More charges for basics like water and sewer in Salt Lake City are leaping upward.

Certain fees on new construction in Utah’s capital are set for a dramatic increase as officials try to shift more of the burdens of paying for growth to developers and away from homeowners and businesses.

These so-called utility impact fees — one-time charges when builders get a building permit for new housing, commercial or industrial projects to help pay for city water, sewer and stormwater services — have not gone up since 1999.

A unanimous vote Tuesday by the City Council has cleared the way for those charges to triple or more in phases over the next two years.

“Growth,” said Council Chair Alejandro Puy, “has to pay for growth

Inflation, rising construction costs and the city’s need to fund immense upgrades to its water and sewer networks are driving the fee increases, according to the city’s Department of Public Utilities.

So is a basic notion of fairness, city officials add.

Leaving utility hook-up fees untouched for nearly three decades, Puy said, “means to my neighbors that they are subsidizing the development that is happening in some parts of our city.”

Added fellow west-side council member Victoria Petro: “This is not just necessary. It’s right and good, and my neighbors didn’t get their increases phased in.”

While developers may pay a bigger share of growth costs, though, this policy move won’t slow the steady rise of monthly utility bills that have some homeowners and existing businesses in Salt Lake City and across the valley chafing.

Big jumps in fees, phased through 2028

Under the changes, someone constructing a single-family home on a typical quarter-acre lot in the city with a three-quarter-inch meter pipe now pays a total of $2,790 in water, sewer and stormwater impact fees.

Those total one-time fees would jump to $11,870 under the new system.

A commercial development spread over 5 acres with a 3-inch meter pipe currently pays $43,158 in total fees, compared to potential future fees of $165,105.

This is all, in a crucial way, separate from those other big boosts in monthly water and sewer bills that took effect earlier this year.

Monthly bills likely to keep rising

Accompanied by a 12.5% hike in the city’s property tax, those monthly charges shot up as well, shocking some residents and business owners and putting a squeeze on purveyors of affordable housing who are trying to keep a lid on rents.

All or some of the costs of these higher impact fees are likely to be passed on to prospective homebuyers and apartment tenants.

Higher monthly bills have affected residents within Salt Lake City as well as those living in suburban Millcreek, Holladay and other adjacent areas that get their water from the capital city.

“No one said that costs, at least for multifamily properties, would be doubling or tripling,” wrote resident Paul Svendsen, who operates a 20-unit affordable housing complex in the city.

“Salt Lake City residents,” he wrote in a recent Salt Lake Tribune op-ed, “deserve better communication and a lot more candor.”

Monthly charges have gone up over several recent years as the city seeks to pay off debt incurred for once-in-a-generation improvements to parts of its aging water and sewer facilities.

That includes an overhaul of the 55-year-old water reclamation plant located in Rose Park, which saw an $850 million price tag.

That debt is not going away easily.

State audit highlights city’s big borrowing

A recent audit released on Utah’s Capitol Hill warned that even with sizable hikes in fees and utility rates, Salt Lake City’s current rate structure “won’t be able to pay for upcoming debt service costs” or for additional debts the city expects to shoulder.

Public Utilities is “in the negative with its income versus its debt payments” as of this year, the audit said. ”In other words, they will not be able to pay their debt.”

City officials say they do have a plan, but they are also making another fact plain: These latest impact fee increases are unlikely to slow that broader upward trend for household bills.

When this round of impact fees is fully in place by mid-2028, according to city documents, it’s expected to pump $7 million more a year into its water fund; add $5.5 million into its sewer fund; and bring $2.25 million more into its stormwater budget.

And yet, the city reports, “revenue from updated impact fees is not expected to prevent or reduce the need for future utility rate increases.”

New funding options for city utilities?

State auditors have urged the city to find alternative funding sources for utility costs, including the option of a dedicated property tax or creating a special taxing district for water and sewer.

Officials with the Utilities Department note the city is in the midst of desperately needed — and in some cases, government-mandated — repairs and upgrades to its water and sewer systems, among some of the oldest city infrastructure of its kind in Utah.

“The stewardship of our water and wastewater systems,” the department’s director, Laura Briefer, told lawmakers, ”means investing in those facilities and infrastructure, investing in those water resources and ensuring the financial means exist to accomplish that.”

Briefer said the department is also exploring other ways to fund necessary improvements beyond borrowing more as part of its long-range planning on rates.

Fees will complicate new housing projects, developers say

For some developers, the bigger picture is a classic double whammy.

“A 200% to 500% increase plus a new fee is difficult to absorb, especially when the monthly utility fees have doubled as well,” said Peter Corroon, a former Salt Lake County mayor who is now a real estate developer.

While most homebuilders and commercial developers recognize an impact fee hike is due after 27 years, Corroon said, “having it all at once could be difficult for those who have been planning projects.”

The council has opted to start phasing part of impact-fee hikes in by the year’s end, with the rest to follow in waves through mid-2028.

Others have told the council the added charges could elevate per-unit costs on housing and might dampen development overall when the city is trying to encourage more homes.

But a member of the west-side Poplar Grove Community Council, Anthony Washburn, pointed to a recent water main break as a result, it appears, of an aging water pipe.

That overnight gush of water damaged 15 homes and displaced a handful of families, leading the city to chip in up to $50,000 to help them. Washburn called the Aug. 16 break “a reminder that we cannot continue to defer investment in our infrastructure.

“Updating impact fees,” he told the council, “is one way that we can help ensure that our systems are adequately funded and better prepared to serve our growing community.”