance expenses:

              Sec. 23-126. —Water System Operation.

              The amount necessary to meet the annual interest payable on the
              debt incurred for the construction for the water system; the
              amount necessary for the amortization of the debt; and the
              amount necessary for repairs, for fire protection, maintenance
              and operation of the system shall comprise the rate for water
              service collected by the city.

              Sec. 23-41. — System Operations.

              The amount necessary to meet the annual interest payable on the
              debt incurred for construction of the sewer system; the amount
              necessary for the amortization of the debt; and the amount
              necessary for repairs, maintenance, and operation for the system
              shall comprise the user charge for sewer service collected by the
              city.
                                DAEDALUS V. CITY OF CHARLOTTE

                                         2022-NCCOA-203

                                        Opinion of the Court

¶5         While Defendant used the connection/tap fees to cover the costs associated with

     connecting the property to the infrastructure and the user fees to cover the costs

     associated with maintaining the infrastructure, Defendant does not have a stated use

     for the capacity fees. Instead, Defendant deposits the fees into its general water and

     sewer fund and “carries [the monies] forward over time.”          Defendant does not

     currently have a plan for spending the carried over monies, and instead, merely

     stated the funds would be spent by Defendant to “fund future operations.”

¶6         Plaintiffs are developers/home builders who paid these capacity fees to

     Defendant in the fiscal years 2016-2018 as a mandatory precondition of connecting to

     Defendant’s existing water and sewer infrastructure. The current litigation arose

     when Plaintiffs filed a Complaint on 5 November 2018, alleging Defendant’s

     collection of capacity fees for the fiscal years 2016-2018 constituted an unlawful ultra

     vires action.   On 13 September 2019, Plaintiff filed a Second Amended and

     Supplemental Complaint,1 alleging the collection of capacity fees for the fiscal years

     2019-2020 constituted an unlawful ultra vires action, or in the alternative, the fees

     violated Plaintiffs’ equal protection and substantive due process rights because the

     fees charged had no reasonable relationship or rational nexus to the impact, if any,

     that new customers have on Defendant’s water or sewer systems.

     1Plaintiff filed a Motion to Amend the Complaint on 6 August 2019, which was granted on
     10 September 2019.
                               DAEDALUS V. CITY OF CHARLOTTE

                                        2022-NCCOA-203

                                       Opinion of the Court

¶7          After Plaintiffs filed their Second Amended Complaint on 13 September 2019,

     Defendant filed an Answer on 23 October 2019. Thereafter, both parties filed motions

     for summary judgment. The trial court heard the matter on 18 December 2019 and

     issued an Order Partially Granting Plaintiffs’ Motion for Summary Judgment and

     Partially Granting Defendant’s Motion for Summary Judgment on 2 October 2020.

     With regard to the capacity fees collected during the fiscal years 2016, 2017, and

     2018, the trial court found “there are no genuine issues of material fact[,]” and

     concluded the assessment and collection of capacity fees during the fiscal years 2016,

     2017, and 2018 were ultra vires. With regard to Plaintiffs’ Second Claim for Relief,

     the alleged ultra vires action of collecting capacity fees during fiscal years 2019 and

     2020, the trial court found “there are genuine issues” of material fact and scheduled

     the matter for trial. However, the trial court also concluded Defendant’s assessment

     and collection of capacity fees during the fiscal years 2019 and 2020 are “not an

     exaction constituting a governmental taking and Plaintiffs have an adequate remedy

     at law.”

¶8         After the entry of the Order, Plaintiffs, with Defendant’s consent, filed a

     Motion to Amend Order to Correct Clerical Error pursuant to Rule 60(a) on 27

     October 2020. In the Motion to Amend, Plaintiffs identified several clerical errors in

     the Order, including references to fiscal years 2018 and 2019, as opposed to fiscal

     years 2019 and 2020, and references to “Defendant’s Claims for Relief,” instead of
                                 DAEDALUS V. CITY OF CHARLOTTE

                                           2022-NCCOA-203

                                          Opinion of the Court

       “Plaintiffs’ Claims for Relief.” In response to the Rule 60(a) Motion, the trial court

       issued an Amended Order on 4 November 2020.

