Why Water and Sewer Tap Fees Are Rising in 2026

Water and sewer tap fees are rising in 2026 because many utilities are finally updating fee studies that were a decade or more old, and the new studies price growth at today’s construction costs. The jumps can be large. Hillsborough County, Florida, adopted water and wastewater impact fees for its South/Central service area that climb from about $5,865 to $13,270 per single-family home by 2029 (before a separate $1,822 accrued guaranteed revenue fee), and Salt Lake City has proposed raising its combined water, sewer and stormwater impact fees for a typical house from $2,790 to $11,840. Other utilities, such as the Southern Nevada Water Authority and Houston, raise fees a little every year through an index.

Below: what changed at seven utilities, the three forces behind the increases, and the state laws that limit them. For fee names and units, see tap fee vs. impact fee.

What changed: recent fee changes at seven utilities

Single-family residential amounts, checked September 24, 2026 against each utility’s own documents. “Old” is the rate in force before the change. Hillsborough’s old rates are derived from its equal phase-in steps (explained below).

Reason 1: old studies meeting new construction costs

A capacity fee is only as current as the study behind it.

The records show how long some of those gaps were. Denver Water says its system development charge had not changed since 2013 before its board voted on March 26, 2025, to raise it. Boise’s staff memo says its sewer connection fees were last updated in FY2014, and that indexing them at 3% to 4% a year would have produced roughly $4,950 to $5,500 by FY2025, against a $3,575 fee at the time. Hillsborough County’s resolution says its fees had been at the same level since 2020.

Hillsborough’s findings are the most specific. The county’s resolution cites unit costs for pipelines up more than 200% and for treatment facilities up more than 300% over the past five years. It lists nearly $2 billion of expansion projects for the South/Central area and warns that several facilities there are expected to be out or nearly out of capacity by 2028.

Reason 2: “growth pays for growth”

Most utilities that charge capacity fees follow a policy that new connections should pay for the capacity they use rather than shifting it onto existing ratepayers. Denver Water states both sides of that policy on its fee page: letting growth pay for growth, and recognizing what existing customers have already invested in the system.

Houston is a useful example of a utility that chose to charge less than the maximum. In its 2021 update, Houston Public Works recommended setting the water fee at 50% and the wastewater fee at 70% of the maximum allowed under state law (HPW memo, March 26, 2021). Houston’s current fee schedule still lists the maximum assessed fee at $3,236.21 for water and $2,316.62 for wastewater, so the collected rates sit below that ceiling.

Reason 3: automatic indexing

Some fees rise every year without a new vote, in smaller, predictable steps.

• Southern Nevada Water Authority: the regional connection charge adjusts every March 1. Through 2027 the increase is 6.5% plus the change in the ENR Construction Cost Index; from 2028 it is the index alone. The 5/8-inch residential charge went from $7,358 to $7,998 on March 1, 2026, an increase of $640, or 8.7%.
• Houston: under City Code sections 47-316(b) and 47-384(b), the wastewater and water impact fees are indexed to the Producer Price Index each July 1, according to the 2021 HPW memo.
• Denver Water: after the 2026 two-step phase-in, the utility now adjusts its charges each year by the Producer Price Index; the approved 2027 adjustment is 4.3%, effective January 1, 2027.

What state law allows, and what it caps

Texas: Local Government Code chapter 395

Texas cities may adopt water and wastewater impact fees only as chapter 395 allows. The key limits:

• A maximum per service unit (sec. 395.015): capital improvement costs, minus a required credit, divided by the projected number of service units.
• A required credit (sec. 395.014(a)(7)): either for the portion of taxes and utility revenue new customers will pay toward the same projects, or a flat credit equal to 50% of the capital plan’s cost.
• Updates every five years (sec. 395.052): the land use assumptions and capital improvements plan must be updated at least that often, unless the governing body follows the no-update procedure in sec. 395.0575.
• A lock after assessment (sec. 395.017): once fees are assessed on a tract, they cannot be raised for that tract unless the number of service units increases. For land platted after a fee is adopted, sec. 395.016 has the fee assessed at plat recording and usually collected at building permit.

