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Metropolitan Water Districts, Metropolitan Sewerage Districts, and Metropolitan Water and Sewerage Districts in North Carolina

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Finance & Tax, Public Enterprise / Utility Finance

Published: 12/31/25

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As discussed in previous posts, North Carolina law authorizes local governments to provide water and sewer services using a range of legal structures. These include direct ownership and operation as a municipal or county public enterprise, contractual interlocal arrangements among governments, and regional entities such as sanitary districts, water and sewer authorities, and county water and sewer districts. Each structure reflects different legislative choices about governance, financing, service areas, and the allocation of authority among participating governments.

This post examines three additional regional district structures authorized under G.S. Ch. 162A: metropolitan water districts (Article 4), metropolitan sewerage districts (Article 5), and metropolitan water and sewerage districts (Article 5A). Each article authorizes the creation of a separate public body to provide water service, sewer service, or both across multiple jurisdictions. While all three are designed to support regional service delivery, they differ in important ways, including which political subdivisions may participate, the procedures required to establish a district, and the structure and authority of the governing board.

To make those differences clear, this post walks through each metropolitan district model by focusing on four core elements: the district’s statutory purpose and scope; who may create the district and how the creation process works; how the district is governed, including board composition; and the district’s core powers and financing authority. It then compares the three models to highlight practical distinctions in governance, legal authority, and use.

Metropolitan Water Districts

G.S. Ch. 162A, Article 4 authorizes the creation of metropolitan water districts as special purpose local governments and public authorities with the power to own, operate, and finance water systems and sewerage systems. Although the statute permits a district to provide both services, the actual scope of a district’s authority is defined in the resolutions adopted by the participating local governments at creation and in the final resolution of the Commission for Public Health. 

For purposes of Article 4, water service encompasses the development, treatment, transmission, and distribution of potable water for public and private use, including sources of supply, treatment facilities, transmission mains, storage facilities, pumping stations, and related infrastructure. G.S. 162A-32. Sewer service refers to the collection, treatment, and disposal of wastewater. Sewerage systems are defined broadly and include collection lines, interceptors, pumping stations, treatment works, outfalls, and other facilities necessary to manage wastewater flows and protect public health. G.S. 162A-32.

Who May Create a Metropolitan Water District and How

A metropolitan water district may be created only within a single county and may be initiated in two ways under G.S. 162A-33. First, two or more political subdivisions in the county (including the county itself) may jointly petition to create a district. Second, one or more political subdivisions may petition together with one or more unincorporated areas of the county. All territory proposed for inclusion must lie within the same county, but it need not be contiguous. (For purposes of Article 4, a political subdivision includes the county, or a municipality or other unit of local government authorized to provide water or sewer service, including existing water or sewer districts and similar special-purpose local governments. G.S. 162A-32(9).)

Each participating political subdivision must adopt a resolution stating that creation of the district is necessary to preserve and promote public health and welfare and requesting creation of a district with defined boundaries. If unincorporated areas are included, residents of each area must submit a petition signed by at least fifteen percent (15%) of registered voters in that area. G.S. 162A-33(1)–(2). If an existing water district, sewer district, or other special-purpose local government seeks inclusion and its territory lies wholly or partly within a municipality, the petition may proceed only if the affected municipality adopts a resolution approving the inclusion or also petitions for inclusion. 

After the required resolutions and petitions are submitted, the county board of commissioners coordinates the remaining steps. The chair of the county board of commissioners notifies the Secretary of the NC Department of Environmental Quality (DEQ) and requests a joint public hearing with a DEQ representative. The Secretary and the county board chair jointly set the time and place of the hearing within the proposed district, and the county board chair provides the required public notice. 

The hearing is jointly conducted by the county board and the DEQ representative. After the hearing, if both the county board of commissioners and the Commission for Public Health determine that creation of the district would preserve and promote public health and welfare, the Commission for Public Health adopts the resolution creating the district and defining its boundaries. 

Governance Structures

A metropolitan water district is governed by a district board. Board members are appointed rather than elected, and appointment authority is allocated by statute. It is divided between the county board of commissioners and the governing boards of the participating political subdivisions, if any, as set out in G.S. 162A-34. The county board of commissioners appoints three members of the district board. These members must reside within the district and are deemed to represent all political subdivisions for which the county board is the governing body, typically the unincorporated areas of the county. The county does not receive any additional appointments in its role as a political subdivision; these three seats are its full representation.

Each municipality included in the district normally appoints one board member through its governing body. A population-based exception applies when a municipality’s population, according to the most recent census, exceeds the combined population of all other municipalities in the district, or, if it is the only municipality, exceeds the population of the remainder of the district. In that case, the municipality appoints three members instead of one. This exception is mandatory when the population threshold is met and can give a single large city appointment power equal to the county’s.

The statute sets no maximum board size. Every district has at least three members, but the board grows with each additional municipality and can grow further if the population exception applies. As a result, board size is driven by district design rather than statutory limits. Because the county’s three appointments create an odd starting point and each additional municipality adds a seat, board size naturally alternates between odd and even. The statute does not require an odd number or provide a tiebreaker. As a result, avoiding even-numbered boards is not a matter of bylaws or drafting, but of intentional district design at formation, including careful decisions about which municipalities are formally included and whether the population-based appointment rule applies.

Initial terms are staggered to promote continuity. The first appointees serve terms expiring one, two, and three years from the date the Commission for Public Health creates the district, with the county board of commissioners assigning the term lengths. When a governing body appoints three members, only one of those members may receive a three-year term. After that, successor appointments are made for the unexpired term only, reappointments are allowed, and appointment authority remains with the original appointing body. Members continue to serve until successors are appointed and qualified.

District board members may be removed only for cause and only by the governing body that appointed them. Before serving, each member must take an oath of office, which is filed with the clerk of the county board of commissioners.

Once seated, the board elects a chair and vice-chair from among its members and appoints a secretary and treasurer, who may or may not be board members and whose offices may be combined. Officer terms are set by the board’s bylaws.

Powers and Funding

A metropolitan water district has broad statutory authority to plan, own, develop, operate, and finance water infrastructure and, if authorized at creation or through a later expansion of authority, sewerage infrastructure. G.S. 162A-36. The board is empowered by statute to do all the following:

Ownership, Planning, and Operation of Systems

The district board is authorized to acquire, lease, construct, reconstruct, improve, extend, enlarge, equip, repair, operate, and maintain water systems and any part thereof. If sewer service is included within the district’s authorized purposes, the same authority applies to sewerage systems. G.S. 162A-36(5). These powers extend to facilities located both within and outside the district’s boundaries, provided that no water or sewerage facilities may be located within a city, town, or incorporated village without the consent of the governing body of that municipality. 

To carry out these functions, the district may acquire real and personal property by gift, purchase, lease, or the exercise of eminent domain, which must be conducted in accordance with Chapter 40A of the General Statutes. G.S. 162A-36(10). This authority includes the acquisition of easements, rights-of-way, and other interests in land necessary for the construction, extension, maintenance, and operation of district facilities. The district may obtain rights-of-way and easements across public or private property, including streets and highways, to facilitate system construction and operation. G.S. 162A-54. Property no longer needed for district purposes may be sold, leased, exchanged, or otherwise disposed of, and the district may manage, protect, and insure its assets. G.S. 162A-36(10).