¶9           On the same day, Defendant filed a Motion for Certification of Judgment

       requesting the trial court certify the Order for immediate appeal with no just reason

       for delay pursuant to Rule 54(b). Plaintiffs consented to the Motion to Certify in a

       Joint Motion to Amend Order filed on 17 March 2021. The Joint Motion to Amend

       also moved for amendment of the Order pursuant to Rule 60(a) in order to clarify that

       “a neutral, third-party Referee under Rule 53 [should] calculate the amount of

       refunded capacity fees plus interest to class members” and add language stating,

       “that this Order is certified for appeal with no just reason for delay pursuant to Rule

       54(b) of the Rules of Civil Procedure.” In response to the Joint Motion, the trial court

       entered the Second Amended Order on 18 March 2021. Thereafter, on 14 April 2021,

       Defendant filed Notice of Appeal from the Second Amended Order.

                                     Appellate Jurisdiction

¶ 10         Plaintiffs and Defendant acknowledge the Order appealed from is

       interlocutory, as the referee has not yet calculated the damages for the years 2016-

       2018 and the ultra vires claim for the years 2019-2020 has not yet been resolved.

       Nevertheless, Defendant contends they are entitled to immediate appellate review

       because (1) the trial court certified the order for immediate review under Rule 54(b);

       (2) the Order affects a substantial right because after the referee’s final ruling,
                                  DAEDALUS V. CITY OF CHARLOTTE

                                            2022-NCCOA-203

                                           Opinion of the Court

       Defendant will be required to pay a significant sum of money to Plaintiffs; and (3)

       Defendant filed a separate petition for a writ of certiorari under North Carolina Rule

       of Civil Procedure 21 contemporaneously with this brief.

             A. Rule 54(b) certification

¶ 11         “[A]ppeal lies of right directly to the Court of Appeals . . . from any final

       judgment of a superior court . . .” N.C. Gen. Stat. § 7A-27(b)(1) (2021). “A final

       judgment is one which disposes of the cause as to all the parties, leaving nothing to

       be judicially determined between them in the trial court.” Veazey v. Durham, 231

       N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950) (citation omitted).           Whereas, “[a]n

       interlocutory order is one made during the pendency of an action, which does not

       dispose of the case, but leaves it for further action by the trial court in order to settle

       and determine the entire controversy.” Id. at 362, 57 S.E.2d at 381.

¶ 12         Generally, there is no right to appeal from an interlocutory order. Jeffreys v.

       Raleigh Oaks Joint Venture, 115 N.C. App. 377, 379, 444 S.E.2d 252, 253 (1994).

       “However, immediate appeal of interlocutory orders and judgments is available in at

       least two instances: when the trial court certifies, pursuant to N.C.G.S. § 1A-1, Rule

       54(b), that there is no just reason for delay of the appeal; and when the interlocutory

       order affects a substantial right under N.C.G.S. §§ 1-277(a) and 7A-27(d)(1).” Turner

       v. Hammocks Beach Corp., 363 N.C. 555, 558, 681 S.E.2d 770, 773 (2009) (citation

       and quotation marks omitted).
                                  DAEDALUS V. CITY OF CHARLOTTE

                                            2022-NCCOA-203

                                          Opinion of the Court

¶ 13         Here, the trial court did not certify this case for immediate review in its initial

       Summary Judgment Order, but rather attempted to add a certification in its Second

       Amended Order under Rule 60(a).         N.C. Gen. Stat. § 1A-1, Rule 60(a) provides

       “[c]lerical mistakes in judgments, orders, or other parts of the record and errors

       therein arising from oversight or omission may be corrected by the judge . . .” N.C.

