An often overlooked or underappreciated part of real estate entitlement is the consideration of Water Tap fees and the interrelated Sewer Use and Drainage Permit (SUDP) fees. In Denver, these fees are administered by two separate entities with differing standards. The result of this split approval process for the inexperienced can result in surprise fee increases when construction is well underway and Developers have finalized budgets and Pro Formas. Fee increases for one building alone can cost a developer up to $30,000, plus the additional expenses tied to delays and wasted time.
To understand this risk, it’s necessary to understand how the fees are administered. The City and County of Denver reviews utility plans and then issues permit fees based on the shown water tap sizes, so long as they are within Denver’s municipal guidelines. Denver Water charges tap fees as well, but their review is dependent on a host of more complex factors ranging from number of units to available pressure at a particular location. The pressure available to projects on certain streets or in certain neighborhoods may actually require a larger than typical tap size. Even though it is Denver Water necessitating this tap upsizing, Developers are still on the hook for the change in permit fees as issued by the City and County.
The table below shows the financial impact a forced upsizing can have on SUDP permit fees:
Proposed Tap Size
|Denver Water Forced Upsizing
||Difference in Cost
The difference in cost shown above is PER Water Tap, which means that the impact could easily be doubled or tripled for larger developments. Despite this fact, utility plans are often an afterthought for Developers, if they are considered at all. While a savvy architect and civil engineer may have properly vetted and spec’d correct water tap sizes, there’s no guarantee they have done the appropriate due diligence to try and lower costs directed toward Developers. In the event Denver Water does attempt to force a tap upsizing, there are strategies available to savvy Developers to try and prevent having to pay additional fees.
Water Tap Fees and the associated SUDP fees are just one of the many fees a Developer needs to understand in order to appropriately plan and budget for a project. RedT Homes has development entitlement experts on staff that can assist Developers by reviewing plans, budgets, and permit applications to be certain that an overlooked detail doesn’t result in an unexpected budget catastrophe later.