State law anticipates coordination with other planning entities. Preliminary plans for district facilities must be submitted to appropriate regional and local planning agencies, and the district is authorized to cooperate with planning agencies and other governmental units, to the extent practicable, in coordinating utility facilities and services. G.S. 162A-55.

Corporate, Administrative, and Contracting Powers

The district may adopt bylaws for the regulation of its affairs, adopt and alter an official seal, maintain offices within the district, and sue or be sued in its own name. G.S. 162A-36(1)–(4). To administer and operate its systems, the district may employ officers, employees, and agents and retain engineers, attorneys, financial advisors, operators, and other professional service providers, subject to applicable budgeting and fiscal control laws. G.S. 162A-36(12).

The district may enter into contracts, leases, and agreements necessary or incidental to the performance of its duties and the execution of its powers. G.S. 162A-36(11). This authority includes contracts and interlocal agreements with counties, municipalities, other districts, authorities, State or federal agencies, and private entities for the planning, construction, financing, operation, management, maintenance, or shared use of water or sewer facilities and services. 

Transfers, Leasing, and Intergovernmental Financial Support

With the approval of the Local Government Commission, political subdivisions included within the district may transfer, lease, sell, grant, or otherwise convey existing water or sewer systems and related property to the district on terms agreed upon by the parties. G.S. 162A-53. The district also may lease water or sewer systems, or portions thereof, from cities, towns, municipal corporations, or other water or sewer districts on terms the district board determines to be fair and reasonable. G.S. 162A-36(16).

The district may negotiate and pay close-out costs associated with the acquisition or lease of existing systems. G.S. 162A-36(14). It may determine the extent to which local distribution or collection system improvements will be financed with district revenues and may contract with other political subdivisions for the construction of jointly financed facilities, with title vested in the district. G.S. 162A-36(15).

Political subdivisions included within the district may make advances or contributions to cover preliminary or start-up expenses, including planning, engineering, and organizational costs, with reimbursement as provided by law or by agreement. G.S. 162A-56. In addition, the district may receive and accept loans, grants, advances, or contributions from the United States, the State, or any agency or instrumentality thereof, and may accept contributions from any source of money, property, labor, or other things of value, subject to applicable conditions and use restrictions. G.S. 162A-36(13).

Taxing Authority

A metropolitan water district has independent authority to levy an ad valorem tax on all taxable property within the district. Property taxes may be levied in amounts sufficient to meet all lawful obligations of the district, including the costs of operating, maintaining, and repairing the district’s water and sewerage systems, as well as paying obligations incurred in the performance of the district’s governmental functions. G.S. 162A-36(9).

The district board determines the amount of tax required and certifies the tax rate to the county board of commissioners. The county levies and collects the tax on the district’s behalf, but the tax is imposed under district authority and for district purposes. G.S. 162A-45.

Tax revenues are subject to express statutory limitations. District revenues, including tax proceeds, may be used only for the operation, improvement, or benefit of the district’s water and sewerage systems and for payment of principal and interest on bonds issued by the district. District revenues may not be used to pay interest or amortization on utility bonds previously issued by a city, town, or other water or sewer district. G.S. 162A-36(b).

Rates, Fees, and Service Enforcement

In addition to taxes, the district board is authorized to fix, revise, and collect rates, fees, rents, and other charges for services furnished by the district’s water and sewerage systems. G.S. 162A-36(8); G.S. 162A-49. Rates and charges may be structured to support system operations, maintenance, debt service, capital improvements, reserves, and other lawful district purposes. A district may provide water service to a municipality or county within the district, for governmental purposes without charge or at reduced rates. G.S. 162A-36(b).

The district may impose system development fees, but only in accordance with Article 8 of Chapter 162A, including statutory requirements governing calculation, adoption, accounting, expenditure, and credits for developer-constructed capacity. G.S. 162A-36(8a); G.S. 162A-49(b).

The district board may adopt methods for collection of such rents, rates, fees and charges and measures for enforcement of collection thereof, including penalties and the denial or discontinuance of service. G.S. 162A-49(a); G.S. 162A-36(17).

Borrowing and financing authority

A metropolitan water district has broad authority to borrow money and issue debt to finance its systems. The district may issue general obligation bonds and general obligation refunding bonds secured by its taxing power, subject to voter approval and compliance with the Local Government Finance Act. G.S. 162A-36(6), (7). General obligation bonds are supported by an ad valorem tax levied on all taxable property within the district. G.S. 162A-45.

The district also may issue revenue bonds and revenue refunding bonds payable solely from revenues derived from the operation of its water and sewerage systems. G.S. 162A-36(6), (7). Revenue bonds do not pledge the taxing power of the district or any participating political subdivision.

In addition, the district may enter into installment financing arrangements pursuant to G.S. 160A-20 and may pledge a security interest as permitted by that statute. G.S. 162A-36(7a).

Once created, the district board exercises these powers independently within the scope of its statutory authority, subject to applicable procedural requirements, financial oversight, and other limitations imposed by state law.

Metropolitan Sewerage Districts

G.S. Chapter 162A, Article 5 authorizes the creation of a metropolitan sewerage district as a special purpose local government and public authority with the power to plan, acquire, construct, operate, maintain, regulate, and finance sewerage systems serving regional needs. 

For purposes of Article 5, “sewerage systems” are defined broadly and include both sewer systems and sewage disposal systems. These terms encompass collection lines, interceptors, trunk sewers, pressure lines, pumping stations, treatment works, outfalls, power facilities, septic and on-site disposal systems, buildings and other structures, and all real and personal property, easements, franchises, contractual rights, and other interests necessary or useful for the collection, treatment, and disposal of wastewater. G.S. 162A-65(a)(11)–(13).

Who May Create a Metropolitan Sewerage District and How

A metropolitan sewerage district may be proposed by any two or more political subdivisions, such as counties, municipalities, or other special purpose local governments, located in one or more counties, or by one or more political subdivisions together with unincorporated areas in one or more counties. G.S. 162A-65; G.S. 162A-66. The political subdivisions and unincorporated areas included in the proposal are not required to be contiguous.

To initiate creation of the district, under G.S. 162A-66, the proposing political subdivisions must file materials with the board or boards of commissioners of the county or counties in which the proposed district would be located. These materials must include:

  1. A resolution adopted by the governing body of each political subdivision proposed for inclusion, stating that creation of the metropolitan sewerage district is necessary to preserve and promote public health and welfare within the proposed district and requesting creation of a district with the boundaries described in the resolution.
  2. If any unincorporated area is proposed for inclusion, a petition signed by at least fifty-one percent (51%) of the qualified voters residing in that area. The petition must define the boundaries of the unincorporated area, state that creation of the metropolitan sewerage district is necessary to preserve and promote public health and welfare, and request creation of a metropolitan sewerage district with the boundaries described in the petition. 

Once the required resolutions and any required voter petitions are filed, the county board or boards of commissioners for the county or counties in which the proposed district will lie take the next procedural steps. Acting through the chair, the county board or boards notify the North Carolina Environmental Management Commission (EMC) that the resolutions and petitions have been received and formally request that the EMC participate in a joint public hearing on the proposed district. 

The public hearing is conducted jointly by the county board or boards of commissioners and a representative of the EMC. The chair of the EMC and the chair or chairs of the county boards jointly select the time and place for the hearing, which must be held within the proposed district. If the proposed district lies in more than one county, the hearing must be held in the county containing the greater portion of the proposed district. 

