Senate committee advances bill to scale water tap fees to expected use, adds contract and clawback protections

House Bill 25-12-11, which would require special water and sanitation districts to scale tap fees to a property’s expected water use and to provide service when they have capacity, moved out of the Senate Local Government & Housing Committee on a 5-2 vote and was sent to the Committee of the Whole as amended.

The bill’s sponsors, Senator Bridges and Senator Kurt Meyer, said the proposal aims to support housing affordability and conserve water by making front-end incentives for developers to build lower‑use homes. Senator Bridges said the measure is not a “silver bullet” but ‘‘one of those silver BBs’’ for housing affordability and water conservation.

Supporters argued scaled tap fees would reward smaller lots and water‑efficient fixtures and reduce long‑term water use. Chelsea Benjamin, policy adviser at Western Resource Advocates, told the committee that conservation‑oriented tap fees — such as charges tied to irrigation needs or efficient indoor fixtures — have been used in Colorado and can lower costs and water use for developers and buyers. Benjie Edelstein, whose research focuses on tap fees and housing markets, testified that flat tap fees are inefficient and that reduced fees can change builder incentives toward more water‑efficient homes.

Opponents, including managers and representatives of several special districts and their trade groups, urged caution and said the bill initially risked shifting infrastructure costs onto existing customers or running afoul of existing contracts and bonding covenants. Kathleen Curry, representing Clifton Water District (and later testifying for Colorado Water Congress), said Clifton serves about 13,000 taps — roughly 40,000 people — and typically adds 100 to 120 new taps a year; she said mandatory reductions tied to factors in the bill would be “problematic from a real world perspective” without protections. Green Mountain Water and Sanitation District manager Josh Stanley said the bill as originally written ‘‘unfairly targets a small percentage of water providers’’ and could shift costs from developers to current users.

Committee sponsors and stakeholders negotiated three amendments that the committee adopted before the final vote. The adopted changes, introduced as L008, L009 and L012, include:

- L008: Clarifies that existing contractual obligations remain in force and creates a process allowing a district to recover (a “clawback”) a previously granted reduced tap fee if actual water use later substantially exceeds the usage basis for the reduction. Senator Bridges described this as preserving contracts and permitting recovery when customers change their use after receiving a reduced fee.

- L009: Further clarifies that the bill’s duty to provide service when a district has capacity does not apply to service provided outside a district’s boundaries or service area when that service is governed by a contract.

- L012: Adds an explicit factor districts may consider when setting proportional or reduced fees: the square footage of the lot or the equivalent residential unit, which sponsors said helps rural and low‑density districts account for lot size when assessing reasonable fees.

Witnesses and associations said the amendments addressed several core concerns. The Colorado Water Congress and the Special District Association of Colorado said they had worked with sponsors; both organizations indicated an ‘‘amend’’ position after the changes. Several district managers and the Colorado Rural Water Association said small and rural systems may need implementation support because they have limited staff and resources.

Committee debate included questions about how long a district could seek a clawback; sponsors said the language does not set a time limit for recovery. Senators also discussed capacity tests and the factors a district may use to determine whether it can serve a new tap, including lot size and projected indoor and outdoor use.

The committee recorded a roll‑call vote on the bill as amended: Senators Liston, Snyder, Wallace, Bridges and the chair voted yes; Senators Bazely and Rich voted no. The committee motion to send the bill to the Committee of the Whole as amended carried on that recorded vote. The bill’s next procedural step is Committee of the Whole consideration on the Senate floor.

Votes at a glance: - Amendment L008 (contracts & clawback): adopted on roll call; committee tally recorded as 6‑1 (Bazely opposed). Mover: Senator Bridges. - Amendment L009 (contract/extraterritorial service clarification): adopted without recorded objection. Mover: Senator Kurt Meyer. - Amendment L012 (lot square footage/equivalent residential unit factor): adopted without recorded objection. Mover: Senator Kurt Meyer. - Final motion (send HB 25-12-11 to Committee of the Whole as amended): passed on roll call, yes: Liston, Snyder, Wallace, Bridges, Chair (5); no: Bazely, Rich (2).

Why it matters: The bill targets how special districts set tap fees — fees that can add tens of thousands of dollars to development costs in some cases — and ties fee reductions to measurable conservation practices. Supporters say the change could lower a barrier to compact, water‑efficient housing. Opponents say the approach must protect existing contract obligations, bond covenants and the financial stability of districts serving current customers.

What the record shows: The transcript includes examples and data used in testimony: Clifton Water District said it serves about 13,000 taps and adds roughly 100–120 taps per year; MetroWest Housing Solutions said a proposed development faced a quoted sanitary sewer tap fee of about $486,000 (roughly $11,000 per unit) while other Lakewood projects had sanitary tap fees of about $3,000–$4,000 per unit; witness testimony and sponsors’ remarks indicate the amendments were developed with input from Colorado Water Congress, several special districts and district trade associations. The bill text and adopted amendments, as described in committee, preserve existing contracts, allow clawbacks where usage later increases, exempt contract‑governed extraterritorial service, and permit lot‑size as a factor in setting proportional fees.

The committee record does not specify an implementation timeline, administrative rules, or a statutory deadline for any clawback action. The transcript also does not include the bill’s final engrossed text; committees and the Committee of the Whole may still change statutory language.

Committee action: HB 25-12-11 advanced to the Committee of the Whole as amended. The bill’s supporters said they will continue stakeholder outreach; opponents asked for clarity on implementation and protections for small and contract‑bound districts.

(Reporting based on the committee hearing transcript.)