       Gen. Stat. § 1A-1, Rule 60(a) (2021). Thus, “[w]hile Rule 60[a] allows the trial court

       to correct clerical mistakes in its order, it does not grant the trial court the authority

       to make substantive modifications to an entered judgment.” Food Serv. Specialists v.

       Atlas Rest. Mgmt., 111 N.C. App. 257, 259, 431 S.E.2d 878, 879 (1993). “A change in

       an order is considered substantive and outside the boundaries of Rule 60(a) when it

       alters the effect of the original order.” Buncombe Cnty. ex rel. Andres v. Newburn,

       111 N.C. App. 822, 825, 433 S.E.2d 782, 784 (1993). This Court has previously held

       “Rule 60(a) is not an appropriate means for seeking an amendment to an order or

       judgment to add the trial court’s Rule 54(b) certification” because a Rule 54(b)

       certification substantially alters the effect of the original order and allows the party

       “to circumvent the established procedural rules governing the bringing of an appeal.”

       Pratt v. Staton, 147 N.C. App. 771, 774-75, 556 S.E.2d 621, 624 (2001).          See e.g.,

       Newcomb v. Cnty. of Carteret, 207 N.C. App 527, 701 S.E.2d 325 (2010); Branch

       Banking & Trust Co. v. Peacock Farm, Inc., 241 N.C. App. 213, 219, 772 S.E.2d 495,

       500 (2015).
                                   DAEDALUS V. CITY OF CHARLOTTE

                                            2022-NCCOA-203

                                           Opinion of the Court

¶ 14          Here, since the trial court did not include the Rule 54(b) certification in the

       original Order and did not have the authority under Rule 60(a) to make a substantive

       modification to the Order by adding a Rule 54(b) certification, the subsequent Rule

       54(b) certification is ineffective to vest appellate jurisdiction.

              B. Substantial Right

¶ 15          Defendant next contends the Second Amended Order affects a substantial

       right because it involves the payment of a significant sum of money. A substantial

       right is one “materially affecting those interests which a person is entitled to have

       preserved and protected by law . . . .” Gunter by Zeller v. Maher, 264 N.C. App. 344,

       346, 826 S.E.2d 557, 560 (2019) (citation and quotation marks omitted). “Whether or

       not a substantial right will be prejudiced by delaying an interlocutory appeal must

       be decided on a case-by-case basis.” Walden v. Morgan, 179 N.C. App. 673, 677, 635

       S.E.2d 616, 620 (2006) (citation and quotation marks omitted).

¶ 16          Orders that compel the immediate payment of a significant amount of money

       may affect a substantial right. Est. of Redden v. Redden, 179 N.C. App. 113, 116-17,

       632 S.E.2d 794, 798 (2006) (emphasis added). However, “an order determining only

       the issue of liability and leaving unresolved other issues such as that of damages

       cannot be held to ‘affect a substantial right.’ ” Johnston v. Royal Indem. Co., 107 N.C.

       App. 624, 625, 421 S.E.2d 170, 171 (1992) (citing Tridyn Indus., Inc. v. Am. Mut. Ins.

       Co., 296 N.C. 486, 491, 251 S.E.2d 443, 447 (1979)). But c.f., Beck v. Am. Bankers Life
                                 DAEDALUS V. CITY OF CHARLOTTE

                                          2022-NCCOA-203

                                         Opinion of the Court

       Assurance Co., 36 N.C. App. 218, 221, 243 S.E.2d 414, 416 (1978) (concluding

       defendant’s filing of supersedeas bond for $21,500.73 was sufficient to convert the

       partial summary judgment into a final judgment that defendant could appeal from

       even though the order left it up to the parties to determine the exact amount

       defendant had to pay). Furthermore, our Supreme Court has held an appeal from

       “the order of compulsory reference, before judgment upon the report of the referee, is

       premature and fragmentary and must be dismissed.” Rudisill v. Hoyle, 254 N.C. 33,

       46, 118 S.E.2d 145, 154 (1961) (citing LeRoy v. Saliba, 182 N.C. 757, 108 S.E. 303

       (1921)).

