Can a Louisiana water district charge developers for system upgrades their projects require?

Plain-English summary

Five developers sought water service approval for new subdivisions, but Lafayette Parish Waterworks District South said its current system could not serve them without substantial upgrades. Its engineer advised that those improvements would not be necessary without the developments. The Attorney General concluded that the district's commissioners could authorize the work by simple majority and assess its cost against the developers through an impact fee.

The opinion relied on statutes allowing waterworks districts to improve their systems and found no special supermajority voting requirement. It also reasoned that using district money to build infrastructure needed only for private developments without developer payment would conflict with the state's prohibition on donating public value to private interests. The proposed charge was a fee because it would be limited to the improvement costs and the developers benefiting from the work, rather than raising unrelated revenue.

What this means for you

Water district commissioners

For the described improvements, the opinion found a simple majority vote sufficient. It treated developer payment as necessary where the work would not otherwise be needed and analyzed the proposed charge according to its actual cost and benefit.

Subdivision developers

The proposed fee was permissible because it would be charged only to the developers whose projects required the upgrades and would pay for those upgrades. The AG said the result would likely differ if the cost were spread across all water ratepayers.

Common questions

Q: Does a Louisiana water district need a supermajority to approve new infrastructure?
A: The AG found no heightened vote requirement in the statutes it reviewed and concluded that this district could approve the contemplated upgrades by simple majority.

Q: Can the district charge only developers for water system upgrades?
A: For upgrades that would not be needed without their subdivisions, the opinion approved an impact fee limited to the related cost and benefit.

Q: Is every charge labeled an impact fee legally a fee?
A: No. The opinion looked at how the charge works. It described a tax as primarily raising revenue unrelated to or materially exceeding the special benefits to those paying. The proposed charge would defray the cost of improvements serving the developers.

Q: Did the AG address what the district could do if it could not impose an impact fee?
A: No. After concluding that the district could impose the proposed fee, the AG treated that alternative question as moot.

Background and statutory framework

La. R.S. 33:3818 empowers a waterworks board to improve its system and contract for the work. La. R.S. 33:3815 concerns laying pipelines and water mains in district roads. The opinion applied those powers alongside the Louisiana Constitution's prohibition on donating public resources to private interests. It characterized the specific developer charge as a fee because it paid for improvements caused by and benefiting the new subdivisions.

Citations and references

• La. R.S. 33:3815, concerning water lines in district roads.
• La. R.S. 33:3818, concerning district rules and system improvements.
• La. Const. art. VII, § 14(A), discussed as the prohibition on donations of public value.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/24-0086

Original opinion text

STATE OF LOUISIANA
DEPARTMENT OF JsTIcE
OFFICE OF THE ATFORNEY GENERAL
P.O. Box 94005
BATON RouGE, LA
70804-9005

November 20, 2024
ATTORNEY GENERAL
OPINION 24-0086

  Mr. Thomas R. Hightower, ill                               172-A   —  WATER DISTRICTS        -   See Political

Subdivisions 90-A
Legal Counsel to Lafayette Parish
-

Waterworks District South
La. Const. art. VII, § 14 La. R.S. 33:3815
La. R.S. 33:3818
P.O. Drawer 51288
Lafayette, LA 70505-1 288
The Lafayette Parish Waterworks District South has
the authority to authorize improvements and may assess the cost of such improvements upon developers when such improvements would not be necessary if not for new development.

Dear Mr. Hightower:

Our office received an opinion request from you regarding the scope of authority the Lafayette Parish Waterworks District South (LPWDS) has with respect to infrastructure improvements. You state in your request that five developers have applied for ‘will serve” water service approval from LPWDS. You further state that, after consultation with an engineer, LPWDS’s current infrastructure would not be able to accommodate the new subdivisions contemplated by the developers and that, to serve the new subdivisions, significant improvements would be needed to extend service to the subdivisions. You note that the engineering firm believes that these improvements would not be needed without the demand created by these new developments.

Question: Does the LPWDS have the authority to authorize improvements by a simple majority vote of its Board of Commissioners?

Conclusion: The LPWDS has the authority to authorize improvements by a simple majority vote of its Board of Commissioners.

The LPWDS is empowered by Lafayette Parish municipal ordinance JO-036-2020, Section 7, which states: “This Board shall have the function, powers and duties as outlined and established in La. R.S. 33:381 1 etseq., as well as any and all otherfunctions, powers and duties outlined and established by any other relevant and applicable statutes or ordinances.” Therefore, we rely on those statutes in our analysis of LPWDS’s authority.

