Costs can drain wallet
The high tap fees put amajor crimp on housing affordability.
Embedded in the price of every new home and apartment built along the northern Front Range are some of the highest water infrastructure costs in the country.
Some factors behind those high costs are intractable: a scarcity of available water and the fact that most Coloradans live on one side of the Rocky Mountains and obtain their water from the other.
But another contributor is the upfront fees local utilities charge to connect water and sewer lines to homes and other buildings. In and around Denver, a chorus of developers, water-efficiency advocates and others say, those charges can add thousands of dollars in unnecessary costs to houses, apartments and condominiums.
Those higher costs, known as impact or tap fees, quietly get passed on to consumers in the form of heftier new-home prices and apartment rents.
“Tap fees cost every homeowner an incredible amount of money,” said Carmine Iadarola, president and founder of aquas an network, a water management and development consulting firm in Denver. “It impacts affordability and reduces conservation.”
One reason for that, Iadarola and others contend, is the wateruse models that predate u.s. entry into World War II. They haven’t kept up with strides in efficiency
and aren’t as accurate as modern alternatives based on actual usage.
In their defense, water utilities that use the old models say they are open to making changes, but they need proof that alternatives won’t be leaving buildings short of water. Undersizing a system, they warn, can create water-pressure problems and leave owners and tenants complaining to the local utility long after the builder has left the picture.
“Developers want least cost, and we want the most adequate supply,” said Cindy Marshall, manager of treated water planning at Denverwater. “There is a place we can meet in the middle.”
Denverwater, the largestwater provider along the northern Front Range, uses these long-standing models, which require a water connection to be big enough to handle every water-related appliance simultaneously without a critical loss in pressure.
Outdated calculations aside, Denverwater charges less forwater infrastructure overall because it got its start in 1918 and owns morewater rights than other utilities in Colorado.
Also, utilities contest the notion that their policies discourage conservation. In Aurora, for example, developers in Colorado’s third-largest city can get their impact fees down from $24,000 to $16,000 through a variety of conservation measures, such as substituting grass lawns with Xeriscaping, or reducing the number of fixtures.
The utility also recently began setting impact fees based on projected consumption rather than peak capacity.
“The more water you use, the more we have to go out and buy,” said Greg Baker, a spokesman at Aurorawater.
Iadarola, a water engineer, has fought for more than three decades to get utilities to allocate water capacity on actual usage. He said escalating home prices and rents have added urgency to the push to find a more dynamic system to set tap fees.
Those high fees hurt developers, too. In combination with rising land costs, they have diminished the pursuit of more affordable housing projects, said Steve Wilson, a development consultant in Denver.
“You can’t build a $200,000 house on a lot that will cost you $75,000 and that you will have to pay $50,000 in impact fees to the city for,” Wilson said. “You are $125,000 in the hole even before you bought a stick of wood.”
Efficiency not rewarded
Eliot Flats, a 40-unit apartment building in Denver’s Highland neighborhood that opened a year ago, offers a case study in howthe current system can work against water efficiency.
Brice Leconte, founder of iunit Denver, which built Eliot Flats, has a mission of developing apartments for a demographic he calls “the missing middle.” The units are environmentally sustainable and relatively affordable.
Living in the building areworking-class tenants who earn too much to qualify for subsidized units but can’t afford the luxury units springing up everywhere in central Denver.
Studio units are 380 square feet and cost $1,050 a month, while one-bedrooms are 460 square feet and rent for $1,300, below the $1,575 average in that part of Denver on a one-bedroom unit, according to Zumper, an apartment listing service.
Apartments at Eliot Flats are equipped with energy- andwaterconserving technologies throughout, and tenants can pull up an application and track their electricity and water use in real time, seeing where, in terms of consumption, they and their neighbors rank.
Because Denverwater charges a per-unit fee on multifamily Brice Leconte, a developer of small affordable apartments, sits in front of the water taps for his newly developed apartment complex, Eliot Flats, at 3233 Eliot St. in Denver. Northern Front Range water tap fees are some of the highest, and some developers argue they aremaking things unaffordable and deferring conservation. Helen H. Richardson, The Denver Post buildings, a studio at Eliot Flats has the same connection charge as a much larger penthouse in Cherry Creek or Lower Downtown.
“We don’t want to be charged like a traditional apartment,” said Leconte. “They didn’t take into account that these would be efficient units.”
Denverwater also required Eliot Flats to put in a 2-inch water pipe to handle peak demand. Leconte hired Aquasan to track actual water usage for nearly a year. Those measurements estimate a 1inch tap would have been more than sufficient.
The water coming into the building isn’t the only issue. The Metrowastewater District, which is separate from Denver Water, charges $92,600 to connect a building with a 2-inch tap versus $22,240 for a building with a 1-inch tap.
Leconte hopes the usage data from meters at Eliot Flats will help justify smaller water and sewer taps on future projects to Denverwater and other utilities. Those savingswould allowhim to put in additional conservation measures or complete the next project at a lower cost.
Lower tap fees could make a dent in developments such as Leconte’s and, more broadly, in Denver’s challenge with affordable housing.
Jeffrey Whiton, CEO of the Home Builders Association of Metro Denver, said that as much as government leaders scramble to provide incentives to promote it, they aren’t taking advantage of a tool they have at hand.