Notice of the hearing is provided by the county board or boards of commissioners. Notice must be posted at the courthouse of each affected county at least 30 days before the hearing and must also be published once a week for four successive weeks in a newspaper of general circulation within the proposed district, with the first publication occurring at least 30 days before the hearing. 

After the public hearing, creation of the district requires affirmative determinations by both the county board or boards of commissioners and the EMC. Each must find that establishing the metropolitan sewerage district would preserve and promote public health and welfare within the area described in the resolutions and petitions. If all the bodies make this finding, the EMC adopts a resolution creating the district, establishing its boundaries, and formally designating the territory as a metropolitan sewerage district under an official name. 

Before adopting the resolution creating the district, however, the EMC must receive a resolution supporting creation from (1) the board of commissioners of each county lying wholly or partly within the proposed district and (2) the governing board of every political subdivision located in those counties. If the EMC does not receive a supporting resolution from each such governing body, it is prohibited from creating the district. G.S. 162A-66.5.

Once the district is created, the EMC must transmit copies of the creating resolution to the county board or boards of commissioners and to the governing body of each political subdivision included in the district. The county board or boards must then publish the resolution in a newspaper circulating within the district once a week for two successive weeks, along with a statutory notice advising the public of the district’s creation and the deadline for challenging its validity. 

Any action or proceeding challenging the validity of the EMC’s resolution or the creation of the metropolitan sewerage district must be commenced within 30 days after the first publication of the resolution. After that 30-day period expires, the validity of the district’s creation may not be challenged in any court on any ground. 

Expansion to Include Additional Political Subdivisions or Unincorporated Areas

After a metropolitan sewerage district is created, its boundaries may be expanded to include additional political subdivisions or unincorporated areas. Expansion is initiated by a resolution of a political subdivision requesting inclusion of all or part of its territory, or by a petition signed by at least fifty-one percent (51%) of the qualified voters in an unincorporated area. The request is filed with the district board. G.S. 162A-68.

If the district board supports the request, it must submit a report to the county board or boards of commissioners and the EMC describing how sewerage service will be extended to the new territory. The report must include maps, a service extension plan, a proposed schedule, estimated costs, financing methods, existing district debt, and assessed property values. Sewerage service must be extended on substantially the same basis as within the existing district. 

The county board or boards of commissioners and the EMC then conduct a joint public hearing, following the same notice requirements used for district creation. If both determine that inclusion would preserve and promote public health and welfare, the EMC adopts a resolution redefining the district’s boundaries to include the additional territory. 

District voters may require an election on the proposed inclusion by filing a petition signed by at least ten percent (10%) of qualified voters in the district. An election is held only after the EMC has approved the inclusion. 

A streamlined alternative applies when a county seeks inclusion and is already receiving bulk sewer service from the district, the district has installed sewer infrastructure in the county, and the district serves customers there. In that case, the EMC conducts a public hearing in the requesting county and may approve inclusion by resolution without an election if it determines that inclusion will not adversely affect customer service in the district and will preserve and promote public health and welfare. G.S. 162A-68.5.

Any territory added to the district becomes subject to all existing district debts. Municipal annexation of territory outside the district automatically brings the annexed area into the district and subjects it to district obligations, but does not trigger the formal inclusion procedures described above. G.S. 162A-68; G.S. 162A-68.5.

Any legal challenge to an EMC resolution approving inclusion must be filed within 30 days after the effective date of the resolution or applicable statutory notice. After that period expires, the inclusion may not be challenged on any ground. 

Following inclusion, district board membership is adjusted as required by statute to provide representation for newly included territory. 

Governance Structures

Under G.S. 162A-67, a metropolitan sewerage district is governed by an appointed district board. Board composition depends primarily on whether any portion of the district lies outside municipal limits, the number of counties involved, and population within the district. For purposes of representation, population is determined using the most recent decennial census and includes only the population residing within the district’s boundaries. Only political subdivisions that own or operate a public wastewater collection system at the time of appointment are entitled to appoint board members. G.S. 162A-67.5.

If the district lies wholly or partly outside the corporate limits of a city or town, the district board is appointed immediately after the district is created, and counties provide the core of the board. In a single-county district, the county board of commissioners appoints three members if the county population is 25,000 or more, or five members if the population is under 25,000. All appointees must be qualified voters residing within the district. Initial terms are staggered, and successor terms are three years. 

If the district lies in two counties, the county containing the larger portion of the district appoints two members and the county containing the smaller portion appoints one member. If the district lies in three or more counties, each county appoints one member who must reside in both the district and the appointing county. In both cases, initial terms are staggered and successor terms are three years. 

In districts that lie wholly or partly outside municipal limits, municipalities and other political subdivisions within the district may also appoint board members. Each political subdivision other than a county that lies wholly or partly within the district appoints one member, unless the county board of commissioners is the governing body of that subdivision. A population-based exception applies if a city or town within the district has more than one-half of the combined population of all other non-county political subdivisions and unincorporated areas within the district, in which case that city or town appoints three members instead of one. 

If the district lies entirely within the corporate limits of two or more cities or towns, a different appointment structure applies. Each city or town appoints two members who must reside in both the district and the appointing municipality. Those appointed members then elect one additional member who must reside in the district and one of the participating cities or towns. Initial municipal appointees serve staggered terms tied to the next regular municipal election cycle, and successor municipal appointees and the board-elected member serve four-year terms. 

Members of the district board may be reappointed, and vacancies are filled by the same governing body that made the original appointment for the remainder of the unexpired term. A member may be removed only for cause by the appointing governing body, and members continue to serve until their successors are appointed and qualified. Before entering office, each member must take an oath of office, which is filed with the clerk of the county board or boards of commissioners. The district board elects its officers, sets its meeting schedule, and conducts business by majority vote with a quorum present. Members may receive compensation and reimbursement of expenses within statutory limits.

Powers and Funding

The district board’s powers and funding authority generally parallel those granted to metropolitan water districts, but are limited to the planning, ownership, operation, and financing of sewerage systems.

General and Operational Powers

A metropolitan sewerage district may adopt bylaws and ordinances; maintain offices; sue and be sued; enter into contracts; and employ staff, professionals, and agents as necessary to carry out its functions. G.S. 162A-69(1)–(4), (11), (12), (14). The district may acquire, hold, lease, convey, and dispose of real and personal property, including property acquired by eminent domain exercised in accordance with Chapter 40A. G.S. 162A-69(10).

The district may acquire, construct, reconstruct, extend, improve, repair, maintain, and operate sewerage systems, including facilities located outside the district with the consent of the affected municipality. G.S. 162A-69(5). It may regulate discharges into district systems by ordinance, require connection to district sewer lines, and impose connection charges, following the notice and review procedures set out in the statute. G.S. 162A-69(13a)–(13b).

The district is granted statutory rights-of-way and easements across State highways and municipal streets when necessary for district purposes, subject to reasonable requirements of NCDOT or the affected municipality. G.S. 162A-74. Before constructing new sewerage facilities, the district must present preliminary plans to applicable planning agencies and coordinate, where practicable, with local and regional land-use plans. G.S. 162A-75.

Rates, Fees, and System Development Fees

The district board may fix, revise, and collect rents, rates, fees, and other charges for sewer services. G.S. 162A-69(8); G.S. 162A-72(a). These charges are not subject to State or local rate regulation. When pledged to revenue bonds or general obligation bonds, rates must be set at levels sufficient to cover operating and maintenance costs, reserves, and debt service. The district may enforce collection through penalties and the denial or discontinuance of service.

