Home Builders' Water Fee Proposal Might Aid Conservation

by Steve Glazer, Chapter Water Resources Chair

The Denver Water Board charges a tap fee called a system development charge (SDC) to its customers in the Denver Metro Area, inside and outside of Denver. In this way new customers pay the costs of system expansion. The charge is meant to make development (and developers and their customers) pay the cost of adding capacity to the system to serve them.

This is one of the few instances where growth "pays its own way." This charge, however, has no conservation component. A builder pays a single charge per unit, which is the same for all residential units whether a $100,000 infill house or a $500,000 trophy residence, and the water user pays the same development charge no matter how much water he or she uses.

SDC's have been charged for the past 20 years in the metro area with the Denver Water Board's charge one of the lowest. When added to the cost of the home, the SDC is paid as part of the monthly mortgage and typically runs about $40 a month. The average water bill in the Denver system runs about $15 a month.

The Denver Metro Area Home Builders Association has proposed that the home buyer be allowed to choose whether to pay the SDC as part of the cost of the home or as part of the water rate. Lower-than-average users could avoid paying the full charge by having it included in the water bill (at the same rate per thousand gallons for every water user). Their water saving would therefore translate into real dollar savings on the development charge as well as the bill for water usage. (Someone using more water than average would probably choose to pay in a lump sum, as part of the cost of the home, because paying the per-gallon charge would result in payment of larger amount.)

If the Home Builders Association proposal is adopted by the water board, we will have the first meaningful test of pricing as a factor in conservation since Denver replaced flat rate billing with meters some years ago. It will eliminate the subsidy that those who conserve currently pay to those who use greater than average quantities.

The conservation community would be well served if someone would come up with equivalent proposals to eliminate the current subsidies to sprawl and for use of the private automobile.

The Conservation Committee has looked at the proposal from the Home Builders but was almost evenly divided over it. Member comments on this interesting idea can best be considered if posted to the conservation area of the chapter bulletin board at RMC-CONS-COMM.