System Development Fees Information & FAQs

What are System Development fees?

System Development Fees are a charge or assessment for service imposed with respect to development to fund the cost of capital improvements that are needed because of the development, and to help recoup costs of existing facilities which serve the development, or a combination of the two.

Who can charge System Development Fees?

Any local government unit may adopt a System Development Fee (SDF) for water or sewer in accordance with N.C.G.S. 162A. Article 8. The statute requires certain conditions be met before the fees are imposed. These conditions include:

• Completion of a supporting analysis prepared by an engineer or finance professional. The analysis will take into account the existing facilities, depreciation, future needs for the next 5-20 years.
• Once the analysis is complete, it must be posted on the website/available to review for at least 45 days.
• After the 45 day period, the governing body must hold a public hearing to receive input about the analysis and proposed fees.
• The local government shall publish the SDF in its annual budget or rate plan.
• An analysis must be conducted every 5 years. The collected SDF can be used to fund the following:
  1. Costs of capital improvements for water and wastewater:
     • Construction contract prices
     • Surveys and engineering fees
     • Land acquisition
     • Principal and interest on bonds, notes, and other financial obligations
  2. Professional fees incurred from the cost of the analysis.
  3. Finance the construction or acquisition of existing water and wastewater capital improvements.

System Development fees are calculated per gallons per day of projected future demand, which is estimated for each development based on a development type-specific metric. The fees can be based on the number of seats in a restaurant, number of bedrooms in a new dwelling, the size of the tap to be installed, or the heated square footage of the structure. The fee structure for each utility authority is based on the analysis completed. System Development Fees are paid at the time a building/development permit is issued. Southport has a lot of aging infrastructure, and several projects are needed to increase capacity, and be able to complete the upgrades and needed maintenance.

The State of NC sets the average per day for each use. A hotel is set at 120 gallons per day per room. A full service restaurant is set at 40 gallons per day per seat. Residences are calculated at 120 gallons per day per bedroom. The minimum water use is 400 gpd and sewer use is 240gpd.

Practical Application/Examples for Southport:

Based on the analysis that was done for Southport, the fees assessed are $ 4.25 per gallon of water, and $44.02 per gallon of wastewater.

New restaurant with 30 seats. The state set the average flow at 40 gallons per day per seat.

(30 seats x 40 gallons per day= 1200 gpd) x $4.25=$5,100 System Development Fee-Water (30 seats x 40 gallons per day=1200 gpd) x $44.02=$52,824 System Development Fee-Sewer

Total SDF due: $57,924.00

New single-family residence with (4) bedrooms. Residences are calculated at 120 gallons per day.

(4 bedrooms x 120 gallons per day=480 gpd) x $4.25=$2,040 SDF-Water

(4 bedrooms x 120 gallons per day=480 gpd) x $44.02=$21,129.60 SDF-Sewer

Total SDF due: $23,169.60

New Car Wash Facility with three bays. Car wash facilities are calculated at 1200 gpd per wash bay.

(3 bays x 1200 gallons per day=3600 gpd) x $4.25=$15,300 SDF-Water

(3 bays x 1200 gallons per day=3600 gpd) x $44.02=$158,472 SDF-Sewer

Total SDF due: $173,772.00

New real estate office with (3) employees, open from 9 a.m. to 5 p.m. General offices are calculated at 25 gpd per employee per shift.

(3 employees x 25 gallons per day=75 gpd) x $4.25=$318.75 SDF-Water

(3 employees x 25 gallons per day=75 gpd) x $44.02=$3,301.50 SDF-Sewer

Total SDF due: $3,620.25

WHY ARE SOUTHPORT’S RATES SO HIGH?

Unfortunately, the City’s infrastructure is very old and deteriorated. And like many other municipalities, maintenance wasn’t done on a regular schedule to minimize any issues. Because the condition of the system is declining, there are many water and sewer projects planned. System Development Fees can be used to pay for water and wastewater infrastructure projects. In addition, unlike some neighboring communities, Southport has not contributed to the Brunswick County water or sewer system. The City has only leased capacity and purchased water.

Southport was awarded grants to have a Utility Merger Feasibility Study completed for both water and wastewater. We hope that based on the results of the study, Brunswick County will agree to take over our systems. Once this happens, the System Development Fees may change. Many other municipalities in Brunswick County have already merged their system with the Brunswick County system. At that point, the System Development Fees will have to revised. A copy of Southport’s current System Development Fee Analysis is available upon request to the City Clerk’s office. You may use the examples above to estimate what your System Development Fees might be for your project, or you can call Public Services at (910) 457-7935 if you have any questions.