A metropolitan sewerage district may impose system development fees, but only in accordance with Article 8 of Chapter 162A. G.S. 162A-69(8a); G.S. 162A-72(b).

Debt and Taxing Authority

A metropolitan sewerage district may issue general obligation bonds and revenue bonds, including refunding bonds, and may issue bonds and notes under the Local Government Finance Act. G.S. 162A-69(6)–(7); G.S. 162A-70. To support district obligations, the district has express authority to cause ad valorem taxes to be levied on all taxable property within the district. G.S. 162A-69(9).

Each year, the district board determines the amount needed to fund operations, meet obligations, and pay debt service, and certifies the required tax rate to the county or counties. The counties levy and collect the tax on the district’s behalf and remit the proceeds to the district. G.S. 162A-71.

Intergovernmental Transfers, Contracts, and Financial Support

Counties and municipalities may, subject to Local Government Commission approval when outstanding debt is involved, transfer existing sewerage systems and related property to a metropolitan sewerage district. G.S. 162A-73(1). Political subdivisions may also contract with the district for sewage collection, treatment, disposal, billing, and enforcement services. G.S. 162A-73(2).

Participating political subdivisions may fix and pledge their own sewer-related rates and fees to meet contractual obligations to the district and may levy ad valorem taxes to make those payments. G.S. 162A-73(3)–(4). Water systems serving the same customers are expressly authorized to act as billing and collection agents for district sewer charges. G.S. 162A-76.

Assumption of Debt and Structural Changes

A metropolitan sewerage district may assume outstanding sewer-related debt of a political subdivision within the district, but only with voter approval. G.S. 162A-77. If debt is assumed, the district must levy a tax sufficient to pay that debt unless other funds are available.

If a district lies entirely within a city or town, it may be merged into that municipality following a special election, with the city or town assuming all assets and liabilities of the district. G.S. 162A-77.1. Political subdivisions may also advance funds for preliminary district expenses, which may be repaid from bond proceeds or other district revenues. G.S. 162A-78.

Metropolitan Water and Sewerage Districts

G.S. Ch. 162A, Article 5A authorizes the creation of a metropolitan water and sewerage district as a special purpose local government and public authority with the power to provide both water service and sewer service within a defined geographic area. For purposes of Article 5A, “water service” is defined consistently with Article 4 (metropolitan water districts), and “sewerage” or “sewer service” is defined consistently with Article 5 (metropolitan sewerage districts).

Who May Create a Metropolitan Water and Sewerage District and How

A metropolitan water and sewerage district may be created by two or more political subdivisions—that is, counties, municipalities or other special purpose local governments. Unlike the other metropolitan district models in Chapter 162A, no State-level approval is required. G.S. 162A-85.1; G.S. 162A-85.2.

To create the district, each participating political subdivision must adopt a resolution establishing the district. The resolutions must collectively set forth:

  • the names of the appointees to the district board,
  • the date on which the district board will be established, and
  • the boundaries of the district. G.S. 162A-85.2.

Before adopting its resolution, each governing body must hold at least two public hearings on the proposed district. The hearings must be held at least 30 days apart, with notice of each hearing published in a newspaper of general circulation at least 10 days before the hearing date.

Once all required resolutions have been adopted and the procedural requirements satisfied, the district is created by operation of law on the date specified in the resolutions.

After creation, the district may later expand to include additional political subdivisions. Expansion requires the adoption of identical resolutions by both the district board and the joining political subdivision, following the same two-hearing notice and timing requirements applicable to initial creation. Upon adoption, the new political subdivision appoints a board member if it is entitled to representation under the board composition statute. G.S. 162A-85.4.

Governance Structures

A metropolitan water and sewerage district is governed by a district board whose composition is intended to reflect the counties, municipalities, and related service areas connected to the district. Appointment authority is shared among participating governments and, in limited cases, governments outside the district whose watersheds serve the system. G.S. 162A-85.3.

Each county served wholly or partly by the district appoints two members to the board. Counties with a population over 200,000 appoint one additional member. Municipal representation is layered in a similar way. Any municipality served by the district that is located in a county with a population over 200,000 appoints one member, and any municipality served by the district with a population over 75,000 appoints two additional members beyond that baseline representation. 

The statute also provides for representation tied to system impacts rather than direct service. If a watershed serving the district lies within a municipality that is not served by the district, the county in which that watershed is located appoints one member, selected from a list of nominees provided by the municipality. In addition, any elected water and sewer district that is wholly contained within the metropolitan district appoints one member to the board. 

Board members serve three-year terms and continue to serve until a successor is appointed and qualified. Vacancies are filled, and members may be removed, by the same governing body that made the original appointment. Before assuming office, each member must take and file the required oath of office. 

The board elects a chair and vice-chair from among its members and appoints a secretary and treasurer, who may or may not be board members. Officer terms and duties are established in the board’s bylaws. The board sets its own meeting schedule, complies with the Open Meetings Law, and acts by majority vote of a quorum. Members may receive per-meeting compensation, subject to a statutory cap, and reimbursement for actual expenses. 

Powers and Funding

A metropolitan water and sewerage district has essentially the same operational, regulatory, and financing authority as a metropolitan water district and a metropolitan sewerage district, and may exercise nearly all of the powers granted to both under G.S. 162A-36 and G.S. 162A-69. See G.S. 162A-85.5. This includes broad authority to acquire, construct, own, operate, and maintain water systems and sewerage systems; to adopt ordinances and enforce them through civil penalties and equitable remedies; to obtain rights-of-way and easements; and to coordinate infrastructure planning with counties and municipalities.

The district may fix, revise, and collect rates, fees, and other charges for water and sewer services, including system development fees adopted in accordance with Article 8 of Chapter 162A. G.S. 162A-85.13. Rates must be applied uniformly throughout the district and are not subject to State or local rate regulation. The district may establish collection and enforcement mechanisms, including service termination for nonpayment.

Unlike metropolitan water districts and metropolitan sewerage districts, however, a metropolitan water and sewerage district does not have authority to levy ad valorem taxes. The taxing authority found in subdivision (9) of G.S. 162A-36 and G.S. 162A-69 is expressly excluded from Article 5A. As a result, district debt must be supported by system revenues or by contractual commitments from participating political subdivisions, rather than by district-imposed property taxes.

Counties and municipalities are expressly authorized to transfer existing water and sewer systems and related property to the district, subject to Local Government Commission approval when outstanding debt is involved, and to enter into contracts with the district for water supply, wastewater services, jointly financed facilities, billing and collection, and enforcement. G.S. 162A-85.19. Participating political subdivisions may pledge their own rates, fees, or other available funds to meet contractual obligations to the district and may levy ad valorem taxes for that purpose, subject to applicable voter approval requirements.

Finally, Article 5A prohibits privatization of the provision of water or sewer services to district customers, except for administrative functions. G.S. 162A-85.29.

Conclusion

Metropolitan water districts, metropolitan sewerage districts, and metropolitan water and sewerage districts provide North Carolina local governments with additional regional tools for delivering utility services across jurisdictional boundaries. Although each model creates a separate public body governed by an appointed district board, the statutes reflect different legislative choices about who may initiate a district, how much local consent is required, how governing boards are structured, and what revenue sources may be used to support operations and capital investment. Understanding these distinctions is essential when evaluating whether a metropolitan district structure is appropriate for a particular service area, set of participating governments, or infrastructure need.

