North Carolina seeks to recoup costs of services to developers

By Robbie Webber

The 2014 North Carolina budget bill mandated recommendations for new fees to cover the cost of services at many state agencies. This effort was supported by the DOT, and they have now released a proposed list of fees for services provided along state roads, possibly raising the cost of subdivisions, utility encroachments, billboards, and driveways.

NCDOT staff spend time reviewing plans, overseeing overweight trucks, inspecting sites, and monitoring utility installations. Many of these services are currently provided free or for nominal fees. But with pressure on the transportation budget mounting, all those services may soon cost more.

In North Carolina, as in many states, such fees are more commonly assessed by municipalities since most development occurs on local roads. However North Carolina is unusual in that all roads are either state- or locally-controlled; there are no county roads. This results in NCDOT controlling 75 percent of the roads in the state, the fourth highest percentage in the country. Despite being considerably smaller, the state is also second only to Texas in the number of miles it controls. This means that many developments and utility encroachments are on state roads instead of those under local control.

In its 2012 report [page 43] on possible revenue sources for state DOTs, SSTI labeled development impact fees as “marginal” in their ability to bring in additional funding. However, North Carolina is not trying to increase revenue, but simply trying to recoup money for services it is already providing.

With the highest gas tax in the southeast and decreasing revenues due to less driving and fuel-efficient cars, North Carolina finds itself in a quandary familiar to many states: How to pay for a transportation system with mounting costs in an environment of falling revenues and no appetite for increased taxes. The new service fees are one answer to this question. DOT staff offered a conservative estimate of $4 million to $7 million in revenue annually from the new fees, but a recent press analysis puts their estimate at $12 million.

Despite the budgetary mandate coming at the request of the DOT itself, and support from the Board of Transportation, the Board wants the fees to be passed by the General Assembly in a legislative session. Business groups have already expressed concern about the hike in costs and complained of slow response time from the DOT, but even they admit that development fees are a normal part of doing business and standard procedure when dealing with local governments.

Robbie Webber is a Senior Associate at SSTI.