Colorado lawmakers are making moves to rein in rising waterline connection fees through a contentious bill that, supporters say, could help tackle the state’s shortage of affordable housing and boost water conservation.
Water and sewer providers charge one-time fees, called tap fees, to pay for constructing pipelines and providing water to new houses and commercial buildings. Developers and local officials say these fees vary widely — from $3,000 to $65,000 — and make it too expensive for people to build affordable housing, like apartment and condo buildings or small houses in backyards.
Water districts, many of which have opposed the legislation, say the fees have risen because the costs to build infrastructure and buy additional water in a water-short state are rising. Proposed changes, accepted during a Senate Local Government and Housing Committee hearing Wednesday, would help address those concerns, several water district representatives said.
The legislation, House Bill 1211, puts best practices identified by Western Resource Advocates into state law, said Rep. Rebekah Stewart, a Lakewood Democrat who sponsored the bill.
“Really, what this bill is hoping to do is move the needle just slightly forward because we have to do better with our water in Colorado, especially on the Front Range,” she said.
This Fresh Water News story is a collaboration between The Colorado Sun and Water Education Colorado. It also appears at wateredco.org/fresh-water-news.
The legislation requires water districts to consider offering discounts for water conservation measures, like expected long-term water usage and the use of water-efficient appliances and graywater systems. Or, districts could tie their fees to home size based on square footage, or the number of bedrooms and bathrooms.
The bill also says water districts should make sure tap fees are closely tied to expenses, and districts must provide water if they have the capacity to do so.
Many districts, like Aurora Water and Denver Water, already use these best practices, and it’s been a success. But some communities have raised concerns about “bad actors” charging too much, Stewart said.
Rising tap fees add to the high cost of housing in Colorado — and they eventually hit the wallets of many homebuyers.
As Colorado communities grow, real-estate developers work with water providers to make sure new neighborhoods and apartment buildings will have water and sewer service. Water providers, in turn, pay for water rights, water treatment plants, the water itself, pipe construction and more to provide those services.
Districts are legally allowed to charge developers and property owners one-time tap fees to cover their infrastructure and water costs. Developers often pass these fees down to homeowners as part of the purchase price for a new home.
The Front Range is a big water user and should be careful about using the resource, Stewart said.
“But also we have a housing affordability crisis,” she said. “It is really important to take into consideration all the pieces that contribute to the cost of housing being built on the front end, and tap fees are a part of that.”
Barriers to affordable housing
The idea for the bill grew, in part, out of a local issue when an affordable housing development fell through in Lakewood, Stewart said.
Metro West Housing Solutions — the Lakewood housing authority — wanted to build affordable housing, but the tap fee was $14,000 per unit, Metro West Chief Real Estate Officer Brendalee Connors said during the hearing Wednesday. In the past, working with a different district on a separate project, the fee was $3,000 per unit.
The $14,000 fee per unit was too high, and they decided not to do the project, she said.
Others said the bill would address “bad actors” who were allegedly overcharging to push back against housing projects they don’t like.
It’s been an issue with Lakewood residents who want to build accessory dwelling units, like apartment units in backyards or above garages, Roger Low, a Lakewood city council member, said during the hearing. Some residents pay a few thousand dollars, but others say their tap fees are $20,000 to $30,000.
“Numerous constituents tell me these fees are literally prohibitive,” Low said. “In other words, if the water district’s goal was to deter construction of new ADUs, I know of multiple cases where it has worked.”
Stewart, a former Lakewood city council member, said she was familiar with inconsistent tap fees and legal battles over water in Lakewood.
The bill would help reduce affordable housing barriers and help make tap fees more proportional, she said.
Materials to create foundations for new housing at Hidden Valley Farm Neighborhood in Severance, Colorado on Wednesday, April 9, 2025. The fast-growing town is in the North Weld County Water District, which has been lobbying on a controversial bill dealing with water tap fees. (Tri Duong, Special to The Colorado Sun)Water districts want changes
Water districts want to make sure their voices are heard.
“It is important that we listen to those who know how to do this. They do take it seriously,” Ann Terry, CEO of the special district association. “Water infrastructure is expensive. It just is. We don’t want to see our development harmed because we can’t afford to provide the water and the water infrastructure to the homes.”
Districts don’t make a profit on tap fees, and they’re legally required to make sure the calculations reasonably compare to the actual costs. They’re also required to be transparent about those calculations, said Josh Stanley, district manager for the Green Mountain Water and Sanitation District.
Some water districts are concerned that if they charge less for tap fees, they’ll have to make up for that income gap, and their only other income source is monthly bills paid by existing customers.
“Costs are costs. If a development is not covering the full costs of the infrastructure upgrades or purchasing water to serve a new development … this means the balance of the cost will be shifted to other users,” Stanley said.
Others took issue with the bill’s language. Districts already incentivize conservation by charging more for more use in monthly bills, speakers said during committee hearings on the bill in February and April.
The bill also “unfairly targets” one group of water providers, special districts, and not others, like municipal water providers, several speakers said. Rural districts with smaller staffs and budgets might face more challenges with the new legislation.
“Policy should not set different standards for different types of water providers,” Stanley said.
Chiseling away at the opposition
Changes to the original bill have slowly addressed water district concerns.
North Weld County Water District and the East Larimer County Water District said they’d be willing to stop opposing the bill, and to move to a more neutral “amend” position if the committee accepted proposed changes — which the committee did Wednesday.
The lawmakers approved a change allowing water districts to take back reductions offered on the tap fees if the proposed conservation doesn’t actually happen. That answers Clifton Water District’s concern, voiced by former state Rep. Kathleen Curry during the hearing.
Colorado Water Congress, also represented by Curry, mainly wanted the bill to address issues with existing contracts and exemptions for small districts that serve less than 3,300 taps, she said.
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3:33 PM MDT on Apr 10, 20254:12 PM MDT on Apr 10, 2025The lawmakers were still considering requests to exempt small districts, Stewart said Wednesday. So far, they tried to give districts more flexibility in how they met the bill’s conservation standards, Stewart said.
“From the preliminary information that we got, it was still over half of the special districts,” Stewart said. “It didn’t feel fair to carve out over half the special districts in the bill.
The committee approved another change Wednesday that exempts water districts from the bill’s requirements if they conflict with ongoing contracts.
East Cherry Creek Valley Water and Sanitation District has a contract that’s nearly 50 years old that comes with a minimum amount allowed for a tap fee, said water attorney Bill Wombacher, who represented the district. In the past, the district has also had agreements, called bonding covenants, that prohibited reduced or free taps to make sure the bond holders would be repaid for the infrastructure costs.
Water districts are doing everything they can to keep costs down, Wombacher said.
“The cost of water rights, water courts, infrastructure and labor costs have all increased,” he said. “That’s why tap fees are increasing. It’s a reflection of the economic, legal and political climate.”
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