The town of Leland must pay builders $5.3 million in an impact fees lawsuit, per an order signed by a local judge last month. Stemming from a case first filed in 2019, the order follows a two-year hold-up of the case prompted by the town’s failed procedural appeal to the state’s highest court.  

The latest ruling is one of many handed down across the state in builders' favor in suits involving impact fees. Municipalities have been found to have charged impact fees in excess of their specific statutory approval. The fees are generally charged to developers as a prerequisite to connecting to utility systems.

Rulings and settlements prompting big payouts follow the aftermath of the precedent-setting 2016 N.C. Supreme Court decision, which ruled the town of Carthage violated the law.  

For the most part, the settlements and judgments represent refunds of the fees charged during a three-year window, before a new law governing the charges took effect in the summer of 2018. The law requires an extensive professional analysis prior to setting the fees, now referred to as system development fees, which many municipalities previously lacked.  

Final approval of a pending $15.25 million settlement with Brunswick County, including the same lead plaintiff, Plantation Building of Wilmington, is anticipated next month. Other local municipalities, including Carolina Beach and Southport, settled with class members in recent years (also led by Plantation) for $538,676 for $310,000, respectively.  

On March 1, Superior Court Judge Thomas Wilson sided with builders in the class-action lawsuit against Leland. The ordered payout includes a $4.1 million principal owed to the entire class and at least $1.2 million in interest, covering a time period of fees charged between Sept. 7, 2015 through June 30, 2018. It does not include attorneys’ fees, which have yet to be sorted out.  

“The matter is presently being evaluated for a possible appeal,” town spokesperson Jessica Jewell wrote in an April 6 email. Leland vigorously opposes wrongdoing in charging the fees the local court ruled were unlawful.  

Because the local order was served March 17, the town still has several days before its 30-day window to appeal is exhausted. Hunter Bryson, an associate at Milberg Coleman Bryson Phillips Grossman PLLC who represents the class, said he understood the town’s deadline to file a notice of appeal is April 18.  
Last month’s ruling re-affirmed a local summary judgment order entered two years ago that the town contested on procedural grounds.  

The trial court first sided with the plaintiff, then only Plantation Building of Wilmington, in March 2020. Before the court’s initial judgment, the town and the builder had consented to a plan to work out class certification later, in a joint motion for continuance leading up to the hearing that prompted the order.  

After the first judgment in the builder’s favor, the builder filed for class certification, which the town contested. Class certification meant more potential parties, which deepened the town’s liabilities.  
Leland asked the court to dismiss the case, citing procedural objections, which Judge Jason Disbrow rejected while certifying the class in August. 2020.  

In October 2021, the N.C. Supreme Court upheld Disbrow’s ruling, upholding the validity of the initial order and class certification. Last month’s ruling sides with the builders’ motion for summary judgment on class liability and damages. 

Plantation Building of Wilmington founder Dave Spetrino said he signed on to the litigation to “at least require municipalities, especially elected officials, to do their job, which is to manage the fiduciary obligations of their community through the proper channels.” 

Spetrino has vowed to give his share of the settlement funds in each case to affordable housing endeavors in each community where the litigation stemmed from. So far, the company has donated about $6,440 and $10,000 to the Brunswick County Habitat for Humanity from settlements with the town of Oak Island and city of Southport and about $6,000 to WARM from litigation with Carolina Beach. 
 
Jewell, the town’s spokesperson, pointed out Leland is different from other municipalities that charged impact fees prior to the 2018 law because it didn’t realize a surplus from charging them. Also, the fees (which Leland referred to as system development charges) were not used for future discretionary purposes, she said.  

“The Town fully believes these charges were collected lawfully to fund investments to sustain the water and sewer systems to accommodate new development, pay for treatment allocation and availability, and other contemporaneous new demands on these systems,” Jewell said. “It is reasonable and appropriate for developers/builders to bear the cost of upgrades needed to accommodate their new demand on the systems and the cost for sewer treatment capacity that they consume by developing and building new homes and businesses.” 

Leland set its fees through an extensive analysis, Jewell said. Liabilities from the suit are the responsibility of Brunswick Regional Water and Sewer H2GO, per the town’s merger with the utility last year.