A recent decision to reduce commercial water tap fees to make Colorado Springs more competitive with other cities along the Front Range and spur development is already having its desired effect.
A day after the City Council voted Feb. 28 to cut the fees, a developer pulled the trigger on an 88-unit condominium project.
“When we took that reduction into play, we said, ‘OK, let’s go,’” Mike Fenton, vice president of operations for Century Communities, said Friday.
“We’re actually going to pull a permit next week and get going,” he said. “We had planned on mothballing this thing until the market really recovered.”
Under the old rate structure, Fenton said he couldn’t make the project pencil out financially.
“We tried to turn the project into apartments. We tried townhomes,” he said. “This is good news for the community because now we’re going to add homes to the tax rolls. At the same time, with interest rates being where they are, we can make people homeowners for less than the cost of apartment rent.”
Colorado Springs Utilities, a city-owned enterprise that charges development fees, proposed the lower water tap fees after a review found it was charging more than other Front Range communities.
“We believe this is a potential detriment to economic development,” Bill Cherrier, Utilities’ chief planning and finance officer, said last month.
Dave Grossman, a Utilities spokesman, said the new rates give Colorado Springs a competitive edge.
“We were actually higher than average for the Front Range in some of those larger commercial tap fees,” he said. “With this change, this brings in us closer to being about in the lowest 25 percent to 30 percent range.”
The old development fee structure was based on a study before the economic downturn, and cities along the Front Range are doing more to encourage new businesses and jobs in their communities, Grossman said.
“We want to make to sure we’re not at a disadvantage with development fees,” he said.
Cherrier said the revenue losses from the lower fees are expected to be offset with increased development activity.
“We believe that with these changes, we’ll be able to significantly mitigate any of these revenue losses through additional meters that will be set through new projects,” Cherrier told the council last month.
The lower rates were endorsed by the Housing and Building Association and the Greater Colorado Springs Chamber of Commerce and Economic Development Corp., among others, who applauded Springs Utilities for making it more affordable to do business in the city.
“Just to put it bluntly, there’s a lot of sticker shock from commercial customers that come into our community with the amount that we’re charging for our fees,” developer Ralph Braden, a member of the HBA, said last month. “This certainly will put us more in line competitively.”
The reduced rates took hold March 1.
“The whole idea was to do something to reduce barriers to business and help the economy and get things moving,” said William Mutch, the HBA’s director of government affairs and public policy. “Already we have a positive story from a developer that it’s having its intended effect.”
Contact Daniel Chacón: 476-1623
Facebook Daniel Chacon