Fort Collins to Phase In New Impact Fees Starting 2026 to Address Housing Affordability

Fort Collins City Council voted October 21 to gradually increase residential and transportation impact fees over two years rather than implementing the full proposed increases immediately, choosing a compromise that aims to balance infrastructure funding needs with concerns about housing costs.

The council selected a two-year phased implementation that will spread fee increases 50-50 between 2026 and 2027, with the motion passing 5-1 on first reading. Council Member Francis cast the sole dissenting vote.

The decision follows intense debate over how to modernize Fort Collins' fee structure—which has remained largely unchanged since 1996—while addressing affordability concerns raised by home builders and housing advocates during the October 21 public hearing.

"Housing is an industry that is death by a hundred thousand dollar increases," said Pat McMeek, president of Land for Hartford Homes, during public comment. "You have a chance tonight to begin to end that cycle and change that culture."

Fee Structure Adds Housing Type Differentiation

The updated fee schedule introduces significant changes beyond the rate adjustments, differentiating for the first time between single-family detached, single-family attached, and multifamily housing. Fort Collins' current capital expansion fees treat all residential housing identically regardless of type.

The new structure also expands from five square-footage categories to 17, providing more granular fee tiers that align with Larimer County's assessment categories.

According to city financial projections, the two-year phased approach will generate approximately 7 percent less revenue than the baseline inflation-adjusted fees in 2026, representing about $830,000 in delayed revenue. By 2027, the city anticipates reaching full implementation of the proposed fee levels.

Jennifer Posnanovich, Fort Collins finance director, told council that the phased option "does delay the full alignment with the land use code and would generate less revenue in those initial years."

Concerns About Housing Costs Drive Compromise

Victoria Hall, executive director of the Homebuilders Association of Northern Colorado, requested council delay the decision entirely, citing concerns about rising construction costs compounded by material tariffs and labor expenses.

"According to the National Association of Home Builders, for every $1,000 increase in the median price of a new home, 104 Fort Collins households are priced out of the market," Hall said.

Council members acknowledged the tension between infrastructure funding needs and housing affordability throughout the deliberations.

Council Member Julie Pignataro voiced support for the phased approach specifically because of economic uncertainty. "I think it's not bad even to incentivize sort of smaller house, you know, those sorts of things," Pignataro said. "I think that's why, just for what it's worth, I'd be interested in the third option to phase it in because there's a lot of things that are out of our control as well."

Council Member Emily Francis opposed the increase, stating difficulty supporting fee adjustments when she believes the underlying methodology does not reflect appropriate service levels or account for situations where developments provide their own infrastructure.

"Housing is one of the biggest impacts to people's lives and these things make a difference," Francis said. "I have a hard time increasing impact fees at this moment."

Council Member Kelly Ohlson made the motion to adopt the two-year phase-in, noting his preference for the full staff recommendation but willingness to compromise. "My preference, and probably the only one I would vote for would be the two-year option," Ohlson said. "I think that's fair."

Fees Fund Parks, Public Safety, Roads

Capital expansion fees in Fort Collins support parks, libraries, police and fire facilities, and general government buildings. Transportation capital expansion fees fund arterial and collector road improvements necessitated by new development.

Colorado statute limits impact fee use to capital facilities directly attributable to growth, prohibiting their use for maintenance, operations, or correcting existing deficiencies. Fort Collins uses a "replacement value per capita" methodology that calculates the growth-related portion of infrastructure costs.

The city last conducted comprehensive fee studies in 2017 using external consultants Duncan & Associates for capital expansion fees and TischlerBise for transportation fees. Those studies recommended increases of 70-80 percent for capital expansion fees and up to 114 percent for large residential transportation fees, which Fort Collins phased in over two to three years.

According to city budget documents, Fort Collins has averaged approximately $19.6 million annually in combined capital expansion, transportation, and utility impact fee revenue over the past four years. A 2018 audit by DPFG found 99.8 percent compliance with legal spending restrictions, with only $130,000 of $54 million spent improperly on park upgrades rather than new facilities—an error the city has since corrected.

Josh Birks, deputy director for sustainability services, explained during a September work session that Fort Collins collected these fees based on nexus studies dating to 2017, which are "getting a little stale in terms of providing the best and most accurate understanding of what replacement cost is."

Regional Fee Comparison

Fort Collins' 2023 single-family capital expansion fee of $7,930 for a 1,890-square-foot home falls between Boulder's $6,125 and Loveland's $8,944, according to city comparison data. Longmont charges $8,649 for comparable units.

Boulder and Loveland have recently enhanced their affordable housing fee waiver programs. Loveland adopted 100 percent fee waivers for Low-Income Housing Tax Credit projects at 80 percent area median income. Boulder maintains a 12 percent inclusionary housing requirement alongside fee waivers for qualifying affordable units.

Fort Collins offers fee waivers and deferrals for affordable housing projects meeting specific income targets, with periodic reviews by working groups that include housing advocates and developers.

Next Fee Study Scheduled for 2030

City staff indicated they plan to conduct the next comprehensive impact fee study with implementation targeted for 2030, maintaining the city's typical four-year update cycle.

Council members raised questions about potentially accelerating that timeline or adopting different calculation methodologies that account for infill development patterns and actual service delivery rather than replacement value approaches.

"I don't agree with the current approach to our impact fees," said Pignataro. "And it's not a reflection of your work. I think that you all did exactly what we asked for in the boundaries that we could."

Council Member Susan Gutowski echoed support for examining alternative methodologies, noting Fort Collins has used the same calculation approach since 1996. "Using this same way of determining fees for over 30 years, a lot has shifted in 30 years," Gutowski said.

City Manager Kelly DiMartino responded that developing alternative plan-based fee structures would require enhanced capital improvement planning and cost estimating to meet legal nexus and proportionality requirements, though she committed to providing timeline estimates between first and second reading.

Second reading of the impact fee ordinance is scheduled for December 2. The updated fees would take effect January 1, 2026, if approved.

Contact the Fort Collins Finance Department at 970-221-6788 for questions about capital expansion fees and transportation capital expansion fees.