Senate committee substitute makes the following changes to the 2nd edition.

Deletes all provisions of the previous edition, including the long title, and now provides the following.

Section 1

Enacts new Article 8, System Development Fees, in GS Chapter 162A, to be known as the Public Water and Sewer System Development Fee Act.

Sets forth the definitions applicable to the Article in new GS 162A-201, including system development fee. Defines the term to mean a charge or assessment for service imposed with respect to new development to fund costs of capital improvements necessitated by and attributable to new development, to recoup costs of existing facilities which serve new development, or a combination of those costs, as provided in the Article. Specifies that the term includes amortized charges, lump-sum charges, and any other fee that functions as described by the definition regardless of terminology. Sets out five charges or assessments that the term does not include. 

New GS 162A-203 authorizes local governments to adopt a system development fee for water or sewer service only in accordance with the conditions and limitations of the Article. Requires a system development fee adopted under this Article and in effect on October 1, 2017, to conform to the requirements of the Article no later than July 1, 2018. 

New GS 162A-205 requires a system development fee to be calculated based on a written analysis that meets eight criteria, as specified, which can constitute or be included in a capital improvement plan. The criteria for supporting analysis includes that the analysis is prepared by a financial professional or a licensed professional engineer qualified as described, and the analysis is adopted by resolution or ordinance of the local governmental unit in accordance with GS 162A-209.

New GS 162A-207 prohibits a system development fee from exceeding that calculated based on the system benefit fee analysis. Requires the system development fee analysis to include as part of the methodology a credit against the projected aggregate cost of water or sewer capital improvements in applying the incremental cost or marginal costs, or combined cost, of water or sewer capital improvements. Details criteria for the revenue credit, prohibiting the credit from being less than 25% of the aggregate cost of capital improvements. Also requires the local governmental unit to credit the value of costs in excess of a new development's proportionate share of connecting facilities required to be oversized for use of others outside of the development. Prohibits credit from being applied for water or sewer capital improvements on-site or to connect new development to water or sewer facilities.

New GS 162A-209 provides for notice, the solicitation of public comments, and a public hearing prior to adoption of a system development fee analysis. Requires local governments to publish the system development fee in its annual budget or rate plan or ordinance. Requires the local government to update the system development fee analysis at least every five years.

New GS 162A-211 limits the uses for which revenue from the system development fees calculated using the incremental cost method or marginal cost method can be used, including costs of constructing capital improvements; professional fees; and principal and interest on bonds, notes, or other obligations to finance the construction or acquisition of existing capital improvements. Limits the uses for which revenue from the system development fees calculated using the buy-in method can be used, including previously completed capital improvements for which capacity exists and for capital rehabilitation projects. Provides for local governments pledging a system development fee as security for payment subject to compliance with the statute's limitations. Requires system development fees to be accounted for by means of a capital reserve fund established pursuant to Part 2 of Article 3 of GS Chapter 159 and limited as to expenditure in accordance with this statute. 

New GS 162A-213 provides for the time for collection of system development fees, depending on whether the new development involves the subdivision of land.

New GS 162A-215 calls for narrow construction of the powers conferred by the Article to ensure that system development fees do not unduly burden new development.

Effective October 1, 2017, and apply to system development fees imposed on or after that date.

Sections 2 through 9

Amends GS 130A-64 (Service charges and rates), permitting county sanitary district boards to require system development fees only in accordance with Article 8 of GS Chapter 162A. Makes organizational changes.

Amends GS 153A-277 (pertaining to counties) and GS 160A-314 (pertaining to cities), authorizing counties and cities to require system development fees only in accordance with Article 8 of GS Chapter 162A. Also permits counties and cities to establish and revise schedules of rents, rates, fees, charges, and penalties for the use of or the services furnished or to be furnished by a public enterprise (currently, does not include future services). Makes conforming changes to GS 160A-317, pertaining to a city's power to require connections to water or sewer service and the use of solid waste collection services.

Adds to the powers of water and sewer authorities set out in GS 162A-6(a), authorizing authorities to require system development fees only in accordance with Article 8. Makes conforming changes to GS 162A-9, concerning water and sewer rates and charges set by authorities.

Adds to the powers of metropolitan water districts set out in GS 162A-36(a), authorizing districts to impose and require system development fees only in accordance with Article 8. Amends GS 162A-49 (Rates and charges for services), permitting the district board to require system development fees only in accordance with Article 8. Makes organizational changes. 

Adds to the powers of metropolitan sewerage districts set out in GS 162A-69, authorizing districts to impose and require system development fees only in accordance with Article 8. Amends GS 162A-72, permitting the district board to require system development fees only in accordance with Article 8. Makes organizational changes. 

Amends GS 162A-85.13, authorizing metropolitan water and sewerage districts to require system development fees only in accordance with Article 8. Amends GS 162A-88, permitting the district board to require system development fees only in accordance with Article 8. Makes organizational changes. 

Provides that the above provisions are effective October 1, 2017, and apply to system development fees imposed on or after that date.

Section 10

Adds to GS 1-52(15). Sets the statute of limitation at three years for the recovery of an unlawful fee, charge, or exaction collected by a county, municipality, or other unit of local government for water or sewer service, or water and sewer service. Provides that this change is to clarify and not alter GS 1-52. Retroactively effective, and applies to claims accrued or pending prior to and after the date Section 10 becomes law. 

Section 11

Provides that the act does not provide retroactive authority for any system development fee, or any similar fee for water or sewer services to be furnished, collected by a local government prior to October 1, 2017. Applies to claims accrued or pending prior to or after the date the act becomes law.