Do You Pay Tap Fees Again When You Tear Down and Rebuild?

Usually not in full. Most utilities credit the capacity the old house already bought, so a one-for-one rebuild on the same service can owe nothing in capacity charges. Seattle Public Utilities charges no water or wastewater system development charge when the new service is the same size as the old one, but upsizing a 3/4-inch service to 1 inch costs 0.7 × ($6,900 + $2,600) = $6,650 in 2026. The credit can also expire: Salt Lake City’s lapses five years after demolition.

The details vary by utility: how the credit is measured, how long it lasts, whether the old tap has to be cut, and what happens when the new building is bigger or holds two homes. Below are the published rules of six utilities in our fee database, taken from their codes and director’s rules. Where we could not find a utility’s rule in a primary source, we left it out.

The rules side by side

Existing-service credits for residential rebuilds, from each utility’s code, rule or fee schedule. Checked 2026-09-24.

The City of Sacramento’s residential fee schedule also notes a credit for existing water service connections against its water development fee, $10,513.13 for a 3/4-inch meter from July 2026; we could not find the published terms of that credit, so ask the Department of Utilities how it is applied.

Seattle: credit by service size

Seattle’s rule is the most mechanical. SPU totals the “customer equivalents” of every active and inactive domestic service on the property, compares that with the services you will have after the project, and charges only the increase. A 3/4-inch service is 1.0 and a 1-inch service is 1.7. If the new total is the same or lower, the water and wastewater SDCs are zero.

Worked example. A 1950s house with a 3/4-inch service is torn down and replaced with a larger house that needs a 1-inch service. The increase is 1.7 − 1.0 = 0.7. Water SDC: 0.7 × $6,900 = $4,830. Wastewater SDC: 0.7 × $2,600 = $1,820. Total $6,650, against $16,150 for a brand-new 1-inch service on a vacant lot. Keep the 3/4-inch service and the SDC is $0.

Seattle’s drainage SDC, new on 1/1/2026, is handled the same way: $1,225 per 1,000 square feet of new hard surface, net of the hard surface already on the parcel. Replacing 2,000 square feet of roof and driveway with 2,800 adds 800 square feet: 0.8 × $1,225 = $980.

Salt Lake City: a five-year clock

Salt Lake City writes its deadline into the code. When a house is demolished and the existing water service is reused for the replacement within five years, no new connection fee is charged. After five years, the owner pays a new fee, which is $1,871 for a 3/4-inch single-family meter inside the city under the fee schedule amended 6/16/2026. Sewer works the same way, with a twist: the $545 sewer connection fee is waived only when the existing lateral is reused and the residential use or building type stays the same as before demolition.

Upsizing is credited by what was paid, not by today’s price. If the meter grows, the credit is the connection fee previously paid. At current rates a 1-inch meter is $3,297, so the best case is $3,297 − $1,871 = $1,426. If the prior owner paid an older, lower fee, the credit is smaller and you pay more.

Denver Water: the old license must survive

Denver Water calls a teardown a “scrape-off.” Under Operating Rule 2.07.6, the SDC on a redevelopment is the SDC for the new connection minus the SDC that would apply to the old one, both at the current schedule. Because the single-family SDC is priced by lot size ($3,380 plus $1.01 per square foot of lot from 7/1/2026), one house replacing one house on the same lot would appear to net to zero; Denver Water sets the credit amount, so confirm it on your application. To qualify, the old connection must be physically disconnected from the main or a refundable deposit posted, the new premises must sit within the original licensed premises, all water and sewer bills must be paid, and the existing license must still be valid.

The scrape-off policy adds physical rules. A tap from 1950 or earlier must be cut at the main and the meter returned. A newer tap may be reusable depending on size, location and demand. If the new house needs a bigger service, the old tap must be cut within 60 days of demolition. None of this changes the $185 tap installation fee if a new tap is made.

Portland: fixture units, not meters

Portland’s sewer SDC counts plumbing fixtures. Under the Bureau of Environmental Services rules, drainage fixture units removed from the property are credited to it, and a single-dwelling home with no records is assumed to have had 16. Homes pay 60% of the $623 per-DFU rate. A replacement house with 25 DFU pays for 25 − 16 = 9 net new units: 9 × 0.6 × $623 = $3,364.20, compared with $9,345 for the same house on a vacant lot. Sanitary credits stay with the property and cannot be transferred.

Other Portland credits have deadlines. Stormwater credit for removed impervious area is void if not used within three years of removal. The Parks SDC gives a demolition credit only if demolition occurred within 36 months of the new permit intake. Transportation SDC credits are good for 10 years. Portland’s water SDC applies when a meter is enlarged; reusing an existing service can be as simple as a $523 activation of an existing 1-inch service (FY2026-27).

Colorado Springs and Nashville

Colorado Springs Utilities may credit the water development charge and water resource fee paid for a prior development, at current rates for the existing meter size, when connections are reused or a new connection serves the same parcel, provided all fees were paid in full when the earlier building permit was issued. For both the water charges and the wastewater development charge ($1,868 for a home), a larger meter pays the difference between the old and new charge. No refunds are given for unused credit, and transfers to another parcel are limited to nonresidential, multifamily and mixed-use property.

Nashville’s code is narrower: its water tapping fee ($500 to $550 for 5/8 to 1 inch) is not charged when an existing tap is reused or a replacement service line is no larger than the old one; a larger tap pays the difference in tapping fees.

ADUs, duplexes and lot splits

Credits cover what was there. Anything added is charged.

• Denver: a detached accessory dwelling unit pays its own SDC, $2,170 inside Denver and $3,030 outside from 7/1/2026.
• Seattle: FIN-219 does not mention ADUs. Its water and wastewater SDCs are triggered by a new or larger water service, so an ADU served by the existing meter would not appear to add customer equivalents, while an added or upsized service does. Confirm with SPU.
• Portland: SDCs apply when adding an ADU, but the city runs an ADU SDC waiver program, and ADUs with a 10-year covenant against short-term rental are exempt from the transportation SDC.
• Salt Lake City: the sewer fee waiver requires the same residential use or building type, so a duplex replacing a single house does not qualify; the fee schedule lists $818 for a duplex sewer connection.
• Lot splits: Denver moves credits only within the original licensed premises and never across a street, and Portland’s sanitary credits stay with the property. The second lot of a split generally starts from zero.

Before you demolish

1. Ask the utility, in writing, what credit the parcel carries and what the deadline is. Seattle and Portland measure it from their records; if records are missing, Portland falls back to 16 DFU.
2. Do not cancel the account or have the service retired until you know whether that ends the credit. Denver’s requires a still-valid license.
3. Decide the meter size early. A jump from 3/4 inch to 1 inch can turn a $0 bill into thousands, as the Seattle example shows.
4. Keep demolition and building permits close together where a clock runs: five years in Salt Lake City, three years for Portland stormwater credits.
5. Check the private side too. Credits cover capacity charges, not the service line or sewer lateral, which an old house may need replaced.

To price the rest of the job, use the utility connection cost calculator, and see who pays tap and impact fees, tap fee vs. impact fee, water meter installation cost, and the city pages for Seattle, Portland, Salt Lake City, Colorado Springs and Nashville, plus the Colorado state guide.

Frequently asked questions