Ensuring the water delivered to customers is safe, reliable and affordable is Denver Water’s core mission. 

And for decades, its customers have consistently told the utility that “growth should pay for growth” as new customers are added to the complex system that collects, cleans and delivers the water for 1.5 million people in Denver and surrounding suburbs. 

With those goals in mind, Denver Water in 1973 created “System Development Charges,” commonly referred to as SDCs or tap fees, a one-time charge assessed on new development to recover the costs associated with providing new service to new customers. The fees also function as an initial “buy-in” into the system created, maintained and supported by existing customers through their water rates, much as new shareholders buy shares when they decide to invest in a company. 

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Existing customers will also pay a fee if they modify their property to require more water or additional infrastructure, such as can happen when an old single-family home is replaced with a multifamily building or an accessory dwelling unit is added to the property. 

Denver Water has periodically reviewed its SDCs over the years and the fees have held steady, with no changes, since 2013. 

“We’ve done a good job of holding our System Development Charges flat for more than a decade, and they’re among the lowest fees for new water service on the Front Range, but over that time our costs have risen and the value of our system has increased substantially,” said Fletcher Davis, Denver Water’s rates manager. 

Over the last decade of investments into the system by Denver Water’s existing customers, the value of one gallon the utility’s clean, safe drinking water has risen by more than 50%.

Information on Denver Water System Development Charges can be found at denverwater.org/SDC.

In addition to rates paid by customers, funding for Denver Water’s infrastructure projects, day-to-day operations and emergency expenses, like water main breaks, comes from bond sales, cash reserves, hydropower sales, grants, federal funding and System Development Charges. The utility does not make a profit or receive tax dollars. 

And Denver Water customers have made significant investments into the system in the last decade, including replacing thousands of old customer-owned lead service lines, building the new Northwater Treatment Plant and a new water quality laboratory, as well as beginning the construction work to nearly triple the storage capacity of Gross Reservoir northwest of Denver. The utility also replaces about 80,000 feet of old pipeline a year. 

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With those factors in mind, the five-member Denver Board of Water Commissioners, which oversees the utility, on March 26 voted unanimously to increase the utility’s SDC fees. The increase will be phased in during 2026 in two steps, with the first step for projects that submit applications and pay the charge on or after Jan. 1, 2026, and the second step being implemented six months later, on July 1, 2026. 

“The board decided to phase in the increase, starting Jan. 1, 2026, in response to feedback from stakeholders and builders in our community who asked for time to adjust to the fee increase,” Davis said. 

Denver Water’s SDC information, the current fees as well as the 2026 phased-in fees, can be found at denverwater.org/SDC. 

While Denver Water’s new development fees are increasing, the actual increase for an individual project will vary depending on the amount of water and infrastructure needed to serve that specific project, Davis explained.

Learn more about Denver Water’s work and the people who do it at denverwater.org/TAP.

It’s a methodology recommended by the national water utility group the American Water Works Association. To ensure its new development fees are set at an appropriate level, Denver Water will continue reviewing its SDC fees every two years, and also having the fees reviewed by a third-party specialist. 

Consistent with the practice in place since Denver Water initiated SDC fees in 1973, fees for projects built outside the city will remain higher to encourage denser development in Denver. 

For example, once the two-step phase-in is complete, the System Development Charge for a new single-family home on a 7,000-square-foot lot in Denver will rise from $7,930 currently to $10,450, an increase of $2,520. The new development fee for a similarly sized new single-family home in Denver Water’s suburban service areas will rise from $11,100 currently to $14,680, an increase of $3,560.

For denser development, such as a 40-unit apartment building, the new development fee inside Denver will rise from $2,166 per unit to $2,451 per unit. Outside Denver, the fee for a new 40-unit apartment building will increase from $3,028 per unit to $3,425 per unit.

For context, the new fees on a 40-unit apartment building will still remain a tiny fraction, less than 1%, of the overall cost to design and build a new apartment building. According to the Colorado Housing and Finance Authority, in 2024 the average cost per unit of affordable housing was nearly $433,000.

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To lessen the impact of the fee increase on new projects, Denver Water also expects to fully implement a long-running pilot program that offers qualifying projects a 20% credit on their new development fee — If developers incorporate water-saving devices and landscapes into their projects, reducing the building’s anticipated water needs by 25%. 

For instance, the pilot program asks developers to use water-efficient washers and low-flow toilets and faucets inside their new buildings in addition to planting water-wise landscapes outside. 

“Living in our dry climate, our water resources are precious, and Denver Water wants to help customers be as efficient as possible with their water use,” said Austin Krcmarik, who oversees the pilot program. 

“This program helps developers reduce their project’s water use up front, when the building is under construction. And that means the building tenants, whether the building is for residential or commercial use, will save water without having to think about — helping to keep water rates lower for everyone,” Krcmarik said.