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At an April 13th study session, the City Council of Commerce City, Colorado (“City”) signaled its potential support for reductions to development and impact fees, which is a welcome change that bolsters the City’s competitive edge in the metro area.
The City recently completed a comparative analysis of fees collected during the development process to create a comparison across metro area jurisdictions that included building permit fees, planning and engineering application fees, and impact fees to better understand where fee adjustments should be considered.
The City’s analysis (found in the staff presentation at this link on the City’s website) compared fee information from Adams County, Northglenn, Westminster, Aurora, Brighton, Thornton, and Castle Rock. The Homebuilder’s Association (“HBA”) conducted a 2025 study that compared development and impact fees across front-range jurisdictions. The HBA study concluded that the City charges collectively higher permit, use tax, and impact fees on single family attached and single family detached residential development than many of its metro area neighbors. The City’s study had similar results. Therefore, the City concluded that development and impact fees present the best opportunity to improve the City’s development climate and be competitive in the metro area.
To understand where the reductions are proposed, it is helpful to understand what fees are assessed during development. Fees fall into two categories – development fees and impact fees.
Development (User) Fees:
o Building permit fees - cover the cost of intake, construction plan review and inspections, and are based on total building valuation and national standards. Use Tax was not assessed independently in the analysis, and although associated with building permits, it is a tax on the materials used in construction which are more affected by market adjustments than City Council actions.
o Planning and Engineering Fees - cover the cost of review and public hearings (when required) for multiple processes including, but not limited to, annexation, rezoning, conditional use permits, subdivision, site plan, and variance requests.
o Right of Way Permit Fees – required of developers performing work in the right-of-way.
Impact Fees:
o Authorized pursuant to Colorado Revised Statutes section 29-20-104(1)(g), impact fees are imposed on projects to fund capital infrastructure improvements needed to serve new development.
o No landowner shall be required to provide site-specific dedications or improvements to meet the same need for capital facilities for which an impact fee is collected.
Recommendations
Reduce Development Fees by 40 percent. Evaluation of development fees focused on a cost recovery model which aims to charge the customer for the cost the city incurs for those services. Anything short of full cost recovery falls to the need for subsidies from other funding sources or an adjustment to the level of service. City recommendations recognize that while land use application fees represent a small amount of the overall project costs, they are higher than many of the metro area neighbors. Further, as these fees are adopted by resolution of the City Council, the City is seeking more flexibility to allow the City Manager to update fees as needed on an annual basis, allowing faster response and implementation.
Reduce Impact Fees by 40 percent. Impact fees have been at the center of multiple updates and studies since their adoption in 2022. The existing fees were implemented at 100% of the Maximum Supportable Fee, calculated to include the incremental infrastructure demand created by new development, capital improvement costs tied to that demand, the allocation of costs only to new development, and credits for other funding sources like taxes or grants.
Based on studies performed in the 2024 and a nexus study in 2025 focused on Parks, Public Safety, and General Government fees, the City identified that current fees may exceed the Maximum Supportable Fee, generally calculated as the highest fee the market will support. Additionally, road impact fees are currently under study, with recommendations planned to be brought forward in an ordinance that would achieve a similar proportional reduction. Unlike development fees, impact fees are adopted by ordinance in accordance with State code and there is no proposal to change the method of adoption.
Increase review efficiency. In addition to fee reductions where possible, the City recommends changes that align with their process improvement initiative “Operation Light Speed.” This initiative seeks to achieve better partner response, expanded intake review, and a mandatory meeting with developers to work through review comments early in the review cycle. To capitalize on these efforts, recommendations include additional fees for fourth reviews, increased fees for working without a permit, and reinspection fees when inspectors are called before improvements are completed.
City Council provided a number of comments in response to these recommendations, generally supporting the need to “right size” fees to remain competitive. Some City Council members indicated caution to ensure that reductions now do not result in funding gaps in the future, or that existing residents are not stuck footing the bill for new development.
Next Steps
Recommendations presented by Staff will result in two actions; (1) a proposed resolution to reduce development fees to make them competitive with other jurisdictions in the area and to allow the City Manager to make administrative adjustments to fees; and (2) a proposed ordinance to reduce the percentage of the Maximum Supportable Fee for all impact fees. We can expect to see these proposed actions on the Council’s May 4, 2026 Agenda.
Administration of development and impact fees is complex and can be difficult to navigate. If you would like more information about the proposed changes to development and impact fees in Commerce City, please reach out to FGMC’s Land Use and Real Estate team.
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