The $68,000 Question: What Colorado’s Development Fee Study Means for Builders in 2025
Key Takeaway: Colorado’s development fee environment has shifted dramatically in 2025. With new constitutional standards, state legislation, and transparency requirements converging, developers now have meaningful tools to challenge, negotiate, and plan around costs that were once considered fixed overhead.
A Developer’s Wake-Up Call
Not long ago, a master-planned community developer faced a rude surprise. Their Castle Rock project had been underwritten with $45,000 per lot in assumed fees. When the final municipal schedule was released, the real figure was $94,113 per detached home. Across 200 lots, that gap represented nearly $10 million in unexpected costs, jeopardizing the project’s viability.
This isn’t an isolated story. A recent study by the Home Builders Association of Metro Denver, covered by The Denver Post, found that development-related costs now average $68,000 per single-family lot across metro Denver, with attached homes averaging $52,000. These charges include permits, impact fees, system development fees, and utility connections — all before a shovel hits the ground.
From large subdivisions to smaller infill projects and even accessory dwelling units like those we’ve seen through Nookhaus (www.nook-haus.com), fee unpredictability can destabilize economics at any scale.
Why 2025 Marks a Turning Point
For years, developers had little leverage when fees escalated. That changed with three legal shifts that now shape every Colorado deal:
Sheetz v. County of El Dorado (2024)
The U.S. Supreme Court held that all development fees, including those adopted by ordinance, must meet constitutional standards of nexus and proportionality. Local governments can no longer rely on blanket fee schedules without showing a clear connection to a project’s actual impacts.
HB24-1107: Litigation Reform
Effective May 30, 2024, Colorado now requires courts to award attorney fees in certain Rule 106 appeals involving higher-density residential projects. The result: fewer frivolous lawsuits designed purely to delay approvals.
HB25-1211: Tap Fee Transparency
Beginning in 2025, water and sanitation districts must justify tap fees based on actual service costs and consider conservation features. For projects where utility fees rival land costs, this provides both transparency and new grounds to challenge excessive charges.
The Geography of Fees
The HBA study revealed how dramatically fees vary across jurisdictions:
Castle Rock: $94,113 per detached home, $85,774 per attached home
Unincorporated Adams County: $36,247 per detached home, $24,260 per attached home
Metro Denver Average: $68,000 per detached home, $52,000 per attached home
These differences show why location decisions are just as important as project design.
Weld County: County impact fees are modest, but water and sewer districts can impose very large tap charges.
Douglas County: A layered system of municipal fees, special districts, and project-specific requirements creates complexity but also negotiation opportunities.
Adams County: Generally more predictable, with transparent schedules and calculation methodologies that support clearer pro formas.
Smarter Strategies for Developers
The convergence of new legal tools and fee data creates opportunities for proactive planning:
Build in fee certainty by referencing published schedules or formulas in agreements.
Challenge overbroad fees using Sheetz standards when costs don’t align with actual project impacts.
Use pay-under-protest tools to keep projects moving while preserving rights to dispute questionable charges.
Leverage conservation features to lower tap fees under HB25-1211.
Quantify affordability impacts — every $1,000 increase in home cost prevents nearly 1,000 Denver-area households from achieving ownership. That data can be powerful in negotiations.
The Bottom Line
The $68,000 per lot average is no longer just a sunk cost of doing business in Colorado. It’s a starting point for strategic optimization. Developers who accept fees as untouchable overhead will find themselves at a disadvantage. Those who understand and apply the new rules will preserve project economics and keep deals on track.
At Bear Peak Law, our work sits at the intersection of real estate law and real-world development. By combining legal expertise with development experience, we help clients navigate Colorado’s evolving fee landscape and structure projects for long-term success.
About the Author
Nick Larson is the founder of Bear Peak Law, a Colorado real estate law firm based in Boulder. As a seasoned Colorado real estate attorney and active developer with Bear Peak Development, Nick brings a rare dual perspective to every deal. He also founded Nookhaus, an ADU housing company, to better understand Colorado’s housing landscape from the builder’s side.
Before launching his firm, Nick served as a U.S. Army Captain and Airborne officer, experience that shaped his disciplined, mission-driven approach to complex real estate transactions. Today, clients rely on him as a trusted real estate development lawyer in Colorado, combining legal expertise with practical development insight to move projects forward.
