EXHIBITS TO THE CLIFTON WATER DISTRICT  -  RULES AND REGULATIONS.

EXHIBIT VI    -    RESIDENTIAL TAP FEE POLICY

Effective Date: 9/11/2025

Purpose and Scope

This policy outlines the basis for how the District establishes residential tap fees, while meeting compliance with relevant state laws and regulations concerning tap fees for utility districts, including HB 25-1211 and C.R.S. § 29-20-104.5, Colorado’s Impact Fee Law.

Terms and Definitions

Accessory Dwelling Unit (ADU): In the context of this policy, an ADU refers to a permanent, secondary housing unit on a property with a main house.

HB25-1211: House Bill 25-1211 enacted in May 2025, states that a water district has a duty to provide water service if the district has the capacity to do so, with certain exceptions. The Bill also requires special districts to satisfy certain requirements when establishing the amount of a residential tap fee, including ensuring that the tap fee is reasonably related to all costs incurred by the District in funding and providing water service, and applying at least one factor supporting the calculation and setting of proportional or reduced fees.

Irrigation Access: In the context of this policy, Irrigation Access is having a functional connection to a method of artificially applying water to land, typically for agriculture or landscaping, through a network of pipes, pumps, sprinklers, or other delivery methods, using water that has not undergone any treatment processes typically applied to drinking (potable) water. Irrigation Access in this Policy means a system that does not use water provided by the District. Grand Valley Irrigation Company (GVIC) is an example of a local irrigation water provider.

Multi-Family Residential: In the context of this policy, “multi-family” refers to properties like apartment buildings, trailer parks, or condominiums containing two or more separate housing units within a single building or complex that share a single water meter.

System Development Fees: System Development Fees (SDFs) are one-time charges to new residential connections to help fund the cost of expanding or upgrading the water system infrastructure and ensure that new development doesn’t unfairly burden existing customers with the costs of providing service to new users.

System Impact Fees: A one-time charge intended to help offset the financial impact new growth places on the current system’s infrastructure.

Tap Fee: In the context of this policy, a Tap Fee is the combination of a System Development Fee and a System Impact Fee into a one-time charge to developers or property owners to connect a property to the District’s system.

Methodology

For System Development Fees (SDFs), the primary consideration of the District is that “growth pays for the costs of growth.” This ensures that existing customers do not subsidize future customers. In addition to meeting the requirements of HB25-1211 and the District’s goals for recovering costs of growth, SDFs are developed in compliance with C.R.S. § 29-20-104.5, Colorado’s Impact Fee Law. The American Water Works Association (AWWA) and Water Environment Federation (WEF) publish recommended industry guidelines for calculating residential SDFs. Methods exist that use either the existing system capacity and value, future system expansions capacity and value, or a combination of both. The combined method was followed by the District in calculating its SDFs.  The combined methodology is appropriate for utilities with some available capacity in the existing system as well as measurable future expansion.

Valuing System Assets: Following the AWWA Manual, the District valued existing fixed asset inventory according to the replacement cost (in today’s dollars) less depreciation, and its Master Capital Improvement Plan (CIP). To avoid double-charging new customers for debt service paid in monthly rates, outstanding debt is subtracted from fixed asset values. In addition, assets contributed by developers were not included in the fixed asset values. Contributed capital, or infrastructure and water rights turned over to the District by developers, are excluded from the facilities values. Only physical assets were included in the determination of system value.

System Capacity: To calculate capacity, the combined methodology captures the existing capacity of the system, including separate components such as storage, pumping, and treatment, and future capacity of growth-related CIPs. Capacities for the District’s existing and future systems components were calculated based on assumptions in the Capital Improvement Plan and discussions with staff. The capacity of the entire system is primarily based on how much the Treatment Plant can produce. The capacity of the Distribution system itself is a difficult amount to estimate in terms of gallons per day, and capacity can vary widely in the Distribution system based on a variety of factors. 

System Demands: Customer demand is analyzed using the same unit measurement as the unit cost of capacity calculation in order to maintain the rational nexus between the cost of facilities and the cost to serve a new customer. Based on water treatment plant data, the average daily water flow per single-family equivalent (SFE) is calculated in gallons per day. A 12-month average peaking factor is determined from Treatment Plant data and applied to the average water flow per SFE to calculate a peak usage per SFE.

System Development Fee: The formula to calculate the base System Development Fee is

System Development Fee = Unit Cost of Capacity x Customer Demand Requirement

Proportional Requirement: To meet the requirement in HB25-1211 of applying factors supporting the calculation and setting of proportional or reduced fees, the District uses the unit size of the customer. The square footage of a unit can be a proxy for indoor water use. The size of a lot can also be correlated with water use; however, it is a less precise approximation because lot size does not indicate how much of the lot is taken up by the footprint of the unit. Nor does it provide information about how much area is landscaped or what type of landscaping may be in place. The lots within the District’s boundary also frequently have irrigation access for outside watering.  Other methods were also considered, including fixture counts, number of bedrooms in the dwelling, and the presence of greywater treatment works. These methods, although applicable to the District, would require significantly more administrative time to implement and to monitor for ongoing changes.

System Impact Fee – Meter Size Multiplier: Meter size is a widely used and straightforward method to predict the highest potential flow of water demand that the meter and infrastructure will need to provide. The necessary meter size is determined through engineering calculations based on maximum predicted flow rate. Most single-family residential homes require 5/8 inch or 3/4 inch meter. The maximum flow rate is used as the proxy for water demand, and fees can be charged accordingly.

Irrigation Access and Discount: Irrigation access allows properties to draw water specifically designated for irrigation, avoiding the use of the more expensive and thoroughly processed potable water supply. This reduces the overall demand on the treated water supply, allowing it to be conserved for essential indoor uses or for other purposes where potable water is strictly required. Because of this reduction in use and demand, if a property purchasing a tap will also have access to functional and active irrigation system, they are eligible for a reduction in the base tap fee.

Residential Tap Fees

Residential Tap fees are determined by combining a System Development Fee based on unit size and irrigation system access, and a System Impact Fee based on the meter size required. See Current Rates and Fees for rates currently in effect.

Tap Fee = System Development Fee + System Impact Fee

For ADU and Multi-Family properties, the System Development Fee is based on the total square footage of all units under a single meter and considers the property's irrigation status. Additional units beyond the first receive a 30% discount on the calculated fee.

Non-Refundable Residential Tap Fees

Residential Tap fees are collected to cover the costs associated with connecting a property to the water system and contributing to the overall infrastructure necessary to serve new customers. These costs include, but are not limited to, the expenses of installing the physical connection to the water main, a proportionate share of the infrastructure capacity, and funding capital improvements related to growth. Once a tap fee is paid, these actions are initiated to provide service, and the costs associated with them are incurred, regardless of whether the service is ultimately used as initially intended. This policy ensures that growth helps pay for growth and that the costs of expanding water infrastructure are fairly distributed among new customers; it also provides financial stability for the District to plan for future infrastructure improvements and maintenance.

Supplemental Fees

The District may charge supplemental fees for increased water demand on a property after the initial tap fee is issued.

Review

This policy should be reviewed at a minimum of every three years to ensure it continues to reflect the current cost of capacity. As the District continues to expand its facilities, future changes in technology, demands, development patterns, or other factors may necessitate additional adjustments.