System Development Fees Frequently Asked Questions - FAQs

What are system development fees?

System development fees (SDFs) are often referred to by a number of different terms including impact, capacity, expansion, connection, facility or capital connection fees or charges. An SDF is a one-time charge implemented to recover costs associated with the upfront capital investments required to make services such as water and sewer available to new homes, subdivisions, and retail/commercial developments. These costs generally include the construction of facilities as well as land, engineering, surveys, rights-of-way acquisition and other related costs.
 
What is the difference between a system development fee and a tap fee?
System development fees help recover the capital cost of new water and sewer lines, water and wastewater treatment plants, tanks, pump stations, and other facilities to provide water and sewer to new customers. Tap fees recover the City’s costs related to construction of the individual service lines from water and sewer mains in the street to the customer’s property line and includes the costs for labor, equipment, and materials.
 
Why are SDFs necessary?
Water and wastewater operators use SDFs to fund capital projects that will provide service to new or future users of the system. This practice helps mitigate the need for the system’s existing customers to pay for system growth and expansion through increased monthly rates. In essence, a SDF assigns growth-related costs primarily to the new customers responsible for creating those additional costs.
 
How much are SDFs and who pays them?
SDFs depend on the customer tap size. A tap is the individual service lines from water and sewer mains in the street to the customer’s property line. An SDF is paid when a new tap is placed and the customer applies for service. The fee can vary. A SDF fee schedule is available on the City’s website for more specific information.The City has also created incentive areas where SDFs may be waived. These areas promote economic growth where infill development is encouraged.
 
Where are the incentive areas?
        The City of Gastonia's website has a map showing these incentive areas.
 
How do the Gastonia’s system development fees compare with those of nearby towns or towns of similar size?
Gastonia’s fees are comparable and competitive with other regional and statewide water and sewer providers. The City also conducts regular surveys of other municipalities to ensure our fees remain comparable on both a regional and statewide basis.
 
Will only City of Gastonia customers pay these fees?
No, any customer that connects to the Two Rivers Utility system pays these fees.
 
Do SDFs apply to existing development?
No, SDFs only apply to new connections to the City’s water and/or sewer system.

Why don’t current property taxes or future taxes paid by new home and business owners cover system expansion costs?
The water and sewer utility does not operate using property taxes. The water and sewer utility operates as an enterprise fund, that is, it uses water and sewer rates and fees to cover the operating, capital, and debt service costs for the utility rather than property tax revenue.