"I think we can be creative and fair, especially with … meeting somewhere near the middle," Pagosa Area Water and Sanitation District board member Glenn Walsh said at the district's Sept. 24, 2026 meeting. "I think 10 is nice, I think it's going to be a 12, but I'm confident that we can be fair and … we're going to have to spread the pain as fairly as we can."
The "pain" was a projected $1.6 million gap in PAWSD's 2027 budget. One of the reasons for it matters to anyone pricing a lot in the Pagosa Lakes subdivisions. The district's large one-time fees on new homes have brought in less money than it planned for. Fewer new homes connected than the forecast expected. The board is now deciding how much of that gap moves to monthly bills and how much moves back onto future builders. That puts a moving number into the math for a vacant lot. It also changes how a lot compares with the resale homes for sale nearby.
The bill that comes before the foundation
The listing price on a Pagosa Lakes lot leaves out the utility side of the purchase. Under PAWSD's 2026 rate schedule, a typical single-family home counts as one equivalent unit, or EU. Here is what it owes over the life of a lot:
- While the lot sits empty. If water and sewer lines run within 100 feet of the property, PAWSD charges availability fees of $458.88 a year for both services. State law limits that money to paying off bonds for major capital projects.
- When you request service. The standard ¾-inch water connection is $2,250, and the standard 4-inch wastewater connection is $565.
- The System Capital Investment Fees. These are $9,504 for water and $16,654 for wastewater per EU, and they pay for current and future capital improvements.
- After you move in. The monthly base charge is $84.53, which covers the first 2,000 gallons. Short-term rentals pay an extra $20.07 a month on the wastewater side.
Items two and three add up to $28,973 for one home, all due before a drop of water comes out of the tap. Developers of Pagosa Views, a proposed project of nearly 800 units on 80 acres, pointed to utility impact fees of nearly $30,000 per unit as a major cost burden. Their plat was later denied over access issues.
How a $6,532 fee became $26,158
These fees were much smaller until recently. PAWSD worked with the engineering firm Stantec on new rates, and at the start of 2024 the combined capital investment fee for a new home in its uptown wastewater district was set to rise from $6,532 to $24,655. The Pagosa Daily Post reported that the increase would fall mostly on properties in the Pagosa Lakes Property Owners Association subdivisions.
| Year | Combined water + wastewater CIF, one new home |
|---|---|
| 2023 | $6,532 |
| 2024 | $24,655 |
| 2025 | $25,395 |
| 2026 | $26,158 |
Most of the 2024 jump came from the wastewater side. Stantec's 2023 study worked out a wastewater fee of $16,509, up from $1,179 in fiscal 2023. The capital list behind those numbers is large. It includes $42.5 million to build the Snowball plant and about $50 million in wastewater regulatory upgrades for nutrient removal and expansion. Downtown history plays a part too. The Town's seven-mile pipeline carries downtown sewage uphill to PAWSD's Vista plant, and that created a treatment-capacity issue and a roughly $10 million Vista upgrade required by state regulators.
At that 2024 meeting, local housing advocates warned that the higher fees would make attainable workforce housing harder to build. The 2026 budget numbers show that those concerns held up.
The forecast assumed more builders
A capital investment fee only produces revenue when someone builds. For 2026, PAWSD budgeted about $1.03 million in water CIF and $1.25 million in wastewater CIF. Through June 30, it had collected $398,891 and $532,442. At the 2026 rate, the full-year budget works out to roughly 87 homes paying both fees. That is our estimate from the dollar figures. PAWSD does not publish an actual count of taps.
The district's own explanation is unusually direct. Its second-quarter report says water CIF stood at 38.7% of budget through June, down 15% from about $471,000 at the same point in 2025. It blames "slowing growth and utilizing a rate study that over estimated growth," and estimates a 2026 deficit near $300,000. The wastewater fund shows a similar gap of about $300,000. This is not a first-year problem. In 2025, water CIF missed its budget by about $240,000, and wastewater CIF came in near $859,000, about $391,000 short of its $1.25 million target.
Building did slow countywide. Archuleta County issued 113 single-family permits in 2025, down from 127 in 2024. In June 2026, the board decided no fee increase or surcharge was needed for the rest of the year. Staff traced the gap to lower-than-expected CIF collections. By late September, the 2027 picture had become harder to put off.
