September 22, 1993
Mr. Jonathan V. Maxwell Guilford County Attorney 1 West Market Street
P. O. Box 3427 Greensboro, North Carolina 27402
Re: G.S. 158-7.1 and G.S. 153A-275 Advisory Opinion to Guilford County Attorney on Proposed Expenditure of County Funds for Water and Sewer Extension to Industry. Administrative Division/Services to State Agencies Section
Dear Mr. Maxwell: In your letter of September 10, 1993 you inquire whether the county’s expenditure of public funds for extension of water and sewer to serve commercial parts of a mixed use development project is authorized by G.S. 158-7.1 or other statute. The greater part of the system would be located within public rights of way. Some parts of the system would be constructed on private property with easements from the property owners. The systems would be operated by the cities of Greensboro and High Point under existing interlocal cooperation agreements with the county.
In a recent examination by this Office of the provisions of G.S. 158-7.1 (copy attached) we advised:
Under long standing common law principles concerning public utilities…… the provision of water and sewer to private industry does not appear to raise any serious constitutional questions.
Existing N.C.G.S. Section 158-7.1(b)(5) provides that "[a] county or city may extend or may provide for or assist in the extension of utility services to an industrial facility, whether the utility is publicly or privately owned." In the municipal and county context, the term "utility" commonly refers to "public enterprises." Under current law cities and counties have authority to operate water and sewer systems as "public enterprises." N.C.G.S. Section 153A-275, 160A-312. This authority has traditionally been interpreted to authorize provision of water and sewer service to private industry. The principle limitations are (a) that service be provided on an equal basis to customers of essentially the same character and service; and (b) that rates must be related to the system’s operating and capital cost and depreciation. Fulghum v. Selma, 283 N.C. 100, 76 S.E.2d 368 (1953); Spring Hope v. Bissette, 53 N.C. App. 210, 280 S.E.2d 490 (1981), aff’d 305 N.C. 248, 287 S.E.2d 851 (1982).
It appears that the water and sewer operations, described here to be paid for and constructed by the county and operated in conjunction with Greensboro and High Point, are "public enterprises" and, as such, are legally authorized by G.S. 153A-275 as well as G.S. 158-7.1.
Board members who approve the expenditure of bond funds for such an authorized purpose, when acting in good faith and in a manner consistent with statutory directions and statutory limitations, are not personally liable for the effects of their official decisions. Miller v. Jones, 224
N.C. 783, 787, 32 S.E.2d 594, 597 (1945); compare, Horner v. Chamber of Commerce, 231 N.C.
440, 57 S.E.2d 789 (1950).
If further assistance is required, please let us know.
Ann Reed
Senior Deputy Attorney General
Douglas A. Johnston
Assistant Attorney General