With any new development, physical expansion, or change in use of property within Fort Collins, a suite of fees will be due and payable before a building permit is issued. For minor improvements or changes – replacing equipment, resurfacing a parking lot, converting a restaurant to a tattoo parlor, et cetera – the cost for the permit may be relatively inconsequential. Grander visions require a more robust bank account.

At its October 24, 2024 Work Session, City Council was presented with staff recommendations for all fees related to new housing and business activities. These recommendations are a distillation of external consultant studies and internal analysis of the cost of delivering existing services and the incremental impacts of each new proposal.

The calculation for certain fee types is strictly defined within state statute (i.e. Capital Expansion Fees for parks, fire, police, general services and transportation), while others are a function of costs of delivery (i.e. Utility Fees for electric, water, wastewater, stormwater, inspections, and permit issuance).

The single largest fee – water supply requirements – doesn’t really fit either description but since Council has already adopted the 2025 fee for accessing its water supply, for now we’ll focus on the other fees mentioned.

Capital Expansion Fees
Alternately referred to as development impact fees, capital expansion fees attempt to determine the proportional and incremental cost of extending delivery of public services and expanding infrastructure capacity to meet the needs of a proposed land use. If a business adds warehouse space, there is a presumption that new space will trigger additional demands upon the public sector (i.e. higher traffic count requires roadway improvements; residential development requires more park lands, et cetera).

In 2017, the City commissioned a study to assess the inputs, methodologies and valuation of public assets. That resulted in the near doubling of all expansion fees beginning in 2018. A subsequent study in 2023 now informs the consideration of adjustments for 2025. In between formal studies, these fees are typically adjusted for inflation.

As recommended in the Council work session, expansion fees on the whole would increase for all residential and commercial uses, except office space.
Residential fees are increasing between 2% (unit size up to 700 square feet) and 13.9% (unit size greater than 2,200 s.f.). General commercial projects would increase by 13.7%, while industrial uses would increase by a whopping 34.6%. Since in the aftermath of the pandemic office workers still aren’t crowding the parking lot, office and other services will see a decrease of 11.4%.

The rationale for increasing fees far beyond inflationary pressure is largely driven by the increasing value of public assets as they exist. Over the years, master plans have been adopted to elevate our game – everything from our new police headquarters to community parks, protected bike lanes, bridges and everything in between is designed and constructed to showcase our community. These standards now saddle new development with the costs of delivering the same level of service at today’s value. In fact, staff helpfully points out the incremental cost to replace police and fire facilities is inflating at a greater rate than the respective service territories.

It was encouraging to hear members of Council start to question whether this approach aligns with other values and priorities of the community in responding to the presentation. It appears Council is starting to embrace our status as an urban-infill, as opposed to a suburban greenfield, community. Our built environment no longer accommodates extensive new lane miles and the need to develop 50-acre community parks.

Utility Fees
Utility fees are not subject to the same statutory limitations as Capital Expansion Fees. Utility fees allow the City to include planned improvements in the system. For sake of ease, this category includes the administrative cost for issuing a permit and related inspections, since the methodologies for calculation are similar.

Applying an inflation factor that more closely resembles the type of purchases within a municipal shopping cart, as opposed to the general populace, a 7.4% inflation factor was applied for 2024. For 2025, new electric service is proposed to increase by an additional 9.3%, while the stormwater fee will increase by 1.5%. No adjustment is proposed for water (“tap fee”) and stormwater. Building permit and inspection fees would both increase by 7.2%.

Though tamer than capital expansion, the cost for electric service is worth noting. In pursuing environmental objectives, public and private utility interests across the country are now in direct competition with one another to obtain transformers, technical expertise and other components necessary to support a massive energy-source conversion. The industrial lead-time to meet demand in this arena is most often measured in decades, rather than the artificial deadline of 2030.

Lost in the conversation is the concept of economy of scale, whereby the unit cost to provide a service or deliver a product is expected to decrease as the number of units produced increases. In the context of a municipality, consider development within our emerging environment. As development patterns go from horizontal (sprawl) to vertical, water lines are brought to a single 60-unit building, rather than 60 individual homes; transportation capacity for such a property is limited to improving the adjacent arterial street, rather than expanding the capacity of a network of neighborhood collectors and the arterial; existing police and fire facilities can be expanded, rather than building new facilities at the periphery of the community.

Our current formula assumes all public facilities that exist will have to be replicated proportional to population growth. It’s also a reason why the cost to expand or open a new business is escalating faster than inflation, plus population growth.

Council will formally consider adoption of the proposed fee schedule at its November 19, 2024 regular meeting. We invite you to share your thoughts on these important decisions with our Fort Collins City Council. Contact information can be found here.