HOME BUILDERS IN DURHAM COUNTY, N.C., were thrown a curveball last August by homeowner Kevin E. Jones, who sought to join the builders as a plaintiff in a lawsuit over school impact fees that had previously been settled.

Senior resident Superior Court judge Orlando Hudson flatly denied Jones' request, which ended his attempt to spearhead a class-action lawsuit on behalf of more than 4,000 homeowners who bought new homes while the county was assessing the fee. Jones argued that he was entitled to a refund because the cost of the school impact fee—about $2,000 on a single-family home—was passed along to homeowners.

The lawsuit was essentially closed earlier in the summer after the state Supreme Court refused to hear the case, letting stand a lower-court ruling that agreed with the builders that the school impact fee levied by Durham County was illegal (see “Impact Fee Relief,” September, page 43).

Impact fees in North Carolina have to be passed by the state legislature. Since no such law was passed for Durham County, the lower court ordered the county to refund $8.3 million to the “fee payers,” the vast majority of whom were builders. Other fee payers included individuals who built one-off homes.

“The impact fee case is an important decision for North Carolina's builders,” says Mike Carpenter, executive vice president of the North Carolina HBA. “It makes it abundantly clear that jurisdictions that don't have a specific act passed from the legislature may not legally impose an impact fee,” he says, adding that the issue of who should receive a refund was argued during the original case, and the courts agreed with the builders.

Learn more about markets featured in this article: Durham, NC.