Coates’ Canons NC Local Government Law

Metropolitan Water Districts, Metropolitan Sewerage Districts, and Metropolitan Water and Sewerage Districts in North Carolina

Published: 12/31/25

Author:

As discussed in previous posts, North Carolina law authorizes local governments to provide water and sewer services using a range of legal structures. These include direct ownership and operation as a municipal or county public enterprise, contractual interlocal arrangements among governments, and regional entities such as sanitary districts, water and sewer authorities, and county water and sewer districts. Each structure reflects different legislative choices about governance, financing, service areas, and the allocation of authority among participating governments.

This post examines three additional regional district structures authorized under G.S. Ch. 162A: metropolitan water districts (Article 4), metropolitan sewerage districts (Article 5), and metropolitan water and sewerage districts (Article 5A). Each article authorizes the creation of a separate public body to provide water service, sewer service, or both across multiple jurisdictions. While all three are designed to support regional service delivery, they differ in important ways, including which political subdivisions may participate, the procedures required to establish a district, and the structure and authority of the governing board.

To make those differences clear, this post walks through each metropolitan district model by focusing on four core elements: the district’s statutory purpose and scope; who may create the district and how the creation process works; how the district is governed, including board composition; and the district’s core powers and financing authority. It then compares the three models to highlight practical distinctions in governance, legal authority, and use.

Metropolitan Water Districts

G.S. Ch. 162A, Article 4 authorizes the creation of metropolitan water districts as special purpose local governments and public authorities with the power to own, operate, and finance water systems and sewerage systems. Although the statute permits a district to provide both services, the actual scope of a district’s authority is defined in the resolutions adopted by the participating local governments at creation and in the final resolution of the Commission for Public Health. 

For purposes of Article 4, water service encompasses the development, treatment, transmission, and distribution of potable water for public and private use, including sources of supply, treatment facilities, transmission mains, storage facilities, pumping stations, and related infrastructure. G.S. 162A-32. Sewer service refers to the collection, treatment, and disposal of wastewater. Sewerage systems are defined broadly and include collection lines, interceptors, pumping stations, treatment works, outfalls, and other facilities necessary to manage wastewater flows and protect public health. G.S. 162A-32.

Who May Create a Metropolitan Water District and How

A metropolitan water district may be created only within a single county and may be initiated in two ways under G.S. 162A-33. First, two or more political subdivisions in the county (including the county itself) may jointly petition to create a district. Second, one or more political subdivisions may petition together with one or more unincorporated areas of the county. All territory proposed for inclusion must lie within the same county, but it need not be contiguous. (For purposes of Article 4, a political subdivision includes the county, or a municipality or other unit of local government authorized to provide water or sewer service, including existing water or sewer districts and similar special-purpose local governments. G.S. 162A-32(9).)

Each participating political subdivision must adopt a resolution stating that creation of the district is necessary to preserve and promote public health and welfare and requesting creation of a district with defined boundaries. If unincorporated areas are included, residents of each area must submit a petition signed by at least fifteen percent (15%) of registered voters in that area. G.S. 162A-33(1)–(2). If an existing water district, sewer district, or other special-purpose local government seeks inclusion and its territory lies wholly or partly within a municipality, the petition may proceed only if the affected municipality adopts a resolution approving the inclusion or also petitions for inclusion. 

After the required resolutions and petitions are submitted, the county board of commissioners coordinates the remaining steps. The chair of the county board of commissioners notifies the Secretary of the NC Department of Environmental Quality (DEQ) and requests a joint public hearing with a DEQ representative. The Secretary and the county board chair jointly set the time and place of the hearing within the proposed district, and the county board chair provides the required public notice. 

The hearing is jointly conducted by the county board and the DEQ representative. After the hearing, if both the county board of commissioners and the Commission for Public Health determine that creation of the district would preserve and promote public health and welfare, the Commission for Public Health adopts the resolution creating the district and defining its boundaries. 

Governance Structures

A metropolitan water district is governed by a district board. Board members are appointed rather than elected, and appointment authority is allocated by statute. It is divided between the county board of commissioners and the governing boards of the participating political subdivisions, if any, as set out in G.S. 162A-34. The county board of commissioners appoints three members of the district board. These members must reside within the district and are deemed to represent all political subdivisions for which the county board is the governing body, typically the unincorporated areas of the county. The county does not receive any additional appointments in its role as a political subdivision; these three seats are its full representation.

Each municipality included in the district normally appoints one board member through its governing body. A population-based exception applies when a municipality’s population, according to the most recent census, exceeds the combined population of all other municipalities in the district, or, if it is the only municipality, exceeds the population of the remainder of the district. In that case, the municipality appoints three members instead of one. This exception is mandatory when the population threshold is met and can give a single large city appointment power equal to the county’s.

The statute sets no maximum board size. Every district has at least three members, but the board grows with each additional municipality and can grow further if the population exception applies. As a result, board size is driven by district design rather than statutory limits. Because the county’s three appointments create an odd starting point and each additional municipality adds a seat, board size naturally alternates between odd and even. The statute does not require an odd number or provide a tiebreaker. As a result, avoiding even-numbered boards is not a matter of bylaws or drafting, but of intentional district design at formation, including careful decisions about which municipalities are formally included and whether the population-based appointment rule applies.

Initial terms are staggered to promote continuity. The first appointees serve terms expiring one, two, and three years from the date the Commission for Public Health creates the district, with the county board of commissioners assigning the term lengths. When a governing body appoints three members, only one of those members may receive a three-year term. After that, successor appointments are made for the unexpired term only, reappointments are allowed, and appointment authority remains with the original appointing body. Members continue to serve until successors are appointed and qualified.

District board members may be removed only for cause and only by the governing body that appointed them. Before serving, each member must take an oath of office, which is filed with the clerk of the county board of commissioners.

Once seated, the board elects a chair and vice-chair from among its members and appoints a secretary and treasurer, who may or may not be board members and whose offices may be combined. Officer terms are set by the board’s bylaws.

Powers and Funding

A metropolitan water district has broad statutory authority to plan, own, develop, operate, and finance water infrastructure and, if authorized at creation or through a later expansion of authority, sewerage infrastructure. G.S. 162A-36. The board is empowered by statute to do all the following:

Ownership, Planning, and Operation of Systems

The district board is authorized to acquire, lease, construct, reconstruct, improve, extend, enlarge, equip, repair, operate, and maintain water systems and any part thereof. If sewer service is included within the district’s authorized purposes, the same authority applies to sewerage systems. G.S. 162A-36(5). These powers extend to facilities located both within and outside the district’s boundaries, provided that no water or sewerage facilities may be located within a city, town, or incorporated village without the consent of the governing body of that municipality. 

To carry out these functions, the district may acquire real and personal property by gift, purchase, lease, or the exercise of eminent domain, which must be conducted in accordance with Chapter 40A of the General Statutes. G.S. 162A-36(10). This authority includes the acquisition of easements, rights-of-way, and other interests in land necessary for the construction, extension, maintenance, and operation of district facilities. The district may obtain rights-of-way and easements across public or private property, including streets and highways, to facilitate system construction and operation. G.S. 162A-54. Property no longer needed for district purposes may be sold, leased, exchanged, or otherwise disposed of, and the district may manage, protect, and insure its assets. G.S. 162A-36(10).

