Denver Water is raising the fees it charges to add new apartments, homes and businesses to its system by as much as 32% this year, a measure the giant agency says is necessary to cover the cost of expanded reservoirs, water supplies and pipelines.
The utility, which serves 1.5 million people in metro Denver, hasn’t raised those rates since 2013, according to its rate manager, Fletcher Davis.
Though the metro area has grown during that period, customer conservation, the use of water efficient landscapes and showerheads and toilets have allowed the utility to cover new growth without additional expensive new infrastructure.
Since 2013, Davis said, “even though costs had increased, the amount that new customers required had decreased.”
But now, the demands of growth have caught up. The expansion of Gross Reservoir, construction of a new water treatment plant, and other projects caused the utility costs to rise, requiring the higher fees, Fletcher said. A tap fee is a one-time charge typically paid by the builder.
Under the new rates, a tap fee for a single-family home within Denver city limits will rise to $10,450, up from $7,930 in 2025, an increase of 32%, according fee scenarios published by the utility. For its suburban customers, the new fee is $14,680, up from $11,100 in 2025. Fees vary depending on the type of construction being served.
The Denver Board of Water Commissioners approved the increases last year, saying they were needed to make sure new growth was paying its own way. The new fees take effect July 1.
Susan Daggett, a University of Denver law professor and expert on affordable housing, said the increase comes at a time when housing growth has slowed in the metro area, a factor that reduces the immediate impact. She is also a former Denver Water board member.
“It is not that it doesn’t matter, but it matters less in Denver than it does in other parts of the state (where tap fees are much higher),” she said. “Our water rights are old, our system is mature and we’re not having to build a lot of new infrastructure. … And we’re just not building that much new housing.”
Other cities charge much higher rates to connect new houses and businesses to their water systems because modern construction costs are much higher than older cities, such as Denver, had to pay.
In Castle Rock, the tap fee for a single-family home is $45,760, according to Mark Marlowe, director of Castle Rock Water.
But the city has closely studied how it charges for water infrastructure, in part because builders are seeking ways to keep building costs lower.
The city responded by creating a set of deeply discounted tap fees on smaller homes. A home that is 1,500 square feet could see a fee that is 39% lower.
“It’s a significant discount,” Marlowe said.
Concern about rising tap fees and housing costs has intensified in recent years, and last year Colorado lawmakers approved House Bill 1211, a measure that imposed new requirements on special districts when they set those fees. Denver Water is a standalone municipal utility, not a special district, so it is not subject to the new law.
State Rep. Rebekah Stewart, a Democrat from Lakewood, said the affordability issue remains a top concern for her. She was a primary sponsor of House Bill 1211.
“If we can do a better job of tying tap fees to the future water use of that home and incentivize lower water use in those projects as well, that is what I would like to continue to see because water is going to be something that we will continue to grapple with in Colorado,” she said.
The issue remains particularly difficult for affordable housing projects, where high tap fees, on top of other development costs, can make projects too expensive to build.
Daggett pointed to one affordable housing project in Lafayette that had to find an additional $5 million to cover the costs of its new water supplies.
Denver Water’s Fletcher, however, said the utility has a special process for affordable housing developers. Those who agree to install ultraefficient appliances and landscaping can reduce their tap fees by 20%.
The latest increases come after Denver Water imposed new drought fees this summer to encourage conservation. The utility said at the time that it is anticipating a $30 million to $70 million budget shortfall this year due to lower water sales.
Across the country water infrastructure costs are rising and Fletcher said he expected Denver Water would face additional costs, but he hoped to avoid such large increases.
“We have some of the lowest fees on the Front Range,” Fletcher said. “And I would like to get to a point where we are raising them more often to avoid these double-digit increases.”
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