¶ 17         Here, the referee has not submitted their report with the damage calculation

       and Defendant has not filed any subsequent documents, like a supersedeas bond,

       representing the amount of Defendant’s liability. Thus, although it appears the trial

       court’s Order would result in Defendant eventually being required to pay Plaintiffs a

       significant sum of money, the Order does not compel the immediate payment of

       money. Consequently, the Order does not affect a substantial right and is therefore,

       subject to dismissal because the appeal is “fragmentary and premature.”           See

       Rudisill, 254 N.C. at 46, 118 S.E.2d at 154.

             C. Writ of Certiorari

¶ 18         Nevertheless, Defendant has also filed a Writ of Certiorari. Under Rule 21 of

       the North Carolina Rules of Appellate Procedure:
                                  DAEDALUS V. CITY OF CHARLOTTE

                                            2022-NCCOA-203

                                           Opinion of the Court

                 The writ of certiorari may be issued in appropriate circumstances
                 by either appellate court to permit review of the judgments and
                 orders of trial tribunals when the right to prosecute an appeal has
                 been lost by failure to take timely action, or when no right of
                 appeal from an interlocutory order exists . . . .

       N.C.R. App. P. 21(1). Thus, “[i]t is an appropriate exercise of this Court’s discretion

       to issue a writ of certiorari in an interlocutory appeal where . . . there is merit to an

       appellant’s substantive arguments, and it is in ‘the interests of justice’ to treat an

       appeal as a petition for writ of certiorari.” Zaliagiris v. Zaliagiris, 164 N.C. App. 602,

       606, 596 S.E.2d 285, 289 (2004) (quoting Sack v. N.C. State Univ., 155 N.C. App. 484,

       490, 574 S.E.2d 120, 126 (2002)).

¶ 19         In this case, a writ of certiorari may be appropriately considered because no

       right of appeal exists from the trial court’s interlocutory Order. Furthermore, it is

       plainly apparent the Order affects numerous parties and involves a substantial

       amount of potential liability. Moreover, it appears the central issue presented in this

       appeal is a vital threshold issue upon which the remaining and extensive litigation

       to follow hinges. Consequently, because of the significant impact of this lawsuit and

       the need for efficient administration of justice, we exercise our discretion to reach the

       merits of Defendant’s appeal from the trial court’s interlocutory Order and grant the

       petition for Writ of Certiorari.

                                                Issues
                                    DAEDALUS V. CITY OF CHARLOTTE

                                              2022-NCCOA-203

                                            Opinion of the Court

¶ 20          The dispositive issue on appeal is whether the trial court erred, as a matter of

       law, in concluding Defendant’s collection of capacity fees for fiscal years 2016-2018

       was an ultra vires action.2

                                                 Analysis

¶ 21          Defendant contends the capacity fees it charged during fiscal years 2016-2018

       were not ultra vires because Defendant (1) provided users with contemporaneous

       service at the time they paid the capacity fee; and (2) used revenue from capacity fees

       to pay existing debt on revenue bonds.

¶ 22          In North Carolina, cities “exist solely as political subdivisions of the State and

       are creatures of statute.” Davidson Cnty. v. City of High Point, 321 N.C. 252, 257,

       362 S.E.2d 553, 557 (1987). As such, cities have “no inherent powers, and can exercise

       only such powers as are expressly conferred by the General Assembly and such as are

       necessarily implied by those expressly given.” High Point Surplus Co. v. Pleasants,

       264 N.C. 650, 654, 142 S.E.2d 697, 701 (1965). “All acts beyond the scope of the power

       granted to a municipality are void.” City of Asheville v. Herbert, 190 N.C. 732, 735,