State law anticipates coordination with other planning entities. Preliminary plans for district facilities must be submitted to appropriate regional and local planning agencies, and the district is authorized to cooperate with planning agencies and other governmental units, to the extent practicable, in coordinating utility facilities and services. G.S. 162A-55.

Corporate, Administrative, and Contracting Powers

The district may adopt bylaws for the regulation of its affairs, adopt and alter an official seal, maintain offices within the district, and sue or be sued in its own name. G.S. 162A-36(1)–(4). To administer and operate its systems, the district may employ officers, employees, and agents and retain engineers, attorneys, financial advisors, operators, and other professional service providers, subject to applicable budgeting and fiscal control laws. G.S. 162A-36(12).

The district may enter into contracts, leases, and agreements necessary or incidental to the performance of its duties and the execution of its powers. G.S. 162A-36(11). This authority includes contracts and interlocal agreements with counties, municipalities, other districts, authorities, State or federal agencies, and private entities for the planning, construction, financing, operation, management, maintenance, or shared use of water or sewer facilities and services. 

Transfers, Leasing, and Intergovernmental Financial Support

With the approval of the Local Government Commission, political subdivisions included within the district may transfer, lease, sell, grant, or otherwise convey existing water or sewer systems and related property to the district on terms agreed upon by the parties. G.S. 162A-53. The district also may lease water or sewer systems, or portions thereof, from cities, towns, municipal corporations, or other water or sewer districts on terms the district board determines to be fair and reasonable. G.S. 162A-36(16).

The district may negotiate and pay close-out costs associated with the acquisition or lease of existing systems. G.S. 162A-36(14). It may determine the extent to which local distribution or collection system improvements will be financed with district revenues and may contract with other political subdivisions for the construction of jointly financed facilities, with title vested in the district. G.S. 162A-36(15).

Political subdivisions included within the district may make advances or contributions to cover preliminary or start-up expenses, including planning, engineering, and organizational costs, with reimbursement as provided by law or by agreement. G.S. 162A-56. In addition, the district may receive and accept loans, grants, advances, or contributions from the United States, the State, or any agency or instrumentality thereof, and may accept contributions from any source of money, property, labor, or other things of value, subject to applicable conditions and use restrictions. G.S. 162A-36(13).

Taxing Authority

A metropolitan water district has independent authority to levy an ad valorem tax on all taxable property within the district. Property taxes may be levied in amounts sufficient to meet all lawful obligations of the district, including the costs of operating, maintaining, and repairing the district’s water and sewerage systems, as well as paying obligations incurred in the performance of the district’s governmental functions. G.S. 162A-36(9).

The district board determines the amount of tax required and certifies the tax rate to the county board of commissioners. The county levies and collects the tax on the district’s behalf, but the tax is imposed under district authority and for district purposes. G.S. 162A-45.

Tax revenues are subject to express statutory limitations. District revenues, including tax proceeds, may be used only for the operation, improvement, or benefit of the district’s water and sewerage systems and for payment of principal and interest on bonds issued by the district. District revenues may not be used to pay interest or amortization on utility bonds previously issued by a city, town, or other water or sewer district. G.S. 162A-36(b).

Rates, Fees, and Service Enforcement

In addition to taxes, the district board is authorized to fix, revise, and collect rates, fees, rents, and other charges for services furnished by the district’s water and sewerage systems. G.S. 162A-36(8); G.S. 162A-49. Rates and charges may be structured to support system operations, maintenance, debt service, capital improvements, reserves, and other lawful district purposes. A district may provide water service to a municipality or county within the district, for governmental purposes without charge or at reduced rates. G.S. 162A-36(b).

The district may impose system development fees, but only in accordance with Article 8 of Chapter 162A, including statutory requirements governing calculation, adoption, accounting, expenditure, and credits for developer-constructed capacity. G.S. 162A-36(8a); G.S. 162A-49(b).

The district board may adopt methods for collection of such rents, rates, fees and charges and measures for enforcement of collection thereof, including penalties and the denial or discontinuance of service. G.S. 162A-49(a); G.S. 162A-36(17).

Borrowing and financing authority

A metropolitan water district has broad authority to borrow money and issue debt to finance its systems. The district may issue general obligation bonds and general obligation refunding bonds secured by its taxing power, subject to voter approval and compliance with the Local Government Finance Act. G.S. 162A-36(6), (7). General obligation bonds are supported by an ad valorem tax levied on all taxable property within the district. G.S. 162A-45.

The district also may issue revenue bonds and revenue refunding bonds payable solely from revenues derived from the operation of its water and sewerage systems. G.S. 162A-36(6), (7). Revenue bonds do not pledge the taxing power of the district or any participating political subdivision.

In addition, the district may enter into installment financing arrangements pursuant to G.S. 160A-20 and may pledge a security interest as permitted by that statute. G.S. 162A-36(7a).

Once created, the district board exercises these powers independently within the scope of its statutory authority, subject to applicable procedural requirements, financial oversight, and other limitations imposed by state law.

Metropolitan Sewerage Districts

G.S. Chapter 162A, Article 5 authorizes the creation of a metropolitan sewerage district as a special purpose local government and public authority with the power to plan, acquire, construct, operate, maintain, regulate, and finance sewerage systems serving regional needs. 

For purposes of Article 5, “sewerage systems” are defined broadly and include both sewer systems and sewage disposal systems. These terms encompass collection lines, interceptors, trunk sewers, pressure lines, pumping stations, treatment works, outfalls, power facilities, septic and on-site disposal systems, buildings and other structures, and all real and personal property, easements, franchises, contractual rights, and other interests necessary or useful for the collection, treatment, and disposal of wastewater. G.S. 162A-65(a)(11)–(13).

Who May Create a Metropolitan Sewerage District and How

A metropolitan sewerage district may be proposed by any two or more political subdivisions, such as counties, municipalities, or other special purpose local governments, located in one or more counties, or by one or more political subdivisions together with unincorporated areas in one or more counties. G.S. 162A-65; G.S. 162A-66. The political subdivisions and unincorporated areas included in the proposal are not required to be contiguous.

To initiate creation of the district, under G.S. 162A-66, the proposing political subdivisions must file materials with the board or boards of commissioners of the county or counties in which the proposed district would be located. These materials must include:

  1. A resolution adopted by the governing body of each political subdivision proposed for inclusion, stating that creation of the metropolitan sewerage district is necessary to preserve and promote public health and welfare within the proposed district and requesting creation of a district with the boundaries described in the resolution.
  2. If any unincorporated area is proposed for inclusion, a petition signed by at least fifty-one percent (51%) of the qualified voters residing in that area. The petition must define the boundaries of the unincorporated area, state that creation of the metropolitan sewerage district is necessary to preserve and promote public health and welfare, and request creation of a metropolitan sewerage district with the boundaries described in the petition. 

Once the required resolutions and any required voter petitions are filed, the county board or boards of commissioners for the county or counties in which the proposed district will lie take the next procedural steps. Acting through the chair, the county board or boards notify the North Carolina Environmental Management Commission (EMC) that the resolutions and petitions have been received and formally request that the EMC participate in a joint public hearing on the proposed district. 

The public hearing is conducted jointly by the county board or boards of commissioners and a representative of the EMC. The chair of the EMC and the chair or chairs of the county boards jointly select the time and place for the hearing, which must be held within the proposed district. If the proposed district lies in more than one county, the hearing must be held in the county containing the greater portion of the proposed district. 

