Even as Salt Lake City has grown in great leaps over a generation, City Hall hasn’t lifted many of its basic fees on development in that time.

Those so-called impact fees — used to pay for the city’s capacity to deliver water, to pipe away and process sewage and to handle stormwater — have not risen since 1999, leaving them at relatively bargain rates compared to what developers pay in many other Utah cities and places like Denver or Grand Junction.

That may soon change.

Elected leaders in Utah’s capital have put in motion a substantial set of impact fee hikes when it comes to those utilities — a move they say will, in effect, more fairly spread the burden of who pays for the effects of growth between developers, small businesses and regular homeowners across the valley.

In the case of water — which Salt Lake City delivers to residents within its bounds as well as to many suburban residents in places like Millcreek, Holladay and other adjacent cities — one-time charges on those constructing new residential, commercial or industrial projects could as much as triple over the next two years.

Tolls on sewer and stormwater connections would vault by a higher percentage in many cases, all as the city seeks to rebalance an antiquated fee system in recognition of what rapid growth today is actually costing.

“The mantra of impact fees is, growth should pay for growth,” said Salt Lake City Council Chair Alejandro Puy. “It’s not quite there right now, with almost a 30-year lag in an update.”

Rebalancing who pays what

The council has given a tentative go-ahead for the city Department of Public Utilities to prepare for across-the-board impact fee hikes for water, sewer and stormwater connections, with a plan to phase those in between now and mid-2028.

Following that thumbs-up last week, the proposals will be drafted as legislation, return to the council for more debate and then go to public hearings in the coming months. If ultimately approved, the new fees could start taking initial effect by 2027.

The move comes as homeowners and businesses saw their own utility bills jump again this year, along with a city property tax increase, in light of rising costs — a contrast that council member Victoria Petro said illustrated the inequity of the current approach.

“Our ratepayers don’t get to decide if things are phased in or not, and they have not had the benefit of rates staying stagnant since 1999,” Petro said last week. All that, she added, has meant those ratepayers “have shouldered development costs for Salt Lake City.”

She and others are anticipating pushback as the fee hikes make their way toward public airing and final approval, particularly from larger developers who would see some of the bigger fees.

“I know this is not going to be an easy lift. I know we’re going to be standing in some crosshairs,” Petro told officials with Public Utilities, “but I’m going to stand right next to you because this is an absolutely necessary policy inflection.”

Keeping up with growth

Impact fees charged by cities and counties in Utah have been intensely scrutinized for decades by the pro-business Legislature, which sets exceptionally tight rules on how they are calculated and how the money can be spent.

So tight, in fact, that the detailed, state-required analysis and vetting that has gone into studying these latest fee hikes has been in the works since 2024. State proscription also partly explains for why the fees haven’t risen since Deedee Corradini was Salt Lake City’s mayor.

“They don’t love impact fees,” Jennifer Bruno, the council’s non-elected executive director, said of state lawmakers. “So they want the city to be as accountable and transparent as possible when even thinking about potentially-maybe-kind-of doing them.”

While these proposed hikes focus on utilities, impact fees in general also are meant to pay for capacity improvements to parks, roads, police and firefighting as cities expand in population and commercial footprint. Those public safety, transportation and recreation fees, though, aren’t proposed to rise as part of this update.

Along with the utility fee hikes, the city is also proposing a change in how it charges those fees, basing it on the actual size of the sewer meter pipe serving a home, an apartment complex or a commercial or industrial site.

All the same, Salt Lake City’s nearly 30-year delay in raising fees is prompting some substantial potential jumps in costs for developers, Laura Briefer, who heads the Department of Public Utilities, acknowledged.

Yet even with those boosts, Briefer said, the city’s charges would compare favorably with those in most other Wasatch Front cities and elsewhere.

“We’re experiencing a lot of growth and change,” Briefer said, “and we want to make sure we’re keeping up with the rate of change.”

How it breaks down

Today, someone constructing a single-family home on a typical quarter-acre lot in Utah’s capital with a three-quarter-inch meter pipe now pays a total of $2,790 in water, sewer and stormwater impact fees — charged when a building permit is issued. Those total fees would jump to $11,870 under the new system.

For commercial projects, the picture is a little more mixed. Take a commercial development on five acres with a three-inch meter pipe. That developer currently pays $43,158 in total fees when they get a permit, compared to potential future fees of $165,105.

But thanks to the city’s proposed shift to basing rates on sewer pipe size, a typical apartment complex in the city might actually pay less under the new system. If a project on a third of an acre with 200 units and a three-inch pipe would pay $133,426 today, the new system would bring the cost down to $129,321.

How are developers reacting?

According to Kristeen Beitel, development services administrator for Public Utilities, reaction from developers to the proposals has been nuanced, particularly as the city consults steadily with those building larger projects more frequently.

The ones used to working in other city markets where rates are higher, Beitel said, “seemed a little bit more prepared to hear this news about increases.” Those working primarily in Salt Lake City, she said, “were reactive to seeing the increases, especially at first.”

Concerned about the effects of raising fees all at once — especially for smaller housing developers with more tentative financing — the council wants to stagger the hikes over several years, with 70% of the jumps going into effect in 2027 and the rest, by mid-2028.

Petro said the increases represent the city telling developers “what the true cost of doing business is here, rather than to artificially keep these rates low.”

“This,” she added, “is us saying, this is the true cost of growth.”