In North Carolina,
coastal towns that need to generate additional enterprise revenue to pay debt
service and operating expenses of their sewer systems face an ethical dilemma
as to who shall pay. Certain North Carolina coastal towns, including the Town
of Oak Island (“the Town”), have been delegated the authority by the North
Carolina General Assembly to generate non-operating enterprise revenue by
imposing a Sewer Treatment Fee/Tax against owners of parcels that “could or
[do] benefit from the availability of sewage treatment.” SECTION 4 of S.L.
2004-96 (as amended by S.L. 2006-54). In the alternative, to generate
additional operating revenue, Towns could raise the rates that sewer users of
developed parcels pay to receive sewage collection and treatment services. In
this case, the sewer user and the owner of a developed parcel have a different
legal relationship, although they may be the same person. The sewer user
contracts with a town for the receipt of sewer collection and treatment
services. In contrast, owners of undeveloped parcels pay taxes, both ad valorem
taxes and taxes for a local benefit. Similar to the owner of a developed
parcel, the owner of an undeveloped parcel pays taxes, both ad valorem taxes
and taxes for a local benefit. However, the owner of an undeveloped parcel
cannot also be a sewer user because the undeveloped parcel generates no sewage
and, as a result, cannot benefit from the receipt of sewage collection and
treatment services.
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