Notice of the hearing is provided by the county board or boards of commissioners. Notice must be posted at the courthouse of each affected county at least 30 days before the hearing and must also be published once a week for four successive weeks in a newspaper of general circulation within the proposed district, with the first publication occurring at least 30 days before the hearing. 

After the public hearing, creation of the district requires affirmative determinations by both the county board or boards of commissioners and the EMC. Each must find that establishing the metropolitan sewerage district would preserve and promote public health and welfare within the area described in the resolutions and petitions. If all the bodies make this finding, the EMC adopts a resolution creating the district, establishing its boundaries, and formally designating the territory as a metropolitan sewerage district under an official name. 

Before adopting the resolution creating the district, however, the EMC must receive a resolution supporting creation from (1) the board of commissioners of each county lying wholly or partly within the proposed district and (2) the governing board of every political subdivision located in those counties. If the EMC does not receive a supporting resolution from each such governing body, it is prohibited from creating the district. G.S. 162A-66.5.

Once the district is created, the EMC must transmit copies of the creating resolution to the county board or boards of commissioners and to the governing body of each political subdivision included in the district. The county board or boards must then publish the resolution in a newspaper circulating within the district once a week for two successive weeks, along with a statutory notice advising the public of the district’s creation and the deadline for challenging its validity. 

Any action or proceeding challenging the validity of the EMC’s resolution or the creation of the metropolitan sewerage district must be commenced within 30 days after the first publication of the resolution. After that 30-day period expires, the validity of the district’s creation may not be challenged in any court on any ground. 

Expansion to Include Additional Political Subdivisions or Unincorporated Areas

After a metropolitan sewerage district is created, its boundaries may be expanded to include additional political subdivisions or unincorporated areas. Expansion is initiated by a resolution of a political subdivision requesting inclusion of all or part of its territory, or by a petition signed by at least fifty-one percent (51%) of the qualified voters in an unincorporated area. The request is filed with the district board. G.S. 162A-68.

If the district board supports the request, it must submit a report to the county board or boards of commissioners and the EMC describing how sewerage service will be extended to the new territory. The report must include maps, a service extension plan, a proposed schedule, estimated costs, financing methods, existing district debt, and assessed property values. Sewerage service must be extended on substantially the same basis as within the existing district. 

The county board or boards of commissioners and the EMC then conduct a joint public hearing, following the same notice requirements used for district creation. If both determine that inclusion would preserve and promote public health and welfare, the EMC adopts a resolution redefining the district’s boundaries to include the additional territory. 

District voters may require an election on the proposed inclusion by filing a petition signed by at least ten percent (10%) of qualified voters in the district. An election is held only after the EMC has approved the inclusion. 

A streamlined alternative applies when a county seeks inclusion and is already receiving bulk sewer service from the district, the district has installed sewer infrastructure in the county, and the district serves customers there. In that case, the EMC conducts a public hearing in the requesting county and may approve inclusion by resolution without an election if it determines that inclusion will not adversely affect customer service in the district and will preserve and promote public health and welfare. G.S. 162A-68.5.

Any territory added to the district becomes subject to all existing district debts. Municipal annexation of territory outside the district automatically brings the annexed area into the district and subjects it to district obligations, but does not trigger the formal inclusion procedures described above. G.S. 162A-68; G.S. 162A-68.5.

Any legal challenge to an EMC resolution approving inclusion must be filed within 30 days after the effective date of the resolution or applicable statutory notice. After that period expires, the inclusion may not be challenged on any ground. 

Following inclusion, district board membership is adjusted as required by statute to provide representation for newly included territory. 

Governance Structures

Under G.S. 162A-67, a metropolitan sewerage district is governed by an appointed district board. Board composition depends primarily on whether any portion of the district lies outside municipal limits, the number of counties involved, and population within the district. For purposes of representation, population is determined using the most recent decennial census and includes only the population residing within the district’s boundaries. Only political subdivisions that own or operate a public wastewater collection system at the time of appointment are entitled to appoint board members. G.S. 162A-67.5.

If the district lies wholly or partly outside the corporate limits of a city or town, the district board is appointed immediately after the district is created, and counties provide the core of the board. In a single-county district, the county board of commissioners appoints three members if the county population is 25,000 or more, or five members if the population is under 25,000. All appointees must be qualified voters residing within the district. Initial terms are staggered, and successor terms are three years. 

If the district lies in two counties, the county containing the larger portion of the district appoints two members and the county containing the smaller portion appoints one member. If the district lies in three or more counties, each county appoints one member who must reside in both the district and the appointing county. In both cases, initial terms are staggered and successor terms are three years. 

In districts that lie wholly or partly outside municipal limits, municipalities and other political subdivisions within the district may also appoint board members. Each political subdivision other than a county that lies wholly or partly within the district appoints one member, unless the county board of commissioners is the governing body of that subdivision. A population-based exception applies if a city or town within the district has more than one-half of the combined population of all other non-county political subdivisions and unincorporated areas within the district, in which case that city or town appoints three members instead of one. 

If the district lies entirely within the corporate limits of two or more cities or towns, a different appointment structure applies. Each city or town appoints two members who must reside in both the district and the appointing municipality. Those appointed members then elect one additional member who must reside in the district and one of the participating cities or towns. Initial municipal appointees serve staggered terms tied to the next regular municipal election cycle, and successor municipal appointees and the board-elected member serve four-year terms. 

Members of the district board may be reappointed, and vacancies are filled by the same governing body that made the original appointment for the remainder of the unexpired term. A member may be removed only for cause by the appointing governing body, and members continue to serve until their successors are appointed and qualified. Before entering office, each member must take an oath of office, which is filed with the clerk of the county board or boards of commissioners. The district board elects its officers, sets its meeting schedule, and conducts business by majority vote with a quorum present. Members may receive compensation and reimbursement of expenses within statutory limits.

Powers and Funding

The district board’s powers and funding authority generally parallel those granted to metropolitan water districts, but are limited to the planning, ownership, operation, and financing of sewerage systems.

General and Operational Powers

A metropolitan sewerage district may adopt bylaws and ordinances; maintain offices; sue and be sued; enter into contracts; and employ staff, professionals, and agents as necessary to carry out its functions. G.S. 162A-69(1)–(4), (11), (12), (14). The district may acquire, hold, lease, convey, and dispose of real and personal property, including property acquired by eminent domain exercised in accordance with Chapter 40A. G.S. 162A-69(10).

The district may acquire, construct, reconstruct, extend, improve, repair, maintain, and operate sewerage systems, including facilities located outside the district with the consent of the affected municipality. G.S. 162A-69(5). It may regulate discharges into district systems by ordinance, require connection to district sewer lines, and impose connection charges, following the notice and review procedures set out in the statute. G.S. 162A-69(13a)–(13b).

The district is granted statutory rights-of-way and easements across State highways and municipal streets when necessary for district purposes, subject to reasonable requirements of NCDOT or the affected municipality. G.S. 162A-74. Before constructing new sewerage facilities, the district must present preliminary plans to applicable planning agencies and coordinate, where practicable, with local and regional land-use plans. G.S. 162A-75.

Rates, Fees, and System Development Fees

The district board may fix, revise, and collect rents, rates, fees, and other charges for sewer services. G.S. 162A-69(8); G.S. 162A-72(a). These charges are not subject to State or local rate regulation. When pledged to revenue bonds or general obligation bonds, rates must be set at levels sufficient to cover operating and maintenance costs, reserves, and debt service. The district may enforce collection through penalties and the denial or discontinuance of service.

