This may shock some of you that don’t live in the West, but it is very arid here. I mean dry like a desert. Here in Denver, we actually have cactus. So water is a very valuable resource. That translates into expensive tap fees. A tap fee in this case is a one-time fee charged to hook into a municipal water system. There are three typical tap fees: water, sewer, and waste-water. Water tap fees vary depending on what water district you are in. To make things more confusing, water districts do not necessarily follow city boundaries (but are often similar). Some cities like Arvada CO charge a flat fee depending on the type of building (residential single-family, residential multi-family, commercial, etc.), in our case residential single-family. Other cities, like Denver, charge water tap fees based on the type of building and the square footage of the lot, the larger the lot, the larger the fee.
Over the past few months, I’ve gotten pretty good at estimating the amount for tap fees in the Denver Water district. Generally a piece of land that’s about half an acre ( just under 22,000 square feet) would be $25,000. Yep! That’s right. $25,000!!! And in Denver that would be just the water tap because the sewer tap fee could be a different sanitation district. In total you would be looking at something around $30,000 in tap fees. Keep in mind that does not include the labor and materials for installing the water line to the house, only the privilege of hooking up to water.
The revelation above is why I soon learned to always ask the question, “Is there water on the land?” The typical answer was, “Water is in the street.” So I’d add $30,000 to the asking price. This is one reason why we expanded our search for land to include lots with houses on them. If there’s a house, there’s likely water too. That means no tap fee. And the cost to tear down a house is generally under $10,000. The math was pretty simple.
So the lesson here is, not all lots are equal and the price on the surface is not the bottom line. If you don’t ask the questions, the seller is not likely to volunteer the details of added expenses like water, sewer, and waste-water tab fees. Live and learn.