That lock is why the plat date matters in Texas. A lot platted before an increase can carry the older assessed rate into construction. See Texas utility connection costs and the Houston tap fee page.

Florida: section 163.31801 phase-in limits

Florida caps how quickly an impact fee can rise (Fla. Stat. 163.31801(6)). An increase of up to 25% must be phased in over two equal annual steps. An increase of more than 25% and up to 50% takes four equal steps. No increase may exceed 50% of the current rate, and fees may not be raised more than once every four years. A local government can exceed those limits only after a demonstrated-need study showing extraordinary circumstances, at least two publicly noticed workshops and a unanimous vote of the governing body, and even then the increase must be spread over two to four annual steps. New or increased fees also require at least 90 days’ notice (sec. 163.31801(4)(d)).

Hillsborough County used both paths. Its Northwest increases, about 19% for water and 43% for wastewater, fit inside the normal limits, so water is phased over two years and wastewater over four. Its South/Central increases, about 112% for water and 135% for wastewater, required a demonstrated-need study. The board adopted the fees 7–0 on December 17, 2025, with collection starting March 23, 2026. See Florida utility connection costs and Tampa tap fees.

How to read a phase-in: the Hillsborough arithmetic

Hillsborough’s resolution prints each step but not the old rate. Because Florida requires equal steps, the old rate can be recovered from the first two steps.

• South/Central water, two steps: $3,449 (2026) and $4,684 (2027). Step size = $4,684 − $3,449 = $1,235. Old rate = $3,449 − $1,235 = $2,214.
• South/Central wastewater, four steps: $4,884.75, $6,118.50, $7,352.25, $8,586. Step size = $1,233.75. Old rate = $4,884.75 − $1,233.75 = $3,651.
• Old total $2,214 + $3,651 = $5,865. Full total $4,684 + $8,586 = $13,270.

The derived rates match the resolution’s own percentages: $4,684 is about 112% above $2,214, and $8,586 is about 135% above $3,651.

These are impact fees only. The county’s 2026 Schedule of Rates adds an accrued guaranteed revenue fee (AGRF) of $833 for water and $989 for wastewater per ERC (one per single-family home) in both service areas, which it says is not an impact fee and is charged in addition to one, plus meter and account set-up charges. See Hillsborough County tap fees for the full total.

The county’s resolution says the fee becomes fixed and payable under its utility connection regulations, so the date that locks your rate is set by those rules, not by when you close on the lot.

What the increases mean for one lot

Denver Water adds a per-square-foot charge to its base fee, so lot size matters. For a 7,000-square-foot lot inside Denver:

• January 1 to June 30, 2026: $3,205 + (7,000 × $0.86) = $9,225
• From July 1, 2026: $3,380 + (7,000 × $1.01) = $10,450
• From January 1, 2027: $3,530 + (7,000 × $1.06) = $10,950

That is $1,725 more for the same lot within twelve months. Outside Denver the base goes from $4,490 to $4,740, then $4,940. See the Denver tap fee page.

How to protect your budget

• Find out what locks the rate. It may be plat recording (Texas chapter 395), a complete application (Denver Water’s 2026 steps apply to complete applications paid on or after July 1), permit issuance, or payment.
• Watch the calendar. Indexed fees change on fixed dates: March 1 in Southern Nevada and July 1 in Houston. Phase-in steps in Hillsborough fall on March 23. Existing-service credits on a teardown have their own deadlines; see tap fee credit rules for rebuilds.
• Read the hearing notices. Salt Lake City’s proposal is not in effect, but it would apply 90 days after approval (see Salt Lake City tap fees). Florida requires 90 days’ notice before a new or higher fee takes effect.
• Budget with the next step, not the current one, if your permit is months away. Use the utility connection cost calculator and tap fees by city for current rates. If a builder is quoting the house, ask who absorbs an increase; who pays tap fees between builder and buyer covers escalation clauses.

Related guides: water tap fee, sewer tap fee, new construction utility costs, Las Vegas tap fees, and Colorado utility connection costs.

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