       130 S.E. 861, 863 (1925) (citations omitted).

       2 Because of our decision in this case, it is not necessary for us to reach the issue presented
       in Plaintiffs’ cross-appeal that the trial court erred in granting Summary Judgment for
       Defendant on Plaintiffs’ Alternative Claims for Relief that the capacity fees charged prior to
       1 July 2018 were unreasonable under Homebuilders Ass’n of Charlotte, Inc. v. City of
       Charlotte, 336 N.C. 37, 442 S.E.2d 45 (1994).
                                  DAEDALUS V. CITY OF CHARLOTTE

                                           2022-NCCOA-203

                                          Opinion of the Court

¶ 23         The General Assembly expressly conferred the power to charge water and

       sewer fees upon cities in N.C. Gen. Stat. § 160A-314(a). Quality Built Homes, Inc. v.

       Town of Carthage, 369 N.C. 15, 19, 789 S.E.2d 454, 458 (2016). The version of N.C.

       Gen. Stat. § 160A-314(a) in effect during the fiscal years 2016-2018 provided, in

       relevant part, “[a] city may establish and revise . . . rents, rates, fees, charges, and

       penalties for the use of or the services furnished by any public enterprise.” N.C. Gen.

       Stat. § 160A-314(a) (2013).

¶ 24         Our Supreme Court interpreted this version of the statute in Quality Built

       Homes. There, the city of Carthage charged impact fees to “offset . . . costs to expand

       the system to accommodate development.” Quality Built Homes, 369 N.C. at 17, 789

       S.E.2d at 456 (alteration in original). The impact fees were charged either: (1) at the

       time of final subdivision plat approval if the development required the subdivision of

       land; or (2) if the subdivision had already occurred, either at the time of tap fees or

       the issuance of a building permit. Id. The Court concluded the enabling statute, N.C.

       Gen. Stat. § 160A-314(a), conferring upon cities the power to charge water and sewer

       fees “for the use of or the services furnished[,]” used language “operative in the

       present tense[,]” and thus, only authorized cities to charge fees “for the

       contemporaneous use of its water and sewer services—not to collect fees for future

       discretionary spending.” Id. at 20, 789 S.E.2d at 458. Applying this interpretation

       of the enabling statute to the fees at issue, the Court held Carthage’s impact fees
                                 DAEDALUS V. CITY OF CHARLOTTE

                                           2022-NCCOA-203

                                          Opinion of the Court

       were not for any “contemporaneous use” because: (1) the fees were charged to a

       property “to be served” by the town and were “not assessed at the time of actual use”

       of the water and sewer system; and (2) the fees were not “tap fees” to pay for the

       actual cost of the connection. Id. at 21, 789 S.E.2d at 458-59.

¶ 25         Following Quality Built Homes, the General Assembly enacted HB 436, the

       Public Water and Sewer System Development Fee Act, N.C. Gen. Stat. § 162A-201,

       et seq., effective 1 October 2017, which prospectively authorized cities to charge water

       and sewer impact fees, called “system development fees,” in order “to fund the costs

       of capital improvements necessitated by and attributable to such new development,

       to recoup costs of existing facilities which serve such new development, or a

       combination of those costs . . .” N.C. Gen. Stat. § 162A-201(9) (2021). However,

       “[n]othing in [the] act provides retroactive authority for any system development fee

       . . . .” An Act to Provide for Uniform Authority to Implement System Development

       Fees for Public Water and Sewer Systems in North Carolina and to Clarify the

       Applicable Statute of Limitations, S.L. 2017-138, § 11, 2017 N.C. Sess. Laws 996,

       1002. Thus, the statute does not apply to fees charged before 1 October 2017.

¶ 26         After the enactment of N.C. Gen. Stat. § 162A-201 in 2017, this Court decided

       Kidd Constr. Grp., LLC v. Greenville Utils. Comm’n, 271 N.C. App. 392, 845 S.E.2d

       797 (2020). There, starting in 2008, the city of Greenville began charging capacity

       fees at the time of a developer’s application for water and sewer service. Id. at 395,
                                 DAEDALUS V. CITY OF CHARLOTTE

                                          2022-NCCOA-203

                                         Opinion of the Court

       845 S.E.2d at 798. According to Greenville, they began charging the fees to “recover

       a proportional share of the cost of capital facilities constructed to provide service

       capacity for new development or new customers connecting to the water/sewer

       system.” Id. Just as in Quality Built Homes, the capacity fees were charged in

       addition to a tapping fee, which covered the cost for physically making a service tap.

