Restrictions on Tap Fees

Current law permits the board of a special district (board) to fix and from time to time to increase or decrease fees for services, programs, or facilities furnished by the special district (district). The bill specifies that tap fees and system development fees imposed by the board of a special district must only be imposed in order to:

• Assign to developers a portion of the costs associated with new development or redevelopment;
• Refrain from imposing costs associated with new development or redevelopment on existing customers; and
• Ensure districts have sufficient funding and capacity to continue to manage and operate their water and sanitation systems.

The bill requires the board to:

• Set tap fees and system development fees at a level that is reasonably related to the anticipated costs of development, as acknowledged in the Colorado supreme court's decision in Krupp v. Breckenridge Sanitation Dist., 19 P.3d 687 (Colo. 2001);
• Consider professional analyses performed for the purpose of setting tap fees and system development fees when setting such fees; and
• Set tap fees and system development fees so that current customers of the district are not required to subsidize growth related to new development or redevelopment.

The bill clarifies that:

• It must not be construed to prohibit the board from securing sufficient water and sanitation capacity for the district's existing customers or from complying with the district's existing water and sanitation service agreements;
• A district shall not, for reasons unrelated to the district's capacity to provide water or sanitation services, refuse to provide water or sanitation services to new development or redevelopment projects that have been approved by the relevant land use jurisdiction; and
• A district must assess the costs of increasing capacity and purchasing water rights and require developers to bear those costs, thereby ensuring that service is not denied arbitrarily and is provided in accordance with the district's ability to expand capacity or acquire necessary resources.

The bill also permits an applicant for water or sanitation services to file a declaratory judgment action to determine whether tap fees or system development fees imposed by the board are reasonably related to the anticipated costs of development and services as set forth in the bill, or to file a challenge to the specific fees imposed upon the application pursuant to rule 106 of the Colorado rules of civil procedure. The bill requires that a the board of a special district, within 30 days of receiving a written request from any local government within the boundaries of which a the district operates or partly operates, provide the rate schedule for the district's tap fees, system development fees, or other fees and charges that contemplate future water or sanitation system usage, and, upon request of the local government, provide the any professional analyses and a detailed written justification of the costs and methodologies used to calculate those fees.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)