Colorado lawmakers send Jared Polis bill aimed at reining in water-connection fees for new construction

Lawmakers on Tuesday passed a contentious bill focused on reining in waterline connection costs for new developments. 

House Bill 1211 focuses on tap fees, one-time charges that developers and property owners pay when they want to connect a new building to an existing water system. It calls on water districts, which collect the fees, to consider cutting costs when conservation efforts or modern efficiencies are included in new developments. 

Many water districts opposed the bill or called for amendments, questioning its effectiveness, financial impacts and challenges for small and rural providers. For supporters, lower tap fees could help tackle the state’s affordable housing shortage by making apartment and condo buildings or small units in backyards less costly.

Rep. Rebekah Stewart, a Lakewood Democrat who sponsored the bill, said she is thrilled the legislation is headed to Gov. Jared Polis’ desk.

“Laying out these best practices will encourage new developments to build with water conservation in mind and support lower costs to affordable housing,” Stewart said in a written statement. 

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 bipartisan legislation passed the Senate and House this week by wide majorities. It 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 gray water 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.

During legislative hearings on the bill, city officials said the cost to connect new developments to water systems could cost anywhere from $3,000 to $65,000 per unit. 

The fees varied vastly even within the same city and it wasn’t always clear why, officials from Lakewood said. Some were high enough that it became too expensive for homeowners to build backyard abodes, called accessory dwelling units, and for some developers to complete affordable housing plans.

During the legislative hearings, some water providers called the bill “vague” and “impractical” or said it could cut into their ability to fund water services.

Tap fees are rising because the cost of infrastructure and water is increasing, they said. 

Districts don’t make a profit on tap fees, which pay for the cost of building new pipelines to reach new buildings, expanding treatment plants and providing additional water supplies when needed. They’re legally required to make sure the calculations reasonably compare with the actual costs. They’re also required to be transparent about those calculations. 

Districts already incentivize conservation in monthly bills by charging more for higher water use. Charging less for tap fees could increase monthly water bills for existing customers who have already paid to connect to a water system, water providers said.

Rural districts with smaller staffs and budgets might face more challenges with the new legislation, some providers said. 

Later amendments addressed many of the water districts’ concerns, minimizing disruptions to current contracts that include tap fee requirements and allowing districts to take back reductions to tap fees if the planned conservation efforts don’t actually happen.

The updated bill “satisfies the intent of the legislation to provide more affordable housing and promote conservation but also to alleviate the concern of shifting tap fee costs from development to the existing customers,” Eric Reckentine, district manager of North Weld County Water District, said in a written statement. 

The water district originally opposed the bill before changing to a more supportive stance once it was updated.