       Id.

¶ 27         We held Greenville lacked the authority to charge the capacity fees prior to the

       enactment of N.C. Gen. Stat. § 162A-201 in 2017 because even though the city did not

       condition final plat approval and the issuance of building permits upon the payment

       of fees, like in Quality Built Homes, the fees were still not for “contemporaneous use”

       as contemplated by the enabling statute. Id. at 399, 845 S.E.2d at 801. This Court

       reasoned the fees were not contemporaneous because the sole purpose of the fee was

       “to provide service capacity for new development or new customers connecting to the

       water/sewer system” and another fee is imposed simultaneously to cover the cost of

       actually connecting the property to the water and sewer systems. Id. at 395, 845

       S.E.2d at 798-99. Thus, new customers did not receive any concurrent service for the

       capacity fee and N.C. Gen. Stat. § 160A-214(a) only empowered Greenville to charge

       fees for “services rendered”—not “for future discretionary spending on water and

       sewer expansion projects.” Id. at 401, 845 S.E.2d at 802.
                                 DAEDALUS V. CITY OF CHARLOTTE

                                          2022-NCCOA-203

                                         Opinion of the Court

¶ 28         Defendant contends its capacity fee is “distinct, in all material respects, from

       the fees in both Quality Built Homes and Kidd.” Specifically, Defendant contends its

       capacity fee differs from the fees in Quality Built Homes and Kidd because Defendant

       collected the fee at the time a user requested service, not at the time the property

       owner sought building approval, and upon receipt of the fee Defendant “reserved”

       specific capacity space. However, Defendant’s capacity fees are identical in relevant

       part to Greenville’s capacity fees we held were ultra vires, as both fees were charged

       to pay for the capacity costs associated with serving new growth; the fees were paid

       at the time of the application for a new service; and the service connection fees

       consisted of two components: a tapping fee and a capacity fee.

¶ 29         Furthermore, Defendant cannot identify any contemporaneous use of the

       water and sewer system property owners receive for the payment of the fees.

       Although Defendant argues the fees were used to pay for existing debt on revenue

       bonds, Defendant’s City Ordinance § 23-12 mandates user rates should be used to pay

       for this debt—not capacity fees. Likewise, the capacity fees were not used to pay for

       the actual cost of tapping into the system, as a separate tap fee covers that cost.

       Capacity fees, by Defendant’s own admission, are merely deposited into Defendant’s

       general water and sewer fund and “carrie[d] forward over time” to “fund future

       operations.”
                                 DAEDALUS V. CITY OF CHARLOTTE

                                          2022-NCCOA-203

                                         Opinion of the Court

¶ 30         Thus, the undisputed evidence shows Defendant’s fees were charged for future

       discretionary spending and not for contemporaneous use of the system or for services

       furnished.    Therefore, in accordance, with Quality Built Homes and Kidd, we

       necessarily conclude Defendant’s action of charging capacity fees for the fiscal years

       2016-2018 was not authorized by the previous version of N.C. Gen. Stat. § 160A-

       314(a) and was ultra vires. Consequently, the trial court did not err in partially

       granting Plaintiff’s Motion for Summary Judgment.

                                           Conclusion

¶ 31         Accordingly, for the foregoing reasons, we affirm the trial court’s 18 March

       2021 Order.

             AFFIRMED.

             Judges ARROWOOD and CARPENTER concur.