A metropolitan sewerage district may impose system development fees, but only in accordance with Article 8 of Chapter 162A. G.S. 162A-69(8a); G.S. 162A-72(b).

Debt and Taxing Authority

A metropolitan sewerage district may issue general obligation bonds and revenue bonds, including refunding bonds, and may issue bonds and notes under the Local Government Finance Act. G.S. 162A-69(6)–(7); G.S. 162A-70. To support district obligations, the district has express authority to cause ad valorem taxes to be levied on all taxable property within the district. G.S. 162A-69(9).

Each year, the district board determines the amount needed to fund operations, meet obligations, and pay debt service, and certifies the required tax rate to the county or counties. The counties levy and collect the tax on the district’s behalf and remit the proceeds to the district. G.S. 162A-71.

Intergovernmental Transfers, Contracts, and Financial Support

Counties and municipalities may, subject to Local Government Commission approval when outstanding debt is involved, transfer existing sewerage systems and related property to a metropolitan sewerage district. G.S. 162A-73(1). Political subdivisions may also contract with the district for sewage collection, treatment, disposal, billing, and enforcement services. G.S. 162A-73(2).

Participating political subdivisions may fix and pledge their own sewer-related rates and fees to meet contractual obligations to the district and may levy ad valorem taxes to make those payments. G.S. 162A-73(3)–(4). Water systems serving the same customers are expressly authorized to act as billing and collection agents for district sewer charges. G.S. 162A-76.

Assumption of Debt and Structural Changes

A metropolitan sewerage district may assume outstanding sewer-related debt of a political subdivision within the district, but only with voter approval. G.S. 162A-77. If debt is assumed, the district must levy a tax sufficient to pay that debt unless other funds are available.

If a district lies entirely within a city or town, it may be merged into that municipality following a special election, with the city or town assuming all assets and liabilities of the district. G.S. 162A-77.1. Political subdivisions may also advance funds for preliminary district expenses, which may be repaid from bond proceeds or other district revenues. G.S. 162A-78.

Metropolitan Water and Sewerage Districts

G.S. Ch. 162A, Article 5A authorizes the creation of a metropolitan water and sewerage district as a special purpose local government and public authority with the power to provide both water service and sewer service within a defined geographic area. For purposes of Article 5A, “water service” is defined consistently with Article 4 (metropolitan water districts), and “sewerage” or “sewer service” is defined consistently with Article 5 (metropolitan sewerage districts).

Who May Create a Metropolitan Water and Sewerage District and How

A metropolitan water and sewerage district may be created by two or more political subdivisions—that is, counties, municipalities or other special purpose local governments. Unlike the other metropolitan district models in Chapter 162A, no State-level approval is required. G.S. 162A-85.1; G.S. 162A-85.2.

To create the district, each participating political subdivision must adopt a resolution establishing the district. The resolutions must collectively set forth:

  • the names of the appointees to the district board,
  • the date on which the district board will be established, and
  • the boundaries of the district. G.S. 162A-85.2.

Before adopting its resolution, each governing body must hold at least two public hearings on the proposed district. The hearings must be held at least 30 days apart, with notice of each hearing published in a newspaper of general circulation at least 10 days before the hearing date.

Once all required resolutions have been adopted and the procedural requirements satisfied, the district is created by operation of law on the date specified in the resolutions.

After creation, the district may later expand to include additional political subdivisions. Expansion requires the adoption of identical resolutions by both the district board and the joining political subdivision, following the same two-hearing notice and timing requirements applicable to initial creation. Upon adoption, the new political subdivision appoints a board member if it is entitled to representation under the board composition statute. G.S. 162A-85.4.

Governance Structures

A metropolitan water and sewerage district is governed by a district board whose composition is intended to reflect the counties, municipalities, and related service areas connected to the district. Appointment authority is shared among participating governments and, in limited cases, governments outside the district whose watersheds serve the system. G.S. 162A-85.3.

Each county served wholly or partly by the district appoints two members to the board. Counties with a population over 200,000 appoint one additional member. Municipal representation is layered in a similar way. Any municipality served by the district that is located in a county with a population over 200,000 appoints one member, and any municipality served by the district with a population over 75,000 appoints two additional members beyond that baseline representation. 

The statute also provides for representation tied to system impacts rather than direct service. If a watershed serving the district lies within a municipality that is not served by the district, the county in which that watershed is located appoints one member, selected from a list of nominees provided by the municipality. In addition, any elected water and sewer district that is wholly contained within the metropolitan district appoints one member to the board. 

Board members serve three-year terms and continue to serve until a successor is appointed and qualified. Vacancies are filled, and members may be removed, by the same governing body that made the original appointment. Before assuming office, each member must take and file the required oath of office. 

The board elects a chair and vice-chair from among its members and appoints a secretary and treasurer, who may or may not be board members. Officer terms and duties are established in the board’s bylaws. The board sets its own meeting schedule, complies with the Open Meetings Law, and acts by majority vote of a quorum. Members may receive per-meeting compensation, subject to a statutory cap, and reimbursement for actual expenses. 

Powers and Funding

A metropolitan water and sewerage district has essentially the same operational, regulatory, and financing authority as a metropolitan water district and a metropolitan sewerage district, and may exercise nearly all of the powers granted to both under G.S. 162A-36 and G.S. 162A-69. See G.S. 162A-85.5. This includes broad authority to acquire, construct, own, operate, and maintain water systems and sewerage systems; to adopt ordinances and enforce them through civil penalties and equitable remedies; to obtain rights-of-way and easements; and to coordinate infrastructure planning with counties and municipalities.

The district may fix, revise, and collect rates, fees, and other charges for water and sewer services, including system development fees adopted in accordance with Article 8 of Chapter 162A. G.S. 162A-85.13. Rates must be applied uniformly throughout the district and are not subject to State or local rate regulation. The district may establish collection and enforcement mechanisms, including service termination for nonpayment.

Unlike metropolitan water districts and metropolitan sewerage districts, however, a metropolitan water and sewerage district does not have authority to levy ad valorem taxes. The taxing authority found in subdivision (9) of G.S. 162A-36 and G.S. 162A-69 is expressly excluded from Article 5A. As a result, district debt must be supported by system revenues or by contractual commitments from participating political subdivisions, rather than by district-imposed property taxes.

Counties and municipalities are expressly authorized to transfer existing water and sewer systems and related property to the district, subject to Local Government Commission approval when outstanding debt is involved, and to enter into contracts with the district for water supply, wastewater services, jointly financed facilities, billing and collection, and enforcement. G.S. 162A-85.19. Participating political subdivisions may pledge their own rates, fees, or other available funds to meet contractual obligations to the district and may levy ad valorem taxes for that purpose, subject to applicable voter approval requirements.

Finally, Article 5A prohibits privatization of the provision of water or sewer services to district customers, except for administrative functions. G.S. 162A-85.29.

Conclusion

Metropolitan water districts, metropolitan sewerage districts, and metropolitan water and sewerage districts provide North Carolina local governments with additional regional tools for delivering utility services across jurisdictional boundaries. Although each model creates a separate public body governed by an appointed district board, the statutes reflect different legislative choices about who may initiate a district, how much local consent is required, how governing boards are structured, and what revenue sources may be used to support operations and capital investment. Understanding these distinctions is essential when evaluating whether a metropolitan district structure is appropriate for a particular service area, set of participating governments, or infrastructure need.

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