Where the gap is headed next
Rising costs make the CIF shortfall worse. PAWSD's debt payments go up by $543,000 in 2027, partly because the last two payments on the Hatcher Lake water treatment plant loan are doubled. The district's lenders require a debt service coverage ratio of at least 1.1. On the current budget, PAWSD projects 0.7. Health insurance costs are expected to rise 14 or 15 percent.
These options were discussed at the Sept. 24 meeting. None has been adopted:
- About 19 percent higher water and wastewater service fees, which district manager Andrew Connor said would close the gap on its own.
- A 10 to 12 percent increase in revenue, spread across rates and other charges and paired with operating cuts.
- A $5 or $6 monthly capital charge on bills, which Walsh suggested could be removed if CIF revenue recovers.
- Higher availability fees or higher capital investment fees, also raised by Walsh.
On today's $84.53 base, 19 percent would add about $16 a month and 10 percent about $8.50. Those figures are our math, not a proposal. Staff planned to bring a draft budget to an Oct. 10 meeting. Connor also pointed to Regulation 31, Colorado's tightening standards for nutrients in wastewater, as a cost the district wants to be ready to absorb.
Every one of these options touches a lot buyer. A monthly increase affects you once you're connected. A higher availability fee affects you while the lot sits empty. A higher CIF affects the day you pull a permit. Someone who closes on a lot this fall and builds in 2027 or 2028 may not know which of these will apply.
Other costs are rising on the construction side too. The Colorado Wildfire Resiliency Code took effect locally on July 1, 2026, and it adds fire-resistant construction requirements to covered work. The state's code also covers additions that grow a building's footprint by 500 square feet or more, and it includes requirements for substantial roof and exterior-wall replacement.
What the resale market looks like right now
A home that's already connected has paid its CIF. The new-hookup fee schedule doesn't touch it, so of everything above, only the monthly bill applies. Meanwhile, Archuleta County's resale market has plenty of homes to choose from. Colorado Association of REALTORS data for August 2026 shows 250 single-family homes for sale and 10.2 months of supply. Year to date through August 2026, the median single-family price was $680,000, homes averaged 131 days on market before selling, and sellers received 96.1% of list price. The same report shows a condo and townhouse median of $362,500 for that period. The August-only median dropped sharply, but the report warns that single-month numbers in a county this size can swing because there are so few sales. The year-to-date figures give a steadier picture.
That's the trade-off a lot buyer is really making. With about ten months of supply and homes taking four months to sell, an existing home can be bought on predictable terms. A lot starts with a fixed utility charge of almost $29,000, and the district is actively deciding how much more each piece of the system will cost. Many of those lots trace back to Eaton International's 1973 subdivision agreement, Fairfield Communities' 1983 purchase, and Fairfield's 1990 bankruptcy, which moved real estate to the county in lieu of taxes. The large supply of platted lots and the high cost of connecting them both come from that history.
Frequently Asked Questions
Does buying an existing Pagosa Lakes home trigger the capital investment fee? PAWSD describes its connection fees as a one-time charge assessed when service is requested, as with new construction. A home that's already connected pays the monthly base charges. Confirm a specific property's account status with PAWSD before closing.
Are there fee waivers for lower-cost homes? They exist, but PAWSD approves them project by project. In 2026, it approved about $130,000 in CIF waivers for five Pagosa Springs Community Development Corporation homes, limited to homes sold to households earning 80% of area median income or less. Archuleta County separately put $40,000 toward tap fees. A private builder's request for about $10,000 was rejected in 2025.
What if a home uses Town sewer? The fee structure is different there. When the 2024 schedule took effect, a new home on PAWSD water and the Town sewer system saw its CIF go from $5,353 to $8,958.
When will the 2027 rates be settled? The draft budget was scheduled for an Oct. 10 meeting. Until the board adopts it, every option above is still a proposal.
If you're comparing a Pagosa Lakes lot with a resale home this fall, The Overington Group can help you add up the fees for a specific parcel and line them up against connected homes on the market now. Explore Our Properties — Contact The Overington Group.