Louisiana Revised Statute 33:381 8(A) grants the board of commissioners of a waterworks district the authority to adopt by-laws, rules, and regulations for the proper conduct and operation of a waterworks system in their district. Louisiana Revised Statute 33:3818(B) provides that the board of commissioners “may effect improvement in the water system and for this purpose enter into contracts for the performance of work or the purchase of machinery.” Louisiana Revised Statute 33:3815(A) states that a waterworks district may

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OPINION 24-0086
Mr. Thomas R. Hightower, III
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dig and excavate the roads, streets, sidewalks, and alleys in the district for the purpose of laying pipeline or water mains.” Therefore, the LPWDS Board of Commissioners has the authority to authorize and undertake the contemplated improvements.

Louisiana Revised Statute 33:3819 establishes the parameters of how a board of commissioners of a waterworks district is to conduct itself regarding meetings. The statute does not contain any requirement that any vote of a board of commissioners be by more than a simple majority. Further, La. R.S. 33:3815 and 33:3818 do not express any additional voting requirements regarding authorizing improvements. Therefore, the LPWDS Board of Commissioners may authorize the contemplated improvements by a majority vote.1

Question: Does the LPWDS have the authority to impose “impact fees” upon developers for improvements that would not be necessary if not for the new development?

Conclusion: The LPWDS has the authority to impose “impact fees” upon developers for improvements that would not be necessary if not for the new development.

Louisiana Constitution article VII, § 14(A) provides that funds, property, or things of value of a political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. You note in your request that, if not for the new subdivisions by the developers, the contemplated improvements would not be necessary. Therefore, the contemplated improvements are in the economic interest of, and of value to, the developers. See also La. Atty. Gen. Op. No. 03-0345, in which this office opined that a waterworks district could not utilize its funds for the construction of a waterline intended to serve private interests. As a result, the LPWDS cannot undertake the otherwise unnecessary improvements without seeking payment from the developers.

You indicate in your opinion request that the LPWDS would like to assess the cost of the improvements upon the developers by utilizing “impact fees.” When analyzing a cost imposed by a government entity, it is necessary to assess whether the cost is properly classified as a fee or a tax.

In making the distinction between a fee and a tax, the Louisiana Supreme Court has said: “The nature of a charge is determined not by its title, but by its incidents, attributes and operational effect. Thus, the nature of a charge must be determined by its substance and realities, not its form.” Safety Net for Abused Persons v. Segura, 96-1 978, p. 4 (La. 4/8/97), 692 So.2d 1 038, 1 041 (citing Gallaspy v. Washington Parish Police Jury, 94— 1434, p. 3 (La. 11/30/94), 645 So.2d 1139, 1141; Reedy. CityofNewOrleans, 593 So.2d 368, 371 (La. 1992)). The Louisiana Supreme Court went on to state that a tax has a

1 Although your opinion request does not inquire as to the process of undertaking the improvements once they have been authorized, we note that, pursuant to La. R.S. 38:22 12, any improvement costing in excess of $250,000.00 must be undertaken in accordance with public bid law. See La. R.S. 38:2211 et seq.

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OPINION 24-0086
Mr. Thomas R. Hightower, III
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primary purpose of raising revenue and that is unrelated to or materially exceeds the special benefits conferred upon those assessed. Id., (citing Audubon Insurance Co. v. Bernard, 434 So.2d 1072, 1074 (La. 1983)).

Our office has previously used the above Louisiana Supreme Court analysis when assessing a “water impact fee” proposed by the Ascension Parish Planning Commission. See La. Atty. Gen. Op. no. 15-0039. There, the Ascension Parish Planning Commission wished to assess a one-time impact fee upon developers to fund the infrastructure necessary to support a new development. Our office opined that the contemplated charge was a fee because it was commensurate with the service being rendered, was being used to provide a benefit only for those assessed with the cost, and was defraying the cost of the infrastructure improvements rather than raising revenue. La. Atty. Gen. Op. No. 15- 0039.

As stated in your opinion request, the charge being contemplated by the LPWDS is only going to be assessed against the developers, and the charge will be used to pay for the improvements. The contemplated charge does not have a primary purpose of raising revenue beyond what is necessary to make the improvements, does not exceed the benefit that that is being conferred, is only assessed against those using the subject benefit, and is related to the subject benefit. As such, the contemplated charge is properly assessed as a permissible fee. The result would likely be different if the costs were imposed on all rate payers (i.e., a tax).

Your final question, as stated, was regarding whatthe LPWDS may do if they do not have the authority to impose the contemplated impact fee. As the LPWDS does have the authority to impose the contemplated impact fee, we consider the question moot and will not address it further.

We trust that this opinion of the Attorney General adequately responds to your inquiry. However, if our office can be of further assistance, please do not hesitate to contact us.

With best regards,

LIZ MURRILL
ATTORNEY GENERAL

BY:___
Olivia G. Boudrea,&
Assistant Attorne General

LM:OGB