Castle Rock updates water fees, smaller homes to pay less, larger more

Castle Rock is shifting its water system development fees to favor smaller homes and charge larger ones more, a move town leaders say better matches how much water new houses will actually use and how much strain they place on Castle Rock’s system.

Castle Rock Town Council approved the overhaul unanimously Tuesday after Castle Rock Water finished an analysis of hundreds of homes built under the town’s 2022 landscaping rules. Castle Rock Water Director Mark Marlowe said the old one-size-fits-all approach did not reflect actual demand as well as square footage does, especially now that the town has years of usage data from newer homes.

The change builds on Ordinance No. 2022-025, which applies to homes permitted on or after Jan. 1, 2023. Under the town’s homeowner guidance, those homes cannot have turf in front yards and are limited to no more than 500 square feet of backyard turf. Castle Rock said those landscaping requirements were meant to cut peak demand on water infrastructure, reduce total renewable water supply needs and lower the long-term cost of water for the community.

That conservation push now carries a direct price signal. Castle Rock Water’s review found that homes built under the newer landscape rules used about 3,000 fewer gallons per month on average than comparable homes built under the prior standard. The April 2026 ordinance says that actual use, measured over two calendar years, showed a clear link between demand and gross floor area. The town concluded that smaller single-family homes should face lower development fees, while larger homes should pay more because they are expected to consume more water and wastewater capacity.

For builders, the revision could change the economics of entry-level housing. System development fees are charged at permitting and are meant to pay for access to existing system capacity and a proportionate share of the cost of adding more capacity. A lower fee on smaller homes may make them easier to pencil out, while higher fees on larger homes could push some projects toward smaller footprints or higher sales prices.

Town officials also framed the move as a fairness issue. Growth in Castle Rock continues to put pressure on water supply, treatment, storage and wastewater systems, and the town wants development to contribute its proportional share of those costs. The Castle Rock Water Commission recommends rates, fee structures and water-related capital plans to Town Council, making it a key player as the town keeps adjusting policy for a fast-growing community.

An outside case study describes Castle Rock as a town of about 60,000 people with growth projected to 140,000 by 2050. It also notes the town’s heavy reliance on groundwater and says declining aquifer levels helped drive conservation-oriented fee policy in the Plum Creek Basin and Cherry Creek Basin. In that context, Castle Rock’s latest fee shift is less a paperwork change than a signal about how the town wants to shape its next wave of housing.